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Journal of African Economies Advance Access originally published online on February 1, 2007
Journal of African Economies 2007 16(4):564-595; doi:10.1093/jae/ejl047
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© The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

From Tailors to Mini-Manufacturers: The Role of Traders in the Performance of Garment Enterprises in Kenya

John E. Akotena and Keijiro Otsukab,*

a Institute of Policy Analysis and Research (IPAR), Nairobi, Kenya tel: +254-20-251179
b Foundation for Advanced Studies on International Development (FASID), Tokyo, Japan

* Corresponding Author: Foundation for Advanced Studies on International Development, 7-22-1 Roppongi, Minato-ku, Tokyo, 106-8677, Japan. Tel: +81-3-6439-6228; fax: +81-3-6439-6010; e-mail: otsuka{at}grips.ac.jp

Industrial clusters are believed to play a significant role in the promotion and development of small enterprises. One channel through which industrial clusters enhance enterprise performance is by reducing transaction costs in marketing through traders. Using survey data on clustered micro and small garment producers in Nairobi, this article demonstrates, through a series of regression analyses that take into account endogeneity problem, that tailors, who are family-based shop operators in three industrial clusters in Nairobi, are less likely to use outside workshops to produce standardized garment products and have a lower employment growth rate than mini-manufacturers, who operate factory-like workshops outside the cluster. It is also shown that the well educated and highly socially networked tailors who are capable of producing a certain product quality standard are likely to link up with traders to become mini-manufacturers over time. This suggests that transactions with traders enable mini-manufacturers to outperform tailors, thereby contributing to the transformation of the mode of industrial production in developing economies.

JEL classification: L23, L67, o14


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