Medium-Run Impacts of Management Training in Garment Clusters

This paper investigates the impact of management training programs on garment clusters in Vietnam and Tanzania. The study found that in the medium run firms showed improvement once they had identified useful practices and adapted them to their operations. Although it takes a few years to experience a significant impact on incomes, management training can increase not just management scores but also incomes or value added.

Policy implications

The effects on business performance of support schemes that aim to increase the adoption of good practices are likely to show in the medium term, after an assimilation period during which firms try out different practices to identify and focus on the useful ones. The majority of firms are located in industrial clusters, where knowledge tends to spill over, and they may not know the value of learning about management. Such spillovers and ignorance which become a cause of market failure, together with the favorable training effects, create ample scope for policy.

Additional information

Hypotheses/research question

When does improvement in management increase income and value added?

The garment cluster in Tanzania is located in Dar es Salaam, the country’s largest city and has more than 700 garment producers, including the self-employed. The study randomly selected 113 firms out of the 250 members of three major associations of garment firms. In Vietnam, the study site is located on the outskirts of Hanoi, the capital city. The sample covers all the 161 final-product producers in the cluster. A major advantage of considering an industrial cluster is that sample firms face the same prices of product, factors, and intermediate inputs, and have the same access to infrastructure because they produce the same products in the geographical proximity. This reduces heterogeneity among sample firms, thereby facilitating statistical inference. However, knowledge spillovers would make estimation of the impact of the treatment difficult.

Cost benefit ratio

Not available.

Rounds of data collection

Baseline and three follow up surveys.

Baseline data collection and method

Information regarding the number of workers, management score, value added and willingness to pay were collected.

Data collection method and data collected

The fraction of the firms that were willing to pay the equivalent of 150 USD for the training was very low in Vietnam, indicating that few business owners in this cluster knew the value of learning about management. Consistently, there were many firms that were invited to the training program free of charge but did not participate in it. In Tanzania, the fraction of willing firms was much higher and reached the upper bound after the training intervention. Indeed, the take-up rate of the training programs was nearly 100 percent.

Unit of analysis

Firms

Reference

Higuchi, Y., Mhede, E. P., Nam, V. H., & Sonobe, T., 2020. Medium-run impacts of management training in garment clusters. The World Bank Economic Review, 34(Supplement_1), S68-S71.

Medium-Run Impacts of Management Training in Garment Clusters

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Key facts

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