Do Clusters Make a Difference? Defining and Assessing their Economic Performance

Spencer G. M., Vinodrai T., Gertler M. S. and Wolfe D. A. Do clusters make a difference? Defining and assessing their economic performance, Regional Studies. This paper contributes to the literature on cluster dynamics by developing a new methodology for identifying clusters that is not dependent on United States-based definitions. This methodology is used to test if the geographical clustering of economic activities leads to superior industrial performance and regional competitiveness. The analysis produces two important findings. First, when industries locate in an urban region with a critical mass of related industries, they tend to generate both higher incomes and rates of employment growth. Second, the overall prevalence of clustering within a city-region is positively associated with income levels and employment growth.