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Economic Development Through Entrepreneurship

Government, University and Business Linkages

Edited by Scott Shane

Despite a wealth of efforts that examine separately the role entrepreneurs and universities play in economic development, no systematic effort has been made to examine the role universities play in promoting economic development through entrepreneurship. This book fills that gap, focusing on policy aspects of government–university partnerships with a discussion both of best practices and problematic strategies. The book begins by tracing the history of American government–university–industry partnerships that have promoted economic development. In succeeding chapters, well-known scholars focus on linkages in different domains such as: technology transfer, innovation networks, brain drain, cluster-based planning, and manufacturing. Practitioner commentaries follow many of the chapters in order to present an evaluation of the arguments from the perspective of someone directly involved in the fostering of these relationships.
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Chapter 7: Smart Places for Smart People: Cluster-based Planning in the 21st Century Knowledge Economy

Michael Luger and Hunter Morrison


7. Smart places for smart people: cluster-based planning in the 21st-century knowledge economy Michael Luger INTRODUCTION Cluster-based planning for economic development has swept across the USA, Europe and Asia during the past decade. The literature that undergirds the practice goes back over a century, to Alfred Marshall. In short, clusters represent a critical mass of businesses related to each other in different ways. Those relationships create various positive externalities for the members of the cluster, and a basis for policy formation at the local level. Clearly Marshall’s economy in the late nineteenth century was different in fundamental ways from today’s economy. His was increasingly dominated by labor-intensive manufacturing businesses and, consequently, he called his clusters ‘industrial districts’. He, and a host of successors stretching to the present, have described the importance of business colocation, or ‘agglomeration’ (Weber, 1929), in terms of what economists now call urbanization and localization economies (Hoover, 1937), increased market power through brokered buying and selling, availability of specialized repair facilities, shared information, reduced risk and uncertainty for entrepreneurs, and tailored infrastructure (Isard, 1956; Lichtenberg, 1960; Vernon, 1960; Carlino, 1978, 1979). Even the earliest theorists recognized the difference between static and dynamic external economies from colocation, where the former arise as a result of reduced costs because of better proximity to suppliers or markets, and the latter are associated with learning, innovation and increased specialization (Bergman and Feser, 1999, p. 8). Bellandi (1989) pointed out that industrial districts are important, not just because of their shared labor...

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