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Industrial Clustering, Firm Performance and Employee Welfare

Evidence from the Shoe and Flower Cluster in Ethiopia


Tigabu Degu Getahun

The author examines the productivity, profitability and welfare effects of industrial clustering and a public policy promoting industrial clusters in Ethiopia. He uses reliable counterfactuals as well as original enterprise and worker level data. By investigating the effect of firm, time, entrepreneur and site specific factors as well as endogenous location choice issues, the author finds strong evidence for the existence of significant agglomeration economies in the Ethiopia leather footwear cluster. Using primary survey data collected from firms which benefited from the cluster policy and those that did not, both before and after the implementation of the policy, the author shows the unintended negative impact of a cluster prompting policy in Ethiopia. The book is essential reading for those who are interested in the gender and welfare impact of female full time labor force participation in industrial jobs.
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It is a great pleasure to thank God, the many people and institutes who made this book possible. First and foremost glory to the Almighty for enabling me to accomplish my writing successfully. My boundless gratitude goes to my first Professor Dr. Joachim Von Braun. Throughout my thesis-writing period, he provided encouragement, sound advice and lots of good ideas. I would have been lost without him. It has been an honor to be his student. I am also very grateful for my second Professor Dr. Ulrich Hiemenz and my Dr. Marc Müller who took time to review my work. I am also greatly indebted to my research partner and friend Dr. Espen Villanger for his continued encouragement, support and inspiration.

I am heavily indebted to H.E Ato Newai Gebre-ab, EDRI director and chief economic advisor to the Ethiopia government prime minister, for his invaluable advice, encouragement, moral support and easy yes for all my difficult requests. I would also like to wholeheartedly thank Mrs Rosemary Zabel, Mrs Maike Retat Amin and Dr. Gunther Manske for their excellent admin and logistic assistance.

I would also like to take this opportunity to gratefully acknowledge the funding sources that made my doctoral study possible. The first three years of my study was primarily funded by the German Academic Exchange Service while part of my last year study was funded by BMZ through ZEF. My field research was mainly funded by the Dr. Hermann Eiselen grant program...

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