Page 84 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.78, # 2, 2021, pp. 74-88

Then, lack of working capital (agro-processing; Textile & Wearing apparel; Metal;
Machinery, Equipment & Motor vehicle, and Furniture) and shortage of supply of spare
parts (for Wood & Paper; Chemicals & Chemical Products and Rubber & Plastic) are
the third major operational problem the large and medium scale manufacturing
industries faced.

III. CONCLUSION AND RECOMMENDATIONS
Conclusions
This empirical study seeks to analyze the determinants of total factor productivity in
large and medium scale enterprises in Ethiopia. In addition, it tries to assess the
trend and structure of large and medium scale enterprises. This study, therefore,
concludes that intensity of imported raw materials, the loan provided to the
manufacturing industries, foreign direct investment, human capital formation, stable
macroeconomic environment (stable inflation), and infrastructure growth (road
coverage) are necessary to improve total factor productivity of Large and Medium
Scale manufacturing industries. However, there is no significant evidence to suggest
that growth in per capita income influence the Large and Medium Scale
manufacturing industries' growth, despite strong theoretical support. The study also
highlights the negative effect of export intensity on Large and Medium Scale
manufacturing industries' growth. This could be because most of the manufactured
exports in Ethiopia are characterized by low-value products and high competition in
export markets. On the other hand, the descriptive analysis confirmed that the
number, jobs created, and value-added per worker of large and medium scale
manufacturing industries are continuously increasing from time to time. This seems
promising performance, though the share of the manufacturing industry to the entire
economy is still very low. This sector is dominated by agro-processing industries
and non-metallic mineral industries. However, regardless of the continuous rise in
number, employment, and value-added, there has been no similar progress in
manufactured exports. This could be due to the weak international competitiveness
of the firms that results from low productivity and low-quality products.

Currently, the operation of Large and Medium Scale Manufacturing Industries in
Ethiopia is highly constrained by a shortage of supply of raw materials; absence of
demand for products, and lack of working capital.

Recommendation
After identifying the main determinants of Large and Medium Scale manufacturing
industries, it is important to discuss what sort of policies can be formulated to
increase Large and Medium Scale manufacturing industries growth in large and
medium scale manufacturing industries in Ethiopia.

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