Clusters and Economic Development Outcomes

Much of the existing empirical research on industry clusters focuses on the detection of clusters for economic development purposes. There are comparatively few studies that relate identified clusters to business and industry growth or that trace changes in designated clusters over time. This article seeks to better understand the link between industry clustering and regional economic outcomes. In a comprehensive study sponsored by the Appalachian Regional Commission and released in 2002, the authors identified technology-based clusters within and on the border of the Appalachian region. The Appalachian technology clusters constituted subregional concentrations of related industrial, research and development, and university-based strengths as of the middle to late 1990s. In this article, the authors investigate how the industries in the identified clusters fared over the subsequent several years in terms of employment and new business formation. They find evidence that clustering is associated with new business formation for selected technology industries but not with employment growth.