Industry clusters refer to the tight connections that bind certain firms and industries together in various aspects of common behavior, e.g., geographic location, sources of innovation, shared suppliers and factors of production, and so forth. Industry cluster concepts date from the last century, but they have captured the imagination of active policymakers and the serious attention of scholars only in the last decade of this century. Because clustering behavior is such a pervasive aspect of modern economies and global trade, it draws the attention of many different disciplines and benefits from their scholarship. Although a consideration of research on this topic might alone justify book-length treatment, industry cluster concepts are also powerful metaphors that are used routinely to guide industrial and regional development planning throughout the world.

Drawing on classic materials and the recent burst of scholarly and policy activity, this monograph examines and demonstrates the use of industry cluster ideas as a means of understanding and shaping regional economies. The highly fluid nature of the rapidly developing body of literature and research on clusters is ideally suited to a web-based presentation, and we attempt to take full advantage of the medium here. Given the limits of a monograph presentation and the highly fluid nature of the literature, however, we focus most attention on areas where the advances have been somewhat more stable, incremental, and generally cumulative. Those concern mainly operational concepts of industry and regional clusters that have benefitted from alternative analytic approaches, and that generate relevant information for regional development policymakers. Each chapter represents our best effort to sort through, clarify and perhaps codify important concepts, definitions, labels, and methods. Occasional self-contained discussions of closely related sub-topics, explanatory sidebars, and short glossaries of terms provide additional elaboration.

Industrial and Regional Clusters: Concepts and Comparative Applications

World development report 2009

Variable returns to agglomeration and the effect of road traffic congestion

Current regional industrialization strategies encourage recruitment, small business development, and business retention and expansion efforts to promote industry cluster development. In this paper, we provide an overview of the advantages and disadvantages of promoting industry clusters as an industrial development alternative for rural areas. Advantages of successful cluster promotion include stronger external economies, a more conducive environment for industrial reorganization, greater networking among firms, and more efficient use of public resources. The disadvantages of an industry cluster approach are selecting industries to target, overcoming latecomer disadvantages, and providing supportive institutions. Findings indicate that an industry cluster strategy is not appropriate for many rural communities. Areas considering cluster promotion should compare costs of initiating or expanding a cluster with the potential benefits of successful cluster development.

https://clusterobservatory.in/articles/Article%20No.%20141.pdf

Rural Industrial Development: To Cluster or Not to Cluster?

This article estimates urbanisation and localisation economies for two digit manufacturing and service industries. The analysis is based on estimation of a translog production-inverse input demand system using data on British firms. We use distance-based measures of localisation to test for the spatial transmission of externalities. We identify positive localisation economies for 13 of the 27 sectors examined. The results indicate that where localisation economies exist, they tend to attenuate fairly rapidly with distance. All localisation externalities are identified within a 10 kilometre radius of the firm. Positive elasticities of productivity with respect to urbanisation are identified for 14 sectors. The weighted average localisation elasticity for manufacturing industries is 0.03 and for services 0.01. The mean urbanisation elasticities are 0.07 and 0.19 respectively.

Resumen
Este articulo estima economias de urbanizacion y localizacion para industrias manufactureras y de servicios de dos digitos. El analisis esta basado en la estimacion de un sistema translog de produccion inversa de demanda de insumos utilizando datos de empresas britanicas. Utilizamos medidas de localizacion basadas en la distancia para comprobar la transmision espacial de externalidades. Identificamos economias de localizacion positivas para 13 de los 27 sectores examinados. Los resultados indican que alli donde existen economias de localizacion, estas tienden a atenuarse bastante rapidamente en funcion de la distancia. Todas las externalidades de localizacion estan identificadas dentro de un radio de 10 km de la empresa. Se identifican para 14 sectores elasticidades de produccion positivas con respecto a la urbanizacion. El promedio ponderado de elasticidad de la localizacion para industrias manufactureras es de 0.03 y para servicios de 0.01. Las medias de elasticidades de la urbanizacion son 0.07 y 0.19 respectivamente.

Eric R. Hansen

Papers

Agglomeration economies and industrial decentralization: The wage — productivity trade-offs