Institutional Constraints to Innovation: Artisan Clusters in Rural India
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Rural enterprise clusters in India have often been characterized by low-end products, poor income earning options and a near-absence of innovativeness. This has implied limited market access, inadequate organization of production and distancing from sources of formal knowledge. Policy neglect of rural industrialization notwithstanding this paper explores the nature of institutional constraints to innovation through intensive case studies of five rural artisan clusters (handlooms and handicrafts) in as many Indian states. Whether it relates to access to loan finance or technology support or linking to markets, the formal institutions (public or private) have been distanced by informality that typifies most rural enterprise clusters. An obsession with a sectoral approach to cluster development has negated addressing infirmities of the space of enterprise, even as scope for learning from some Asian economies in rural enterprise promotion exists. The paper also enquires if the innovation systems have been inclusive and pro-poor.
Abstract
Rural enterprise clusters in India have often been characterized by low-end products, poor income earning options and a near-absence of innovativeness. This has implied limited market access, inadequate organization of production and distancing from sources of formal knowledge. Policy neglect of rural industrialization notwithstanding this paper explores the nature of institutional constraints to innovation through intensive case studies of five rural artisan clusters (handlooms and handicrafts) in as many Indian states. Whether it relates to access to loan finance or technology support or linking to markets, the formal institutions (public or private) have been distanced by informality that typifies most rural enterprise clusters. An obsession with a sectoral approach to cluster development has negated addressing infirmities of the space of enterprise, even as scope for learning from some Asian economies in rural enterprise promotion exists. The paper also enquires if the innovation systems have been inclusive and pro-poor.
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