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Coordination Failure, Clusters, and Microeconomic Interventions

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  • Andrés Rodríguez-Clare

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Abstract

This paper discusses coordination failures, their relevance to developing countries, and the circumstances under which they occur, arguing that that clusters can be seen as agglomerations of firms and organizations in related economic activities among which coordination failures are likely to arise. In other words, clusters provide opportunities for microeconomic interventions that promote coordination and collective action to improve productivity. Subsequently presented is a model of a small economy plagued by sector or cluster-specific coordination failures, which demonstrates that policy should foster cooperation in sectors where the economy already shows comparative advantage. In regard to innovation, general policies that aim to increase innovation across the board are likely to be inferior to policies that take a more selective approach by trying to induce the development of innovation clusters in areas of comparative advantage. The paper concludes with suggestions on how an understanding of coordination failures and clusters can form the basis for a set of effective microeconomic interventions for middle-income countries.

Suggested Citation

  • Andrés Rodríguez-Clare, 2005. "Coordination Failure, Clusters, and Microeconomic Interventions," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2005), pages 1-41, August.
  • Handle: RePEc:col:000425:008660
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Glavan, Bogdan, 2007. "Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View," MPRA Paper 5757, University Library of Munich, Germany.
    2. repec:eee:regeco:v:67:y:2017:i:c:p:25-41 is not listed on IDEAS
    3. Juan Carluccio & Thibault Fally, 2008. "Multinationals, technological incompatibilities and spillovers," PSE Working Papers halshs-00586040, HAL.
    4. Brian K. Kovak, 2013. "Regional Effects of Trade Reform: What Is the Correct Measure of Liberalization?," American Economic Review, American Economic Association, vol. 103(5), pages 1960-1976, August.
    5. Lucas Figal Garone & Alessandro Maffioli & Joao Negri & Cesar Rodriguez & Gonzalo Vázquez-Baré, 2015. "Cluster development policy, SME’s performance, and spillovers: evidence from Brazil," Small Business Economics, Springer, vol. 44(4), pages 925-948, April.
    6. Huberto M. Ennis, 2005. "Complementariedades y Política Macroeconómica," Department of Economics, Working Papers 054, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.

    More about this item

    Keywords

    coordination; developing countries; clusters;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

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