Working Paper: NBER ID: w20375
Authors: Mercedes Delgado; Michael E. Porter; Scott Stern
Abstract: Clusters are geographic concentrations of industries related by knowledge, skills, inputs, demand, and/or other linkages. A growing body of empirical literature has shown the positive impact of clusters on regional and industry performance, including job creation, patenting, and new business formation. There is an increasing need for cluster-based data to support research, facilitate comparisons of clusters across regions, and support policymakers and practitioners in defining regional strategies. This paper develops a novel clustering algorithm that systematically generates and assesses sets of cluster definitions (i.e., groups of closely related industries). We implement the algorithm using 2009 data for U.S. industries (6-digit NAICS), and propose a new set of benchmark cluster definitions that incorporates measures of inter-industry linkages based on co-location patterns, input-output links, and similarities in labor occupations. We also illustrate the algorithm's ability to compare alternative sets of cluster definitions by evaluating our new set against existing sets in the literature. We find that our proposed set outperforms other methods in capturing a wide range of inter-industry linkages, including grouping industries within the same 3-digit NAICS.
Keywords: clusters; regional performance; interindustry linkages; economic development
JEL Codes: R0; R1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| clusters (C38) | job creation (J68) |
| clusters (C38) | patenting (O34) |
| clusters (C38) | new business formation (M13) |
| improved cluster definitions (C38) | enhanced regional economic strategies (R10) |
| interindustry linkages (L69) | regional performance (R11) |