Industrialization Pathways to Human Development: Industrial Clusters, Institutions and Poverty in Nigeria
Creators: Oyelaran-Oyeyinka, Oyebanke
Publisher: name: Columbia University
Year: 2014
Subjects: City planning
Labor economics
Public policy (Law)

description: Industrial cluster literature has traditionally focused on work-place upgrading, clusters' ability to promote firm productivity, economic growth, and benefits that firm owners can or will give to workers. However, even in growing, productive clusters, such a work-place focus leaves out questions about how to situate the contribution of the firm and cluster in improving living standards in the wider socio-economic and spatial context of the region. By providing a systematic examination of the relationship between industrial clusters and poverty analyzed within a multidimensional frame, this dissertation attempts to close this bridge. It asks under what conditions firms in productive clusters pass on benefits to workers in ways that improve their living standards, even when they are not required by law to do so.
      Three hypotheses are put forward. First, firms in their own interest boost worker productivity by providing certain kinds of work-place benefits such as overall capability, proxied by various types of internal technological knowledge and skills. Second, firms choose not to give other place-based and work-based benefits like health or housing because social policies do not demand it and it has no direct benefit to the firm. Third, firms pass on these benefits because it costs little, and tend to deepen employee loyalty. The study analyses the case of the Otigba Information and Communications Technology cluster in Lagos, Nigeria and uses survey questionnaires, interviews, and archival research.
       
      Results confirm that clustering promotes not just firm-level productivity as literature on agglomeration economy highlights, but also raises workers' living standards compared to non-clustered firms in the same sector. Older employees, and those with prior experience in other firms report improvements in their living standards since working in their firms. Furthermore, firms in the cluster give a diverse number of non-income benefits such as housing, health insurance, feeding and transportation allowance, training, child care, funding for further education, pension and company products, based on the length of service in the firm, age of employee, and size of the firm. Additionally, while formal state-supported social protection institutions are largely absent, monetary and non-monetary benefits such as employment, provision of skills through apprenticeships, housing, transportation, and feeding allowance are channeled to employees through firms and informal institutions based on social and kinship ties. A high level of horizontal and collective cooperation based on professional lines has also emerged within the cluster in the absence of formal state institutions. 
      The dissertation makes a theoretical contribution by bridging studies on industrial clusters with those on social protection policy instruments. The study gives greater evidence to the diversity of social protection available, as well as the opportunity for economic development planners to explore ways in which firm-driven social protection can be integrated into social policy.