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The Role of Human Capital in Cluster†Based Industrial Development

Author

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  • Keijiro Otsuka
  • Tetsushi Sonobe

Abstract

More often than not, manufacturing industries are clustered in small areas in developing economies of Asia and sub†Saharan Africa (SSA). While agglomeration economies arising from low transaction costs are a clear advantage of industrial clusters, a drawback is the ease of imitation, which leads to the gap between social and private benefits of innovation. An important observation is that multifaceted innovation, consisting of the quality improvement of products, improved internal management, and the introduction of new marketing systems, takes place in many industrial clusters in Asia, but such innovation seldom occurs in SSA. This article attributes this to greater endowment of entrepreneurial human capital, and increased possibility of learning advanced technologies and management methods from neighboring countries in Asia than in SSA. This article also discusses evidence suggesting that multifaceted innovation can be stimulated by offering management training to entrepreneurs in SSA.

Suggested Citation

  • Keijiro Otsuka & Tetsushi Sonobe, 2018. "The Role of Human Capital in Cluster†Based Industrial Development," The Developing Economies, Institute of Developing Economies, vol. 56(2), pages 104-116, June.
    • Handle: RePEc:bla:deveco:v:56:y:2018:i:2:p:104-116
    DOI: 10.1111/deve.12166
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    References listed on IDEAS

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    1. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2016. "Management as a Technology?," Harvard Business School Working Papers 16-133, Harvard Business School, revised Oct 2017.
    2. Tomoko Hashino & Keijiro Otsuka (ed.), 2016. "Industrial Districts in History and the Developing World," Studies in Economic History, Springer, number 978-981-10-0182-6, March.
    3. Yoshimichi Murakami & Keijiro Otsuka, 2017. "A Review of the Literature on Productivity Impacts of Global Value Chains and Foreign Direct Investment: Towards an Integrated Approach," Discussion Paper Series DP2017-19, Research Institute for Economics & Business Administration, Kobe University, revised Aug 2019.
    4. Lei Wang & Mengjie Li & Cody Abbey & Scott Rozelle, 2018. "Human Capital and the Middle Income Trap: How Many of China's Youth are Going to High School?," The Developing Economies, Institute of Developing Economies, vol. 56(2), pages 82-103, June.
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    Cited by:

    1. Nobuhiko Fuwa & Yuya Kudo & Keijiro Otsuka & Jacques†François Thisse & Scott Rozelle, 2018. "Revisiting the Role of Human Capital in Development: Discussion," The Developing Economies, Institute of Developing Economies, vol. 56(2), pages 140-144, June.
    2. Adamu Jibir & Musa Abdu, 2021. "Human Capital and Propensity to Protect Intellectual Properties as Innovation Output: the Case of Nigerian Manufacturing and Service Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 595-619, June.
    3. Keijiro Otsuka & Yuya Kudo & Nobuhiko Fuwa, 2018. "Introduction to the Special Issue on Revisiting the Role of Human Capital in Development," The Developing Economies, Institute of Developing Economies, vol. 56(2), pages 78-81, June.
    4. Shamsuzzoha & Makoto Tanaka, 2021. "The role of human capital on the performance of manufacturing firms in Bangladesh," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 21-33, January.

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