Business Associations and Their Potential to Contribute to Economic Development: Reexploring an Interface between the State and Market

Abstract

This paper is an examination of the role of business associations as agents to facilitate economic development through (1) provision of selective services to their members, and (2) through collective benefits. The author assesses the extent to which associations offer solutions to collective action problems. Business directories and other sources are then used in order to assess the role played by UK associations. All major business associations are examined: trade associations, professional associations, associations of the self-employed or sole traders, and Chambers of Commerce. This paper contributes the first assessment of the population of associations. The author concludes that, although there are strong contrasts between types of association, they are all strongly focused on one or a few services, and there is considerable fragmentation and range of size of associations which appear to relate to two overlapping submarkets (one for ‘collective’ goods, another for selective ‘services’). Associations appear to be quite stable over time, demonstrating a strong path-dependency. The author concludes that if government wants associations to play a larger role in economic development little more will be achieved by voluntary action alone.