ABSTRACT
At first sight, the recent European industrial district success stories from especially the Third Italy seem very relevant as an example for clusters in developing countries.1 These European industrial districts by and large share the following characteristics (Schmitz and Musyck, 1994; Rabellotti 1995). First, they tend to specialize in labor-intensive artisanal sectors, such as foot wear or garments, in which less developed countries are often thought to enjoy a comparative advantage. Secondly, the Italianate industrial districts are built on local firms, mainly of small and medium size. Most clusters in developing countries also consist overwhelmingly of small and very small firms. Moreover, local and regional policy makers in developing countries are desperately looking for ways to stimulate a more endogenous industriali zation process. Thirdly, the Italian industrial districts are situated in regions that were rooted in small-scale agriculture and which industrialized rela tively late. This means that these success stories were part of an industrial ‘periphery’. Similarly, most clusters in developing countries are also located in the peripheral areas of their respective countries. In short, at first glance the Italianate industrial district experience appears to show that a successful industrialization process built on locally owned firms is possible after all, even in peripheral areas.
