ON THE CLUSTERING OF SMALL FIRMS

This article is concerned with the viability of small-scale manufacturing in LDCs. Its purpose is to put forward a few categories which may help to disentangle the issue and to suggest a line of research. The starting point is the distinction between dispersed and clustering producers, since there is a substantial difference in the dynamic governing their viability. Clustering facilitates gains in efficiency and flexibility which are rarely attainable by dispersed small firms. The concept of collective efficiency is put forward to capture these gains. In future research it is suggested to distinguish between clusters which are hierarchical and those in which equals compete or cooperate; and between stages in which collective efficiency comes about spontaneously and those in which it results from planned action.