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Encyclopedia > Cluster development

Cluster development (or cluster initiative) is the economic development of business clusters. The cluster concept has rapidly attracted attention from governments, consultants, and academics since it was first proposed in 1990 by Michael Porter. Many governments and industry organizations across the globe have turned to this concept in recent years as a means to stimulate urban and regional economic growth. As a result, a large number of cluster initiative organizations were started during the 1990s, and the trend continues. The first comprehensive study of cluster initiatives around the world was reported in the "Cluster Initiative Greenbook" published by Örjan Sölvell, Christian Ketels and Göran Lindqvist, with a foreword by Michael Porter. The report was presented at the annual meeting of The Competitiveness Institute, TCI, in Gothenburg in 2003. A follow up study in 2005 covered more than 1400 cluster initiative organizations across the globe. Economic development is the development of the economic wealth of countries or regions for the well-being of their inhabitants. ... It has been suggested that Cluster effect be merged into this article or section. ... A consultant is a professional that provides expert advice in a particular domain or area of expertise such as accountancy, information technology, the law, human resources, marketing, medicine, finance or more esoteric areas of knowledge, for example engineering and scientific specialties such as materials science, instrumentation, avionics, and stress analysis. ... Plato is credited with the inception of academia: the body of knowledge, its development and transmission across generations. ... Michael E. Porter (born 1947) is the Bishop William Lawrence University Professor, based at Harvard Business School where he leads the Institute for Strategy and Competitiveness. ...

While the purpose of cluster initiative organizations is to promote economic development within the cluster by improving the competitiveness of one or several specific business sectors, it is important to differentiate these public-private organizations from policy-making organizations at different levels, e.g., national government units such as the UK Department of Trade and Industry (DTI), and supranational bodies such as the OECD and the European Commission and from industry associations comprising firms within one business sector, e.g., biotech, steel. The Organization for Economic Co-operation and Development (OECD) is an international organization of those developed countries that accept the principles of representative democracy and a free market economy. ... The European Commission (formally the Commission of the European Communities) is the executive body of the European Union. ...

More specifically, cluster initiatives are organizations or projects that are organized as collaborations between a diverse number of public and private sector actors, such as firms, government agencies, and academic institutions. Whereas lobbying policymakers may be one of the cluster initiative’s activities, cluster initiatives generally are involved in a broad range of activities, e.g. supply-chain development, market intelligence, incubator services, attraction of foreign direct investment, management training, joint R&D projects, marketing of the region, and setting technical standards. A project is a temporary endeavor undertaken to create a unique product or service. ... The word incubation (from Latin incubare, to lie upon - cf. ... Foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. ... The term management characterizes the process of and/or the personnel leading and directing all or part of an organization (often a business) through the deployment and manipulation of resources (human, financial, material, intellectual or intangible). ... The phrase research and development (also R and D or R&D) has a special commercial significance apart from its conventional coupling of research and technological development. ...

See also

An innovation system is the flow of technology and information among people, enterprises and institutions which is key to an innovative process. ...

External links

  • Sector (and Business Cluster) Development, The World Bank
  • Clusters and Cluster Development, The Institute for Strategy and Competitiveness at Harvard Business School
  • The Center for Strategy and Competitiveness at the Stockholm School of Economics
  • Industry Clusters: An Internet Resource for Economic Developers, University of North Carolina


  • Fairbanks, M, & Lindsay, S, Plowing the Sea. Harvard Business School Press, 1997.
  • Porter, M E, The Competitive Advantage of Nations. Basingstoke: Macmillan, 1990 (reprint Free Press 1998, ISBN 0-684-84147-9)
  • Solvell, O, Lindqvist, G, & Ketels, C, The Cluster Initiative Greenbook, 2003.
  • Teigland, R, & Lindqvist, G, Seeing Eye-to-Eye: How Do Public and Private Sector Views Differ of a Biotech Cluster and its Cluster Initiative? European Planning Studies, Forthcoming.
  • Teigland, R, Hallencreutz, D, & Lundequist, P, Uppsala BIO–the Life Science Initiative: Experiences of and Reflections on Starting a Regional Competitiveness Initiative,2005.



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