This book looks at two-stage industrial cluster theory and new innovation models in the context of the IT-ization and servitization of products. The formation of industrial clusters, such as export processing zones and special economic zones, has been the preferred mechanism for developing countries to boost their industrial development and export performance for the past several decades. Existing literature related to development economics cites numerous benefi ts of industrial clusters, and several countries have demonstrably reaped such benefits.

The book goes beyond an evaluation of the development of traditional industrial clusters by promoting the idea of the formation of two-stage clusters. Moreover, it takes into consideration new innovation models, with ideas promoted that are based on empirical evidence available through evaluations of Chinese and Taiwanese firms in the consumer electronics and automobile sectors.

Finally, the book looks at company strategies in a new business environment dominated by the servitization of industrial products. It proposes that firms integrate manufacturing and services to a greater extent, and, to substantiate these arguments, presents empirical evidence from India, Taiwan, and Bangladesh. Furthermore, the study contends that innovation and knowledge acquisition strategies are infl uenced not only by the size of fi rms but that they also vary with market preferences.

Hitoshi Hirakawa is a Professor, specializing in Asian economies, at the Economic Research Center, Graduate School of Economics, Nagoya University, and Visiting Professor of Japanese Economy at Nankai University, Tianjin, China. He had previously taught at Tokyo Keizai University, Ibaraki University, and other academic institutions in Japan. Professor Hirakawa obtained his Ph.D. degree in Economics from Kyoto University, Kyoto, Japan. He also holds a Master's degree in Business Administration from Meiji University, Tokyo, Japan.

Kaushalesh Lal earned his Ph.D. degree from Erasmus University Rotterdam, the Netherlands. He holds Master's degrees in Physics, from Kanpur University, and in Operations Research, from the University of Delhi, India. Prior to joining United Nations University (UNU)-MERIT, the Netherlands, in 2003, he taught at the Institute of Economic Growth, University of Delhi, for almost 21 years. He has completed a full six-year term at UNU-MERIT. Presently, he is affi liated faculty to UNU-MERIT.

Naoko Shinkai is an Associate Professor at Graduate School of International Development, Nagoya University, Nagoya, Japan. She has many years of experience in research and development work on development economics and international economics issues, including trade policy, labor and productivity, growth and income distribution, fi nancial sector management, industrial development, and poverty reduction strategy. She received her Ph.D. in Economics from the University of Michigan, Anu Arbor, the United States of America.

Norio Tokumaru is Associate Professor at Nagoya Institute of Technology, Nagoya, Japan. His research interest is in changing innovation systems in the ICT related industries in South and East Asia, including India, China, and South Korea, from the institutional and evolutionary perspectives.