P values in parenthesis
The estimates of the supply equation are as expected for both countries. From the first
two columns of the Gabon estimates in Table 3, and from the first two columns of the Chad
estimates, we can see that output grows in response to a reduction in unit variable costs. The
other four regressions in Table 3 use total unit costs, which turn out not to be statistically
significant. This is not particularly surprising, as this measure of costs is a function of output and
is likely therefore to be endogenous. More crucially, total unit costs are meant to measure the
long-run cost function, which may be an inappropriate determinant of short-run supply behavior.
Finally, there may be problems with the measurement of capital costs.
Export orientation is also a significant determinant of output growth. From the first
columns of the two countries’ regressions in Table 3, we see that exporters are more responsive
to price shocks than non-exporters (the export dummy multiplied by the variation in costs is
negative). The positive coefficient of the export dummy in the second set of regressions
indicates that output growth was faster for exporting firms, even after controlling for price effects.
Collinearity problems did not permit to include both variables (DUMEX and DUMEXΔC) in the
equation. We also see that productivity growth contributes to output growth. Finally, capacity
utilization in 1993 bears the expected negative sign, but the coefficient is not statistically different
from zero.
Turning to the productivity equation, real output growth plays a statistically significant role
in both countries (Table 4). This implies that there are important scale effects which were not
accounted for when we computed total factor productivity under the assumption of constant
returns to scale. Also, we see that the skill proxies are significant for Gabon only. Moreover, in
the case of Gabon, firms with a large share of expatriates on the payroll and a significant foreign
ownership show a greater productivity increase.
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