A Comparison of Clustered and Dispersed Firms in the Small-scale Clothing Industry of Lima’, World Development 27

Summary. — This study provides empirical evidence on the strength and type of clus-tering advantages, contrasting the performance of small clustered firms with several control groups of dispersed producers in the garment industry of Lima, Peru. Repeated measurement facilitates an evaluation of the ability of clustered firms to respond to pressures arising from the swift trade liberalization carried out in Peru after 1990. The evidence suggests that clustering advantages have been significant, particularly for the smallest firms. Cost reductions and information spillovers are the dominant type of advantages. These are however, passive advantages of clustering. They largely arise at the level of transactions in goods and services, and to a lesser extent in the transfor-mation of inputs into output. While significant, these advantages are insucient for sustaining competitiveness in the liberalized markets. The garment cluster runs the risk of entropic death if information spillovers remain limited in origin and diversity and if interfirm cooperation does not cross local borders. Ó 1999 Elsevier Science Ltd. Al