Cluster policies have become very popular among policy makers over the last thirty years. However, the mechanisms at work behind cluster dynamics, the gains that can be expected from more clustering, and the determinants of cluster policies that are implemented are not so clear. This book addresses these issues theoretically and empirically on the French case. Studying France is interesting because there is a long tradition of strong government intervention regarding the location of economic activity and because French cluster initiatives are more or less unified across the country. From a the ... More

Cluster policies have become very popular among policy makers over the last thirty years. However, the mechanisms at work behind cluster dynamics, the gains that can be expected from more clustering, and the determinants of cluster policies that are implemented are not so clear. This book addresses these issues theoretically and empirically on the French case. Studying France is interesting because there is a long tradition of strong government intervention regarding the location of economic activity and because French cluster initiatives are more or less unified across the country. From a theoretical point of view, spatial agglomeration brings gains until a certain point from which congestion effects can offset these gains, and under certain conditions, it is likely that firms tend to cluster too much. This raises questions about cluster policies that would aim at always increasing concentration. Moreover, cluster policies are very demanding in terms of information and are subject to many political economy issues. The empirical analysis on French firm‐level data confirms that, in the short run, firms reap gains from agglomeration until a given level of agglomeration from which congestion effects become more important. Given these agglomeration economies, the current geography in France does not seem vastly suboptimal. On the other hand, the analysis of the first cluster policy implemented in this country shows that traditional equity determinants of regional policies, instead of competitiveness considerations, were still in play. In that sense, while acknowledging the positive impact of spatial agglomeration on firm‐level performance, this book tends to tone down the worldwide enthusiasm for cluster policies.