ABSTRACT
Clusters – i.e. localized agglomerations of specialized firms – have for long supported the activities of multinationals. Particularly in developing countries, multinationals clustered their foreign investment, channeling knowledge and imported inputs to selected locations. This chapter traces the historical evolution of clusters and reviews the major contributions and puzzles at the core of the theory on industrial concentration. Traditionally, the literature overemphasized local elements as sources of competitiveness as opposed to external factors, making the cluster literature self-contained and “location-obsessed.” In contrast, recent contributions showed that clusters impact economic activity beyond their location and constitute the building blocks of today’s global economy. The chapter includes two historical examples from emerging economies, illustrating how clusters worked as major tools for international business. Through the cases of the plantation cluster in colonial Southeast Asia and the eco-tourism cluster in Costa Rica after WW II, this chapter argues that clustering facilitated multinationals’ investment in developing economies, fostering global capitalism. As such, clusters represent structural elements of the global economic architecture.
