Advertisement

The European Journal of Development Research

, Volume 27, Issue 1, pp 99–121 | Cite as

Impacts of a Micro-Enterprise Clustering Programme on Firm Performance in Ghana

  • Jörg Peters
  • Maximiliane Sievert
  • Christoph Strupat
Original Article

Abstract

Widely considered an important backbone of economies in developing countries, micro- and small enterprises face several growth constraints. The creation of industrial zones (IZs) with improved access to infrastructure and secure land tenure is a potential remedy to promote local economic development. We assess the effects of an intervention on business performance indicators that establishes IZs for micro-enterprises in Ghana based on firm-level data on 227 enterprises. The results show that the establishment of IZs leads to the creation of new firms, but for existing firms that relocated to the IZs the effects on firm performance are negative.

Keywords

project evaluation firm clustering micro-enterprises 

Abstract

Considérées comme la pierre de voute de l’économie des pays en développement, les micro et petites entreprises font face à plusieurs contraintes quant à leur croissance. La création de zones industrielles (ZI) permet un meilleur accès à l’infrastructure et à une propriété foncière sécurisée, et est un remède potentiel pour promouvoir le développement économique local. Nous évaluons les effets d’une intervention sur les indicateurs de performance commerciale ; l’intervention consiste à établir une ZI pour les micro-entreprises au Ghana, et les données sont collectées auprès de 227 entreprises. Les résultats montrent que la mise en place de ZI entraîne la création de nouvelles entreprises mais que l’impact est négatif sur la perfomance des entreprises existantes qui se sont déplaçées sur la ZI.

Notes

Acknowledgements

We thank Sven Neelsen, Colin Vance and Christoph M. Schmidt for valuable comments. Financial support of the Netherlands Enterprise Agency (RVO) is gratefully acknowledged.

References

  1. Ali, M. (2012) Government’s role of cluster development for MSEs – Lessons from Ethiopia. CMI Report R2012, Chr. Michaelsen Institute, Bergen, Norway.Google Scholar
  2. Ali, M. and Peerlings, J. (2011) Value added of cluster membership for micro enterprises of the handloom sector in Ethiopia. World Development 39 (3): 363–374.CrossRefGoogle Scholar
  3. Bigsten, A., Gebreeyesus, M., Siba, E. and Söderborn, M. (2011) The effects of agglomeration and competition on prices and productivity: Evidence for Ethiopia’s manufacturing sector. Center for the Study of African Economies Working Paper, WPS/2011, Oxford, UK.Google Scholar
  4. Blien, U., Suedekum, J. and Wolf, K. (2006) Local employment growth in West Germany. Labor Economics 13 (4): 445–458.CrossRefGoogle Scholar
  5. Boomgard, J., Davies, S., Haggblade, S. and Mead, D. (1992) A subsector approach to small enterprise promotion and research. World Development 20 (2): 199–212.CrossRefGoogle Scholar
  6. Combes, P.-P. (2000) Economic structure and local growth: Franc, 1984–1993. Journal of Urban Economics 47 (3): 329–355.CrossRefGoogle Scholar
  7. Deaton, A. and Grosh, M. (2000) Consumption. In: M. Grosh and P. Glewwe (eds.) Designing Household Survey Questionnaires for Developing Countries: Lessons from 15 Years of the Living Standard Measurement Study. Vol. 3. Washington DC: World Bank, 91–134.Google Scholar
  8. Di Lucio, J.J., Herze, J.J. and Goicola, A. (2002) The effects of externalities on productivity growth in Spanish industry. Regional Science and Urban Economics 32 (2): 241–258.CrossRefGoogle Scholar
  9. Economist Intelligence Unit (EIU) (2008) Ghana: Country Profile 2008. London: Economist Intelligence Unit (EIU).Google Scholar
  10. Fafchamps, M. and Hamine, S. (2004) Firm productivity, Wages, and Agglomeration Externalities. Center for the Study of African Economies Working Paper, WPS/2004-32, Oxford, UK.Google Scholar
  11. Gebreeyesus, M. and Mohnen, P. (2013) Innovation performance and embeddedness in networks: Evidence from the Ethiopian footwear cluster. World Development 41 (1): 302–316.CrossRefGoogle Scholar
  12. Grimm, M., Knorringa, P. and Lay, J. (2012) Constrained gazelles: High potentials in west Africa’s informal economy. World Development 40 (7): 1352–1368.CrossRefGoogle Scholar
  13. Henderson, J.V. (1997) Externalities and Industrial Development. Journal of Urban Economics 53 (3): 1–28.Google Scholar
  14. Hutchings, F. (2012) Transforming informal street vendors into formal local businesses in Rwanda. In: S. David, O. Ulrich, S. Zelezeck and N. Majoe (eds.) Managing Informality: Local Government Practices and Approaches towards the Informal Economy – Learning Examples from Five African Countries. Pretoria, SA: South African LED Network, SALGA and LEDNA, pp. 44–55.Google Scholar
  15. Imbens, G.W. and Wooldridge, J.M. (2009) Recent developments in the econometrics of program evaluation. Journal of Economic Literature 47 (1): 5–86.CrossRefGoogle Scholar
  16. Krugman, P. (1991) Geography and Trade. Cambridge, MA: MIT Press.Google Scholar
  17. Marshall, A. (1920) Principles of Economics. London: Palgrave Macmillan.Google Scholar
  18. Mati, F. (2012) The case of muthurwa market in Nairobi. In: S. David, O. Ulrich, S. Zelezeck and N. Majoe (eds.) Managing Informality: Local Government Practices and Approaches Towards the Informal Economy – Learning Examples from Five African countries. Pretoria, SA: South African LED Network, SALGA and LEDNA, pp. 23–33.Google Scholar
  19. McCormick, D. (1999) African enterprise clusters and industrialization: Theory and reality. World Development 27 (9): 1531–1551.CrossRefGoogle Scholar
  20. Mitchell, T. and Thompson, L. (1994) A theory of temporal adjustments of the evaluation of events: Rosy Prospection & Rosy Retrospection. In: C. Stubbart, J. Porac and J. Meindl (eds.) Advances in Managerial Cognition and Organizational Information-Processing 5. Greenwich, CT: JAI press.Google Scholar
  21. Omungo, R. (2008) KENYA: Relocation of traders in Nairobi still beset with problems, http://www.ipsnews.net/2008/04/kenya-relocation-of-traders-in-nairobi-still-beset-withproblems/, accessed 15 July 2013.
  22. Peters, J., Sievert, M. and Vance, C. (2011) Impacts of electricity usage on micro-enterprises in Peri-Urban Ghana. Journal of Social and Economic Policy 8 (1): 55–70.Google Scholar
  23. Porter, M. (1990) The Competitive Advantage of Nations. London: Palgrave Macmillan.CrossRefGoogle Scholar
  24. Rosenbaum, P.R. (1995) Observational Studies. New York; Heidelberg; London: Springer.CrossRefGoogle Scholar
  25. Ruan, J. and Zhang, X. (2009) Finance and cluster-based industrial development in China. Economic Development and Cultural Change 58 (1): 143–164.CrossRefGoogle Scholar
  26. Schmitz, H. (1999) Global competition and local cooperation: Success and failure in the Sinos Valley, Brazil. World Development 27 (9): 1627–1650.CrossRefGoogle Scholar
  27. Sonobe, T. and Otsuka, K. (2006) Cluster-Based Industrial Development. An East Asian Model. NY: Palgrave Macmillan.CrossRefGoogle Scholar
  28. The United Nations Commission on Private Sector and Development (2004) Unleashing Entrepreneurship. New York: UNDP.Google Scholar
  29. UNIDO (2010) Cluster development for pro-poor growth: The UNIDO approach, Technical Paper Series, Vienna, Austria.Google Scholar
  30. Van Dijk, M.P. and Sverrisson, A. (2003) Enterprise clusters in developing countries: Mechanisms of transition and stagnation. Entrepreneurship & Regional Development 15 (July): 183–206.CrossRefGoogle Scholar
  31. World Bank. (Ed.) (2012) World Development Indicators 2012, World Bank Publications, Washington.Google Scholar

Copyright information

© European Association of Development Research and Training Institutes 2014

Authors and Affiliations

  • Jörg Peters
    • 1
    • 2
  • Maximiliane Sievert
    • 1
  • Christoph Strupat
    • 3
  1. 1.Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)EssenGermany
  2. 2.AMERU, University of the WitwatersrandJohannesburgSouth Africa
  3. 3.University of Duisburg, EssenGermany

Personalised recommendations