External Economies occupied a very prominent position in the Development Economics of the after war decades and the related theories of "balanced growth" and of "big push" significantly influenced the industrialization policies in underdeveloped countries. In the following years the concept lost its prominence as the formalisation of externalities in a static framework resulted unsuitable to study their effects on investment decision. Furthermore the failure in many countries of large-scale industrialization advocated by the theorist of "big push" and the emphasis on export-led growth reduced the relevance of those theories. Some new trends in economic research and the outgoing critical assessment of the adjustment policies of the 1980s led to a revival of the externalities in the analysis of industrialization and development problems. One of the most promising contribution to a new approach to industrialisation in developing countries can be drawn from research on small firms clusters building on the concept of Marshall's industrial district. The mix of competition and co-operation, typical of the most developed clusters, supported by appropriate public policies, can be able to overcome the limits both of large-scale planned industrialization and of the undisputed faith in market competition.