Is clustering beneficial to small-scale producers? Does it help producers cope better with tough international competition? Sales figures in 1993 for clustered firms in the Peruvian clothing industry in Lima were significantly higher than those for producers outside the cluster. And the smaller the firm the better the result. Research at the University of Amsterdam coordinated by the UK Institute for Development Studies, examined this gap in performance, in the light of different entrepreneurial approaches to cooperation. Liberalization in the 1990s forced producers to compete internationally, highlighting the need to find innovative responses to market forces.