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Virtual Incubation in Industrial Clusters: A Case Study in Pakistan

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  • Babur Wasim Arif

    (Federal Bureau of Statistics, Pakistan)

  • Tetsushi Sonobe

    (National Graduate Institute for Policy Studies)

Abstract

In industrial clusters, transaction costs are kept low and free riding is discouraged by a community mechanism developed through dense and repeated interactions among entrepreneurs. In such environments, new entrants without established reputations and connections are put at a distinct disadvantage. This negative effect on new entry must be neutralized for an industrial cluster to expand. Using enterprise level data from Pakistan, this study finds that personal networks are indeed important for successful enterprise operation, which works to the advantage of incumbents, but that subcontracting plays the role of virtual incubation in nurturing new enterprises, reinforcing the cluster’s dynamism.

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Bibliographic Info

Paper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 11-08.

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Length: 35 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:ngi:dpaper:11-08

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Keywords: South Asia; Pakistan; industrial cluster; social capital; subcontracting;

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References

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  1. Eiji Yamamura & Tetsushi Sonobe & Keijiro Otsuka, 2003. "Human capital, cluster formation, and international relocation: the case of the garment industry in Japan, 1968--98," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 37-56, January.
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Citations

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Cited by:
  1. Sonobe, Tetsushi & Higuchi, Yuki & Otsuka, Keijiro, 2012. "Productivity growth and job creation in the development process of industrial clusters," Policy Research Working Paper Series 6280, The World Bank.
  2. Tetsushi Sonobe & Keijiro Otsuka, 2012. "The Role of Training in Fostering Cluster-Based MSE Development," GRIPS Discussion Papers 12-14, National Graduate Institute for Policy Studies.
  3. Sonobe, Tetsushi & Otsuka, Keijiro, 2012. "The Role of Training in Fostering Cluster-Based Micro and Small Enterprises Development," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Fahd Rehman, 2012. "Human Capital and MultifacetedInnovation: Evidence from the Lahore Knitwear Cluster in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(2), pages 63-86, July-Dec.

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