Musings on Entrepreneurship and Innovation
Tuesday, March 02, 2004A Cautionary Note Regarding Cluster Policies
Kevin Morgan offers some thoughtful criticism of regional economic development policies [1]:
[T]he growing interest in clusters, among theorists and policy-makers alike, is paralleled by an increasingly ambiguous evidence base. That is to say we actually know much less than we think we know about how firms actually learn, particularly as regards the interplay between learning and proximity, be it physical or organizational proximity...Far from evoking caution from the architects of policy, however, this knowledge deficit has been sidelined as policy-makers throughout the OECD prescribe cluster-building regional policies for all regions whatever their circumstances...
[S]o it may be a planner's conceit to think that 'institutional thickness' is always necessary for successful innovation...This point needs highlighting because the recent 'institutional turn' in economic geography is wont to give the impression that supportive institutions matter as much, if not more than, the firms at the heart of the innovation process. This point also has implications for the new generation of regional innovation strategies in less favoured regions. It is not that these strategies are wrong to emphasize the role of supportive institutional networks, just that the latter cannot be a substitute for a local corporate sector, which is by definition weak in peripheral regions...
It is at the less dynamic end of the spectrum, in the context of less favoured regions, where we encounter one of the biggest questions in political economy today, that is whether localized learning and innovation can be consciously induced through judicious public intervention and new forms of collective action...It would be a tragedy for these poor regions if their embryonic efforts to promote localized learning and innovation were to be over-burdened with the unrealistic expectations of cluster-building regional policies since clusters, contrary to what [Michael] Porter seems to think, are not uniformly relevant or appropriate. If less favored regions are to become something other than they are today, specially if they are to develop a more robust endogenous capacity for innovation and development, they will ned to adopt a twin-track approach. They'll need to recognize that local circumstances are the only meaningful point of departure for a genuinely attuned regional strategy and they'll also need to recognize that local resources are a necessary but not a sufficient condition for progress.
[1] Morgan, Kevin. The exaggerated death of geography: learning, proximity and territorial innovation systems. Journal of Economic Geography 4 (2004) pp 3-21.
