Determinants of African manufacturing investment: the microeconomic evidence

In this survey paper we consider the microeconomic evidence on investment i n African manufacturing. We analyse both the determinants of investment beh aviour and the return to that investment. In tile 1990s market selection - the process by which the capital stock is reallocated in favour of more eff icient firms - has been as strong in Africa as elsewhere. While the macroec onomic literature has focused on low returns to investment as an explanatio n for Africa's poor growth performance, the micro-data indicate high potent ial returns. However, investment rates remain quite low, presumably as a re sult of risk, but the surveys currently available are not suitable for test ing this.