Abstract This paper examines productivity differences among Egyptian manufacturing firms and the extent to which they are associated with firm capabilities and the business environment. Using firm-level data from the Egyptian Industrial Firm Behavior Survey 2020/21 (EIFBS), we estimate Total Factor Productivity (TFP) for more than 2,000 firms using Cobb–Douglas and Translog production functions, before analyzing its correlates across firms, sectors, and locations. The results point to substantial productivity heterogeneity within Egyptian manufacturing. Two factors emerge as particularly robust correlates of higher TFP: worker training and location in industrial zones. By contrast, other firm characteristics, including exporting, formality, foreign participation, and ownership structure, are less consistently associated with productivity once the full set of controls is included. The heterogeneity analysis further shows that productivity drivers differ across firm size, sector, and geographical location. Industrial-zone location is especially relevant for firms in metropolitan areas and for SMEs, while worker training is particularly important for SMEs and nonoil sectors. The findings suggest that policies to raise firm productivity in Egypt should go beyond broad business-environment reform and pay closer attention to firm capabilities, spatial inequalities, and the uneven effectiveness of industrial-zone policies across different types of firms.
Martínez‐Zarzoso et al. (Tue,) studied this question.
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