Brief description of own African related research activities Mulu Gebreeyesus UNU-MERIT Presentation on Africa Research in UNU-MERIT Workshop October 21, 2011, Maastricht 1. Agglomeration/trade opening and firm productivity in Ethiopian manufacturing • • This is a collaborative project with Gothenburg University, Sweden It is based on a decade long firm level census data in Ethiopian manufacturing and constitutes three separate topics 1.1. Firm productivity and Exports (with Arne Bigsten - JDS, 2009) • This paper examines the causal relationship between exporting and productivity. • We find strong evidence of not only self-selection but also learning-by-exporting. 1.2. The response of firm performance to gradual trade liberalization (with Arne Bigsten and Mans Soderbom - working paper, CSAE Oxford) • It examines the effect of trade liberalization on firm performance during 1997-2005 • We find relatively large effects of tariff reductions on total factor productivity. 1.3. Agglomeration effects in Ethiopian manufacturing (with Arne Bigsten, Mans Soderbom, and Eyerusalem Siba) • It analyses the effect of agglomeration on two key determinants of firm performance; productivity and output prices. • We find statistically significant effect of agglomeration of firms on prices, suggesting that new entry leads to higher competitive pressure in the local economy. • We also find a positive and statistically significant effect of agglomeration on productivity which is consistent with the notion of positive externalities. 2. The impact of export promotion on selected sectors in Ethiopia 2.1. Financing Constraints and Industry Promotion: the case of the Garment Industry in Ethiopia (with Tetsushi Sonobe, and Keijiro Otsuka, GRIPS, Japan) – Preferential financing simply leads to a large debt unaccompanied by a sufficiently large amount of working capital. – The shortage of working capital results in a limited opportunity for learning by doing because the operation size is small. 2.2. Discovery of Flower Industry in Ethiopia: Experimentation and Coordination (with Michiko, UNU-MERIT) – /forthcoming JGD/ – This paper examines the discovery process of a recent and extremely successful non-traditional export activity in Africa – the Ethiopian flower industry – It highlights the importance of a shared vision and good relations between the government and private sector for development of this new industry. 2.3. Governance of global value chain and market formation in Ethiopian floriculture (with Tetsushi Sonobe GRIPS, Japan) /forthcoming JDS/ – This paper analyze the impact of increasing standards and delivery requirements in EU floriculture market on capability of African suppliers based on case study of Ethiopian flower industry 3. Innovation in the informal sector 3.1. The relation between micro-enterprises growth and innovative and entrepreneurial attributes /book chapter/ – This paper addresses two prominent issues on the development of small enterprises in Africa. What factors inhibit or foster innovation activities in small enterprises? Do innovators create more jobs? – It relies on a large set of micro-enterprises survey data from Ethiopia that comprise 1000 observations with 10 and fewer workers. 3.2. Innovation performance and embeddedness in networks: evidence from the Ethiopian footwear cluster (with Pierre) – working paper UNU-MERIT – This study provides empirical evidence on the impact of firm heterogeneity in embeddedness in networks and absorptive capacity on innovation performance of firms. – It revealed that despite homogeneity in social background the firms in the cluster behave and perform differently. – We documented a positive and strong effect of local network position and absorptive capacity of the firm on innovation performance. The impact of the T&C quota removal on global export flow (ongoing work) • It has been five years since the removal of the long awaited quota on Textile and Clothing in 2005. • This project examines the impact of quota removal on global apparel export flow and the relative performance of quota constrained and preferentially treated countries in the post-quota period. – The performance of SSA countries that have preferential treatment under AGOA in the US market and under EBA in the EU market is also analyzed • A separate analysis in both the US and EU apparel imports show that the previously quota constrained countries increased their export substantially in the post-quota period. In contrast, the preferred and FTA countries show poor performance the largest losers being AGOA and EBA countries. Learning to Compete (L2C): Accelerating Industrial Development in Africa • It is a collaborative undertaking of UNU-WIDER, Brookings Institution, and African Development Bank (AfDB) – (2011-2013) – It is a project of comparative study of 10 African countries plus 2 other South Asian countries. – I am principal investigator for the Ethiopian country team • One dimension of the research is thematic, resting on a common quantitative and qualitative approach to addressing such issues as: – – – – What is the role of exports in industrialization? Will lack of skills constrain Africa’s ability to compete? Can industrial clusters boost competitiveness? Can foreign direct investment build Africa’s industrial capability? • The second dimension is a detailed country study on industrialization process and the evolution of public policies to influence industrial development.