A Life Cycle for Clusters?: The Dynamics of Agglomeration, Change, and Adaption (Contributions to Economics)

The phenomenon of non-random spatial concentrations of firms in one or few related sectors (clusters) is intensively debated in economic theory and policy. The euphoria about successful clusters however neglects that historically, many thriving clusters did deteriorate into old industrial areas. This book studies the determinants of cluster survival by analyzing their adaptability to change in the economic environment. Linking theoretic knowledge with empirical observations, a simulation model (based in the N/K method) is developed, which explains when and why the cluster’s architecture assists or hampers adaptability. It is found that architectures with intermediate degrees of division of labour and more collective governance forms foster adaptability. Cluster development is thus path dependent as architectures having evolved over time impact on the likelihood of future survival.