Location, competition, and economic development: Local clusters in a global economy

Economic geography during an era of global competition involves a paradox. It is widely recognized that changes in technology and competition have dim inished many of the traditional roles of location. Yet clusters, or geograp hic concentrations of interconnected companies, are a striking feature of v irtually every national, regional, state, and even metropolitan economy, es pecially in more advanced nations. The prevalence of clusters reveals impor tant insights about the microeconomics of competition and the role of locat ion in competitive advantage. Even as old reasons for clustering have dimin ished in importance with globalization, new influences of clusters on compe tition have taken on growing importance in an increasingly complex, knowled ge-based, and dynamic economy. Clusters represent a new way of thinking abo ut national, state, and local economies, and they necessitate new roles for companies, government, and other institutions in enhancing competitiveness .