Ethnic Ties in Trade Relationships and the Impact on Economic Performance: The Case of Small-Scale Producers in the Handloom Sector in Ethiopia

Merima Ali and Jack Peerlings

Journal of Development Studies, 2011, vol. 47, issue 8, 1241-1260

Abstract: This article analyses the importance of ethnic ties in trade relationships of small-scale producers in the handloom sector in Ethiopia using both a non-parametric and a parametric statistical method. It is shown how various socio-economic characteristics of producers lead to ethnic ties with traders. It is also shown that ethnic ties affect the performance of producers negatively. Apparently the positive effect of ethnic ties, through the reduction of transaction costs arising from market imperfections, does not outweigh the negative effects of closed social networks.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jdevst:v:47:y:2011:i:8:p:1241-1260

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DOI: 10.1080/00220388.2011.579110

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