The development of industrial clusters and public policy

This paper assesses the relationships between public policy and the development of industrial clusters. A conceptual model of the relationship between public policies and the development of industrial clusters is developed and tested using data from 43 European industrial clusters. The results indicate that most government policies have no significant impact on the growth of industrial clusters or for the development of co-operation within industrial clusters. There is limited evidence that packages of government policies that are specifically geared towards improving the local asset base are effective in overcoming obstacles to growth of industrial clusters. However, when age is used as a control variable the weak relationship between policy packages and growth of industrial clusters disappear. The results indicate that individual and packages of public policies are not strongly connected to either high levels of co-operation, or high growth in industrial clusters. Moreover, no clear evidence was found that high levels of co-operation were associated with growth in industrial districts. In the light of the failure to find clear-cut associations between public policies and the development of industrial clusters the paper outlines a research agenda to help to increase our understanding of these issues.