Agglomeration economies are among the most important
factors to increase firm productivity. However, there
is little evidence supportive of this in Africa. By applying
the conditional and nested logit models, this paper
examines the relationship between firm locations and
infrastructure accessibility in Rwanda. It is found that
agglomeration economies matter to even one of the smallest
countries in Africa. It is also found that infrastructure
availability has an important role in affecting the firm location
decision. Electricity access and transport connectivity
to the domestic and international markets are found to
be important to attract new investment. In addition, the
quality of local labor supplied, measured by educational
attainment, is found as an important determinant of firm
location, while the effect of labor costs remains inconclusive.