Industrial Clusters in Developing Countries: A Survey of the Literature
The Lahore Journal of Economics, Vol. 10, No. 2, pp. 15-34, Winter 2005
25 Pages Posted: 24 Nov 2009
Date Written: Winter 2005
This paper provides a survey of the theoretical and empirical literature relating to industrial clusters. These clusters are groups of firms that are specialized by sector, located in close geographic proximity and consist of mostly small and medium sized enterprises. The benefits to firms from clustering are sometimes referred to as active and passive collective efficiency. Passive collective efficiency refers to benefits accruing to a firm by virtue of being in a cluster, such as access to markets and skilled labor, technological spillovers, flexible specialization, and reduced transactions costs. Active collective efficiency, on the other hand, stems from purposeful cooperation between clustered firms to undertake a large-scale project to upgrade production, such as entering into product marketing.
Keywords: industrial clusters, collective efficiency
JEL Classification: Economic Development; Industrial Organization
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