International competitiveness and small firm clusters – evidence from Pakistan

Highly successful industrial clusters exist outside Italy and the developed world. Sialkot, in Pakistan, is the location of a thriving surgical instrument manufacturing cluster, dominated by small business and mainly exporting to high-quality markets in Western Europe and America. Clustering has allowed small businesses to become highly specialized, and to benefit from external economies and joint action. This article describes the origins of the cluster in Sialkot's history, analyses the extent and benefits of vertical and horizontal co-operation, and indicates how external institutions have supported the growth of the surgical instruments industry.