The Impacts of Small Scale Industrial Clusters in Improving Wellbeing of the Poor: The Case of Gulelle Sub-City Textile Firm Clusters

Abstract

The concept of industrial cluster is not new. Various literatures described the impacts that clusters have in promoting competitiveness and growth among firms.  However, little is known whether the progress made on industrial clusters development has a direct impact on improving  poor households’ wellbeing, or not. In consequence, losing clear insight about that link can make government’s intervention efforts of battling poverty pointless. Moreover, it conceals managerial gaps created with local institutions in making MSE cluster developments endeavors geared towards improving the living standards of the poor.  Thus, the study was devoted to investigate the impact of small scale textile clusters in improving the wellbeing of poor households within Gulelle Sub-City. It specifically enquires if cluster development initiatives can have positive impacts that enhance households’ economic condition and reduce vulnerability. To meet that objective quasi experimental research design was used, because, the research intended to compare the condition of households earning daily livelihood from clustered firms with that of dispersed firms. Qualitative data was used to triangulate quantitative data and explore the impacts of clustering on the livelihood condition of the poor households. The sample size of the research was limited to be 208 operators, of which 104 of them were from clustered firms while the remaining 104 were from dispersed firms. The analysis was made by examining primary and secondary data collected using questionnaires and interview guides. In the process of data analysis descriptive and inferential statistical tools such as Independent sample T-test and Man-Whitney U test were employed.  The results of the study indicate that clustered textile firms in Gullele Sub-City are not in a position to improve economic well beings’ of households and reduce vulnerability of clustered producers from income shocks and consumption insecurities. However, it was found out that cluster producers are included more in social activities than dispersed firms.

Keywords: Cluster, economic wellbeing and Vulnerability