Aid and management training
It is widely recognized that entrepreneurship is of critical importance to industrial development. Despite this importance we know little about the skills of business owners and managers in developing countries. In the WIDER Working Paper ‘The Role of Training in Fostering Cluster-Based Micro and Small Enterprises Development’ Tetsushi Sonobe and Keijiro Otsuka look at industrial clusters of small and micro businesses in Asia and sub-Saharan Africa and assess whether management training can improve the managerial and innovative capacities of managers and owners.
Industrial Clusters
An industrial cluster is the localization of firms producing similar and related products. These clusters often form as businesses move together in order for firms to survive in a business environment. However these clusters often perform poorly because their own managerial and innovative capacities are inadequate. Sonobe and Otsuka show this to be the case in a comparative case study of the garment industries in Bangladesh and Ethiopia. In both countries the government supported the development of this specific industry.
However in Ethiopia the focus of the support was on supplying land and finance, whereas in Bangladesh there was a strong focus on training managers in production skills, management skills, international procurement, and marketing. The Bangladesh garment industry currently employs over 4 million people and ranks amongst the world’s largest producers of garment items. Conversely, in Ethiopia the performance of the garment industry has been very poor, despite strong government support. Sonobe and Otsuka suggest that this difference in performance is due, at least in part, to the fact that the Ethiopian government attached only a secondary importance to promoting the skills of managers in the garment industry.
This report by James Stewart summarizes WIDER Working Paper no. 2012/99 'The Role of Training in Fostering Cluster-Based Micro and Small Enterprises Development' by Tetsushi Sonobe and Keijiro Otsuka.
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