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The alleged beneficial effects of regional industrial clusters for competitiveness and growth in developing countries have been subject to intensive study. A prominent place in the debate has been occupied by the collective efficiency approach. In this paper we extend that approach by incorporating insights from the literature on firm-level technological learning in development. The resulting framework is applied to the software cluster of Bangalore (India), to illustrate the ways in which spatial proximity of firms and other parties interacts with cluster knowledge creation in a dynamic environment. A number of new insights emerge, including the importance of "old economy" factors such as high demand for innovation, international technology transfer, low wages and strong technology and education institutions. To the extent that "new economy" regional factors also matter, spontaneous agglomeration advantages appear to be important alongside active collective efficiency. [ABSTRACT FROM AUTHOR]

Drawing on a recent data set of the Indian manufacturing industry for the period 1994-2008, this article shows for eight sectors that core infrastructure matters in determining Total Factor Productivity (TFP) and Technical Efficiency (TE). Results suggest that the impact is rather strong on both measures (elasticity of 0.32 and 0.17, respectively). This finding is of particular importance in the Indian context characterized by infrastructure bottlenecks and strongly supports the view that a lack of infrastructure can hamper growth in developing countries. [ABSTRACT FROM AUTHOR]