chapter  5
15 Pages

State–business relations and firm performance in Zambia

WithMAHVASH SAEED QURESHI AND DIRK WILLEM TE VELDE

Introduction This chapter examines whether an effective state-business relationship (SBR) facilitated by an organised private sector promotes the economic performance of firms. Effective SBRs lead to a better allocation of resources in the economy, including through an increased effectiveness of government involvement in supporting private sector activities and by removing obstacles to business operations (te Velde 2006; Sen and te Velde 2009; Qureshi and te Velde 2012). While being part of the good governance literature, effective SBRs may also lead to and prioritise governance reforms that could have a positive catalytic effect on private sector development. Despite the importance of the issue, discussions of SBRs for sub-Saharan African countries have been patchy or absent; a detailed analysis of its effect on economic performance has been largely lacking. This chapter exploits the enterprise survey data of the World Bank Group for Zambia for over 200 firms with data on firm-specific characteristics, including data that facilitate the calculation of productivity levels, and on the institutional context facing or perceived by firms.