Economic clusters

Finally, our findings suggest that there is a significant level o f cooperation between the unrecorded workshops, including the sharing o f orders, information and financing arrangements. This type o f cooperation was found to be lacking in the case o f the recorded factories. These findings feeds into the important literature on clusters.

As noted earlier in Chapter Five, there is a consensus in the literature that the most basic advantage which firms (especially small firms) derive from being located in a cluster lies in local external economies. Where producers cluster, they attract specialized suppliers o f inputs and buyers o f their outputs; a pool o f specialized workers emerges, and new ideas and practices diffuse rapidly. Numerous analyses o f contemporary clusters confirm the relevance o f these local external economies. The literature on contemporary clusters also suggests that in addition to the incidental external economies there is often a deliberate force at work: joint action amongst the clustering firms. The increase in cooperation between clustering firms is seen as a response to new competitive challenges, either in export markets or in import competition or a combination o f export and import challenges.

One of the peculiarities o f the Shubra El Kheima case is that although the city has a concentration o f firms at each stage o f the textile and garment industry- spinning, weaving, dying and garment production, our findings suggest that there are no backward links or vertical cooperation between the small garment producers and the local textile

industry. Even the contractors, both for the recorded and the unrecorded establishments, are usually from outside the city.

This is in sharp contrast with for example, the case of the knitwear producers in Ludhiana, who are linked to a local knitting machinery industry and a local spinning industry producing a wide range o f raw materials used by the knitters (Tewari,1999). In fact it is precisely through avoiding the local sources o f raw materials that the unrecorded workshops o f our study were able to compete with imported garments. This contrasts clearly with the positive effects o f vertical cooperation found in a number o f industrial clusters in India (Knorringa, 1999), Pakistan (Nadvi, 1999), Mexico (Rabellotti, 1999) and Brazil (Schmitz, 1999).

Another peculiarity in the Egyptian case is that very limited horizontal cooperation exists between the larger garment factories o f our study. Although there is an association o f garment producers in Shubra El Kheima, and although the majority o f these producers face severe pressures from import competition, which is a usual catalyst for the activation o f such associations, in this case it plays no role in promoting cooperation between garment producers. Government control and the dominating interests o f the large public sector companies, make such an association useless to the smaller private firms. Thus, we can observe a situation where there is no significant horizontal cooperation between recorded garment factories, no significant vertical cooperation within Shubra El Kheima, and significant horizontal cooperation between small-unrecorded garment workshops.

In the literature on clusters a distinction is made between simple horizontal cooperation, which takes place between individual firms, and forms of collective action through associations. In our study it was only the former that was found and even that is restricted to the small-unrecorded workshops. Thus, only some of the features associated with economic clusters can be found in our case. Firstly, external economies due to concentration o f establishments in the same geographical area such as the availability o f a pool o f labour with a variety of skills within the area, are clearly present in Shubra El Kheima. Yet, as we have seen, the combination of intense import competition due to smuggling, coupled with the restrictions on legally imported cheap cloth for the recorded garment producers and the relatively low quality and high cost of the cloth produced by

the large textile mills, has prevented the emergence o f an industrial cluster with the varieties o f vertical and horizontal cooperation associated with successful clusters in other developing cities.

Further Research

Based on these findings and conclusions several areas that require further research become apparent. Firstly, in the area o f labour, it seems clear that there is a world of academically, politically and statistically invisible workers who probably form the majority o f the working class. Understanding the changing structure o f the Egyptian working class, its living and working conditions, its culture and its traditions of resistance, all these aspects require an accumulation o f research projects in the many and varied slum cities and industrial areas o f urban Egypt.

Secondly, in the area o f markets, in order to reach a deeper understanding o f the economic dynamics o f industrial production, distribution and consumption in Third W orld cities such as Cairo, a reliance on formal statistics will lead to inevitable distortions in the results and conclusions o f research. A variety o f case study research projects on the vast world o f unrecorded small scale production and the links between this world and the global and local commodity chains within which it is embedded, will help economists in particular and social scientists in general reach a more accurate and useful understanding o f the complexities and contradictions of Third World industrialization.

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