The Relationship Among Enterprise Clustering, Prices, and Productivity in Ethiopia's Manufacturing Sector

24 Pages Posted: 9 Oct 2020

See all articles by Eyerusalem Siba

Eyerusalem Siba

affiliation not provided to SSRN

Mans Soderbom

University of Gothenburg

Arne Bigsten

University of Gothenburg

Mulu Gebreeyesus

affiliation not provided to SSRN

Date Written: August 2020

Abstract

We use census panel data on Ethiopian manufacturing firms to analyze how enterprise clustering in local markets covaries with firm‐level output prices and physical productivity. We find a negative and statistically significant relationship between the density of firms that produce a given product in a given location and the local price of that product. We also find a positive and statistically significant relationship between the density of firms that produce a given product in a location and the physical productivity of same‐product firms in the location. These results are consistent with the notion that increased clustering of firms generates higher competitive pressure and positive externalities. Across firms that produce different products, we find no statistically significant relationship between enterprise clustering and firm‐level output prices and productivity. We also find no clustering effects across towns. Our results suggest that while clustering can impact firm performance, the advantages are narrow in scope.

Keywords: agglomeration economics, African manufacturing, Ethiopia, prices, productivity

Suggested Citation

Siba, Eyerusalem and Soderbom, Mans and Bigsten, Arne and Gebreeyesus, Mulu, The Relationship Among Enterprise Clustering, Prices, and Productivity in Ethiopia's Manufacturing Sector (August 2020). Review of Development Economics, Vol. 24, Issue 3, pp. 831-854, 2020, Available at SSRN: https://ssrn.com/abstract=3706970 or http://dx.doi.org/10.1111/rode.12677

Eyerusalem Siba (Contact Author)

affiliation not provided to SSRN

Mans Soderbom

University of Gothenburg ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

Arne Bigsten

University of Gothenburg ( email )

Box 640
SE 405 30 Gothenburg
Sweden

HOME PAGE: http://www.hgu.gu.se/item.aspx?id=2619

Mulu Gebreeyesus

affiliation not provided to SSRN

No Address Available

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