Industrialisation and urbanisation

Project Active from to Firms, Cities and Firm capabilities

Ethiopia is a fast-growing low-income country with an expanding manufacturing sector. A key policy objective of the government of Ethiopia is to accelerate industrialisation through the creation of several industrial parks across the country. The parks are designed to offer high-quality government services and infrastructure (including a reliable energy supply), access to a large pool of workers, and the benefits that come from agglomeration, particularly a fast and wide circulation of ideas and knowledge. However, recent work on Ethiopia has revealed high levels of worker turnover in manufacturing firms (Blattman and Dercon 2016, Abebe et al. 2016), which weaken the incentives to train workers and make it hard for firms to plan production.

In an ongoing project, Population Services International, a nonprofit global health organisation, is collecting evidence on the newly launched industrial park of Hawassa, a large-scale development which is projected to employ up to 60,000 workers once operating at full capacity. The ongoing research coupled with the newly proposed study on housing conditions in Hawassa would speak to the following important policy issues:

  • Key determinants of workers’ turnover, productivity, and workplace satisfaction. The project will gather direct evidence on a number of constraints that may decrease worker retention and satisfaction, with detrimental consequences for labour productivity.
  • The constraints that workers face in terms of housing, commuting costs from place of residence to the factories, and its implication for worker absenteeism and turnover.
  • The interaction between housing, worker retention, and satisfaction. This evidence is going to guide the design of future interventions to improve labour productivity in the parks.
  • Document problems related to the housing market that develops around the park, which would offer insight into the municipality government. This project is also planning to use the evidence collected in the study to design, implement, and test policy interventions targeted to improve housing access for workers in the parks.
  • The lessons learnt will be of great relevance to growth policy in Ethiopia, where the country is experiencing rapid urbanisation with concomitant spatial concentration of firms in industrial parks.