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Public cluster policy and neighboring regions: beggar-thy-neighbor?

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  • Erik E. Lehmann
  • Matthias Menter

Abstract

Research on public cluster policy has largely taken a perspective evaluating firm performance or local cluster performance, almost neglecting spillover effects on neighboring regions. This study evaluates the effects and performance of public cluster policy in three ways: firstly, by evaluating public cluster policy per se; secondly, whether positive effects are shaped as a consequence of the ‘picking-the-winner’ competition or by the subsidizing effects afterwards; and finally, whether effects of public cluster policy spill over to neighboring regions or are mainly bounded locally. Based on a unique panel dataset encompassing all German labor market regions and covering a 15-year period, we apply difference-in-difference estimations and quantile regression techniques to identify and separate the different effects. Our results confirm positive cluster effects of the chosen industries, but also show that positive externalities are spatially limited. Policy-makers should be aware of the local boundedness of public cluster initiatives and possible adverse ‘beggar-thy-neighbor’ effects.

Suggested Citation

  • Erik E. Lehmann & Matthias Menter, 2018. "Public cluster policy and neighboring regions: beggar-thy-neighbor?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 27(5-6), pages 420-437, August.
    • Handle: RePEc:taf:ecinnt:v:27:y:2018:i:5-6:p:420-437
    DOI: 10.1080/10438599.2017.1374039
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    Cited by:

    1. James A. Cunningham & Erik E. Lehmann & Matthias Menter & Nikolaus Seitz, 2019. "The impact of university focused technology transfer policies on regional innovation and entrepreneurship," The Journal of Technology Transfer, Springer, vol. 44(5), pages 1451-1475, October.
    2. Audretsch, David B. & Lehmann, Erik E. & Menter, Matthias & Wirsching, Katharine, 2021. "Intrapreneurship and absorptive capacities: The dynamic effect of labor mobility," Technovation, Elsevier, vol. 99(C).
    3. Erik E. Lehmann & Matthias Menter & Katharine Wirsching, 2022. "University spillovers, absorptive capacities, and firm performance," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 125-150, March.
    4. Feng Wang & Tayyaba Rani & Asif Razzaq, 2023. "Environmental impact of fiscal decentralization, green technology innovation and institution’s efficiency in developed countries using advance panel modelling," Energy & Environment, , vol. 34(4), pages 1006-1030, June.
    5. Uwe Cantner & James A. Cunningham & Erik E. Lehmann & Matthias Menter, 2021. "Entrepreneurial ecosystems: a dynamic lifecycle model," Small Business Economics, Springer, vol. 57(1), pages 407-423, June.

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