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

By Kerstin Press

The phenomenon of non-random spatial concentrations of organisations in a single or few comparable sectors (clusters) is intensively debated in financial thought and coverage. The euphoria approximately profitable clusters in spite of the fact that neglects that traditionally, many thriving clusters did become worse into previous commercial parts. This ebook experiences the determinants of cluster survival through studying their adaptability to alter within the financial atmosphere. Linking theoretic wisdom with empirical observations, a simulation version (based within the N/K process) is built, and is the reason whilst and why the cluster's structure assists or hampers adaptability. it's stumbled on that architectures with intermediate levels of department of labour and extra collective governance kinds foster adaptability. Cluster improvement is therefore direction established as architectures having advanced through the years effect at the probability of destiny survival.

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

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Examples could be an increase in demand in a new industry or policy initiatives supporting start-up activity (Brenner 2003). e. a cluster emerges. The latter is then stabilised by agglomeration economies against small changes in external conditions (endurance). If changes in the external conditions however come to exceed a threshold value, symbiosis is rendered non self-enforcing (exhaustion). This change can again be brought about directly (reducing the strength of an agglomeration economy) or indirectly (through a reduction in numbers of firms).

This effect is however distorted by the existence of agglomeration benefits: If one area attracts a sufficient number of firms, the impact of agglomeration can bring its total benefits to a level exceeding that of all other areas. 21 The spatial distribution of an industry thus depends on the heterogeneity of firms’ locational preferences and the relationship between agglomeration benefits and local firm numbers. In absence of agglomeration effects, firm location choice depends exclusively on locational preferences and the resulting geographic benefits offered by each area.

Brülhart 1996; Davis and Weinstein 2003, 2002 or Hanson 1996b and historically Crafts and Mulatu 2004). For overviews of empirical work in the NEG framework see: Overman et al. 2001 or Head and Mayer 2003. 19 Although the reasoning advanced in Krugman’s core model resembles Marshall’s idea of pooled labour markets (see Chap. 3), there is an important difference. In the former concept, pooled markets provide a better quality and a lower cost of labour due to cumulative effects of individual firm behaviour.

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