SME clusters, acquisition of technological capabilities and development : concepts, practice and policy lessons

The paper contributes to the current policy debate about promoting regional economic growth and competitiveness of small and medium industrial enterprises in development. An analytical framework is elaborated, which integrates complementary insights from existing approaches that have been used as a basis for policy design in this area. These are: the meso-level collective efficiency approach and the micro-level technological capability approach. The new framework gives insight into the different ways in which firm-level technological learning could be fostered through geographical clustering. It also provides new directions for policy. An empirical case study of farm equipment manufacturing in Pakistan's Punjab Province is used to illustrate the added value of the new approach.