Understanding Industrial Parks

Ethiopia has recently launched an ambitious programme of industrialisation. The government of this fast-growing, densely populated country hopes to attract foreign investment in its brand-new industrial parks by offering a large workforce, competitive wages, cheap electricity and good infrastructure. Several garment factories have already started production in the industrial park of Hawassa, in the South of the country. However, despite the initial enthusiasm, many companies that operate in the park have not yet reached the productivity levels that would make their investment sustainable. In this project, we will design and evaluate interventions aimed at boosting worker retention and productivity in the industrial park of Hawassa. Labour turnover problems are common in low-skill occupations, but our knowledge of what firms can do to retain workers and improve their morale and productivity is limited.

The evidence collected in this project is going to inform industrial policy in Ethiopia and in other countries that are currently looking to emulate Ethiopia’s experiment with industrialisation. Further, the demand for this research comes also from the private investors in the industrial park. We will engage with both of these key stakeholders during project design as well as when we will disseminate our results.

We will collect novel data on worker retention and productivity in the industrial park. We will then experimentally evaluate whether interventions aimed at increasing workers’ welfare reduce retention and increase productivity. We plan to use structural methods to uncover underlying market failures affecting firms and workers.