Cluster-Based Industrial Development: A View From East Asia

In this paper I attempt to formulate an endogenous model of cluster-based industrial development, based on case studies in Japan, Taiwan, and China, where the initiation phase is followed by the quantity expansion phase through imitation and subsequently by the quality improvement phase through innovation. I argue that such a process of industrial development is supported by the development of market transactions among assemblers, parts-suppliers, and merchants, and the stimulation of innovation made possible by the benefits of industrial clusters arising from the geographical concentration of a large number of enterprises and a variety of human resources in a small geographical area.