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Abstract
This article provides a case study of the Ethiopian flower export industry which successfully emerged at time when the EU market (main destination) was already characterised by increasingly stringent standards and delivery requirements. Entering this market required a multitude of capabilities at firm, sector and national levels. Several of these capabilities were absent or weak in the domestic market when the new activity kicked off. The article analyses how the capabilities of individual firms and the industry at large co-evolved and the role of various actors in the ‘market formation’ process.
Acknowledgements
The authors would like to thank the anonymous referee and editors Lindsay Whitfield and Stefan Ouma for their valuable comments on the previous draft.
Notes
1. An exception in this regard is Riisgaard (2009), who examines the opportunities and challenges that private social standards pose for labour organisations in the Kenya and Tanzania flower industries
2. This survey was a collaborative project between the Ethiopian Development Research Institute (EDRI) and the Japanese National Graduate Institute for Policy Studies (GRIPS). It was administered by the authors and about eight enumerators were dispatched to carry out the interviews.
3. See Gebreeyesus and Iizuka (2010) for further details on the emergence of the industry.
4. The terms ‘farms’, ‘firms’ and ‘enterprises’ are used synonymously hereafter, given that all flower farms in the Ethiopian industry are separately managed, individual legal entities.
5. Among others, these standards require full traceability of all products; professional administration staff for comprehensive record keeping; additional facilities to separately store chemicals, fertilisers, packaging; restricting the use of some type of chemical; hygiene precaution; minimum working standards for workers; and announced and un-announced on-farm audit (Labaste, 2005).
6. Altenburg (2006) and Maertens and Swinnen (2006) have excellent reviews on this debate.
7. Domestic firms may also experiment in the local market if the market for that product exists locally. In such cases market formation might involve domestic market protection for firms to build up capacity and adequate size to be able to compete with imports and abroad as it was found in the case of Korean machinery industry (Jaccobson and Bergek, 2006).
8. Access to modern equipment such as the greenhouse is also crucial and this was mainly acquired from abroad (Israel, the Netherlands, and Spain).
9. The figures provided in this sub-section are based on data set from the survey (details omitted to save space).