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• Cultural institutions
• Infrastructure
• Natural environment
• Plus many more.
They are predominantly immobile locational factors. Consequently, public
policy has the aim to improve the immobile factors in order to attract the mobile
factors: Investments, jobs, and highly skilled workers. The role of public policy
concentrates on promoting the kind of resources that are relevant for innovation:
Human capital, innovative capital, the competence to interact, and coordinate and
entrepreneurial performance. Successful clusters are located in places where
people can acquire and share tacit knowledge.
Clusters can take a long time to develop. For many clusters, historical reasons
can be found for their existence today. For example, natural factors like resources
or the location at a major trading route or river can be the root for evolution of a
cluster. Also, the existence of an initial institution, such as a company or a uni-
versity can be the root for cluster development. They can over time act as an
anchor for the cluster by spinning-off new businesses and attracting investment
from companies outside the region. The evolution of a cluster can take years or
decades. However, the literature indicates that some clusters have developed much
faster ''because of the determined action of regional leaders who had spotted the
potential of their region for the cluster'' (Ketels
2003
, p. 6).
3.4 Clusters and Economic Performance
Clusters create economic benefits. These benefits have three dimensions:
• Companies can operate with a higher level of efficiency, drawing on more
specialized assets and suppliers with shorter reaction times than they could in
isolation.
• Companies and research institutions can achieve higher levels of innovation.
Knowledge spill overs and close interaction with customers and other compa-
nies create more new ideas and provide intensive pressure to innovate while the
cluster environment lowers the costs of experimenting.
• The level of business formation tends to be higher in clusters. Start-ups find
external suppliers and partners on whom to rely. Clusters also reduce the cost of
failure, as entrepreneurs can fall back on local employment opportunities at
many other companies in the same field (Ketels
2003
, p. 7).
Empirical findings suggest that clusters improve the economic performance of
individual participants of the clusters and as a consequence the entire region
benefits. There is a positive and significant relationship between the existence of
strong clusters and higher overall wages. Strong employment in a cluster category
in which a region is strongly specialized leads to higher overall wages in the
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