Transnational Entrepreneurs, Global Pipelines and Shifting Production Patterns: The Example of the Palanpuris in the Diamond Sector

Abstract

Building on the buzz-and-pipelines model of regional clusters, the paper shows that transnational entrepreneurs play an important role in the construction of external cluster relations and hence influence both the dynamics of regional clusters and global production settings. Unlike most studies on the economic implications of transnational migrants, the paper deals with a labor intensive manufacturing sector. In detail, diamond dealers from the Indian city of Palanpur will be conceptualized as transnational entrepreneurs who, in the past, were able to cover certain locations of the diamond value added chain with family members. The global relations set up by these families at the same time formed business networks allowing for an intense global exchange of knowledge and artifacts (diamonds). In the long run, these patterns implied a change of the overall production structures: in Antwerp, a traditional diamond trading and cutting center, the Indian dealers developed to strong competitors in the smaller stones segment and as such contributed to the fading away of the historically grown industrial base. In addition, the institutional support structures were partly dismantled. On the other hand, in India, a new cluster in diamond cutting emerged. The findings suggest that transnational entrepreneurs can contribute to a weakening of traditional cluster structures and therefore call for a more differentiated view as evoked by the one-sided focus of studies on returnee migrants in the high-tech sector.