Untraded inter‐dependencies as auxiliary production factors for informal artisans in urban industrial clusters: An empirical study in Kumasi, Ghana

Abstract

The concept and influence of untraded inter‐dependencies are under‐explored in the industrial cluster and informal economy literature. In this paper, we attempt to bridge this gap by extending the conventional Cobb‐Douglas production function to operationalising and testing the moderating effects of two forms of untraded inter‐dependencies in informal production. Based on the diffusion theory, we argue that knowledge‐sharing would favour informal production, as opposed to tool‐sharing. Using quantitative methods, 334 informal artisans were randomly sampled from three clusters in the Kumasi Metropolis of Ghana and analysed data obtained with moderating models and simple slopes plots. The tested models and fuzzy set configurations confirmed that knowledge‐sharing, but not tool‐sharing, has significant interaction effects on informal production. The optimal model derived would be one in which capital interacts with incremental knowledge‐sharing at the existing level of tool‐sharing among the artisans. This paper serves as an extension of new economic geography with an additional factor of untraded inter‐dependencies. As part of post‐COVID restoration and enhancement of informal production processes, we recommend city officials to deliberately plan and space clustered enterprises that enable the observed rates of interactions between production factors and untraded inter‐dependencies.