Clusters, Convergence, and Economic Performance

Mercedes Delgado (), Michael E. Porter and Scott Stern

No 18250, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper evaluates the role of regional cluster composition in the economic performance of industries, clusters and regions. On the one hand, diminishing returns to specialization in a location can result in a convergence effect: the growth rate of an industry within a region may be declining in the level of activity of that industry. At the same time, positive spillovers across complementary economic activities provide an impetus for agglomeration: the growth rate of an industry within a region may be increasing in the size and "strength" (i.e., relative presence) of related economic sectors. Building on Porter (1998, 2003), we develop a systematic empirical framework to identify the role of regional clusters - groups of closely related and complementary industries operating within a particular region - in regional economic performance. We exploit newly available data from the US Cluster Mapping Project to disentangle the impact of convergence at the region-industry level from agglomeration within clusters. We find that, after controlling for the impact of convergence at the narrowest unit of analysis, there is strong evidence for cluster-driven agglomeration. Industries participating in a strong cluster register higher employment growth as well as higher growth of wages, number of establishments, and patenting. Industry and cluster level growth also increases with the strength of related clusters in the region and with the strength of similar clusters in adjacent regions. Importantly, we find evidence that new regional industries emerge where there is a strong cluster environment. Our analysis also suggests that the presence of strong clusters in a region enhances growth opportunities in other industries and clusters. Overall, these findings highlight the important role of cluster-based agglomeration in regional economic performance.

JEL-codes: L26 R11 R30 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-cse, nep-geo, nep-sbm and nep-ure
Note: PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Published as “Clusters, Convergence, and Economic Performance,” with Michael E. Porter and Scott Stern, 2014, Research Policy, 43 (10), pp. 1785–1799 (also available as NBER WP 18250).

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Related works:
Journal Article: Clusters, convergence, and economic performance (2014)
Working Paper: Clusters, Convergence, and Economic Performance (2010)
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