Journal of development economics vol:68 issue:1 pages:117-135
The paper presents evidence in support of a particular growth process of firms that is consistent with a missing middle in the size distribution of manufacturing firms in African countries. Firm growth is explained by size and age effects as a result of efficiency exploiting through scale enlargements and learning, but is strongly moderated by reputation effects and formal legitimation which facilitate access to output markets and resources. Complementing the model with data on growth obstacles as perceived by the owners of firms, medium sized firms are found to be strongly hurt by insufficient access to infrastructure and financial services. (C) 2002 Elsevier Science B.V All rights reserved.