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Walecki
The popularity of the growth center theory had gradually diminished, but the attention to
geographic space and industrial concentrations continued in the remaining part of the XXth
century in geography and regional science. In the U.S. the federal government also contributed to
a better understanding of spatially based economic development by sponsoring important
research projects on industry clusters. In 1996 the U.S. Department of Commerce report
optimistically identified 380 clusters which drove the U.S. economy. According to the study,
these clusters accounted for 57% of the U.S. labor force, they produced 61% of the national
output and generated 78% of the U.S. exports (U.S. Dept. of Commerce, 1996; Gollub, 1997).
Despite many other similar projects at regional and local levels and the existing vast body of
research on geographic concentrations of economic activities, including agglomeration and
localization economies, the very concept of industry cluster within geographic space would
probably have still escaped the attention of economics and the business world had it not been for
catching the interest of Michael Porter and his followers. According to Porter’s definition:
“clusters are geographic concentrations of interconnected companies, specialized suppliers,
service providers, firms in related industries, and associated institutions (e.g. universities,
standards agencies, trade associations) in a particular field that compete but also cooperate”
(Porter, 2000b, p. 15). This is one of the broader definitions of industry cluster that serves many
purposes. It is important to notice that Porter’s definition includes universities, while some
studies may exclude academic institutions (SANDAG, 2001). Ketels adds specific benefits of
clusters and defines them as: “groups of companies and institutions co-located in a specific
geographic region and linked by interdependencies in providing a related group of products
and/or services. Because of the proximity among them - both in terms of geography and of
activities - clusters constituents enjoy the economic benefits of several types of positive locationspecific
externalities” (Ketels, 2003, p. 3-4).
The theory of industry clusters and location-specific externalities has its strong roots in
geography and Porter admits that despite an assumed decline in the importance of location,
geographic space continues to play an important role in economic advancement and business
growth: “clusters ... are a striking feature of virtually every national, regional, state, and even
metropolitan economy, especially in more advanced nations” (Porter, 2000b, p. 15). In his earlier
works Porter attempts to place clusters within what he calls the ‘new economics of competition’
rather than regional economics, or economic geography (Porter, 1998a). He tends to overlook the
contribution of the location theory and is interested in only certain aspects of geographic space
and even clusters, but nevertheless his attention to geographic space, even if limited in scope,
signifies an enormous progress in expanding the horizons of economists and business experts.
Other researchers, including Porter’s colleagues and even his DBA students have often tried to
build on his research and clarify different concepts within the theory of clusters. For example
Ketels attempts to add natural resources to explain the creation and evolution of clusters (Ketels,
2003). Many studies show that clusters have not only a positive impact on productivity growth,
but they also stimulate innovation and contribute to new business creation (Ketelhohn, 2002;
Porter, 1998a & 1998b; Porter and Stern, 2001). Porter goes beyond clusters’ impact on firms
and claims that: “clusters represent a new way of thinking about national, state, and local
economies, and they necessitate new roles for companies, for various levels of government, and
for other institutions in enhancing competitiveness. For companies, thinking about competition
and strategy has been dominated by what goes on inside the organization. Clusters suggest that a
good deal of competitive advantage lies outside companies and even outside their industries,
residing instead in the location at which their business units are based” (Porter, 2000b, p.16 &
2000a). He seems to move easily between the role of clusters for individual companies and their
importance to regional growth, as if there were no conflicts at all between various economic
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