Although it is widely recognized that changes in technology and competition have diminished many of the traditional roles of location, this study argues for a prominent role of clusters, or geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that compete but also cooperate. Clusters are a striking feature of virtually every national, regional, state, and even metropolitan economy, and can be seen as a new way of thinking about different level economies. Their prevalence reveals important insights about the microeconomics of competition and the role of location in competitive advantage. Clusters occur in many types of industries, in large and small economies, in rural and urban areas, and at most geographic levels. The most important reason for using clusters, rather than more traditional groupings (e.g. companies, industries, sectors), as a unit of analysis is that clusters are better aligned with the nature of competition and appropriate roles of government. They are broader than traditional industry categorizations, and thus capture important linkages, complementarities, and spillovers in terms of technology, skills, information, marketing, and customer needs that cut across firms and industries. The study argues that proximity in geographic, cultural, and institutional terms of the institutions and businesses within clusters plays an important role in allowing special access and relationships, as well as better information, powerful incentives, and other advantages in productivity that are more difficult to achieve from a distance. Clusters have three major effects on competition: 1) increasing the current (static) productivity of constituent firms or industries; 2) increasing the capacity of cluster participants for innovation and productivity growth; and 3) stimulating new business formation that supports innovation and expands the cluster. The study argues that government should focus on facilitating cluster development and upgrading, with special attention to established and emerging clusters rather than new clusters. (AT).

There is now a wide spread interest in regions as a key focus in the organization and governance of economic growth and wealth creation. This important book considers the factors that influence and shape the competitive performance of regions. This is not just an issue of academic interest and debate, but also of increasing policy deliberation and action. However, as the readings in this book make clear, the very idea of regional competitiveness is itself complex and contentious. Many academics and policy makers have used the concept without fully considering what is meant by the term and how it can be measured. Policy formulation has tended to rush ahead of understanding and analysis, and the purpose of this book is to close this important gap in understanding. This book was previously published as a special issue of Regional Studies.

Economic challenges in developing Asian countries have become more complex: urban populations are growing at great cost to the environment, climate change has increased risks of natural disasters, and income gaps within and between developing countries are widening. These factors threaten the sustainable growth and development of urban areas, the drivers of Asia's economy. A strategic approach for inclusive growth is needed. The City Cluster Economic Development approach provides a strategic framework and a set of analytical tools, which governments, businesses, and communities can use to support the inclusive and sustainable development of competitive urban economies in Asia. Said approach was developed and tested by the Asian Development Bank to improve the basis for integrated planning and development of urban regions in Asia and the Pacific. It also elps urban managers and other city stakeholders identify action plans and determine priority investment areas.

This book provides a comprehensive, up-to-date, and expert synthesis of location theory. What are the impacts of a firm’s geographic location on the locations of customers, suppliers, and competitors in a market economy? How, when, and why does this result in the clustering of firms in space? When and how is society made better or worse off as a result? This book uses dozens of locational models to address aspects of these three questions. Classical location problems considered include Greenhut-Manne, Hitchcock-Koopmans, and Weber-Launhardt. The book reinterprets competitive location theory, focusing on the linkages between Walrasian price equilibrium and the localization of firms. It also demonstrates that competitive location theory offers diverse ideas about the nature of market equilibrium in geographic space and its implications for a broad range of public policies, including free trade, industrial policy, regional development, and investment in infrastructure. With an extensive bibliography and fresh, interdisciplinary approach, the book will be an invaluable reference for academics and researchers with an interest in regional science, economic geography, and urban planning, as well as policy advisors, urban planners, and consultants.

Now beyond its eleventh printing and translated into twelve languages, Michael Porter’s The Competitive Advantage of Nations has changed completely our conception of how prosperity is created and sustained in the modern global economy. Porter’s groundbreaking study of international competitiveness has shaped national policy in countries around the world. It has also transformed thinking and action in states, cities, companies, and even entire regions such as Central America. Based on research in ten leading trading nations, The Competitive Advantage of Nations offers the first theory of competitiveness based on the causes of the productivity with which companies compete. Porter shows how traditional comparative advantages such as natural resources and pools of labor have been superseded as sources of prosperity, and how broad macroeconomic accounts of competitiveness are insufficient. The book introduces Porter’s “diamond,” a whole new way to understand the competitive position of a nation (or other locations) in global competition that is now an integral part of international business thinking. Porter's concept of “clusters,” or groups of interconnected firms, suppliers, related industries, and institutions that arise in particular locations, has become a new way for companies and governments to think about economies, assess the competitive advantage of locations, and set public policy. Even before publication of the book, Porter’s theory had guided national reassessments in New Zealand and elsewhere. His ideas and personal involvement have shaped strategy in countries as diverse as the Netherlands, Portugal, Taiwan, Costa Rica, and India, and regions such as Massachusetts, California, and the Basque country. Hundreds of cluster initiatives have flourished throughout the world. In an era of intensifying global competition, this pathbreaking book on the new wealth of nations has become the standard by which all future work must be measured.

During the last two decades a new growth theory has emerged - often labelled "endogenous economic growth". The contributions in the book develop these advances into a theoretical framework for endogenous regional economic growth and explain the implications for regional economic policies in the perspective of the new century. Endogenous growth models can reflect increasing returns and hence refer more adequately to empirical observations than earlier models, and the models become policy relevant, because in endogenous growth models policy matters. Such policies comprise efforts to stimulate the growth of knowledge intensity of the labour supply and knowledge production in the form of R&D.

This volume of original essays brings the practical world of trade policy and of government and business strategy together with the world of academic trade theory. It focuses in particular on the impact of changes in the international trade environment and on how new developments and theory can guide our trade policy.Contents: New Thinking about Trade Policy, Paul Krugman (Sloan School of Management, MIT). Rationales for Strategic Trade and Industrial Policy, James A. Brander (University of British Columbia). Strategic Export Promotion: A Critique, Gene M. Grossman (Woodrow Wilson School, Princeton University). Government Policy and the Dynamics of International Competition in High Technology, Michael Borrus, Laura d'Andrea Tyson, and John Zysman (all at the University of California, Berkeley). What Should Trade Policy Target? Barbara Spencer (University of British Columbia). Credit Policy and International Competition, Jonathan Eaton (University of Virginia). Industrial Policy: An Overview, Geoffrey Carliner (National Bureau of Economic Research). Japan's Industrial Strategy, Kozo Yamamura (University of Washington). U.S. Trade and Industrial Policy, William R. Cline (Institute for International Economics). Strategic Behavior and Trade Policy, Alvin K. Klevorick (Yale University) and William Branson (Princeton University). The New Political Economy of Trade Policy, J. David Richardson, (University of Wisconsin). Trade Policy: An Agenda for Research, Avinash K. Dixit (Woodrow Wilson School, Princeton University).Paul Krugman is Professor of Economics at MIT. A former member of the staff of the Council of Economic Advisers, Krugman is also coauthor, with Elhanan Helpman, of Market Structure and Foreign Trade (MIT Press 1985).