Updated: Aug 20, 2021

The tendency of firms in certain industries to concentrate in geographic areas where there are other firms of a similar type. This enables them to use the services of related industries providing inputs of goods and services, and possibly to gain from the training provided by other firms in a cluster by poaching their skilled labour force. This is held to explain the tendency of industries to concentrate in particular areas, for example Silicon Valley in California, with a high density of electronics and computer-based industries, and the M4 corridor in England. Economic development agencies often aim at the creation of new clusters; this is sometimes difficult to achieve, as it involves simultaneous investment in various industries and forms of technical education.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.