Firm Performance in Ghana: the Role of Infrastructure 

The study examines the effect of infrastructure on the performance of firms in Ghana and also explores whether size and age matter with respect to how infrastructure affects firm performance in Ghana. This study utilises firm level data from the World Bank Enterprise Survey (WBES) for Ghana, where the determinants of infrastructure were captured using both composite indexes and subcomponents of three infrastructure indicators - financial, physical and institutional. By the application of the least square method while controlling for firm-level invariant covariates as well as industry and location effects, the paper provides evidence that well developed financial infrastructure has positive relation with firm performance whilst poor physical infrastructure has a negative association with the performance of firms. With respect to individual indicators, the findings reveal that better access to finance and telecommunication have positive and significant association with firm performance whilst poor transportation network, inconsistent supply of power as well as bottlenecks in customs and trade regulations are negatively related to firm performance. Finally, results from the interaction between firm size and infrastructure reveal that larger firms benefit more from institutional infrastructure than smaller firms. The paper offers policy recommendations to government and stakeholders.