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Ethnic Ties in Trade Relationships and the Impact on Economic Performance: The Case of Small-Scale Producers in the Handloom Sector in Ethiopia


  • Merima Ali
  • Jack Peerlings


This article analyses the importance of ethnic ties in trade relationships of small-scale producers in the handloom sector in Ethiopia using both a non-parametric and a parametric statistical method. It is shown how various socio-economic characteristics of producers lead to ethnic ties with traders. It is also shown that ethnic ties affect the performance of producers negatively. Apparently the positive effect of ethnic ties, through the reduction of transaction costs arising from market imperfections, does not outweigh the negative effects of closed social networks.

Suggested Citation

  • Merima Ali & Jack Peerlings, 2011. "Ethnic Ties in Trade Relationships and the Impact on Economic Performance: The Case of Small-Scale Producers in the Handloom Sector in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 47(8), pages 1241-1260, November.
  • Handle: RePEc:taf:jdevst:v:47:y:2011:i:8:p:1241-1260
    DOI: 10.1080/00220388.2011.579110

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    References listed on IDEAS

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    Cited by:

    1. Merima Ali & Jack Peerlings & Xiaobo Zhang, 2014. "Clustering as an organizational response to capital market inefficiency: evidence from microenterprises in Ethiopia," Small Business Economics, Springer, vol. 43(3), pages 697-709, October.

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