Rethinking economies of scale towards network economies

The authors reflect on the growth opportunities for small-sized companies from models and practices that are based on spatial and business interaction, cooperation and competitiveness between firms as well as on integration with local systems and international supply chains. The article argues that enterprises realize significant economies of scale when they are co-localized and linked together-through networks, cooperatives, consortia or clusters. This has a positive impact on their ability to access markets and resources, to integrate into local and global value chains as well as to generate innovation. Clusters and networks of enterprises become an effective model to foster inclusive and sustainable industrial development. © 2017 Society for International Development.