Cluster development policies and firms’ performance: evidence from an emerging economy in Latin America

Abstract

Purpose Impact evaluations of cluster programs at firm level are still scarce in the literature. The available evidence on the effectiveness of such programs based on rigorous quantitative impact evaluations is mixed. The purpose of this paper is to contribute to the body of literature the evaluates quantitatively the impact of cluster programs in emerging economies on firms’ performance. In particular, the authors evaluate the impact of a cluster program in Uruguay on firms’ sales and exports. Design/methodology/approach The authors use state-of-the-art impact evaluation methods to evaluate the impact of the program. In particular, difference in differences and matching methods Findings There is very strong evidence that the program had a positive impact on exports and the propensity to export of firms. However, the evidence of a positive impact on sales is weak. The evidence suggests that the maximum effect of the program can be found in the fourth or fifth year after the intervention. Originality/value The contribution of this paper to the literature is fourfold. First, this paper adds to the scarce body of literature evaluating the effects of cluster development programs with state-of-the-art impact evaluation methods. Second, it adds evidence for Latin America, a region that has implement a number of cluster policies (Maffioli et al., 2016) and where, as far as the authors know, there is only one additional paper evaluating rigorously the impacts of them (Figal-Garone et al., 2015). In addition, the authors provide evidence about the timing of the effects after the implementation of a cluster policy, an important issue that is mostly overlooked in the existent literature. Finally, the paper focus its attention on the impacts on exports and the propensity to export of firms, key elements for small open economies in Latin America that are heavily reliant on foreign currency inflows.