September 15, 2008

Book Chapter: Diversity and the Case Against Specialized Clusters

  • Pierre Desrochers

    Associate Professor of Geography, University of Toronto - Mississauga
  • Gert-Jan Hospers

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From the Introduction: 

The geographical concentration of related manufacturing and service firms is as old as economic development but it has drawn renewed attention in the last two decades in the wake of the spectacular growth of regional economies such as Silicon Valley (South San Francisco Bay), Route 128 (greater Boston area) and the ‘discovery’ of numerous manufacturing districts in locations ranging from Denmark and Italy to Thailand and Japan. While contemporary policy prescriptions that built on geographically-localized, related and interdependent firms can be traced back to the ‘growth poles’ and ‘growth centers’ strategy of the 1950s and 1960s, the most appealing to policy makers in recent times has been the ‘cluster’ strategy put forward by Harvard Business School’s Michael Porter in his 1990 best-seller The Competitive Advantage of Nations. In short, this approach suggests that the geographical concentration of firms working within in a particular field raises their productivity, innovativeness, competitiveness, profitability, and job creation capacity, and therefore of their immediate and wider geographical areas. This prescription was further repeated, refined and sometimes made more confusing in following years. Although the Harvard scholar did not invent or even do the most original work on regional economic development, his reputation and well established status as one of the world’s foremost business strategy theorist puts him in a unique position to popularize his growth prescription to policymakers worldwide. Indeed, as one observer put it, ‘governments and regional development organizations on all continents except Antarctica have come calling’ to Porter.

Despite its widespread adoption, the cluster-based development strategy has been criticized on many counts, ranging from the fuzziness of the concept to its status as a rationale for arbitrary industrial policy. Perhaps the main problem with clusters remains, as Chapman points out, the inevitable ‘difficulties faced by many formerly successful, but specialized old industrial areas [which] provide clear evidence that territorially based advantages may mutate into liabilities’. Building on insights that have long been known to regional development specialists and on more recent ones, this essay reexamines the case against regional specialization by pointing out that it is more likely to result in economic downturns, to prevent the spontaneous creation of inter-industry linkages, and to hamper the creation of innovative ideas through the combination of existing know-how and artifacts than a more diversified economic base.

Citation (Chicago Style)

Desrochers, Pierre, Frederic Sautet, and Gert-Jan Hospers. "Diversity and the Case Against Specialized Clusters." In Handbook of Research of Cluster Theory, edited by Charlie Karlsson. Handbooks of Research on Clusters 1. Northampton, MA: Edward Elgar, 2008.