Göran Lindqvist

This report investigates the potential contribution of clusters and cluster policies in the design and implementation of Smart Specialisation Strategies. Both cluster policies and Smart Specialisation Strategies are policy approaches with a place-based dimension, aiming at exploiting advantages of proximity to promote economic growth and competitiveness. With regions across Europe currently working on their Smart Specialisation Strategies, the question whether and how clusters and cluster policies can be used in this endeavour is highly relevant. Smart Specialisation Strategies are difficult to design and implement because they are based on a new and complex academic framework that now has to be translated into policy practice. The contention of this report is that lessons learnt from the rich history of cluster policies can provide concrete inputs into the development of Smart Specialisation Strategies (S3).

This paper contributes to the literatures on entrepreneurship and economic geography by investigating the effects of clusters on the survival and performance of new entrepreneurial firms where clusters are defined as regional agglomerations of related industries. We analyze firm-level data for all 4,397 Swedish firms started in the telecom and consumer electronics, financial services, information technology, medical equipment, and pharmaceuticals and pharmaceutical sectors from 1993 to 2002. We find that that firms located in strong clusters create more jobs, higher tax payments, and higher wages to employees. These effects are consistent for absolute agglomeration measures (firm or employee counts), but weaker for relative agglomeration measures (location quotients). The strengths of the effects are found to vary depending on which geographical aggregation level is chosen for the agglomeration measure.

It is a general fact of economic life that regions differ markedly in their innovative capacity and economic prosperity. This is certainly true for nations across Europe, but is similarly true across regions within each nation. Successful regions have economic profiles different from those of less successful ones. This paper compares differences in both regional specialization giving rise to Marshallian (or MAR) externalities and urban diversity giving rise to Jacobian externalities. The analysis is based on a structural equation model with data from 211 regions in Europe. It shows that both types of externalities play important roles, but in different ways. First, our results show that MAR externalities are important for economic prosperity, but only indirectly through innovation. Specialized regions in Europe perform much better in terms of innovation input and output, which in turn leads to improved GDP/capita. Second, urbanization plays a direct positive role for economic prosperity. It also plays a role in explaining public R&D, but is not directly linked with business R&D or innovation output. Third, public R&D only leads to innovation output through business R&D, and thus the notion that more investments in public R&D should lead directly to more innovation does not agree with the empirical results for Europe.