Investigation of Competitive Advantage of the Dairy Industry Cluster: The Case of Rwanda

Antoine Matemane  Mahirwe; Long  Wei

doi:10.4236/ajibm.2018.85092

Antoine Matemane Mahirwe, Long Wei

Abstract: This paper explores the dairy industry cluster in Rwanda and its competitive advantage basing on the Porter’s diamond model. Additionally, this study identifies other factors critical to the competitiveness of the dairy industry cluster in Rwanda and includes them to the diamond model to create a multiple diamond model. This study argues that the direction taken to increase milk supply in Rwanda by increasing the number of cattle farmers through the government program known as “One cow per poor family” is not suitable in that it exerts more pressure on already scarce resources such as land. In fact, this study suggests that given the challenges facing the dairy industry, more emphasis should be put on improving efficiency and increasing productivity in the value chain. This study proposes the multiple-diamond model which extends Porter’s Diamond model to include other factors central to the competitiveness of the dairy industry cluster in Rwanda. To test the effect of the proposed multiple-diamond determinants, ARDL test was run. The findings confirmed the effect of trade openness on the dairy cluster industry competitiveness. Development assistance and milk cattle were found to have a negative and significant effect on the dairy cluster industry competitiveness while FDI inflow and market sophistication were found to have non-significant effect. The study concludes by providing recommendations for future studies in this field.

Keywords: Dairy Cluster, Competitiveness, Domestic Diamond, Multiple Diamonds

Cite this paper: Mahirwe, A. and Wei, L. (2018) Investigation of Competitive Advantage of the Dairy Industry Cluster: The Case of Rwanda. American Journal of Industrial and Business Management, 8, 1358-1388. doi: 10.4236/ajibm.2018.85092.

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