A Life Cycle for Clusters?: The Dynamics of Agglomeration, by Kerstin Press

By Kerstin Press

The phenomenon of non-random spatial concentrations of enterprises in a single or few similar sectors (clusters) is intensively debated in fiscal thought and coverage. The euphoria approximately winning clusters notwithstanding neglects that traditionally, many thriving clusters did go to pot into previous business parts. This ebook reviews the determinants of cluster survival by means of reading their adaptability to alter within the financial setting. Linking theoretic wisdom with empirical observations, a simulation version (based within the N/K process) is constructed, and is the reason whilst and why the cluster's structure assists or hampers adaptability. it's chanced on that architectures with intermediate levels of department of labour and extra collective governance types foster adaptability. Cluster improvement is therefore course based as architectures having developed through the years impression at the chance of destiny survival.

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Additional info for A Life Cycle for Clusters?: The Dynamics of Agglomeration, Change, and Adaption

Sample text

In contrast, a decrease in trade costs reduces local product market competition as distant markets become increasingly accessible. 16 Any change in trade costs therefore produces a deterministic change in the spatial distribution of the industry towards increased agglomeration or dispersion. The models of the NEG thus show that in the presence of increasing returns to scale at the firm level, small causes (such as small size differentials between areas) can have major effects regarding the geographic distribution of industries.

In addition, the industry’s technology becomes more standardised. As a result, the importance of proximity for knowledge transfer and inter-firm co-ordination declines. The second stage of the cycle would therefore see a consolidation of firm numbers and a growth of the cluster as a whole. e. negative agglomeration externalities start to materialise, limiting cluster growth. In the third stage, the product becomes even more standardised making cost rather than performance the driving force in competition.

The following chapter takes a closer look at this literature that started with the pioneering work of location choice theory and Alfred Marshall in the early 19th century. Building on the insights gained in this part, a model 36 2 Stability and change: Driving cluster development framework for analysing cluster adjustment to change will be introduced in part III. e. benefits and downsides to firm co-location. Both were generated by the activities of local firms. As an example, greater numbers of firms in an area increased the availability of labour (through training and in-migration).

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