No.28 Empirical Study on Industrial Cluster in Africa, the Role of Space, Infrastructure, Human Resource and Social Capital — Location Choice and Performance of Furniture Workshops in Arusha, Tanzania—
This study uses data collected in an emerging furniture cluster in the Tanzanian city of Arusha to investigate the determinants of location choice and location effect on the performance of micro and small furniture enterprises in Africa. Based on empirical analyses of a census of 234 workshops located in five sub-clusters, the results show that furniture producers tend to locate in sub-clusters where industrial peers from their own ethnic group have gathered. Meanwhile, the results, consistent with the literature on agglomeration economics, shows that entrepreneurs in Africa desire to locate in proximity to a large output market. However, performance analyses show that ethnic networks did not contribute to the performance of workshops as measured by DEA and product quality. In contrast, workshops located in sub-clusters with more machinery shops outperformed workshops located in sub-clusters with fewer machinery shops, implying that well-integrated upstream industries in the sub-cluster foster the development of the industry.