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The Messy Reality of Agglomeration Economies in Urban Informality: Evidence from Nairobi’s Handicraft Industry

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  • Harris, John

Abstract

This paper investigates intermediate input effects and labor pooling in the context of urban informality, examining the handicraft industry of Nairobi, Kenya. The paper tests if conditions found in informality interfere with transition pathways in production clusters. 102 semi-structured interviews were conducted with industry participants, including 69 production firms. Findings confirm the existence of important agglomeration economies, but those benefits are curtailed due to constraints of informality on firms, especially location constraints in urban space. At the same time, informality also introduces particular diseconomies of agglomeration that undermine the value of proximity of firms to each other, particularly within clusters.

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  • Harris, John, 2014. "The Messy Reality of Agglomeration Economies in Urban Informality: Evidence from Nairobi’s Handicraft Industry," World Development, Elsevier, vol. 61(C), pages 102-113.
    • Handle: RePEc:eee:wdevel:v:61:y:2014:i:c:p:102-113
    DOI: 10.1016/j.worlddev.2014.04.001
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    3. Gustavo A. García, 2019. "Agglomeration economies in the presence of an informal sector: the Colombian case," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(2), pages 355-388.
    4. Alessia Matano & Moisés Obaco & Vicente Royuela, 2020. "What drives the spatial wage premium in formal and informal labor markets? The case of Ecuador," Journal of Regional Science, Wiley Blackwell, vol. 60(4), pages 823-847, September.
    5. Priscila Mendez & Miguel Atienza & Félix Modrego, 2023. "Urbanization and productivity at a global level: new empirical evidence for the services sector," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(9), pages 1981-1997, December.
    6. Dong Feng & Jian Li & Xintao Li & Zaisheng Zhang, 2019. "The Effects of Urban Sprawl and Industrial Agglomeration on Environmental Efficiency: Evidence from the Beijing–Tianjin–Hebei Urban Agglomeration," Sustainability, MDPI, vol. 11(11), pages 1-12, May.
    7. Amin, Mohammad & Islam, Asif, 2015. "Are Large Informal Firms More Productive than the Small Informal Firms? Evidence from Firm-Level Surveys in Africa," World Development, Elsevier, vol. 74(C), pages 374-385.
    8. Ana Isabel Moreno-Monroy & Gustavo Adolfo García Cruz, 2016. "Intra-Metropolitan Agglomeration of Formal and Informal Manufacturing Activity: Evidence from Cali, Colombia," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 107(4), pages 389-406, September.
    9. Eloiza Regina Ferreira de Almeida & Veneziano C. Araujo & Solange Gonçalves, 2024. "Urban wage premium in a labor market with informality," Working Papers, Department of Economics 2024_25, University of São Paulo (FEA-USP), revised 14 Nov 2024.
    10. Mohammad Amin & Asif M. Islam, 2022. "Does manager education play a role in the productivity of informal firms in developing economies? Evidence from firm‐level surveys," Review of Development Economics, Wiley Blackwell, vol. 26(2), pages 962-984, May.
    11. Alessia Matano & Moisés Obaco & Vicente Royuela, 2018. "“What drives the spatial wage premium for formal and informal workers? The case of Ecuador”," AQR Working Papers 201806, University of Barcelona, Regional Quantitative Analysis Group, revised Jun 2018.

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