The impact of cluster policy on innovation

In recent years clusters have become an important component of the policy maker’s toolbox, particularly in respect of endogenous pressures for growth and innovation. Academic and policy interest in clusters has emerged from the observation that many industries tend to cluster and the ex post analyses of the economic and innovation performance of a number of high-profile clusters. However, despite the popularity of the cluster concept and the widespread use of cluster policy, the question of whether public support of clusters is effective, particularly for innovation, is an open one. This chapter seeks to address this evidence gap. It first examines the main arguments underpinning cluster policy. It subsequently focuses on a number of recent experiences in supporting clusters across the OECD, and further highlights the challenges associated with the evaluation of these initiatives and available evidence on their outcomes. It then reviews the impact of a number of programmes that are selected for closer scrutiny. The chapter draws on available cluster policy evaluation exercises and related academic literature to report on the impacts and outcomes, both soft and substantive, of cluster policy. Finally, some broad implications for policy are drawn, in particular in relation to the need for policies to improve their clarity and focus in their choice of objectives and rationales, the need to allow for evaluation early on in the process, and the use of flexible and adapted interventions that are realistic rather than a rigid cluster model, together with a more careful targeting and a better balance between a hands-off approach and direct steering of clusters.