Diversity and the Case Against Specialized Clusters

HANDBOOK OF RESEARCH ON CLUSTERS, Charlie Karlsson, ed., Edward Elgar Publishing, Vol. 1, 2008

Posted: 16 Sep 2008

See all articles by Pierre Desrochers

Pierre Desrochers

University of Toronto - Department of Geography; PERC - Property and Environment Research Center

Frederic Sautet

The Catholic University of America (CUA) - Busch School of Business

Gert-Jan Hospers

University of Twente

Date Written: September 1, 2008

Abstract

The geographical concentration of related manufacturing and service firms is as old as economic development but it has drawn renewed attention in the last two decades in the wake of the spectacular growth of regional economies such as Silicon Valley (South San Francisco Bay), Route 128 (greater Boston area) and the 'discovery' of numerous manufacturing districts in locations ranging from Denmark and Italy to Thailand and Japan.

While contemporary policy prescriptions that built on geographically-localized, related and interdependent firms can be traced back to the 'growth poles' and 'growth centers' strategy of the 1950s and 1960s, the most appealing to policy makers in recent times has been the 'cluster' strategy put forward by Harvard Business School's Michael Porter. In short, this approach suggests that the geographical concentration of firms working within a particular field raises their productivity, innovativeness, competitiveness, profitability, and job creation capacity, and therefore that of their immediate and wider geographical areas. Over the years, many policy makers have followed Porter's approach.

Despite its widespread adoption, the cluster-based development strategy has been criticized on many counts, ranging from the fuzziness of the concept to its status as a rationale for arbitrary industrial policy. Perhaps the main problem with clusters remains the inevitable 'difficulties faced by many formerly successful, but specialized old industrial areas [which] provide clear evidence that territorially based advantages may mutate into liabilities'. Building on insights that have long been known to regional development specialists and on more recent ones, this essay reexamines the case against regional specialization by pointing out that it is more likely to result in economic downturns, to prevent the spontaneous creation of inter-industry linkages, and to hamper the creation of innovative ideas through the combination of existing know-how and artifacts than a more diversified economic base.

Keywords: Clusters, Cluster Policy, Michael Porter, Diversity

JEL Classification: L1, L5, L6

Suggested Citation

Desrochers, Pierre and Sautet, Frederic E. and Hospers, Gert-Jan, Diversity and the Case Against Specialized Clusters (September 1, 2008). HANDBOOK OF RESEARCH ON CLUSTERS, Charlie Karlsson, ed., Edward Elgar Publishing, Vol. 1, 2008, Available at SSRN: https://ssrn.com/abstract=1268862

Pierre Desrochers

University of Toronto - Department of Geography ( email )

Mississauga, Ontario
Canada
(905) 828-5206 (Phone)
(905) 828-5273 (Fax)

HOME PAGE: http://eratos.erin.utoronto.ca/desrochers/

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

Frederic E. Sautet (Contact Author)

The Catholic University of America (CUA) - Busch School of Business ( email )

Maloney Hall
620 Michigan Ave, NE
Washington, DC 20064
United States

HOME PAGE: http://business.cua.edu/faculty/sautet.cfm

Gert-Jan Hospers

University of Twente ( email )

Faculty of Public Administration & Public Policy
Postbus 217
7500 AE Enschede
Netherlands

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