clusters

clusters

geographically proximate groups of interconnected companies, suppliers, service producers and associated institutions, linked by commodities and complementarities. Michael Porter identified clusters as being vital for competitiveness insofar as they improve productivity and flexibility, aid innovation and contribute to new business formation. Porter noted that national economies tend to specialise in certain industrial clusters and that if these clusters are internationally competitive then their export performance will be good. See COMPETITIVE ADVANTAGE OF COUNTRIES, EXTERNAL ECONOMIES OF SCALE.