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

Abstract

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

Suggested Citation

Chaudhry, Theresa Thompson, Industrial Clusters in Developing Countries: A Survey of the Literature (Winter 2005). The Lahore Journal of Economics, Vol. 10, No. 2, pp. 15-34, Winter 2005, Available at SSRN: https://ssrn.com/abstract=1014573

Theresa Thompson Chaudhry (Contact Author)

Lahore School of Economics ( email )

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