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Industrial Clusters and Micro and Small Enterprises in Africa
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total sales volume, US$ billions
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Figure 1 Aggregate Sales and Number of Enterprises in Sub-Saharan Africa, by Size of Firm
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Source: Authors’ estimation based on WBES data from 17 Sub-Saharan African countries, for which sample weights are available.
and abroad. The case of local garment enterprises in Zhejiang, China, shows how direct transactions with outside merchants and large customers became the drivers of growth as their product quality improved. Another example is found in Thailand, where many domestic enterprises have forged alliances with foreign enterprises to become suppliers to the export-oriented auto industry cluster in the Thai Eastern Seaboard.
Performance Gaps between Domestically Owned and Foreign-Owned Firms in Africa Domestically owned enterprises are on average less productive than foreign-owned enterprises. This is true worldwide. In general, in Africa and elsewhere, multinational firms perform better than other enterprises, given their superior access to capital and technology. The gap, however, seems to be wider in Africa than in regions like Asia. A similar gap is observed between enterprises owned by ethnic Africans and those owned by non-African entrepreneurs. The performance gap between domestically owned and foreign-owned firms in Africa is explained largely by the difference in firm size. Foreignowned firms tend to have more employees and to be more productive than domestically owned firms (see figure 2). Firm size also appears to be a significant determinant of access to external markets (see figure 3). Size