The location and concentration of businesses in Britain: business clusters, business services, market coverage and local economic development

An important debate has recently developed around the significance of busin ess clusters for the development of the economy. This paper assesses the ex tent to which concentrated clusters of businesses exist in Britain, using t he fine spatial mesh of postcode districts. It identifies the major cluster s using a development of the methodology to define local labour market area s. The paper demonstrates the high degree of localization and uneven develo pment of businesses in Britain. It also shows that business service firms a re even more highly localized and clustered than other businesses. Moreover , the larger the business centre, the more localized and clustered the firm s. The pattern suggests Bat there is a strong influence of increasing retur ns of scale, and that, as well as local clusters, much of the British econo my is covered by one metacluster. Implications from these results are drawn for the likely future development of the economy, the location of business service suppliers in order to develop their market coverage, and local eco nomic development policy.