chapter  4
41 Pages



In Chapter 1 we noted that there is a low road and high road to the development of local systems through micro-, small and medium enterprises. The low road is characterised by limited interaction and specialisation (especially vertical) among enterprises in the local system, limited action by the local government, limited institutional development, little cooperation between enterprises, and so on. The high road is characterised by different actors in the local system cooperating, innovating, and competing, thus producing a collective efficiency of the system; this process along the high road also features the involvement of associations of producers, labour and local government. Some of the industrial clusters in the low road and most of the high road clusters can bring to the local system human development and poverty reduction (Nadvi and Barrientos, 2004). However, as we argue in Chapter 11, the experience of most of the clusters in the selected Asian developing countries involving homework does not display even the characteristics of the low road to development. For this reason we called it the ‘dirt road’, which brings no human development. This is primarily because the subcontracting process, while offering work to those hitherto not in the labour force, offers very little else. The subcontracting is simply driven by the desire of firms to cut costs to the barest minimum. Meanwhile, there is very little government action to ensure social protection for the workers.1 In fact, policies, as we discuss in Chapter 11, cannot stop at the level of homeworkers. Indeed, the situation is more complex since homeworkers’ clusters are often part of a wider local system of production for example, a larger cluster composed by Small and Medium Enterprises (SMEs).