30 June 2015
* Tunisian firms often choose to locate near each other in Central Business Districts (CBDs) in coastal areas where there is high local demand
* More than 83% of industrial firms are located on the country's coast, with nearly 40% of these located in either the Tunis governorate or the Sfax governorate
The clustering of industries in specific areas has improved industrial productivity in a number of countries. Since the mid-1990s in Tunisia, concerted policies have been introduced which focus on improving the efficiency of the labour force, and the productivity of firms by creating clusters of industries. This has, however, been accompanied by an unequal spatial distribution of economic activities and has engendered large regional disparities in economic performance between coastal urban areas and interior governorates. Why have firms chosen to cluster in certain areas, and what has been the impact?
Why do firms cluster?
Firms normally cluster in one location due a rich and dense 'knowledge environment' in which there are fruitful exchanges between industries. Evidence from Tunisia indicates that firms choose to cluster in areas where there is high local demand--strategically locating near the majority of customers allows firms to save on transport costs. Within individual clusters, the transmission of innovative ideas is encouraged, thus creating a form of commercial relationship between competing firms.
The impact of clustering on productivity in Tunisian industries
For industrial firms that choose to locate in clusters in the greater Tunis area, there are significant benefits associated with clustering. Areas that have substantial concentration of industrial activity, thus greater competition, tend to be more attractive to new firms surveying desirable locations. When firms choose to locate near one another, they benefit from the knowledge and expertise of other firms in the same domain.
The advantages derived from industrial agglomerations in Tunisia highlight the importance of CBDs for productivity and information sharing. In the littoral region of the country, CBDs facilitate information-sharing and access to transportation and infrastructure. They also play an important role in creating a competitive environment that has the potential to spark further employment growth.
Over time, due in part to the tendency of firms to cluster in Central Business Districts (CBDs) in coastal areas, the...