ABSTRACT
The theory behind clusters is potentially vast. The term cluster has been applied to geographical scales ranging from part of a single urban economy to a group of neighbouring economies. The ‘new economic geography’, for example, relates clustering to the tendency for economic activity to concentrate in extensive metropolitan regions rather than to diffuse evenly across national economies (see Brakman et al., 2001). ‘Old’ economic geographers, on the other hand, are most likely to reserve the term for pockets of economic specialisation within a city or shared among neighbouring settlements (see May et al., 2001). In the context of a book that is concerned with the policy applications of theory, this chapter is most aligned with the old geography interpretation of a business cluster. While new economic geography has played a significant role in convincing policy makers that enterprise policy should include a spatial dimension, new economic geographers recognise that their methods are still too abstract to yield policy guidance. As one prominent economic geographer has put it, this branch of economics is still in the Wright Brothers’ phase of learning to fly (Fujita cited in Stelder, 2002). In contrast, the old economic geography conception of clusters has been extensively promoted and highly influential within the field of local economic policy. Indeed, it can be claimed that encouraging business clusters has been one of the biggest ideas in local economic development of the last few decades (Martin and Sunley, 2003). This is seen the efforts of public agencies to increase awareness of the existence of business clusters (Department of Trade and Industry, 2001) and in many industrybased projects to promote membership-based cluster groups (Sölvell et al., 2003).
