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Measuring Agglomeration Economies: The Case of the Ethiopian Cut Flower Industry

Yukichi Mano () and Aya Suzuki

No 2013-04, Discussion Papers from Graduate School of Economics, Hitotsubashi University

Abstract: Industrial clusters are ubiquitous, and the associated low transaction costs allow producers to benefit from information spillovers, interfirm division and specialization of labor, and the development of skilled-labor markets. Previous studies, however, have seldom quantified the benefits on business performance. Ethiopia’s cut flower industry provides a rare opportunity to compare agglomerated with dispersed producers. Agglomerated farms frequently share technological knowledge and market information to decide when and even whether products are worth harvesting and shipping and to select product varieties. Econometric results indicate that agglomerated farms export higher valued flowers and achieve higher productivity and profitability. These findings imply that promotion of industrial clusters would further develop the industry.

Keywords: agglomeration economies; information spillovers; market information; technological knowledge; cut flower; Sub-Sahara Africa; Ethiopia (search for similar items in EconPapers)
JEL-codes: L15 L25 O12 O25 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-afr, nep-cse, nep-geo and nep-ure
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