The Performance of Seaport Clusters - RePub - Erasmus Universiteit ...

Chapter 5 – Cluster Structure 41
The third agglomeration economy is termed ‘knowledge spillovers’ (see Marshall, 1890, p.
271 and Krugman, 1995) 16 . Knowledge and information is cheaper and earlier available
inside clusters than outside, because it flows more easily locally. This factor has been widely
discussed and has become popular among regional policy makers.
Empirical research has demonstrated the positive effect of clustering on innovation (see
Baptista and Swann, 2000, Audretsch and Feldman, 1996 and Nooteboom, 1999) and the
positive effect of clustering on knowledge diffusion (Baptista, 2000). Audretsch and Feldman
(1996, p. 637) empirically prove that ‘industries where new economic knowledge tends to
play a more important role have a higher propensity to cluster together’. This demonstrates
that knowledge spillovers are an agglomeration economy 17 .
Apart from the agglomeration economies, ‘dispersion forces’ exist. Without these forces all
activities would be concentrated in one place. Two dispersion forces are widely
acknowledged: land scarcity and congestion (see Fujita and Thisse, 1996). Agglomeration
forces foster concentration. Since space is limited, land in clusters becomes scarce. This
leads to high land prices. Such high land prices in a cluster decrease the attractiveness of
locating in a cluster. High land prices - even though they reflect the strength of
agglomeration economies - are a dispersion force.
Congestion is a second dispersion force. In general, clusters need investments in transport
infrastructure. Given the scarcity of land and concentration of economic activities,
congestion is likely to develop. This decreases the attractiveness of a cluster, compared to
locations without congestion. Table 6 shows the above-mentioned three agglomeration
economies and two dispersion forces.
16 The argument that proximity influences the diffusion of knowledge does not really fit in
Krugman’s neo-classical framework, because this is hard to reconcile with arguing that distance
influences the diffusion of innovations, since ‘transport costs’ are irrelevant for the diffusion of
ideas, information and knowledge. The importance of proximity is thus at odds with the
assumptions of rational actors and perfect information.
17 Even though these spillovers are beneficial for the cluster, they are not necessarily beneficial for
firms in the cluster. In many cases, firms would rather control and limit the spillover of their
knowledge. In clusters this is difficult because information is ‘in the air’.