April 2011 recommendations

Europe 2020 Flagship: An Industrial Policy for the Globalization Era
http://ec.europa.eu/enterprise/policies/industrial-competitiveness/industrial-policy/index_en.htm

European Commission: Entreprise and Industry

In this era of intensifying globalization, the concept of national sectors and industries is obsolete. Coordinated European policy responses are needed. Europe also needs an approach that looks at the whole value chain, from infrastructure and raw materials to after-sales service. Promoting the creation and growth of small and medium-sized enterprises has to be at the core of EU industrial policy. Moreover, the transition to a sustainable economy has to be seized as an opportunity to strengthen competitiveness. Only a European Industrial Policy targeting competitiveness and sustainability can muster the critical mass of change and coordination needed for success. This report outlines ten key actions to stimlate European industrial competitiveness.

Clusters, Convergence and Economic Performance

http://www.isc.hbs.edu/econ-clusters.htm
Mercedes Delgado, Michael E. Porter and Scott Stern

This paper evaluates the role of regional cluster composition in the economic performance of industries, clusters and regions. On the one hand, diminishing returns to specialization in a location can result in a convergence effect: the growth rate of an industry within a region may be declining in the level of activity of that industry. At the same time, positive spillovers across complementary economic activities provide an impetus for agglomeration: the growth rate of an industry within a region may be increasing in the size and “strength” (i.e., relative presence) of related economic sectors. Building on Porter's previous work the paper develops a systematic empirical framework to identify the role of regional clusters – groups of closely related and complementary industries operating within a particular region – in regional economic performance. It exploits newly available data from the US Cluster Mapping Project to disentangle the impact of convergence at the region-industry level from agglomeration within clusters. It finds that, after controlling for the impact of convergence at the narrowest unit of analysis, there is significant evidence for cluster-driven agglomeration. Industries participating in a strong cluster register higher employment growth as well as higher growth of wages, number of establishments, and patenting.