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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.

Suggested Citation

  • Glavan, Bogdan, 2007. "Coordination Failures, Cluster Theory and Entrepreneurship: A Critical View," MPRA Paper 6275, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:6275
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    File URL: https://mpra.ub.uni-muenchen.de/6275/1/MPRA_paper_6275.pdf
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    References listed on IDEAS

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    1. Adsera, Alicia & Ray, Debraj, 1998. "History and Coordination Failure," Journal of Economic Growth, Springer, vol. 3(3), pages 267-276, September.
    2. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," CEPR Discussion Papers 4767, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Triyakshana Seshadri & Virgil Storr, 2010. "Knowledge problems associated with creating export zones," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 23(4), pages 347-366, December.
    2. Filippova, Irina & Unknown, Unknown, 2013. "Кластерные Стратегии И Кластерные Инициативы: Перспективы И Факторы Эффективной Кластеризации
      [Cluster strategy and cluster initiatives: prospects and factors of effective clustering]
      ," MPRA Paper 49949, University Library of Munich, Germany.
    3. 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, vol. 1(1), pages 673-682, July.
    4. Steiner, Bodo & Ali, Jolene, 2009. "Regional food clusters and government support for clustering: Evidence for a ‘dynamic food innovation cluster’ in Alberta, Canada?," MPRA Paper 26251, University Library of Munich, Germany.
    5. Филиппова, Ирина, 2014. "Анализ Факторов Эффективной Кластеризации
      [Factors influencing the effetiveness of clustering]
      ," MPRA Paper 66632, University Library of Munich, Germany, revised 2014.
    6. Sarath W.S.B. Dasanayaka & G D Sardana, 2015. "Development of Small and Medium Enterprises through Clusters and Networking: A Comparative Study of India, Pakistan and Sri Lanka," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 84-108.

    More about this item

    Keywords

    Coordination; Market failure; Economic development;

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H0 - Public Economics - - General

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