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The Modified Diagonalization Method for Analysing Clusters within Economies


  • Henryk Gurgul

    (University of Science and Technology, Poland)

  • Pawel Majdosz

    (University of Science and Technology, Poland)


In this paper a modification of the diagonalization method, originally put forward by Hoen (2002), is suggested which is aimed at uncovering clusters of sectors within an input-output framework. Our interest in this subject was largely motivated by the fact that the preceding method appears to be incapable of providing us with an accurate representation of the real cluster structure that exists in an economy, as a consequence of missing the position at which a given inter-sectoral flow stands in the hierarchy of the purchasing industry and the supplying industry. By making a distinction between an internal and external relationship, when it comes up at the moment of deciding whether each pair of industries is categorized as belonging to the same or different clusters, the proposed alternative, which will be referred to as the modified diagonalization method, seems to be superior to its predecessor. Such a conclusion is supported by the results of comparison of the relative performance of the rival methods (i.e. the original and modified diagonalization method) which show, among other things, that the average value of flows between industries grouped into clusters is higher in the case of the proposed method.

Suggested Citation

  • Henryk Gurgul & Pawel Majdosz, 2008. "The Modified Diagonalization Method for Analysing Clusters within Economies," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 6(1), pages 53-73.
  • Handle: RePEc:mgt:youmgt:v:6:y:2008:i:1:p:53-73

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    References listed on IDEAS

    1. Johan Hauknes, "undated". "Norwegian Input-Output Clusters and Innovation Patterns," STEP Report series 199815, The STEP Group, Studies in technology, innovation and economic policy.
    2. Antonelli, Cristiano, 2001. "The Microeconomics of Technological Systems," OUP Catalogue, Oxford University Press, number 9780199245536.
    3. Alex R. Hoen, 2002. "Identifying Linkages with a Cluster-based Methodology," Economic Systems Research, Taylor & Francis Journals, vol. 14(2), pages 131-146, June.
    4. Gashawbeza Bekele & Randall Jackson, 2006. "Theoretical Perspectives on Industry Clusters," Working Papers Working Paper 2006-05, Regional Research Institute, West Virginia University.
    5. Henryk Gurgul & Pawel Majdosz, 2005. "Key Sector Analysis: A Case of the Transited Polish Economy," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 3(1), pages 95-111.
    6. Ron Martin & Peter Sunley, 2003. "Deconstructing clusters: chaotic concept or policy panacea?," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 5-35, January.
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    More about this item


    internal and external interindustrial relationships; diagonalization method; clusters;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology


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