




































American International Journal of Agricultural Studies  

Vol. 1, No. 1; 2018 

Published by American Center of Science and Education, USA 

 

60 

 

 

Agglomeration Economies among Animal and Crop Producers in 

Nigeria: A Panacea for Diversification and Sustainable Economic 

Growth in South Eastern Nigeria 

 

 
Omeje Emmanuel E 

Department of Agricultural Economics 

University of Nigeria, Nsukka, Nigeria 

Email: ejiofor.omeje@unn.edu.ng   

Tel: 08038090907 

 
Onah Ogochuchukwu G 

Department of Agricultural Economics 

 University of Nigeria, Nsukka, Nigeria 

 
Chiemela Peter N 

Division of Animal and Dairy Science  

Chungnam National University 

Daejeon 34134, Republic of Kore 

 
Agbo Nneka H 

National Productivity Centre 

Enugu State Office 

 

 

Received: December 10, 2018      Accepted: December 15, 2018             Online Published: December 31, 2018    

     

 
 
Abstract 
This paper investigates agglomeration economies among Farmers in cluster areas of South Eastern Nigeria as a tool 

for economic emancipation with a special interest in diversification and growth. It also identified other vital roles 

agglomeration plays in developing economies like Nigeria. These are not only as tools for poverty alleviation and 

diversification of sources of livelihood among farmers but also tools for employment generation and sustainable 

economic growth. This paper was motivated by the quest to provide urgent policy recommendations for a 

sustainable approach to agricultural development in South Eastern Nigeria. The specific objectives of the study were 

to: (i) describe the socioeconomic characteristics of the respondents; (ii) ascertain the perception of the farmers on 

diversification and other benefits from agglomeration locations in the region, and (iii) ascertain the challenges 

militating against diversification and economic growth as benefits from agglomeration clusters. Descriptive survey 

research design and structured questionnaire were adopted for this study. Pearson's product moment correlation 

method and split half technique were adopted to determine the internal consistency of the instrument on 150 

questionnaires retrieved and reliability coefficient of 0.91 was obtained. Objective (i) and (ii) were realized using 

descriptive statistics and charts while Objective (iii) was realized using weighted mean, standard deviation and 

rankings. Majority of the farmers were within the active age of 40-49 years. Basic education (69.3%) was also 

pronounced and most farmers operate either medium or large-scale farming. Farmers were of the views that they had 

benefited immensely from agglomeration economies especially in areas of transportation, diversification, access to 

information and innovation as well as access to credit. Fear of risks and uncertainties, dependency on rain-fed 

farming, and limited access to long-term credit ranked highest among the critical challenges limiting them from 

diversification and economic growth potentials in agglomeration. 

 
Keywords: Agglomeration Economies, Economic Growth, Diversification and South Eastern Nigeria 

http://www.acseusa.org/journal/index.php/aijas


www.acseusa.org/journal/index.php/aijas          American International Journal of Agricultural Studies            Vol. 1, No. 1; 2018 

 

61 

 

 

1. Introduction 
The primary ideology of agglomeration economies among farmers is that production and processing are facilitated 

when there is an effective cluster of linked economic activities. The concept of agglomeration economies is akin to 

the explanations and ideas of economies of scale and network effects respectively. According to Edward (2010), 

agglomeration economies are the benefits that come when firms and people locate near one another together in a 

place or industrial clusters. Edward was of the view that all these benefits ultimately come from transport cost 

savings and that transportation costs could be interpreted broadly to include the difficulties in exchanging goods, 

people, services, and ideas. While we agree with Edward that transportation benefit is central, we further 

conceptualized the view that agglomeration economies is also capable of influencing diversification and improving 

economic growth among others. This is true because even the simplest activity in the farm requires a network of 

supporting linkages, services and markets that individual firms or farms cannot organize. Those who doubt the 

awesome potentials of agglomeration economies should visit Dongguan, a city halfway between Guangzhou and 

Shenzhen in Southeast China.  

The World Development Report (2009) offered a useful classification of the different types of scale economies. 

According to the report, there are three broad categories: internal economies, localization economies and 

urbanization economies. The internal economies arise from larger plant sizes (better deals from suppliers, division of 

labour); localization economies arise from the clustering of firms in the same industry or in the same space (which 

increases the supply of information and the pool of specialized labour); and urbanization economies which arise 

from having a large number of industries in the same place. Hence, internal economies are firm specific (and are 

greater in heavy industries where plant sizes are larger). Localization benefits accrue within a given industry and 

urbanization benefits are typically realized across industries. 

According to Alan, Gaiv, Vijaya, and Ivan (2015), agglomeration benefits have been sought in industries and spatial 

areas through a variety of modalities, including industrial zones, Special Economic Zones and other similar 

institutional arrangements with varying degrees of success of which China probably has the best record.  However, 

replication of the Chinese model in Sub-Saharan Africa and other developing countries like Nigeria has been very 

challenging. Farole (2011) provides a very useful overview of how special agglomeration economic zones or 

clusters have fared in Sub-Saharan Africa. Alan, et al, (2015) also noted that the intellectual clarity of the 

agglomeration approach may be overestimated if its implementation challenges are ignored during policy 

formulation. The authors added that agglomeration projects and local investment clusters can have a large effect on 

land values, raising issues of ownership, massive by-waste, control, and allocation. This is an important issue here 

since land tenure has always been a critical challenge to Nigerian agriculture. This same land reform issues is a 

major critique to the location theory for agricultural sector developed by Von Thünen which recommended the 

optimal use of land for an isolated city (Lang 2014). Other major observable challenges to economies of 

agglomeration may include: Strong environmental pressures leading to land degradation and pollution; high land 

prices; bottlenecks in public goods such as overburdened infrastructure; corruption and exploitation; and 

unfavorable competitive pressures. 

Many theories revolve round this economies of agglomeration.? 

While some economic theories suggest that agglomeration might ease coordination failures in particular sectors or 

geographic locations, Weber (1909) exploited a neoclassical location approach for industrial companies to find the 

optimal production location based mainly on regional endowments and transportation costs. These regional, cluster 

or spaceless endowments may be explained to include: a great local market; large supply of labour and thus the 

increased chance of supply and demand for labour and lower search costs; the accumulation of knowledge and 

human capital which lead to knowledge, skills, ideas and information spillovers between firms and individuals; the 

basis for distribution and growth of diversification; the quicker diffusion and adoption of innovation; and the quicker 

access to credit facilities among farmers as well as between farmers and formal credit institutions. Also related to 

this conceptualization is the general equilibrium theory of spaceless economics which would then be a special case 

in which transport costs are zero and therefore disregarded and all inputs and outputs are perfectly mobile (Lang 

2014). The mobility in this context means that needed resource inputs are not only available but also accessible and 

that market for output is also not a problem. This is true among farmers in cluster areas because it is easier for farm 

and off farm activities to boom under this arrangement. Take for instance, rice farmers produce at maximum 

capacity because rice millers are on the standby, enterprises engaged in de-stoning of rice are making progress 

because they have enough raw material at nearly zero transport cost, buyers from all parts of the country head to the 

rice market in the same cluster area to make purchases and this results to a boom in the transport sector. In all these, 

direct and indirect services and labour are created, agricultural jobs increased and its demand and supply stabilised.  

 Many research outputs on the economies of agglomeration suggest that benefits such as diversification and 

economic growth as well as its demerits vary with location (Ellison and Glaeser, 1999). Rigby and Essletzbichler 

https://en.wikipedia.org/wiki/Economies_of_scale
https://en.wikipedia.org/wiki/Network_effect


www.acseusa.org/journal/index.php/aijas          American International Journal of Agricultural Studies            Vol. 1, No. 1; 2018 

 

62 

 

 

(2002); Rosenthal and Strange (2001, 2003) and Baldwin, Brown, and Rigby (2008, 2010), all keyed on seeking 

evidence of the relative benefits of labour pooling, buyer/supplier networks, and knowledge spill-over across 

different industries and regions. This is a major research gap in South Eastern Nigeria. To fill this gap which will 

assist development stakeholders in making relevant policies, this paper was guided by three relevant research 

questions which include: what is the socioeconomic characteristics of farmers involved in agglomeration economies 

or clusters? What are their views regarding benefits of agglomeration to diversification among others? And in their 

opinion, what are the major challenges facing the practice and its benefits to diversification and economic growth in 

the area? 

The broad objective of the study was therefore, to ascertain the contribution of economies of agglomeration to 

diversification and economic growth among farmers in southeastern Nigeria. The specific objectives of the study 

were to: (i) describe the socioeconomic characteristics of the respondents; (ii) ascertain the perception of the farmers 

on diversification and other benefits from agglomeration locations in the state; and (iii) ascertain the challenges 

militating against economic diversification and growth arising from agglomeration or clusters. 

2. Methodology 
Descriptive survey research design was adopted for this study. Structured questionnaire was used for collecting data 

from respondents. The study area was South Eastern Nigeria including Abia, Anambra, Ebonyi, Enugu and Imo 

States. The sample for the study was 150. A purposive random sampling technique was used to select 150 farmers 

that were involved in agglomeration activities or linked cluster areas. Aba in Abia State, Abakiliki in Ebonyi State 

and Uzouwani in Enugu State were purposively selected due to their dominance in cluster-related agglomeration 

economies. Fifty respondents were randomly selected from each of the 3 states. Pearson’s product moment 

correlation method and split half technique were adopted to determine the internal consistency of the instrument on 

150 questionnaires retrieved.  A reliability coefficient of 0.91 was obtained.  

Objective (i) and (ii) were realized using descriptive statistics such as frequency, mean, and charts while Objective 

(iii) was realized using weighted mean, standard deviation and ranks. Decision on the level of agreement by the 

respondents with each elements of the critical constraints to agglomeration was observed as: (i) the element of each 

critical constraint that had the highest weighted mean was ranked first and considered the element with highest 

agreement by the respondents as challenging to their engagement in agglomeration; (ii) any element with a standard 

deviation below 1.96 indicates that the respondents were not too far from the mean and from the opinion of one 

another, while any elements with a standard deviation above 1.96 indicated that the respondents were far from the 

mean and from the opinion of one another. 

3. Results and Discussion 
3.1 Socioeconomics of the Farmers Involved in Agglomeration Activities 

The result in figure 1 shows that the responses of respondents on age, marital status, literacy level, income level, 

farm size and types of farming. Majority of the farmers were within the active age of 40-49 years which constituted 

the highest percentage of 34% among the group. The respondents between 60 years and above had the lowest 

percentage of 9.35%.  This result follows the normal distribution curve for agricultural employment where active 

young people participate more in the farming activities such as in clusters.  

 
Figure 1: Distribution of respondent according to socio-economic characteristics N=150. 

Source: Field Survey, 2018 



www.acseusa.org/journal/index.php/aijas          American International Journal of Agricultural Studies            Vol. 1, No. 1; 2018 

 

63 

 

 

It entails that the younger population maybe engaged in schooling while the elderly people are retiring from farming 

activities. In terms of marital status, 48% were married while 20.67% of the respondents were single. However, the 

lowest percentage among them was divorcee with 7.33%. In terms of literacy level, high percentage of the 

respondents (69.3%) had formal education, 30.7% had no formal education. The farm size distribution of the 

respondents shows that 44% and 46% of the farmers had large and medium size farms respectively while 10% had 

small farm sizes. This result suggests that many of the farmers are actually benefiting from the agglomeration hence 

fewer small scale farmers. With regards to the types of farming, the result indicates that crop production was most 

practiced in the area with 91% of the respondents involved in the production. This implies that crop production 

provides a greater source of livelihood as engaged by many people in the cluster regions. 

 

3.2 Diversification and Other Benefits of Agglomeration Economies 

The results presented in table 2 showed that majority of the respondents (78.7%) were in agreement that economic 

growth was one of the major benefits from their agglomeration activities. It showed that easier transportation 

(76.6%), economic diversification (73.3%) and adoption of innovation (73.3%) were also part of the major benefits 

of agglomeration within their clusters. Other benefits from their activities include: quick and easier diffusion of 

idea/information (50%), quicker access to credit (90%) and access to viable and efficient market (75.3%). 

 
Figure 2: Frequency distribution showing the agreement of respondents on benefits of agglomeration economies. 

N=150 

Source: Field Survey, 2017 

3.3 Critical Challenges to Diversification and Economic Growth as Benefits of Agglomeration economies 

The result in table 3 below showed that the mean values of the respondents on the elements of challenges to 

diversification and economic growth as benefits of agglomeration economies ranged from 2.41 to 3.92. This shows 

that each element in the table has significant influence as constraint to diversification and economic growth as 

benefits of agglomeration economies. The critical elements of the constraints as shown in the table are: Fear of risks 

and uncertainty (3.92); Poor supply of electricity (3.41); and Poor access to long term credit (3.37) which was 

ranked as 1
st
, 2

nd
 and 3

rd
 respectively. 

 

Table 1: Mean Rating and Rank Order to the Respondents’ Agreement on challenges to diversification and 

economic growth as benefits of agglomeration economies 

S/N challenges to diversification and economic growth as benefits of agglomeration economies 
 

SD Rank 

1 Corruption/exploitation by government agents 2.71 0.81 7
th

  

2 Poor infrastructure and Poor supply of electricity 2.83 0.81 6
th

  

3 insecurity 2.41 0.53 8
th

  

4 Fear of risks and uncertainty 3.92 0.64 1
st
  

5 dependency on rain-fed farming 3.41 0.67 2
nd

  

6 Land tenure/pressure 3.11 0.76 4
th

  

7 Poor access to long term credit 3.37 0.90 3
rd

  

8 Unfavourable competitions 2.92 0.74 5
th

  

Source: Field survey, 2018. 



www.acseusa.org/journal/index.php/aijas          American International Journal of Agricultural Studies            Vol. 1, No. 1; 2018 

 

64 

 

 

The standard deviation of the ranked items ranged from 0.53 to 0.90 indicating that responses were very close and 

therefore, shared similar opinions. 

4. Conclusion 
This study showed the importance of agglomeration economies among farmers in poverty alleviation, job creation 

and economic growth of the region. It also explained the socioeconomic characteristics of the farmers and the 

perceptions of the farmers on their benefits from such agglomeration activities. However, the study highlighted 

some of challenges to diversification and economic growth as benefits of agglomeration economies. This paper 

therefore suggests that government and relevant stakeholders should find solutions to the stated problems to enable 

them harness these potentials. 

References 
Edward, L. G. (2010). Agglomeration Economics. National Bureau of Economic Research. The University of 

Chicago Press, http://www.nber.org/chapters/c7977 

Alan, G., Gaiv, T. Vijaya, R. and Ivan, R. (2015). “When Agglomeration Theory Meets Development Reality: 

Preliminary Lessons from Twenty World Bank Private Sector Projects.” CGD Policy Paper 054. 

Washington DC: Centre for Global Development. http://www.cgdev.org/publication/when-agglomeration-

theory-meets-development-reality-preliminary-lessons-twenty-world 

Lang, G. (2014). Macro attractiveness and micro decision in the mutual fund industry: an empirical analysis. 

Hardcover, xii, 178, page 22. http://www.springer.com/978-3-642-39723-3 

World Bank, (2009). World Development Report 2009: Reshaping Economic Geography. Washington DC: The 

World Bank Group. 

Farole, T. (2011). Special Economic Zones in Africa: Comparing Performance and Learning from Global 

Experience. World Bank: Directions in Development. 

Ellison, G., and E. Glaeser. 1999. "The Geographic Concentration of Industry: Does Natural 

Advantage Explain Agglomeration?" The American Economic Review. Vol. 89. No. 2. p. 

311−316. 

Rigby, D.L., and J. Essletzbichler. 2002. "Agglomeration economies and productivity differences in U.S. cities." 

Journal of Economic Geography. Vol. 2. No. 4. p. 407−432. 

Rosenthal, S.S., and W.C. Strange. 2001. "The Determinants of Agglomeration." Journal of 

Urban Economics. Vol. 50. No. 2. p. 191−229. 

Rosenthal, S., and W. Strange. 2003. "Geography, Industrial Organization, and Agglomeration." The Review of 

Economics and Statistics. Vol. 85. No. 2. p. 377−393. 

Baldwin, J., D. Beckstead, W.M. Brown, and D.L. Rigby. 2008. "Agglomeration and the 

Geography of Localization Economies in Canada." Regional Studies. Vol. 42. No. 1. p. 117−132. 

Baldwin, J.R., W.M. Brown, and D.L. Rigby. 2010. "Agglomeration Economies: Microdata Panel Estimates from 

Canadian Manufacturing." Journal of Regional Science. Vol. 50. No. 5. p. 915−934. 

 

 

 

 

Copyrights  

Copyright for this article is retained by the author(s), with first publication rights granted to the journal. This is an 

open-access article distributed under the terms and conditions of the Creative Commons Attribution license 

(http://creativecommons.org/licenses/by/4.0/). 

 

 


