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Coordination Failures, Cluster Theory and Entrepreneurship: A Critical View

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  • Glavan, Bogdan

Abstract

Development policy has been energized in the last decades by a number of contributions emphasizing a new positive role the state can and should play in fostering economic growth. The central pillar of this literature is Michael Porter and his theory of clusters. A number of economists have attempted to anchor the appetite for clustering initiatives in a solid theoretical bedrock. They have pointed out an interesting market failure that may prevent the emergence of profitable clusters and thus jeopardize overall economic development: the failure of individuals to coordinate changes in their actions in order to reap the benefits of a better situation. This paper intends to provide a refutation of the idea that coordination failures as manifested in the inability of clusters to emerge can serve as a ground for government intervention. It uses mainly Porter, Rodrik and Rodriguez-Clare thesis as an example of this approach and criticizes the claim that coordination externalities prevent the market process to allocate resources optimally.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6275.

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Date of creation: Apr 2007
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Handle: RePEc:pra:mprapa:6275

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Keywords: Coordination; Market failure; Economic development;

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  1. Adsera, Alicia & Ray, Debraj, 1998. " History and Coordination Failure," Journal of Economic Growth, Springer, Springer, vol. 3(3), pages 267-76, September.
  2. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp04-047, Harvard University, John F. Kennedy School of Government.
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Cited by:
  1. Steiner, Bodo E. & Ali, Jolene, 2009. "Regional Food Clusters and Government Support for Clustering: Evidence for a ‘Dynamic Food Innovation Cluster’ in Alberta, Canada?," Staff Paper Series, University of Alberta, Department of Resource Economics and Environmental Sociology 99705, University of Alberta, Department of Resource Economics and Environmental Sociology.
  2. Sipos-Gug Sebastian & Badulescu Alina-Daciana, 2013. "Entrepreneurial Activity In Romania - A Time Series Clustering Analysis At The Nuts3 Level," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 673-682, July.
  3. Filippova, Irina & Unknown, Unknown, 2013. "Кластерные Стратегии И Кластерные Инициативы: Перспективы И Факторы Эффективной Кластеризации
    [Cluster strategy an
    ," MPRA Paper 49949, University Library of Munich, Germany.
  4. Triyakshana Seshadri & Virgil Storr, 2010. "Knowledge problems associated with creating export zones," The Review of Austrian Economics, Springer, Springer, vol. 23(4), pages 347-366, December.

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