This chapter discusses some of the strategies that are commonly used to build effective clusters and industrial parks. Industrial districts (clusters) offer three major advantages: better access to suppliers and markets, labour market pooling, and spillovers of technological know-how. Compared to the central government, local governments are in a better position to identify and solve the bottlenecks that affect clusters and industrial parks, mainly because of their informational advantage. The

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... hapter first provides an overview of clusters and industrial parks before analysing the experiences of—and the lessons learned by—developing countries such as China in building them. Four strategies to increase the chances of success of a cluster and industrial park are highlighted: targeting international firms, targeting grouped businesses, incentivizing first movers, and adopting a step-by-step approach. The chapter also considers a number of reasons why clusters and industrial parks failed in countries like India, Egypt, and Senegal.