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The Extension of Clusters: Difference-in-Differences Evidence from the Bavarian State-Wide Cluster Policy

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  • Oliver Falck
  • Stephan Heblich
  • Stefan Kipar

Abstract

If one cluster increases local competitiveness, can politicians, by interlinking clusters, achieve an even better effect at the state level? To answer this question, the paper analyzes the “Cluster Initiative” introduced in 1999 by the Bavarian State Government. The purpose of the initiative was to create a Bavarian-wide innovation network in support of state-wide knowledge flows. Using a difference-in-differences approach, we find that introducing the Bavarian-wide cluster policy increased the likelihood of innovation by a firm in the targeted industry by 4 to 7 percentage points. However, this effect is mainly driven by large firms’ increased likelihood to innovate.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2463.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2463

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Keywords: difference-in-differences; cluster policy; regional policy;

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