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Does light touch cluster policy work? Evaluating the tech city programme

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  • Nathan, Max

Abstract

Cluster policies are popular with policymakers, but we know surprisingly little about their effectiveness. This paper evaluates the causal impact of a flagship UK technology cluster programme that uses ‘light touch’, market-orientated interventions. I build a simple framework and identify effects using synthetic controls plus placebo tests to handle programme endogeneity concerns. I implement this design on rich workplace-level microdata from the Business Structure Database, alongside a range of other administrative sources. I explore mechanisms through further tests for timing, cross-space variation, scaling and churn. The policy grew and densified the cluster, but has much weaker, partial effects on tech firm performance. I also find most policy ‘effects’ began before rollout, raising questions about the programme's added value. More careful policy design could make future interventions more effective.

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  • Nathan, Max, 2022. "Does light touch cluster policy work? Evaluating the tech city programme," Research Policy, Elsevier, vol. 51(9).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:9:s0048733320302134
    DOI: 10.1016/j.respol.2020.104138
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    More about this item

    Keywords

    Clusters; Technology policy; Economic development; Synthetic controls;
    All these keywords.

    JEL classification:

    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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