Economics of Clusters

A Brief History of Cluster Theories and Policy

Jérôme Vicente

• Publisher: Palgrave Pivot
• Year: 2018
• ISBN:
  9783319788708
• Topic: Volkswirtschaftslehre
• Subtopic: Entwicklungsökonomie

When we talk about clusters, it's the fabulous destiny of Silicon Valleythat first comes to mind – the place where entrepreneurs and policymakers alike flock. But do we really understand the complex mechanics of these clusters? What tools can economics and other related disciplines use to analyze their performance? When it comes to spending taxpayer money to support cluster development, do benefits actually exceed costs?

This book provides a synthesis of cluster theory and presents methodologies to analyze their structure and performance. It also contains insights into how to renew regional innovation policy.

The French edition of this volume was granted Best Book in Economics 2016 by The French Association of Economics (AFSE)

© The Author(s) 2018

Jérôme VicenteEconomics of Clustershttps://doi.org/10.1007/978-3-319-78870-8_1

Begin Abstract

1. Introduction

Jérôme Vicente¹ 

(1)

LEREPS, Sciences-Po, University of Toulouse, Toulouse, France

 

Abstract

The academic literature on clusters emerged in the early 1990s and has grown in popularity ever since, achieving maturity in the late 2000s. Nowadays, ‘cluster’ is a key concept brandished by international organizations as a pledge of innovation and growth in knowledge-based societies. In parallel to the large dissemination of the concept by Michael Porter, the Silicon Valley’s long-run success has served as an example of the type of economic and knowledge interactions which can foster innovation in regions. This very example, however, also questions policy makers about the type of public incentives that should be implemented in order to replicate the conditions for such a success elsewhere.

Keywords

IntroductionClusterInnovation

End Abstract

When one mentions the term ‘cluster’ to innovation and competitiveness experts, the fabulous destiny of Silicon Valley comes to mind. A world-class place of innovation, south of San Francisco, it is easy to associate the location with the names of the most prestigious high-tech companies. This place simultaneously fascinates the scientific community (Saxenian 1994) and inspires economic newspapers (Nora 2009; Piscione 2013). The popularity of the Silicon Valley is such that countless attempts since the 1990s have been made to build on its fame or even replicate the model. They often use related labels: the Silicon Alley in New York (USA), the Aerospace Valley in Toulouse (France), the Silicon Saxony in Dresden (Germany), the Genome Valley in Hyderabad (India), and many others. Around the world, locations rebrand themselves by identifying with the famous Californian cluster as if it is a challenge to other territories engaged in an international competition based on innovation.

The academic literature usually acknowledges that a cluster exists when a set of organizations are located in the same place and are active on similar markets, industries, or technological fields. These organizations are not only companies but also universities, public research institutes, and other technology transfer or funding institutions. This form of clustering can be distinguished from traditional industrial agglomerations because of the relational density between these organizations underlying different forms of cooperation and knowledge exchange. The academic literature on clusters emerged in the early 1990s and has then grown in popularity to achieve maturity in the late 2000s (Fig. 1.1).

Fig. 1.1

The diffusion of academic researches on clusters. (EconLit Database extraction, with Cluster (title), Economics (abstract), and Policy (abstract))

The exponential growth of these academic publications, however, should not be too quickly considered a scientific ‘revolution’ or breakthrough in economic geography and economics of innovation. Indeed, this concept builds on many others whose origins can be traced back to Principles of Economics (Book 4—Chapter 10) by Alfred Marshall (1890). Marshall develops the idea that, when information and skills circulation are facilitated by geographical proximity , the organization of an industry in districts constitutes an efficient trade-off between increasing returns and flexibility. This concept would be further developed in the 1970s by Italian researchers (Becattini 1979) at the beginning of the wave of research on the determinants of post-Fordist systems of economic production in industrialized economies. The concepts of industrial agglomeration (Storper 1989), innovative milieu (Camagni 1995), or technopole (Scott 1990) are also based on Marshall’s seminal ideas. These concepts have contributed in highlighting the role of networks and untraded interdependencies beyond traditional localization externalities, and they are still at the core of modern cluster theories.

Nevertheless, the popularity of the cluster is neither just a trend nor old wine in a new bottle. The cluster concept differs from earlier ones in nature because it contributes to a larger framework that attempts to identify determinants of the performance of so-called knowledge-based economies (Foray 2009). These are economies where faster innovation cycles and product differentiation are more important than cost competitiveness and returns to scale, where borders between science and industry are becoming increasingly blurred with the unprecedented growth of academic entrepreneurship , where increasing technological complexity requires renewed forms of cross-sector economic coordination, and where globalization increases competition between territories. Largely absent from previous work, these aspects are at the core of cluster theories, shaping a framework to analyse the innovative performance of territories. This literature has now matured and reached major international institutions such as the European Commission, the Organisation for Economic Co-operation and Development (OECD), and the World Bank. With other national and regional institutions, since the second half of the 2000s, these organizations have applied the cluster concept by developing and disseminating cluster policy guidelines. Their goal is to absorb these academic insights and transform them into guides to good practice. In this respect, cluster analysis refers not only to purely academic theories of localization but also to concrete innovation policy . On the one hand, it is key to understand what kind of economic interactions give birth to clusters, how these clusters develop but also sometimes decline, and how this occurs independently of the intervention of a public actor. However, it is also a question of highlighting the role that institutions can play particularly through the multiple incentives that they can implement to support clusters and promote their development.

This book offers a synthesis of the process by which clusters have become a core research topic for all social sciences dedicated to understanding the mechanisms of production and diffusion of innovation. It describes the origins of the concept in the literature (Chap. 1) then discusses mechanisms that have been proposed by economists and geography of innovation scholars (Chap. 2). It shows how cluster theories have truly reached maturity progressively through the study of the structure and dynamics of innovation networks (Chap. 3) to become a building block of modern innovation policy (Chap. 4).

References

1. Becattini, G. (1979). Dal “Settore” industriale al “distretto” industriale. Alcune considerazioni sull’unità d’indagine dell’economia industrial. Rivista di economia e politica industrial, 1, 7–21.
2. Camagni, R. (1995). The Concept of Innovative Milieu and Its Relevance for Public Policies in European Lagging Regions. Papers in Regional Science, 74(4), 317–340.Crossref
3. Foray, D. (2009). Economie de la connaissance. Paris: Repères.
4. Marshall, A. (1890). Principles of Economics (8th ed. 1920). London: Macmillan.
5. Nora, D. (2009). Les Pionniers de l’or vert. Paris: Grasset.
6. Piscione, D. P. (2013). Secrets of Silicon Valley: What Everyone Else Can Learn from the Innovation Capital of the World. New York: Palgrave Macmillan.
7. Saxenian, A. L. (1994). Regional Advantages: Culture and Competition in Silicon Valley and Route 128. Cambridge: Harvard University Press.
8. Scott, A. J. (1990). The Technopoles of Southern California. Environment and Planning A, 22(12), 1575–1605.Crossref
9. Storper, M. (1989). The Transition to Flexible Specialisation in the US Film Industry: External Economies, the Division of Labour, and the Crossing of Industrial Divides. Cambridge Journal of Economics, 13(2), 273–305.

© The Author(s) 2018

Jérôme VicenteEconomics of Clustershttps://doi.org/10.1007/978-3-319-78870-8_2

Begin Abstract

2. A Brief History of Cluster Theory

Jérôme Vicente¹

(1)

LEREPS, Sciences-Po, University of Toulouse, Toulouse, France

Abstract

Several theories explaining clusters coexist and confront each other. When examined closely, they converge on at least two points. On the one hand, they all find their roots in the late-nineteenth-century work by British economist Alfred Marshall. Going back to Marshall’s seminal contribution is therefore essential, since several parts of his work on districts contain key elements that have been partly adopted and readapted by different schools and thus put, nearly one century later, at the heart of the understanding of spatial clustering. ...