The Determinants of Labor Productivity in South Sudan Manufacturing Sector

Abstract

The manufacturing sector is widely believed to play a significant role with a lot of potentialities in driving the economic growth of most of the developing countries through its value addition. However, with regards to South Sudan despite some positive contributions of the sector to the economy, it is still characterized by low labour productivity relative to other developing countries which poses a challenge to the country’s desire to achieve SDG by 2030 and South Sudan Vision 2040 on time. Since labour productivity is an important measure of efficiency and competitiveness, rigorous analysis of the determinants of labour productivity is imperative given that there is a dearth of specific studies done on the topic in the country. This study aims to investigate the determinants of labor productivity in South Sudan manufacturing sector. It applies the Ordinary Least Square approach to analyze the labour productivity model using the cross-sectional data obtained from the World Bank Enterprise Survey 2014 database. From the findings, the study reveals that capital intensity, average years of education and medium-sized firm are positive and impact labor productivity significantly. Foreign ownership is also found to be significant however, it exhibits a negative relationship with labour productivity. To improve labor productivity in South Sudan manufacturing sector, the government should increase investment in human capital especially by allocating more resources to boost educational institutions at all levels and enacting some laws of compulsory education across the country. Also, the government should create a favorable environment for the growth and expansion of medium firms by giving them support in terms of more credit to boost their capital needs and reduces their production costs. Furthermore, both the government and firms should channel more resources into investments in physical stock to boost labour productivity. Finally, the government should also create a more conducive environment to attract foreign investors into the country by eliminating any other obstacles that may distract foreigners from investing in the country.