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一篇优秀留学生经济学硕士论文节选--英国论文代写范文精选

2015-11-20 | 来源:51Due教员组 | 类别:更多范文

经济与经济挑战
 
我们生活在这样一个世界里,经济和经济挑战已经改变了我们的观点、我们的日常生活,甚至我们的思维方式。今天,任何国家或个人的政策和计划都以经济繁荣、发展和增长作为中心点,经济的扩张、发展和进步都与人民的福利成直接比例关系。如今的各行各业,尤其是制造业,一方面不仅创造了舒适、奢侈的生活,另一方面也在经济上帮助了国家和个人成长。行业能够提供就业机会,产生收入,支付税款,并且最终为国家和个人收入做出贡献。

世界上超过97%的企业的类型是小型和中型企业,俗称中小企业(术语称为微小型和中型企业,非洲也适用)。这些中小企业为全球GDP做出了重要的贡献 (图1)。(TBL2011)
巴基斯坦每十家企业中有九家就是中小企业,这巨大的比例显示了中小企业在该国的经济发展中的重要性 (SMEDA,2010)。
 
Economy And Economic Challenges Economics Essay
 
We are living in a world where Economy and economic challenges have changed our view points, our daily lives, even the way we think. Today the centre point of any national or individual policy, plan, or project, only focuses on economic prosperity, development and growth. The expansion/development/progress in economy is directly proportional to the welfare of the people. Industries, especially manufacturing sector, on one hand not only making life comfortable and luxurious but on the other side helping the nations and individuals to grow economically. Industry provides jobs, generates revenues, pays taxes and ultimately contributes in national and individual income.
 
World over 97% of all businesses/industries falls in the category Small & Medium Enterprises, commonly known as SMEs (the term Micro Small & Medium Enterprises, also used in Africa). The contribution of these SMEs in the world GDP is very significant (figure 1). (TBL, 2011)
 
In Pakistan 9 out of every 10 enterprises are SMEs, this huge proportion shows the importance of SMEs in the economic development of the country (SMEDA, 2010). In short, SMEs account for about 30% of Pakistan’s GDP, 15% of investment, and 80% of employment (SMEDA, 2010).  According to UNIDO (United Nations Industrial Development Organization) they also play a prominent role as existing or potential producers of export goods. It is justifiable to say that SMEs are the most important factor of economic development of Pakistan.
 
Clusters are geographical concentration of enterprises which produce and sell a range of related or complementary products and are, thus, faced with common challenges and opportunities. In Pakistan, many clusters have been emerged in industrial as well as agriculture sector, such as wood work in Chinyot, Punjab, Fan producing in Gujarat, rice processing in Larkana, and Banana Farms in Dadu, Sindh. A very new and emerging industrial cluster is Motorcycle Manufacturing and its allied industries in Hyderabad, Sindh..
 
CHAPTER 1 ENTERPRISES
 
This cluster is very significant in many ways, because it emerged in a city where, there were no any automobile industry exits, it grew rapidly and still growing, as the new investment is coming continuously and new units are being developed.
 
In this research, it was tried to discover the factors that causes the development of this cluster and its rapid growth.
 
1.1SMALL AND MEDIUM ENTERPRISES
 
“SMEs are a major source of entrepreneurial skills and creativity and contribute to economic and social cohesion. They hold the key to innovation & competition and are also emerging as global players, by participating in worldwide production and supply chains.” (eBusiness guide for SME's, p.8, 2008). This statement focusing, enough on the importance and potential role of SME’s in the economic development.
 
Small and medium enterprises are companies whose headcount or turnover falls below certain limits. European Union (EU) standardized a Small business, as with 50 employees and the establishment which employs less than 250 employees, is categorized as medium. But US describes Small business with 100 worker, whereas, Medium enterprise as with 500. In Canada a business belongs to manufacturing sector and have near about 100 employees, is categorized as Small enterprise, but for the service sector it is limited to 50 workers. A Medium-sized business in Canada is that, which have fewer than 500 personnel. Another category of business according to headcount is Micro Enterprises, which is most popular in Africa, but now has also been accepted as a separate entity in Europe and limits to fewer than 10 workers (SMEDA, 2010).
 
In developing as well as developed economies SMEs are much greater in number. In Europe 99% of all firms are SMEs, and about 65 million people are working in them (European Commission, 2003). The Micro and Small Enterprises (MSEs) sector plays a vital role in the overall industrial economy of the India. It is estimated that in terms of value, the sector accounts for about 39% of the manufacturing output and around 33% of the total export of the country. This sector employs about 31 million people in 12.8 million SMEs (Indian Ministry of Agro and Rural Industries, 2005). The labor intensity of SMEs is almost 4 times greater than Large Scale Enterprises (LSE), the major edge of this sector is its employment potential at low capital investment. These figures also represent the other economies in the world. Globally SMEs account for 99% of business numbers and 40% to 50% of GDP of the world (ASI, 2011).
 
1.1.1State Of SMEs In Pakistan
 
According to SMEDA (Small and Medium Enterprises Development Authority, 16-07-2009), SMEs constitute nearly 90% of all the enterprises in Pakistan; employ 80% of the non-agricultural labor force; and their share in the annual GDP is 40%, approximately. But this sector has financial and other constraints too, which need to be addressed seriously, in order to achieve optimum outputs..
 
1.2 INDUSTRIAL/BUSINESS CLUSTER
 
The importance of geography in economy was highlighted by Paul Krugman, in his book Geography and Trade (1991). The concept of industrial/business cluster is mainly based on the geography. “An Industrial/business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field”.
 
The term industrial cluster also know as Porterian Cluster, was introduced by Michael Porter in The Competitive Advantage of Nations (1990). Economists relate it with the Alfred Marshal’s concept of agglomeration economies. Michael Porter claims that a business cluster affect the competition in three different ways;
 
by increasing the productivity of the companies in the cluster
 
by driving innovation in the field
 
by stimulating new businesses in the field
 
There are many types of cluster based on their location and knowledge (Saxenian, 1994);
 
Techno Clusters - These clusters are high technology-oriented, well adapted to the knowledge economy, e.g. Silicon Valley.
 
Historic Know-how-based Clusters - They based on more traditional activities that maintain their advantage in know-how over the years even centuries. These clusters are often industry specific. For example: Ajrak making in Hala and wood work in Chinyot.
 
Factor Endowment clusters - They are created because a comparative advantage they might have linked to a geographical position. For example edible oil industry in Malaysia, because the environment and atmosphere suits the cultivation of Oil Palm.
 
Industrial cluster also emerged at a location where enough resources and competences amass, and every entrepreneur wish to establish business there. A location can be industrialized and clusterized by giving it a key position in a specific branch of industry, with a decisive sustainable competitive advantage over other places, or even a world supremacy in that field.
 
1.2.1Industrial/Business Clusters in Pakistan
 
There are many business clusters in Pakistan, some are in agriculture sector like Rice cultivation in Larkana and its spillovers e.g. rice factory, and banana farms in Dadu and Tando Allahyar. Manufacturing industrial clusters have also been developed here, for example electrical fan industry Gurjat, sports good and surgical instruments in Sialkot, textile industry in Faisalabad. Some clusters are centuries old like Ajrak making in Hala, while some are being emerged like motorcycle manufacturing and its allied industries in Hyderabad.
 
1.3 MOTORCYCLE INDUSTRY
 
Motorcycles are one of the most common and affordable type of motor vehicle and motorized transport in many parts of the world and, for most of the world's population. There are around 200 million motorcycles are in use worldwide or about 33 motorcycles per 1000 people (Shuhei, 2006). 58% of total motorcycles are on the roads of Southern, Eastern and Pacific Asia.
 
German inventors Gottlieb Daimler and Wilhelm Maybach in Bad Cannstatt, Germany in 1885, designed the first motorcycle and named that Reitwagen ("riding car") (Tony Long, 2007). It was designed as an expedient test bed for their new internal combustion engine, rather than a true prototype vehicle, consequently it was not produced commercially. Before Reitwagen, steam propulsion two wheeler have been designed first by French Michaux-Perreaux in 1868 (Setright, 1979), followed by the American Sylvester H. Roper of Roxbury, Massachusetts in 1869 (Falco, Charles M., 1998). Roper also produced 10 more copies of the steam powered bike. Those motorcycle were very different from today’s one, in shape and technology.
 
In 1894, Hildebrand & Wolfmüller became the first series production motorcycle and the first to be called a motorcycle (German: Motorrad) (Brief History of the Marque: Hildebrand & Wolfmuller. 2007). In the early period of motorcycle history, many producers of bicycles adapted their designs to accommodate the new internal combustion engine. As the engines became more powerful and designs outgrew the bicycle origins, the number of motorcycle producers increased.
 
Until World War-I, the largest motorcycle manufacturer in the world was India, producing over 20,000 bikes per year (Walker, 2006). In early 1920s, this honor went to Harley-Davidson, with their motorcycles being sold by dealers in 67 countries (Jeremy Cato 2003). By the late 1920s or early 1930s, DKW (Dampf-Kraft-Wagen) of Germany took over as the largest manufacturer (Bill Vance, 2009). After World War II, the BSA (Birmingham Small Arms) Group, England, became the largest producer of motorcycles in the world, producing up to 75,000 bikes per year in the 1950s. The German company NSU held the position of largest manufacturer from 1955 until the 1970s (Wikipedia, 2010). From the 1960s through the 1990s, small two-stroke motorcycles were popular worldwide (especially in Europe and Americas), partly as a result of East German Walter Kaaden's engine work in the 1950s (motorcycle museum, 2009). Today, the motorcycle industry is mainly dominated by Japanese companies such as Honda, Kawasaki, Suzuki, and Yamaha, although Harley-Davidson and BMW continue to be popular and supply considerable markets. Other major manufacturers include Piaggio group of Italy, KTM (Austria), Triumph (UK) and Ducati (Italy). The lion’s share of world motorcycle market is being captured by the Japanese brands, namely Honda, Suzuki, Yamaha and Kawasaki. Although Japan itself produced minimal number of motorcycles, its brands with strong presence in the Low Cost Countries (LCC) like China, India, Indonesia, Thailand, Pakistan etc., control 50% of the world market (CSF, 2006). Chinese brands controlling more than two thirds of the Chinese market but still the basic designs are modeled round the popular Japanese models. Hero Honda and TVS of India heavily rely on their Japanese partners for basic designs and model innovations. R&D for the industry is expensive as well as time consuming that is why above countries use the developed models of Japanese brands. The Japanese manufacturers named above have financial muscle as well as the technical capability to undertake the required R&D..
 
The global motorcycle industry is mainly dominated by Japanese companies such as Honda, Kawasaki, Suzuki, and Yamaha, although Harley-Davidson and BMW continue to be popular and supply considerable markets. Other major manufacturers include Ducati, Piaggio group of Italy, Triumph (UK) and KTM sports motorcycles of Austria.
 
Today, this area is dominated mostly by Chinese companies’ e.g. Chang Jiang Motorworks, Hi-Bird and Jincheng Group, followed by Indian companies with Hero Honda emerging as the big manufacturer of two wheelers. Other major producers are Bajaj and TVS Motors. The four largest motorcycle markets in the world are all in Asia: China, India, Indonesia, and Vietnam (O'Malley, 2007).
 
According to Anwar Iqbal (2003) the industry Worldwide has seen a tremendous growth in the past 5 years. Production in 2010 has been estimated at 45.0 million units with China producing 20.0 million units, while the total domestic market has only reached around 15 million units. This global surge in market has also been felt in Pakistan where the industry in the financial year ended June 2010 manufactured more than 245,000 units (Auto Mark).
 
1.3.1Motorcycle Industry in Pakistan
 
Motorcycle manufacturing in Pakistan, was initiated by a man from Lahore Mr. Hamid Omer, who designed and made his Wooden Bike with 4-Stroke electric generator engine in 1960, definitely it was not a commercial project (Picture 1.2).
 
Atlas Honda the most seasoned motorcycle manufacturer in Pakistan installed its first plant in 1963 at Karachi, today there are 17 MMUs in the city about 24% of total MMUs in the country. As Karachi’s contribution to Pakistan's manufacturing sector amounts to approximately 30 percent and GDP is around 20% of the total GDP of Pakistan (ADB, 2005). A PricewaterhouseCoopers study released in 2009, which surveyed the 2008 GDP of the top cities in the world, calculated Karachi’s GDP (PPP) to be $78 billion. It confirmed Karachi’s status as Pakistan’s largest economy, well ahead of the next two biggest cities Lahore and Faisalabad, which had a reported GDP (PPP) in 2008 of $40 billion and $14 billion, respectively. Karachi's high GDP is based on its mega-industrial base, with a high dependency on the financial sector. Karachi has several large industrial zones such as Karachi Export Processing Zone, SITE, Korangi, Northern Bypass Industrial Zone, Bin Qasim and North Karachi, located on the fringes of the main city. Its primary areas of industry are textiles, pharmaceuticals, steel, and automobiles. In February 2007, the World Bank identified Karachi as the most business-friendly city in Pakistan. Keeping all the facts about the city’s industrial culture, the number of MMUs installed here are not eye catching.
 
Today the biggest chunk of motorcycle manufacturers is in Lahore. Lahore is the second largest financial hub of Pakistan (GC-GDP Ranking, 29-03-2011) and has industrial areas including Kot Lakhpat and the new Sundar Industrial Estate (near Raiwand). Lahore’s economic base is broad and varied. The city is the engineering hub of the country. Major industries include the manufacture of automobiles and motorcycles, home appliances, steel, telecommunications, information technology, chemicals, pharmaceuticals, computers, engineering, and construction material. A major industrial agglomeration with about 9,000 industrial units, Lahore has shifted in recent decades from manufacturing to service industries. Some 42% of its work force is employed in finance, banking, real estate, community, cultural, and social services. The city is the country’s largest software producing center, and hosts a growing computer-assembly industry. Keeping in view the industrial background, the clustrization of motorcycle manufacturing/assembling industry in the city is not surprising..
 
Hyderabad is an important commercial centre in Sindh, where many industries are established including: textiles, cement, manufacturing of glass, soap, ice, paper, pottery, plastics, hosiery mills, sawmills and tanneries. Handicraft industries, including silver and gold work, lacquer ware, ornamented silks, and embroidered leather sandals, are also well established. City is producing almost all of the ornamental glass bangles in country. Hyderabad is a major commercial centre for the agricultural produce of the surrounding area, including millet, rice, wheat, cotton, and fruits.
 
A simple analysis of industries of the city reviles that different industries are working in Hyderabad, but there was not a single unit related to automobiles, until Fateh group introduce its bike “Hero” in 1998. Initially they were installing car manufacturing plant with technical support of Hyundai of Korea, but for some reasons that deal was not materialized. Today there are 12 MMUs in Hyderabad and one is in Kotri, on the other side of River Indus.
 
The above figures are diverting attention, in a city where there was not a single automobile manufacturer/assembler 11 year ago, now housing 13 motorcycle manufacturers (one is in Kotri), 02 Tractor assemblers and 3 CNG-Rickshaw producers. 04 among top five Pakistan Motorcycle brands are in Hyderabad. Why?
 
1.4  RESEARCH OBJECTIVE
 
Studies on cluster and SMEs mainly cover the established SMEs clusters on one hand and their main focus usually remain on the rapidly industrializing economies like China and India, on the other. Most of these studies focus on the behavior and evaluation of their performance, their impact on the market aspects of innovation. Very few efforts have been made to investigate the factors behind those clusters, especially when a cluster is in progress.
 
This research is significant because no any study have been conducted about the Clustering of Motorcycle Manufacturing Industry in Hyderabad. Today these MMUs are categorized as SMEs but some of them are going to be Large Scale Enterprises (LSEs), as they are engaged in manufacturing of CNG-Rickshaws as well as of Tractors. Bull-eye of the study is to identify the factors those causing/caused this clustering in relatively short period. This will be accomplished by focusing on following objectives:-
 
To study the industrial/manufacturing policy of government in order to identify the incentives to the industrialist especially of Hyderabad.
 
To study the industrial clusters in other city, to find similarities with Hyderabad.
 
To identify the factors causing the clustering of Motorcycle Manufacturing industry in Hyderabad.
 
To point out the most influencing factor(s).
 
1.5 RESEARCH METHODOLOGY
 
The study focuses on the causes behind the establishment of motorcycle manufacturing units in Hyderabad..
 
At the first stage the different factors for example: cheap labor, environment, availability of parts, etc were identified through literature review and qualitative data collection. The desk research regarding government policies of manufacturing and industrial sector was conducted. After identifying the factors a questionnaire survey was conducted to get insight of the factors and how the managers looking at the different identified factors.
 
The data were then analyzed through statistical software to examine all the factors and to identify the factors which are responsible in the growth of this cluster.
 
This research is consists of a mixed methodology, where qualitative study is conducted to identify the factors and then quantitative data collection is to examine the factors. However, Quantitative style is dominant to qualitative style of data analysis.
 
1.6 SCOPE AND LIMITATIONS
 
The motorcycle manufacturing industry in the city is in clustering phase, as new entrants are coming and few competitors have left the market. Therefore, this analysis of the factors causing the clustering in Hyderabad is a timely study. The managements of MMUs in Hyderabad are totally Seth based, no proper organizational structure is there and corporate culture is a strange concept. All manufacturers are partnerships concerned and private limited companies, so their reports are not publicly available. People working there are not properly educated and they take a new person as competitor, resultantly they are very reluctant to inform about their organization. The reluctance of entrepreneurs to report on the values such as sales, income and wages paid, and their ability to provide accurate retrospective data and information as well as accurate valuation for current assets, inputs and output poses a major challenge to measuring performance of the MMUs. On the other hand, simpler measures such as variations in the number of person engaged may not fully reflect the reality of their performance. But few friendly people are also working there. However, it is managed to get relevant information through survey. One MMU have left the market, but manager responded and it is included in the analysis.
 
Mainly this study focuses on the Factors “causing the industrial cluster” in Hyderabad. And it would provide useful information to policy makers to devise the policies, keeping in view the ground facts of the city, in order to attract more investors to accelerate the economic activities. This effort can be useful for the investors to analyze the opportunities here.
 
1.7 STRUCTURE OF THE THESIS
 
The second Chapter reviews the literature relevant to the research i.e. in the areas of Industrial Clusters, Small and Medium Enterprises, Motorcycle Industry and SMEs Cluster & Motorcycle Industry in Pakistan. Government policies related to industrial and manufacturing sector will also be highlighted..
 
Third Chapter elaborates the detailed research methodology of the present study. It also informs about the method of data collection and analysis.
 
Fourth Chapter presents the findings of the research. Various factors that motivate the investors for investing in Hyderabad and in Motorcycle manufacturing will be discussed for each firm separately. A comparison between most influential factors would also be presented.
 
Fifth Chapter gives conclusions and suggests some policy measures for the development and improvements of the industrial and manufacturing sector of the city in the light of findings of the study. Recommendations for new entrants are also given.
 
References of all the literature reviewed and studied, during the research are given at the end. Survey questionnaire and list of firms surveyed are given as appendices.
 (51Due编辑:BUG)
CHAPTER 2 LITERATURE REVIEW
 
2.1 SMALL AND MEDIUM ENTERPRISES
 
“SMEs are a major source of entrepreneurial skills and creativity and contribute to economic and social cohesion. They hold the key to innovation and are also emerging as global players, by participating in worldwide production and supply chains.” (Thomas Renner, 2008)
 
The above statement shows the increasing importance of SME's in the development of countries. Albert Berry in 1998, states that, important role of small and medium enterprise has been increasingly recognized over the last twenty years, both in an extensive literature which emphasizes their role and in the policy discourse of many developing countries. Nelson Duarte (2004) point out another aspect of SMEs in today’s business world that, entrepreneurship and firm creation is mostly related to small and micro firms, which lead us to look at them as an important development agent in any society. In “The Theory of Economic Development” Shumpeter (1934) emphasizes on the role of entrepreneur as a prime cause of economic development and innovation. To contribute in development and for expression of innovations Entrepreneur play the role through the “institution” that (s)he owns: the Firm. Recent studies from a range of developed countries single out a leading role for small enterprises in highly dynamic and research-oriented industrial sectors, thus challenging the widely held perception that SMEs are confined to low-technology and low-productivity activities. At the same time, the SME sector is being identified as the greatest seedbed of entrepreneurship, which is widely viewed as the most crucial resource to trigger dynamic growth in an economy. The contribution of SMEs in creating employment opportunities in both developed and developing countries is widely recognized. The resilience of the SME sector to business cycle fluctuations is also well acknowledged. (Tilman Altenburg and Ute Eckhardt, 2006).

All over the world, SMEs are being supported on the grounds that they make substantial contributions to productivity and, consequently, competitiveness and aggregate economic growth. In addition, SMEs are believed to be especially effective job creators and have a reputation for providing income and training opportunities. SME promotion is, hence, considered an important trigger for poverty reduction, both directly, through their immediate contribution to employment and income generation, training and the decentralized provision of goods and services, and indirectly, by adding to productivity and overall economic growth (Tilman Altenburg and Ute Eckhardt, 2006).
 
Despite its commendable contribution to the nation's economy, SME sector does not get the required support from the concerned Government Departments, Banks, Financial Institutions and Corporate, which is a handicap in becoming more competitive in the National and International Markets. SMEs faces a number of problems - absence of adequate and timely banking finance, limited capital and knowledge, non-availability of suitable technology, low production capacity, ineffective marketing strategy, identification of new markets, constraints on modernization & expansions, non availability of highly skilled labor at affordable cost, follow-up with various government agencies to resolve problems etc (Salunkhe, 2011)#.
 
Literature review reveals that, SMEs are major if not the only source of economic development and innovation. SMEs not only provide jobs and opportunities for training and income generation but also provide runway for new comers. But, SMEs have to face the problem of adequate funding, affordable technology and above all handling with government. These problems are common in the world, especially in developing countries.
 
2.1.1 SMEs in Pakistan
 
SMEs account for about 30% of Pakistan’s GDP, 15% of investment, and 80% of employment. They also play a prominent role as existing or potential producers of export goods, as stated by Nadvi (1999) Small and medium enterprises (SMEs) have made Sialkot Pakistan's leading center in per capita terms for manufactured exports. SMEs may thus be justifiably characterized as the principal building blocks of the Pakistani economy, providing the country with many opportunities for increased employment (including female employment) and poverty eradication on the one hand, and enhanced productivity, competitiveness and international market penetration on the other (UNIDO, 2011).
 
Extensive literature is available highlighting the importance and positive role of SMEs in the economic development of the nations. But the primary concern of this study is not the SMEs, it is just described because the MMUs in Pakistan mainly categorized as SMEs.
 
2.2   INDUSTRIAL CLUSTER
 
Porter (1998) defines the industrial cluster as “a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalties and complementarities”. In 2000 Porter again defines business cluster with special emphasize on competition and cooperation, he states that “a geographic concentration of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (e.g. universities, standard agencies, trade associations) in a particular field that compete but also cooperate"
 
Industrial Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field. Clusters increase the productivity with which companies can compete. The development and upgrading of clusters is an important agenda for governments and other institutions including companies. Economists have developed a lot of different theories explaining why firms may locate next to each other and which kind of competitive advantages they gain from their location.
 
A broad cluster captures important linkages and spillovers of technology between industries, which are fundamental to competition, productivity and innovation. The geographic scope of a cluster ranges from a single city or region to a country or even a network of regions in neighboring countries. Clusters vary in size, depth and level of aggregation across geographic localization, industries and from cluster to cluster. Business clusters in a particular region could include industries, which are not included in clusters in other countries. Boundaries of a cluster change over time as new firms, industries and institutions evolve and as established industries and institutions change. Government legislation also contributes to the change of a cluster as new laws and regulatory changes make new demands for the cluster.
 
Marshall (1890) gave the idea of Industrial Cluster in his work under the heading of “The Concentration of Specialized Industries in Particular Localities” and pointed out that;
 
enterprise in a cluster can easily learn from other enterprises (Information spillovers)
 
Business/firms can easily transact intermediate goods and service with each other (Division of labor)
 
enterprise can easily find workers with desired skills (and such workers can easily find jobs) (Formation of market for special skills)
 
Glaeser et al. (1992) states that a geographic agglomeration of firms in a cluster may emerge either as a result of the firm’s localization decisions or due to a higher survival rate among firms in the cluster. In both cases, the cluster may offer some economic advantages compared to other areas and in the literature it is common to distinguish between natural cost advantages and advantages from firm spillovers which could be either physical or intellectual. The natural cost advantages can emerge from a lot of sources such as climate, soil, minerals, electricity, costal location, infrastructure, cheap labor cost etc., and many industries are clustered around such natural sources, e.g. Fruit Farms, shipbuilding, food processing, fishing, mining, etc.
 
Brenner & Muhlig (2004) identified some factors and processes in the literature those causing the emergence of local clusters and distinguish three types of factors and processes: prerequisites, triggering events and self-augmenting processes;
 .
Actions which utilize favorable conditions of a region in order to trigger a development process can be named as triggering events.
 
Activities in an industry and a region increases more and more, when they exceeded a certain critical mass, this phenomenon can be named as self-augmenting process. For example, spillovers that causes local firms to grow faster, the attraction of specialized service or supply firms to the region, making it more attractive and beneficial for the industry, and the generation of human capital and knowledge in the region that are beneficial for additional firms.
 
Prerequisites are all local factors and resources given in a region when a local cluster emerges, making its emergence in this region more likely. Prerequisites are listed below;
 
Stroper & Walker (1989) argued that the local conditions do not determine the emergence of a local cluster and that it can also emerge in regions with less favorable conditions. And it is the chance (accident) which leads to the emergence of local industrial cluster, but some other events can also trigger the clustering;
 
Self-augmenting processes are the underlying mechanisms responsible for the existence of local clusters. In the literature they are also called Marshallian externalities or localization economies It can be proved that if such Marshallian externalities exist and if they are sufficiently strong, industrial activities might agglomerate in one or a few regions Their existence is necessary for the occurrence of local clusters. (Fujita & Thisse 2002, ch. 8, and Brenner 2004, Section 2.2). Some of these processes listed down;
 
Lot of work has been done to identify the reasons and causes behind the emergence of industrial cluster, but it is difficult to grasp a clear picture of what really causes the emergence of local industrial clusters (Brenner & Muhlig, 2004).
 
Holbrook J.A. (2004) associated the clusters with regions and set the following propositions;
 
Regions are the fundamental units of the world economy (not nation-states)
 
Industrial clusters shape the economies of regions
 
Input advantages specific to a region are the basis of competitiveness of its clusters
 
A collaborative culture creates economic advantage.
 
Holbrook also admits that besides these there are several other results reflecting the relationships between regions and clusters. A region can be a subset of a nation-state or a municipality: it is merely a matter of scale. Each region has a range of clusters they need not be directly related to each other. The clusters have a life cycle, from birth through growth, decay and finally disappearance. Generalized technologies like the Internet enable them to be more flexible and competitive and support specific technologies that are unique to particular industrial sectors in that region.
 .
Porter (1990) highlighted the competitive environment among local firms within the same industry as an important source to build up a highly innovative and competitive cluster on the world market. He also finds that the clusters often consist of many local firms in intense competition within the same industry and he concludes that this increases the innovative capability of the cluster and the incentive to develop new products of a better quality and more efficient production facilities. In contrast with the idea of same industry’s cluster of Porter, Jacobs (1969) presents another view, and states that variety and diversity of industry structures promote innovation and growth. Flow of ideas between different industries with their different technologies creates an opportunity for creative thinking and new innovation. Therefore, from a theoretical point of view high-tech clusters are not necessarily industry-specific but could span over several technological unrelated industries. But both are agreed that clusters increase the productivity with which companies can compete.
 
Industrial clusters usually emerge as an accident and policies and infrastructures augment the growth and density. Clusters create competition and competitiveness which ultimately leads to innovations and modernization. Firms get the benefit of flow of idea and easily available skilled labor force. Buyer/seller interaction is convenient in clusters as inter related industries gathered.
 
2.2.1 Industrial Clusters in Pakistan
 
Industrial Clusters are not new to Pakistan and country has many clusters of different natures/industries in different cities. Most renowned is Sialkot (Punjab) Stainless Steel Surgical Instrument Cluster, according to Nadvi (1999) it is one of Pakistan's rare examples of consistent export success. It is largest in employment terms. The 300 or so family-run manufacturing enterprises that form the core of the Sialkot surgical instrument cluster together exported over US$100 million worth of instruments in 1992-93. The cluster's main market is the United States with 60% of total export sales. At present, the surgical instruments manufacturing industry in Sialkot is one of the world's largest surgical instruments manufacturing industrial clusters second only to Tuttlingen, Germany. However, the quality of workmanship and raw materials are the issues that have been hindering the progress of this niche industry which is also likely to face increasing pressures from the rapid advances in the field of surgery. Sialkot's SMEs are organized around sector specific clusters and include Leather Tanneries, Leather Garments, Musical Instruments, Sportswear included Martial arts wear, Gloves, Badges, Seat and Walking Sticks, Cutlery, Hunting Knives, Air Guns and Shotguns. These are all export-oriented businesses and fetch billions of dollars of forex every year (SCCI, 2011).
 
The emergence and clustering of Sialkot’s Surgical Instrument Industry was an accident, like industrial clusters elsewhere in the world. According to Wikipedia (2010) in 1905, some broken surgical equipment at the American Mission Hospital in Sialkot afforded a chance for Sialkot craftsmen to adopt their skills. Encouraged by the hospital staff, they gradually started manufacturing replicas of originals. Orders were received from other mission hospitals in British India. By 1920, Sialkot was exporting these surgical instruments to all parts of the British Empire including Afghanistan and Egypt and was later selected for supplying surgical instruments for the Allied forces in World War II. This war expended the horizon of the industry and introduced it to the world outside British Empire. Although the surgical instruments manufacturing factories were mostly owned by Hindus, but the craftsmen were mostly Muslims and the industry was not affected by the partition of British India in 1947. The above references show that this industry and its clustering were not planned and there were no any particular factor that caused clustering..
 
Another very contributing and active industrial cluster in the country is Gujrat Electric Fan Cluster (Term Fan includes, ceiling, pedestal, bracket, louver, table, exhaust and blowers). The city is located in the north-east of Lahore, and is the third pillar of “Golden Triangle” i.e. Gujrat, Gujranwala, Sialkot. Before the emergence of fan production, local metal workshops were busy in manufacturing of components for water pipes (elbow, T, hubble-bubbles, nipple, socket etc.) and water hand-pumps. Today city also have many other businesses like Furniture, Ceramics, Shoes, PVC pipes, Abrasive Cloth, & Motorcycle and playing a vital role to uplift the economy of Pakistan. These industries are not only fulfilling the needs of domestic buyers but are also exporting their products to different parts of the world. A large number of persons directly & indirectly are employed in these industrial units. The Fan manufacturing industry was started in Gujrat, before the partition of British India by late Mr. Muhammad Azam. He founded M/s S.A Fans in 1944, and drives the industry with his personal technical skills and experience. (He gained experience of fan manufacturing from Amratsar, India). After partition, some more entrepreneurs initiated the fan manufacturing business and got acquainted with the trade in later years. The hot climatic conditions of country were the major driving force behind the ever increasing domestic demand and, thus, the fan industry started to flourish in Gujrat. Today, the city cradles the largest concentration of fan manufacturers in Pakistan.
 
Total production of the fans in the city is 7 million, a rough estimate unveiled that the installed capacity of the cluster is almost double. Nearly 16000 persons are employed in fan manufacturing industry with an investment of approx. Rs. 4 billion. A fully developed industrial estate of 71 acres was established in the city and almost 40% of the fan industry is situated with the industrial estate, while the rest was spread out in different areas of city. The Gujrat Fan cluster has evolved over a long span of time. The present configuration of the cluster was the reflection of the changes and adjustments that have taken place overtime including the habits of the entrepreneur, the growth of workers into SMEs and the spread of the skills from the workers of the pioneer firms to the new comers. All these developments have gradually contributed to the evolvement of a dynamic cluster entity. Government in the beginning realized the potential and developed a fully infrastructured industrial state in 1961-62, different other departments (like SMEDA, PSIC, TDAP etc.) are also playing their role in the development of the industry and cluster (Farooqi, 2006).
 
The question is un-answered, why did fan manufacturers gathered in Gujrat, and as rest of the world’s industrial clusters it is also an accident. But there are some similarities with Hyderabad MMI which will be discussed in next chapter..
 
Textile Industry in Faisalabad, Cutlery manufacturing in Wazirabad, Glass Bangles in Hyderabad, Finance/Money and Banking Industry at I.I. Chundrigar Road, Karachi, are also notable industrial/business clusters in the country. Besides these, many more clusters exist in Pakistan.
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2.3 MOTORCYCLE MANUFACTURING INDUSTRY
 
Motorcycles are mostly concentrated in Asian and African countries, as it suits the pocket of majority of population, lack of infrastructure and insufficient public transport also catalyzing the demand. Mostly people preferred to buy smaller capacity bikes (less than 200 CC) because of comparatively less price and fuel consumption. The four largest motorcycle markets in the world are all in Asia: China, India, Indonesia, and Vietnam (Nakata, 2008). Popularity of motorcycle can be analyzed with the example of Honda Super Cub model of 1958, which become the biggest selling vehicle of all time, with its 60 millionth unit produced in April 2008 (Chuck Squatriglia, 2008). Hero Honda of India is emerging as one of the world's largest manufacturer of two wheelers with its Splendor model, which has been sold more than 8.5 million to date (indiacar.net 2009). Other major producers are Bajaj and TVS Motors. There is an interesting figure that in the economic downturn of 2008, when every market and business sector was declining, the motorcycle market globally grew by 6.5% (Kitamura and Komatsu, 2009).
 
Today, China is dominating the world manufacturing sector and leading in the motorcycle manufacturing, about 42% bikes of the world are being manufactured in China, India is on 2nd number in motorcycle production, producing almost 25% of the world, while Pakistan is on number seven, contributing 2% in the world (CSF, 2006). China has installed motorcycle production capacity more than the demand of domestic market. Consequently, Chinese motorcycle producers have aggressively pursued an export strategy supported by the government incentive to try to sell it excess capacities to other countries, particularly large developing countries like Indonesia, Vietnam, Brazil, Argentina and now in Pakistan etc. (Anwer Iqbal, 2003).
 
Infact Chinese government is supporting its industrialists through subsidies, low utility rates, easy tax and tax system, and other fixed assets such as inexpensive land and building as well as standard machinery are also comparatively cheap. Most of the motorcycle manufacturers were government owned companies that in the past used to produce armament for the defense. With more peaceful domestic as well as international environment, this excess capacity as well as its well-trained technicians have been transferred into vehicle production facilities; particularly motorcycle (Anwer Iqbal, 2003). As a result, their initial investment cost is low. Learning period has been shortened by obtaining the licensing and joint ventures with Japanese and other world-class manufacturers; and at the same time copied the Japanese model that has not been licensed to the local partners. Because of the above factors the market price of Chinese bikes is comparatively very low which popularized it among the masses..
 
Manufacturing of Parts locally
 
Credit for Investment in Auto Sector
 
Promotion of competitiveness
 
Assistance by the Government to Acquire Technology
 
Richard (2005) categorized the causes of industrial locations (clustering) in two, according to their nature. He explained that physical geography features (natural cause, fixed) are “first nature” causes and the business environment created by the interaction of economic agents are “second nature” causes, those can be changed easily and are not fixed. Richard further categorized the causes and called them “1.5-nature”, this consists of some physical features, like the transport network, that are physically difficult to alter quickly, and some, such as knowledge networks that are not physically difficult to alter but nevertheless play an important role in sustaining the massively unbalanced spatial distribution of economic activity that we observe in industrialized nations. These features of the economic landscape are far from fixed, but are also extremely expensive to change rapidly.
 
Marshall (1920) emphasized three different types of transport costs -the costs of moving goods, people, and ideas that could be reduced by industrial agglomeration. First, he argued that firms will locate near suppliers or customers to save shipping costs. Second, he developed a theory of labor market pooling to explain clustering. Finally, he began the theory of intellectual spillovers by arguing that in agglomerations, "the mysteries of the trade become no mystery, but are, as it were, in the air". Firms, such as those described by AnnaLee Saxenian (1994) in Silicon Valley, locate near one another to learn and to speed their rate of innovation.
 
After analyzing the data gathered during survey, it could be stated that Free idea (to establish a MMU) is the cause of clustering, here low cost of idea or free idea is not the consequence of clustering but it is the cause of clustering. However, initial clustering develop a labor pool which work as catalyst for MMU gathering.
 
Through a thorough survey, interviews with the associate persons and keen observations it is found that MMUs in Hyderabad not at all interested in R&D, the only thing they seeking is to copy Chinese bikes, as much as China agrees. So innovation is very far at least in these conditions.
 
Wickham (2005) mentioned that the role of government in development and sustainability of an industrial cluster is very important and serves as excel. He further stated that government policies influence the clustering of industry. One of the fastest rates of industrialization occurred in the late 20th century across four countries known as the Asian tigers thanks to the existence of stable governments and well structured societies, strategic locations, heavy foreign investments, a low cost skilled and motivated workforce, a competitive exchange rate, and low custom duties (wikipedia, 2011). A government official informed that keeping in view the significant role of industry and especially of SMEs, government designed industry friendly policies, and SME Policy 2007 is very comprehensive and supporting. Favoring government official’s statement a representative of HCCI informed that government allocates 50 acres for SMEs (not exclusively for MMUs) and an auto industry park is also under consideration. He further added that access to finance on less interest is easy and available..
 
But ground realities are completely against the world practice and political/government statements. Hundred percent MMUs of Hyderabad are sure that there is no any single facility; subsidy, incentive, support or even relaxations have been provided by the government. A representative of MMU said that government policies are very unfriendly, even discouraging for industrialists.
 
According to Government policies there is no any relaxation with import duties on the import of assembly line of MM or any other part for an infant and unconventional industrial cluster in the city. When the question was asked from the MMUs about the relaxation in taxes and other government duties, the unanimous answer was “NO”.
 
Each and every MMU is unsatisfied about the performance of government official and about the continuously raising charges of utilities. They informed that on the one hand government is not giving any subsidy on charges of very expensive utilities, but on the other hand the supply of utility services is not smooth especially of electricity. Breakdowns of electricity not only hindered the production of bikes but it also wastes the precious time.
 
Different countries providing subsidies to their industries to grow and expend e.g. US Congress subsidized its aviation industry by providing $15 billion (Khor, 2007), similarly China expending its paper industry through subsidies, today china is biggest producer and exporter of paper. China fueled its industry with $33 billion which not only make it tough enough but also resulted in job cuts in US paper industry (Content, 2010).
 
10 (90.9%) MMUs informed that there is no any kind of subsidy, including subsidy on utility services in the city for MM industry and they are getting these services on same commercial rates as other manufacturers in other cities, similarly facing same problems regarding service availability and standards. Only one (9.1%) unit informed that they are getting electricity on subsidized rates. Representative of same unit informed that they are using electricity from their spinning unit and government providing electricity on subsidized rates to spinning mills.
 
Relaxation in taxes and tariffs is another form of non-cash subsidy this can be used for boosting and supporting an industry which is on its early stages. Taxes are inversely proportional to profit margin, and a good profit margin is a good attraction for the investors and industrialists.
 
11 out of 11 (100%) MMUs stated in questionnaire that they are not getting any tax relaxation. Government papers support industrialist point of view.
 
Industrial parks are one of the most important factors supporting positive economy development. An industrial park is based on a philosophy of integration of relatively different functions (production function, and that of services, relaxation and education, too) into an industrial area with majority of industrial production and services with high economy turnover and high employment (Vidova, 2010). The survey results show that no any exclusive auto/motorcycle manufacturing industrial park is established in the city as well as in the country..
 
A “One/Single Window” environment aims to expedite and simplify information flows between trade and government and bring meaningful gains to all parties involved. In a theoretical sense “a system that allows traders to lodge information with a single body to fulfill all regulatory requirements” (UN/ECE). In practical terms a one window environment provides on entrance, either physical of electronic, for the submission and handling of all data, and documents related to release and clearance of any trade issue, including installation of new industry. This “entrance” is managed by one agency, which informs the appropriate agencies, and/or directs combined controls.
 
A ‘one window’ environment is, therefore, a practical application of trade facilitation concepts to reduce non profit trade barriers and deliver immediate benefits to all member of the trade cycle.
 
Government is not providing any such facility to the motorcycle manufacturers of the country, province and especially of the city Hyderabad, which is emerging as new cluster of motorcycle manufacturing industry. There are many government agencies involved in the installation of motorcycle manufacturing facility; EDB (Engineering Development Board), Excise and Taxation Department, Government of Sindh, Pakistan Standard and Quality Control Authority (PSQCA), Ministry of Industries, Government of Pakistan, Water & Power Development Authority (WAPDA), Federal Board of Revenue (FBR) etc. Each and every department is traditional government department, environment is so discouraging, and so much patience and dedication is required to handle them. MMUs express their grievances and informed that government departments create so many red tape hindrances, which is a big hurdle for the new comers in the market.
 
Above factors/issues were searched through desk research and was asked by representatives of MMUs and answered as negative. Besides these an option was given for any other incentive of any kind by concerned authorities to manufacturer and the answer was same as above.
 
SME finance is the funding of small and medium sized enterprises, and represents a major function of the general business finance market in which capital for different types of firms are supplied, acquired, and costed or priced. Capital is supplied through the business finance market in the form of bank loans and overdrafts; leasing and hire-purchase arrangements; equity/corporate bond issues; venture capital or private equity; and asset-based finance such as factoring and invoice discounting (ISRP, 2008).
 
Industrial clusters are noted as one form of institution that can help ease the financial constraints microenterprises face even when there is a low level of financial market development. Various studies point to the importance of industrial clusters in facilitating access to informal finances where repeated interactions between local producers and traders promote trust that enables reciprocal exchange of information that may reduce the problem of moral hazards and the cost of monitoring in credit relationships (Becattini 1990; Grabher 1993; Schmitz 1995; Nadvi 1999; Russo and Rossi 2001, Ali and Peerlings 2010b)..
 
Banks are not lending finance to bike manufacturers in the city and not any especial scheme is introduced for the industry by the conventional banks. MMUs showed their dissatisfaction about the performance of SME banks regarding money lending for business installation or expansion. However, secretary of HCCI informed that government is planning to make strategy of easy loans for SMEs (including MMI).
 
One of the three classical factors of production is “land”. And land in planned SITE areas is easily available in the city. However, prices of industrial land/plots are market based, and like other issues government is not supporting MMUs for purchase and allocation. Initially (1998-99) one acre was available against the amount of PKRs. 2 million and now in 2010-11 the same area worth more than PKRs. 8 million. Government allocated 300 acres for big manufacturers and 50 acres for SMEs.
 
04 out of 11 (36.36%) respondents affirmed that, availability of comparatively inexpensive land might be one of the reasons behind the clustering of MM industry in Hyderabad. 63.64% MMUs argued that availability of land can not be the attraction to the industrialist, and industrial plots are easily available in other cities on market based rates.
 
The general body of wage earners is referred as Labor. In classical economics, labor is one of the three factors of production, along with capital and land. Labor can also be used to describe work performed, including any valuable service rendered by a human agent in the production of wealth, other than accumulating and providing capital. Labor is performed for the sake of its product or, in modern economic life, for the sake of a share of the aggregate product of the community's industry.
 
Wage rate, controlled by a particular kind of labor in the market depends on a number of variables, such as the technical efficiency of the worker, the demand for that particular skill, and the supply of similarly skilled workers. Other variables include training, experience, intelligence, social status, prospects for advancement, and relative difficulty of the work. All these factors make it impossible for economists to assign a standard value to labor. Instead, economists often quantify labor hours according to the quantity and value of the goods or services produced.
 
If a laborer is not being paid according to market rates or the value/quantity of the goods/services being produced, it means that labor is cheap. It may be because of the access supply of laborer in the market. It is a very attractive situation for the industrialists.
 
China’s rapid growth in industrial output has owed much to the impacts of globalization, in particular, the influx of foreign capital. Exploiting low-cost labor has been described in the literature as one of the key motivations for foreign direct investment (FDI) into China (Wang & Mei, 2009). The primary objective behind the early FDI that came from overseas Chinese in the 1980s was to exploit China’s low-cost labor in the manufacture of consumer products for export (Shi 2001; He 2003). Later on, in the late 1990s, the major Japanese and Western MNCs entered China with significant FDI for the same cost-based reasons (Wang & Mei, 2009)..
 
Motorcycle manufacturing industry in the city is labor intensive, because the manufacturing units are not so much automated and most of the work is being done manually. Not only in the main assembling units lot of labor is involved but many other people are also employed in in-ward and outward supply chains.
 
Minimum wages were set PKRs.6,000/= per month in 2007 by government of Pakistan, which was increased by 20% to PKRs.7,200/= per month in 2008, but very few private sector firms following these instructions. Normal laborer is getting PKRs.4000 to 5000/month in MMUs.
 
Respondents of 8 (out of 10, 80%) MMUs are very much agree that low cost labor is one of the major reasons of MMU clustering in the city and this argument is supported by the prevailing wage rate in the industry. But two other representatives argued that in Punjab the wage rate is lower than Hyderabad, then why this industry is not booming with the same pace there? They further stated that low cost of labor could be one of the reasons behind clustering but it cannot be the sole reason of it.
 
Companies have an interest in peace and stability. Lack of a predictable political and economic framework and violence disrupts production and supply lines, increases operating costs and delays business activities. For companies of all sizes, being operational in "conflict-prone", "weak" or "post-conflict" countries poses a number of dilemmas with no easy answers (UNGC, 2011).
 
For a high growth trajectory, the domestic investment environment and law and order situation must be improved. Terrorist attacks, target killings, kidnapping and group extortion are causing hundreds of billions of losses in trade and business activities, especially in Karachi (Ghani, 2011).
 
Traders expressed anxiety over the deepening trend of lawlessness and rising incidents of extortion of money by bhatta mafia, distribution of (parchi) paper slips demanding money, threatening phone calls and street crimes (Dawn, 19-08-2011).
 
40% MMUs stated that law and order situation could be one of the reasons behind the rapid growth of MMI in the city, because the situation of peace is worse in the nearest industrialized city. Bhatta system is almost negligible in Hyderabad, which also attract investors. However, most of the MMUs (60%) are not agree on the point. They argue that, law & order situation is not so much better here, and industrialist have to pay Bhatta here too.
 
A running business establishment helps entrepreneur to take risk for another business venture, because he has enough knowledge about the market environment and business culture of the city. Moreover, it is comparatively easy for the established entrepreneur to get access to credit/finance, which is one of the main factor of production.
 
100% owners of MMUs of Hyderabad already have business interests in the city and all were engaged in some production activity. Every representative of each MMU regarded it as a basic and main factor behind the installation of MMUs here in Hyderabad..
 
SMEs face unrelenting pressure from powerful customers and competitors to lower prices and accept shrinking margins on sales. They have responded to this pressure by adopting innovations in operational excellence. As these innovations approach their limits, SMEs are starting to seek revenue growth from new products and services. They must offer their customers something different than their competitors offer in order to avoid the same low-margin trap that they now face. A powerful way for SMEs to do this is to offer customers new products and services that allow more efficient and effective use of the products that they currently sell. These new products may complement existing products, and require new manufacturing and design skills, but offering new services is uncharted territory for most SMEs (Susman et al, 2006).
 
The above referred passage not only emphasizing the importance of business expansion but also highlighting the necessity of innovation in competing markets.
 
It has been mentioned that, every proprietor of Hyderabad based MMU, were busy in some business activity in the city. 3 out of 13 (23%) MMU proprietors were somehow related to automobile sector. One was manufacturing three-wheelers (two-stroke auto rickshaws), it moves towards assembling of motorcycle and now manufacturing CNG-Rickshaws too. The other two were dealers of a big brand of Japan oriented bikes, and they were engaged in selling and after sale services, now producing own bikes. To shift their business from sale to production was need of the time for survival and expansion but it also provides a niche market.
 
No any research have been conducted yet, to prove that environmental conditions of Hyderabad city is suitable for the color finishing of bikes, however, 40% (4 out of 14) respondents of questionnaire stated that humidity and temperature of the city is very much suitable for the color finishing of motorcycle parts. Further it was added that the environmental conditions give extra glossy touch and strength to the paints of motorcycles. They figured out that it is one of the reasons behind the clustering of motorcycle industry in the city. 60% respondents didn’t second this opinion.
 
“It is wonder that Pakistan’s economy survived at all in the early years. Why did it survive? It was because of the entrepreneur skills of Muslim community who had migrated to Pakistan from their original homeland in India and prominent among them were Memons. If Pakistan beat the economic odds then, a great deal of credit goes to the Memons. Nobody could have predicted it and while in later years it became fashionable to decry the dominance of the Memons in Pakistan’s business community, the fact is that without such dominance Pakistan’s economy may never have developed.” This passage from the book “Pakistan’s Industrial and Trade Policies” (Lewis, 1970) is self explanatory and drawing the complete picture about the abilities and capabilities of Memon community in the field of business..
 
In Hyderabad 13 factories are manufacturing motor cycles and amongst which 08 (61%) factories are owned by Memons. This industry becomes more flourishing because of strenuous efforts of Memon owners in this field. Memons entered in motor cycle industry at very initial stage and captured the market with their business strategic plan. The first Memon motorcycle unit was previously engaged in producing 2-stroke auto rickshaws, it was then shifted to bike manufacturing because of ban on 2-stroke rickshaws by the government. This company was a partnership and this partnership brake-up resulted in more MMUs in the city.
 
Some other factors were also highlighted by the respondents of the questionnaire. Secretary of industrialists association stated that investors are embarking upon new MMU un-thoughtfully, without considering the ground realities, he further added that this trend following is without market research and soon they will be at a point of saturation. A chartered accountant was giving credit of this growth of motorcycle industry to the government officials, and stated that the rate of corruption is comparatively lower then the other industrialized cities, theft of utilities and tax is a common cause of this growth. One of the big 5 of this industry in Pakistan, explained that, initially there was one company in the city jointly managing by Memon partnership, when the partnership broke and each partner installed his own manufacturing facility, even the manager of the first Memon’s company start his own unit. Another factor was also identified by a person, while giving interview that investors were eager to start some business, but there was no any opportunity/area for investment in the city, so as soon they recognized this industry as profitable one, they turn their financial flow towards this business.
 
Factors responsible for the industrial clustering are different for different regions and depend upon the needs and nature of industry.
 
Yodisha and Nakanishi (2005) describe different causes of clustering as regards with the nature of industry, for the manufacture of vehicles, general machinery, electronic machinery, and software, the existence of related industries and of industries likely to form nuclei for growth were seen as preconditions for cluster formation, whereas for biotechnology products, medical services, and products associated with public welfare, there was a strong tendency for the existence of universities and research institutions to be seen as a precondition for the development of a cluster.
 
Brenner et al (2004) conclude in his research about the formation of clusters that, geographical location and the particular industrial environment have become less important, while policy intervention and location interactions of various kinds have gained importance. Furthermore, high-tech local clusters are based more on variables related to human capital, public research and policy intervention than low-tech local clusters..
 
As there are many factors caused formation of business cluster, but according to Baldwin (2005) there are, of course, many forces opposing concentration and these are called dispersion forces. For example, land prices and the cost of some forms of labor tend to be higher in built-up areas. This counteracts the agglomeration forces by increasing the attractiveness of less developed regions. So dispersion forces could cause formation of new industrial/business cluster.
 
Spin-Off and spill over effects are also augments the process of cluster formation. Garavaglia (2008) explains that in the process, of cluster formation, on the one hand, spin-offs are a crucial means through which clusters take off and develop and, on the other hand, external economies and institutions’ effects feed and reinforce the process of agglomeration and development of spin-offs.
 
From the above discussion it has been cleared that there is not a single cause behind the formation of cluster, many reasons of 1st nature geography, 2nd nature geography and 1.5th nature geography (See Richard, 2005) are making and boosting the Motorcycle Manufacturing Cluster in Hyderabad, like almost every (unplanned) other industrial cluster in the Pakistan. May be it is because there is not any Industrial Policy yet. A draft policy was prepared in September 2010, which was accepted to be approved in March 2011, but not materialized. The only thing which is supporting local manufacturers is the rate of duty on completely build-up bikes, which is 60%, though it is 20% lesser then the rate of duty in 2008-09 which were 80%.
 
CHAPTER3-4 略

CHAPTER 5
 
CONCLUSIONS AND RECOMMENDATIONS
 
5.1. CONCLUSIONS
 
SME Clusters can contribute more, because geographical concentration of small firms help them to face the hurdles associated with their small size, promote technological development/up-gradation by creating competitive environment which ultimately enhance the ability to compete in local and global market. These clusters can also promote sustainable employment and incomes for the labor force.
 
Industrial clusters positively contributes to overall national competitiveness efforts, which move towards trade capacity building, public-private cooperation, development of workforce, economic development, policy reforms etc. Carefully designed and efficiently implemented clusters initiatives could be the most effective tool for economic development.
 
Theories defines and describes many factors behind the formation of industrial clusters, but in real world the clustering of industry caused by maze of reasons from policy initiatives to natural advantage. Natural geographical advantages are permanent (at least for a long long time) and mostly not changed, and policies manipulations (such as subsidies, liberalization and tax relaxation) work together to cradle the clustering. But policy and natural advantage are not enough; there are some more catalyst for the process, such as dispersion forces (see Beldwin, 2005) and physical infrastructure, such as transport network and educated/skilled labor force pool..
 
Stopper and Walker (1989) and Brenner & Muhlig (2004) discussed that presence of attractions behind industrial clustering are not necessary, it can be formed even in less favorable circumstances. And if factors are active in formation then it is very difficult to grade e.g. most deriving factor or less attractive incentive.
 
There is not a single or dominant factor behind Motorcycle Manufacturing Industry’s Cluster in Hyderabad. Dispersion forces are active here, worse law & order situation, Bhatta mafia, comparatively high wages etc, are dispersion forces for Karachi, but they are positively working here. Local entrepreneurs are trend followers and they consider new venture as risky adventure. At present motorcycle industry is boosting, and market is in expansion mode, foreign markets are being explore, such as Sri Lanka, Bangladesh and Afghanistan, and these are profit making agents, same are attracting those investors who don’t risk with their capital, and always go for safe side, otherwise they don’t invest. Memon community is dominating the industry, which usually follow fellow community members. The dominance of one community/caste in the cluster is one of the similarity with Gujrat, Fan cluster, which is dominant by Shaikh & Kashmiris. Other similarities are (Farooqi, 2006b);
 
Entrepreneurs are less educated some are even illiterate.
 
Seth based institutions, no proper organizational structure adopted.
 
No professional marketing team/and strategy.
 
No expense on Research and Development
 
Government is not playing any important role in the development of MMI in the city. Government is not making any special efforts which trigger or augment (Brenner & Muhlig, 2004) the process of cluster formation in the city.
 
It is basically very difficult to calculate these factors empirically because they correlate with each other in such a complex way that make it difficult if not impossible to determine what caused most in Hyderabad.
 
Like most of other industrial/business clusters in the country the MMI’s cluster is an incidental cluster.
 
5.2. POLICY RECOMMENDATIONS
 
Industrial clusters lend themselves to a poverty reduction agenda. Clustering may not only raise employment and incomes for the poor, it can also have implications for wider notions of poverty—addressing issues of risk, vulnerability, empowerment and participation for poor and marginalized groups. This has been the basis for the argument that clusters can offer a “high road” of development, marked by rising incomes and employment. But pro-poor outcomes necessarily emerge from cluster development, and does it require particular forms of policy interventions? (Nadvi et al, 2004)
 
Considering Nadiv’s argument, government must take Industrial/business cluster development as an agent of economic development for poverty reduction through job creation and entrepreneurship. For the creation and development of industrial clustering in Pakistan following recommendations are made for different stakeholders..
 
5.2.1. Recommendations for Government
 
Pro-clustering policies should be developed, after comprehensive research and considering the potential of regions.
 
A comprehensive industrial policy should be devised, with consultation of all stakeholders.
 
Must develop 1.5 nature and 2nd nature geographies, in order to encourage entrepreneurs (Richard, 2005).
 
Devise a comprehensive “Auto Industry Investment Policy”
 
Special incentives may be provided according to the region in order to form special clusters
 
Conducive business environment in terms of law & order must be assured to attract maximum of investment.
 
S.R.O.200(I)/2008 dated 1st March, 2008. “Research and Development Support (Motorcycle Industry) Order, 2008”, which stated that “an equivalent amount of US$ 50 in PKR per motorcycle will be provided to every completely built-up unit of motorcycles exported” is not giving desired output. In order to encouraging research and development special incentives may be provided to firms which undertake collaborative projects with universities. It will work in two directions;
 
On one side it will provide academia to interact with industry, which will be a chance to learn and capacity building through research.
 
On the other it will develop the industry’s capacity and to absorb new research and techniques.
 
Facilitate auto industry’s integration into the global supply chain.
 
To materialize “Technology Acquisition Support Scheme”.
 
Immediate improvement in basic civil and industrial necessities in the city.
 
5.2.2. Recommendations for Industry
 
Professional Marketing and Management team must be employed.
 
Explore new markets internationally.
 
Must get international standard certifications to be eligible for global market.
 
In todays’ globalize market, companies needs to focus on research and development to achieve technological advancement, develop more advance skills and faster the pace of innovation to ensure their survival, and maintain and enhance their competitiveness. It is, therefore, crucial for the firms to engage themselves in collaborative research and product development activities with the academia.
 
5.3. RECOMMENDATIONS FOR FUTURE RESEARCH
 
Present study investigated factors causing formation of MMI cluster in the Hyderabad.
 
A SWOT analysis must be carried out in order to fetch recommendations for policy making and development of industry.
 
Performance of this cluster.
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