Start Switch for Innovation in “Construction Sequencing”: Research Funding

Clusters of knowledge-intensive industries and manufacturing industries form industrial agglomeration in Step I and activate innovation in Step II. Industry clusters are formed by building segments. “Construction sequencing” in the construction industry refers to the process of determining the sequence of segments to optimize a project’s resources, budget, and scheduled timeline. The process usually begins by dividing a project into segments. Urban segments consist of public spaces, airports, factories, health, housing, etc. A “segment” is a component of a cluster; the organization of a cluster consists of constructing segments. These segments can be divided into four main categories: human resources, physical infrastructure, institutions, and the living environment. Each segment has a specific function in the process of building a cluster. This study focused on innovation in Step II and extended the Fujita–Thisse model of spatial economics to hypothesize that research expenditure per researcher leads to value being added. The Granger causality was tested for the knowledge and manufacturing industries in nine major countries including China and the U.S. The results showed that the hypothesis was significant in identifying the starting segment of innovation in Step II. Accordingly, it can be concluded that research funding is the start switch that triggers innovation. The policy implication is that activating innovation in cluster policies begins with the establishment of a research fund for researchers in its assigned clusters.