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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Endogenisation or enclave formation? The development of the Ethiopian cut flower industry
Authors:Melese, Ayelech TiruwhaISNI
Helmsing, A.H.J.ISNI
Periodical:Journal of Modern African Studies (ISSN 0022-278X)
Geographic terms:Ethiopia
foreign investments
development cooperation
External link:https://www.jstor.org/stable/40538347
Abstract:This paper examines the evolution of the Ethiopian cut flower industry, illustrating how rapidly a potential comparative advantage can be realizd. But the question is to what extent a country benefits from this in the long run, if foreign direct investment is the principal driving force. Will the new industry become an enclave, or will it be accompanied by a process of building local capabilities, a process which the authors denominate endogenization? A value chain framework is used to analyse the industry and to develop a number of indicators on the development direction. The cut flower industry in Ethiopia is characterized by a dominant role of Dutch foreign investors, Dutch trade auctions which dominate the export trade, and Dutch development cooperation The authors conclude that endogenization is taking place to some extent and at a very incipient stage. Dutch investment has little direct interest to share technologies, but there is joint collective action on non-core activities, notably transport, which constitutes the largest item in the total cost. Dutch cooperative flower auctions are a vital trade channel giving Ethiopian flower growers access to international markets. The Ethiopian government has promoted the industry, making available land and low cost finance, and it is creating trade standards and supporting knowledge institutions. The main challenge is Ethiopian entrepreneurship: many are attracted by the high growth and profitability of the industry, but lack the technical competence to meet growing competition in the industry. Bibliogr., notes, sum. [Journal abstract, edited]