Making Sense of Clusters

What are industry clusters?  How can they be used to better understand regional economies and advance economic development strategies.  Joe Cortright’s 2006 report, published by the Brookings Institution reviews the academic literature on the subject and offers key lessons for policy makers and practitioners.

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In recent years, “cluster strategies” have become a popular economic development approach among state and local policymakers and economic development practitioners. An industry cluster is a group of firms, and related economic actors and institutions, that are located near one another and that draw productive advantage from their mutual proximity and connections. Cluster analysis can help diagnose a region’s economic strengths and challenges and identify realistic ways to shape the region’s economic future. Yet many policymakers and practitioners have only a limited understanding of what clusters are and how to build economic development strategies around them.