This paper examines the determinants of the productivity
of Nigerian firms, using three waves of Enterprise Surveys
from 2007, 2009, and 2014 and 7,670 firms. The paper
uses three alternative measures of productivity, which are
found to be highly correlated: labor productivity, value
added per worker, and total factor productivity. The more
notable trends in the data show: a rise in productivity,
with the output of exporting firms decreasing; increasing
concentration of production, reflected in the rise of the
Herfindahl-Hirschman index by a factor of three; increasing
costs of crime, power outages, lack of security, and bribery;
significant heterogeneity of these costs along several dimensions,
such as firm size, age, location, and the exporting
or domestic nature of the market it serves. These costs are
inversely related with investment. Regardless of the measure
of productivity, its main determinants are the education of
the worker, size of the firm, availability of credit, and business
climate variables. When labor productivity is used, the
stock of capital is also a major determinant of productivity.
Within the investment climate variables, power outages and
the corruption index are the more significant ones. Power
outages are negatively associated with productivity. Bribery
is positively related, supporting the “greasing the wheels”
hypothesis of bribery as a factor that reduces transaction
costs. The impact is nonlinear, as it decreases with firm size.
The results also show a positive association between productivity
and exporting, but the causality is reversed when the
analysis controls for endogeneity: productivity is a weak
determinant of the likelihood of a firm becoming an exporter