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The cluster model is effective for several reasons. First, conventional economic development approaches, such as a sector or industry-specific strategy, are often characterized by compartmentalized and isolated activity. In contrast, the cluster approach is integrative, bringing coherence to disparate activities and projects. Clusters are defined by interdependencies and are inclusive of other economic development approaches.
Second, clusters drive innovation and innovation drives productivity. "Innovation and the commercialization of new technology take place disproportionately in clusters." The argument follows that to move a concept to a commercialized product, many organizations must co-operate and collaborate. Clusters provide the critical mass for this to occur by facilitating interaction by participants. Few companies have all the necessary skills to develop unique products and services by themselves, therefore clusters, rather than single companies or industries, are the sources for income, jobs and export growth.
Third, the cluster approach is about inclusion, collaboration and co-operation and there are benefits to all participants. The cluster approach breaks down organizational, geographic and sector silos, promotes social capital and facilitates tacit knowledge, all critical ingredients for a creating a virtuous cycle of sustainable economic growth. The cluster approach promotes horizontal collaboration and strategic partnerships. It focuses on strengthening economic foundations such as infrastructure and workforce development. The cluster strategy brings coherence and co-ordination to various programs and funding at various levels of government that usually exist in isolation and lack cumulative impact.
Fourth, clusters provide benefits to all involved. From a major firm's perspective, firms in a cluster share hard and soft infrastructure, energy, transportation, R&D, and health and safety standards. It provides them with access to all players, attracting brainpower, expertise and local suppliers. In turn, it makes the industry more innovative to adopt technology, enabling them to develop and export unique products and services.
Major multinational firms can transfer benefits of innovation to their foreign subsidiaries. Working in a cluster brings benefit to firms in terms of their being viewed as good corporate citizens. Businesses in a cluster have a stronger voice compared with individual firms in targeting government funding for R&D, infrastructure, skills development, legislation and so forth.
From an educational institutions and research point of view, clusters provide critical mass for brainpower, talent, funding for R&D and access to industry. The Research Triangle Park at the University of Duke, North Carolina State University at Raleigh, University of North Carolina at Chapel Hill and Biotechnology Clusters at University of California at San Diego strengthened research capabilities and promoted entrepreneurship. Being part of a cluster allows universities to translate concepts and ideas into commercialized products.
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