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Determinants of manufacturing micro firms' productivity in Ecuador. Do industry and canton where they operate matter?

Abstract:

This study aims to identify the productivity determinants of manufacturing micro firms, emphasizing on regional and industrial factors. A cross-classified multilevel model is employed using the Economic Census of 2010 from Ecuador. Results show (90.1%) that the heterogeneity of the total factor productivity of micro formal firms of the manufacturing sector is mainly due to differences across firms. The remaining variation of the TFP is explained to a larger extent by the industrial context (5.8%) than the geographical context (4.1%). Among firm characteristics, information and communication technologies, cbkp_redit and training are important drivers of productivity. Despite this, very few micro firms use the Internet, have cbkp_redit access or engage in training in Ecuador. Moreover, micro firms benefit from agglomeration economies derived from specialization, diversity and density that they themselves generate.