This case study explores ways on how industrial policy based on clusters and free trade benefits the poor. Being the connection between free trade, clusters and the poor not so well developed in the literature, the paper uses regional case studies in the aerospace sector to identify new dimensions and key elements from the Mexican experience. The relationship is relevant in today’s global economy where competition based on productivity, one of the main outcomes of cluster initiatives, combine with low cost makes some developing regions quite attractive, but not necessarily better off. The attraction of aerospace foreign direct investment, which has grown exponentially under free trade, adds the dimension of how to create sustainable high-tech jobs in a developing country.
