Growth of firms in developing countries, evidence from Co ˆte d’Ivoire Leo Sleuwaegen a,b, * , Micheline Goedhuys a a Catholic University of Leuven, B-3000 Leuven, Belgium b Erasmus University Rotterdam, Netherlands Received 30 November 1997; accepted 30 June 2001 Abstract The paper presents evidence in support of a particular growth process of firms that is consistent with a missing middle in the size distribution of manufacturing firms in African countries. Firm growth is explained by size and age effects as a result of efficiency exploiting through scale enlargements and learning, but is strongly moderated by reputation effects and formal legitimation which facilitate access to output markets and resources. Complementing the model with data on growth obstacles as perceived by the owners of firms, medium sized firms are found to be strongly hurt by insufficient access to infrastructure and financial services. D 2002 Elsevier Science B.V. All rights reserved. JEL classification: D92; L11; O17; O55 Keywords: Size distribution; Firm size; Firm growth; Learning; Legitimation 1. Introduction In many African countries, even in countries with a comparatively large manufactur- ing sector, the size structure of firms is highly dualistic, with a small number of large firms producing the largest share of output and a very large number of small firms operating on the fringes of the economy. Micro-enterprises and small firms have insufficiently evolved into more productive formal activity firms, and they seldomly 0304-3878/02/$ - see front matter D 2002 Elsevier Science B.V. All rights reserved. PII:S0304-3878(02)00008-1 * Corresponding author. Faculty of Economic and Applied Economic Science, Catholic University of Leuven, Naamsestraat 69, B-3000 Leuven, Belgium. Tel.: +32-16-32-69-13; fax: +32-16-32-67-32. E-mail address: Leo.Sleuwaegen@econ.kuleuven.ac.be (L. Sleuwaegen). www.elsevier.com/locate/econbase Journal of Development Economics Vol. 68 (2002) 117–135