The Pitfalls and Booby Traps of Cluster Policy
AbstractOver the past two decades, cluster policies have become a standard instrument of public authorities and economic development practitioners in many parts of the world. This paper takes a critical stance on this phenomenon and provides theoretical arguments that challenge the widespread application of cluster initiatives to promote long-term regional development. We distinguish between and compare two main bodies of thought: the neoclassical view and the agglomeration view. We show that there are no rationales for cluster policy from the perspective of neoclassical theory. The agglomeration view, in contrast, provides a convincing conceptual basis for justifying economic policies implemented in form of cluster initiatives. At the same time, however, it points to major problems related with the cluster policy approach. We identify and elaborate on three essential difficulties, i.e. the proper (1) targeting, (2) dosing, and (3) timing of cluster policy actions. We highlight that the problems related with these fundamental issues of each public initiative constitute powerful pitfalls and booby traps of cluster policies.
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Bibliographic InfoPaper provided by Institute for the Environment and Regional Development, Department of Socioeconomics, Vienna University of Economics and Business in its series SRE-Disc with number sre-disc-2012_01.
Length: 26 pages
Date of creation: 2012
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-25 (All new papers)
- NEP-GEO-2012-01-25 (Economic Geography)
- NEP-URE-2012-01-25 (Urban & Real Estate Economics)
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