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Active Private Sector Development Policies Revisited: Impacts of the Ethiopian Industrial Cluster Policy

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  • Tigabu Degu Getahun
  • Espen Villanger

Abstract

We analyse impacts of a cluster policy aiming to increase firm growth through maximising agglomeration benefits and improving production facilities. Firms located in a natural cluster were incentivised to move to a new government-created cluster. A limited number of firms were allowed to move, and many similar firms, also eager to move but could not, formed our comparison group. Controlling for selection, and employing difference in-difference estimation, we find large negative effects on job-creation and firm performance. The policy hampered the firms’ business and knowledge networks, reduced trust among firms, increased transaction costs and curbed market information.

Suggested Citation

  • Tigabu Degu Getahun & Espen Villanger, 2019. "Active Private Sector Development Policies Revisited: Impacts of the Ethiopian Industrial Cluster Policy," Journal of Development Studies, Taylor & Francis Journals, vol. 55(7), pages 1548-1564, July.
    • Handle: RePEc:taf:jdevst:v:55:y:2019:i:7:p:1548-1564
    DOI: 10.1080/00220388.2018.1443211
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    Cited by:

    1. Yilong An & Yinghua Zhang, 2021. "Crossing the Valley of Death for SMEs: Management Practices From China," SAGE Open, , vol. 11(3), pages 21582440211, September.
    2. Jiaxin Wang & Qinghong Xie & Xinyu Geng, 2024. "Exploring the Effects of Multi-Governance Mechanisms throughout the Dynamic Evolution of the Cooperative Innovation Network," Sustainability, MDPI, vol. 16(5), pages 1-27, February.
    3. Jingjing Chen & Han Feng & Hong Zhou, 2022. "Local industrial policy and productivity: Evidence from China," Contemporary Economic Policy, Western Economic Association International, vol. 40(1), pages 138-161, January.
    4. Bloem, Jeffrey R. & Liverpool-Tasie, Saweda & Adjognon, Serge G. & Dillon, Andrew, 2022. "Private Sector Promotion of Climate-Smart Technologies: Experimental Evidence from Nigeria," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322152, Agricultural and Applied Economics Association.

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