This white paper, oriented toward a national policy audience, discusses the growing role of clusters as a fundamental economic unit in the modern economy and as an important driver of competitiveness. Clusters have long been a feature of economic geography, but their influence on competition has grown with the shifting nature of competition and the restructuring of how companies operate. Competition in advanced economies is increasingly driven by knowledge and skill, with low cost labor and other resources accessed in cheaper locations. Clusters are important because they play a fundamental role in knowledge creation, innovation, the accumulation of skills, and the development of pools of employees with specialized expertise.
Cluster-based policies have begun to play a prominent role in some U.S. states and regions and in many other nations, but cluster-based approaches have been all but absent at the federal level in the United States. A selective federal role in cluster-based policy will make federal economic policy more effective and better utilize the scarce resources available. Federal leadership in cluster-based policy would also encourage cluster-based approaches at the state and local level.
Image: Nick Lowndes