Networks and Clusters: The Yin and Yang of Rural Development

Beginning in the mid-1980s, policymakers, particularly in rural areas, realized that they could no longer rely only on attracting large branch plants to sustain their economies. Increasing competition from newly developed and less developed low-wage nations was erasing their cost advantages. The more creative development agencies began to rechannel efforts towards stimulating entrepreneurial activity and strengthening indigenous businesses. Among the many policies discovered and promulgated by various experts and advocates in the late 1980s was interfirm collaboration, i.e., the widespread formation of formal and informal alliances, or networks, among groups of companies for mutual competitive advantage.