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In this article, we examine the role of social upgrading in developing country industrial clusters. We argue that while economic growth and productivity enhancement matter, social conditions within clusters are influenced by state monetary, fiscal, and labour policies and regulations, as well as by dynamic processes of agency among cluster governance actors. We find that the state's policies and regulations might enable or constrain cluster actors to behave in ways that affect social upgrading or downgrading. These policies and regulations may also be used by the state to directly change social conditions in national contexts, including in cluster settings, in order to further the government's overall economic strategy. The conclusion outlines our main findings, and the research and policy implications of our analysis.

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