LIMITATIONS OF INDUSTRIAL CLUSTERING IN DEVELOPING COUNTRIES: A LITERATURE REVIEW

Abstract

In recent decades, industrial clusters have gained popularity as a vital economic development strategy to boost competitiveness, innovation and growth in a globalized economy for advanced and developing countries. However, the socio-economic impacts of clustering in developing countries are generally below expectations. Therefore, the question that can be asked is "why industrial clustering does not bring the same results to all developing countries as in advanced countries?". We have identified six features that limit the contribution of clusters to the development and competitiveness of developing countries, namely: the dominance of SMEs, specialization in low value-added activities, inadequate macroeconomic environment, strong external dependence, lack of social responsibility and the decreasing role of the socio-cultural environment. These factors show that the contextual differences between the two groups of countries are not inconsequential with regard to the clustering experience and that policy makers in developing countries need to redouble their efforts to improve the business context and provide the existing clusters with the necessary conditions of success.