The Economics of Clusters

The development of clusters of economic activity is an important feature of industrial policy. Industry clusters have long fascinated economists and geographers alike, the most renowned being Silicon Valley which is seen by many as the blueprint for regional development, innovation, and growth. Several clusters have also developed across Europe, including SiliconFen in Cambridge and Minalogic in Grenoble, and in recent years cluster policies have become popular among policy makers as a useful tool for informing decisions on industrial, regional, and public policy. This book looks at the mechanisms at work behind cluster dynamics, the gains that can be expected from increased clustering, and the determinants of cluster policies. Focusing on France, it provides a theoretical and empirical study of clusters, their success and failures, and the policy lessons that can be applied to the wider international community. France is particularly interesting because there is a long tradition of strong government intervention regarding the location of economic activity, and cluster initiatives are relatively unified across the country. This book shows that, whilst gains from clusters do exist, some firms tend to cluster too much and that spatial agglomeration is only successful to a point, after which congestion effects can offset these gains. It questions the need and the feasibility of cluster policies aimed at interfering directly in the concentration process of firms, and thus looks beyond the general enthusiasm for clusters.