Clusters evolve as a mechanism to gain competitive advantage, when industrial units come together to share knowledge and supplement each other in enhancing strengths. The phenomenon of clustering is known to have created a high degree of networking, a market focus, an ambiance of high productivity, excellence, development of skills and creativity. These in turn can lead a firm to technological innovation and its applications. Large customers prefer to source from clusters which have developed networking to meet the challenges of high demand. A high rate of success of SMEs in India, Pakistan and Sri Lanka can be traced in part to clusters. Some of these clusters are quite large responsible for a substantial share of production. The paper takes up several perspectives discussing the evolution and the growth of the clusters, their spread in the three countries and how these have helped in the development of SMEs.
Keywords: small and medium-size enterprises, SMEs, clusters, SME development, India, Pakistan, Sri Lanka