This paper documents the determinants of firms’ probability of exiting from 2008 to 2020 in Senegal. We analyze to what extent productivity, location, local competition, and legal form status affected the movements of firms operating in Senegal between 2008 and 2020. Our findings are summarized as follows. Several firm characteristics, including the firm’s age and size, affect the firm probability of exiting. Interestingly, spendings in Research and Development (R&D) decrease a firm’s likelihood of leaving. Regarding the location, the results suggest that firms outside the capital have a higher market exit probability than those in Dakar. Moreover, the results indicate the importance of local competition in the survival of firms. Indeed, the number of firms in the location sector and an inverse Hirschman-Herfindahl Index (how monopolistic the sector is in the location) increase the probability of exiting. The results also indicate that more productive firms are less likely to exit. Using a microeconometric model, we also assess whether the Cournot model is relevant to the Senegalese firms and economy. The results indicate that that is the case and that our profitability measures derived from the Cournot model are highly significant determinants of firm dynamics (entry and exit movements) for all sectors.
