TY - RPRT AB - This paper empirically analyzes the productivity, profitability, innovation and network effects of a public policy promoting micro and small scale industrial clusters in Ethiopia. To this end, firm-level survey data was collected from randomly selected clustered leather shoe manufacturers that have directly benefited from the policy and those that do not, both before and after the cluster policy intervention. The results from econometric analysis suggests that the industrial cluster policy adversely impacts the productivity, profitability, growth, and innovation performance of the small and micro leather shoe manufacturing enterprises that moved to the government created clusters . The analysis of the transmission mechanism further reveals that the relocated cluster policy hampers the treated firms’ collaborative business and knowledge network and aggravates their growth impediments which includes lack of trust, high customer and supplier search and reach cost, lack of market information, imperfect contract enforcement, delays in the supply of raw materials and the lack of skilled labor. The time lag between policy implementation and its impacts may conceal the long-term impact of the cluster policy. The overwhelming majority of the representatives of treatment group firms also continue to believe that their buisness performance will improve over time as a result of their participation in the MSE cluster development program. This study is a pioneer to quantitatively evaluate the productivity, profitability, innovation and network effect of industrial cluster policy in Ethiopia. AU - Getahun, Tigabu Degu DA - 2016-01 DA - 2016-01 DO - ISSN: 1436-9931 DO - 10.22004/ag.econ.229713 DO - Other DO - doi ED - Wünscher, Tobias ED - editor EP - 34 EP - 1 ID - 229713 KW - Institutional and Behavioral Economics KW - Production Economics KW - Research and Development/Tech Change/Emerging Technologies KW - Risk and Uncertainty KW - Cluster Policy KW - Productivity KW - Profitability KW - Networks KW - Small and Micro Enterprises KW - Ethiopia L1 - https://ageconsearch.umn.edu/record/229713/files/ZEF%20DP%20208.pdf L2 - https://ageconsearch.umn.edu/record/229713/files/ZEF%20DP%20208.pdf L4 - https://ageconsearch.umn.edu/record/229713/files/ZEF%20DP%20208.pdf LA - eng LK - https://ageconsearch.umn.edu/record/229713/files/ZEF%20DP%20208.pdf N2 - This paper empirically analyzes the productivity, profitability, innovation and network effects of a public policy promoting micro and small scale industrial clusters in Ethiopia. To this end, firm-level survey data was collected from randomly selected clustered leather shoe manufacturers that have directly benefited from the policy and those that do not, both before and after the cluster policy intervention. The results from econometric analysis suggests that the industrial cluster policy adversely impacts the productivity, profitability, growth, and innovation performance of the small and micro leather shoe manufacturing enterprises that moved to the government created clusters . The analysis of the transmission mechanism further reveals that the relocated cluster policy hampers the treated firms’ collaborative business and knowledge network and aggravates their growth impediments which includes lack of trust, high customer and supplier search and reach cost, lack of market information, imperfect contract enforcement, delays in the supply of raw materials and the lack of skilled labor. The time lag between policy implementation and its impacts may conceal the long-term impact of the cluster policy. The overwhelming majority of the representatives of treatment group firms also continue to believe that their buisness performance will improve over time as a result of their participation in the MSE cluster development program. This study is a pioneer to quantitatively evaluate the productivity, profitability, innovation and network effect of industrial cluster policy in Ethiopia. PY - 2016-01 PY - 2016-01 SP - 1 T1 - The Effect of Industrial Cluster Policy on Firm Performance in Ethiopia: Evidence from the Leather Footware Cluster TI - The Effect of Industrial Cluster Policy on Firm Performance in Ethiopia: Evidence from the Leather Footware Cluster UR - https://ageconsearch.umn.edu/record/229713/files/ZEF%20DP%20208.pdf Y1 - 2016-01 T2 - ZEF Discussion Papers on Development Policy T2 - 208 ER -