Research for Development and Justice

Poverty Dynamics

clustering, industrialization, finance, microenterprises, Ethiopia

Countries and regions:

Clustering as an Organizational Response to Capital Market Inefficiency:Evidence from Handloom Enterprises in Ethiopia

Merima Ali, Jack Peerlings and Xiaobo Zhang (2010)

IFPRI (Disussion Paper no. 01045)



Using data from microenterprises of the handloom sector in four regions of Ethiopia, the paper shows that clustering, through specialization and division of labor, can lower entry barriers by reducing the initial capital required to start a business. This effect is found to be significantly larger for microenterprises investing in districts with higher levels of capital market inefficiency, indicating the importance of clustering as an organizational response to a constrained credit environment. The findings highlight the importance of cluster-based industrial activities as an alternative method of propagating industrialization when local conditions do not allow easy access to credit.

Publications with same geographic focus:

Journal Article (Peer-Reviewed)

Ethiopia After Meles: Stability for How Long?

Lovise Aalen (2014) in Current History vol. May 2014

Book Chapter

When Per Diems Take Over: Training and Travel as Extra Pay

Ingvild Aagedal Skage, Tina Søreide, Arne Tostensen (2014) in Tina Søreide, Aled Williams: Corruption, Grabbing and Development: Real World Challenges. Cheltenham and Northamption (MA): Edward Elgar Publishing

Publications within same theme:

Book Chapter

Micro effects of natural resources: Insights from a survey of Angolan microcredit clients

Allan Cain, Ivar Kolstad and Arne Wiig (forthcoming) in A. Grant, W. R. N. Compaoré, and M. Mitchell: New Approaches to the Governance of Natural Resources: Insights from Africa. New York: Palgrave Macmillan

Book Chapter

Resource curse

Ivar Kolstad (forthcoming) in Vodosek, M. and Hartog, D. v. (eds.): Wiley Encyclopedia of Management, 3rd edition, Volume 6 International Management. West Sussex: John Wiley & Sons

Journal Article (Peer-Reviewed)

Returns to education among entrepreneurs in Bangladesh

Ivar Kolstad, Arne Wiig and Khondaker Golam Moazzem (2014) in Journal of Asian Economics vol. 34 pp. 54-65

Publications with similar keywords:

Journal Article (Peer-Reviewed)

Farm households and nonfarm activities in Ethiopia: Does clustering influence entry and exit?

Merima Ali and Jack Peerlings (2012) in Agricultural Economics vol. 43 no. 3 pp. 253-266

Journal Article (Peer-Reviewed)

ValueAdded of ClusterMembership for MicroEnterprises of the HandloomSector in Ethiopia

Merima Ali and Jack Peerlings (2011) in World Development vol. 39 no. 3 pp. 363-374


Merima Ali

Economist focusing micro-economic analysis of small-scale industries, informal networks, Taxation Quality of health care and health systems.

By the same author:

CMI (Chr. Michelsen Institute)
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