Assessing the Impact of Cluster Policies: the case of the Arranjos Productivos Locais in Brazil

This paper assesses the impact of a cluster development policy in Latin America. A Local Productive Arrangement (APL) is a cluster of firms within the same territory, operating around the same activity and maintaining ties of cooperation and learning among themselves and with other stakeholders. Using firm-level data comprising information on SMEs from Brazil for the years 2002 to 2009 we apply fixed effects, matching and reweighting methods to estimate both the direct and the indirect – i.e. spillovers – causal effect of participating in APLs on a series of SMEs’ performance indicators, including level of employment, value of exports and likelihood of exporting. The cluster policy is found to generate a positive direct impact on the three outcomes of interest. Moreover, we find some evidence of positive spillovers on both export outcomes, which become more relevant in the medium and long term. The results reinforce the importance of correctly accounting for the timing and considering gestation periods when assessing the impact of clusters policies to allow both the direct and indirect effects of such policies to materialize.