Should Regional Policies Try To Promote Clustering?

It is currently very fashionable in regional policy to support clusters of activities as a way of promoting growth and innovation. Typically this is done through programs aimed at encouraging cooperation between governmental authorities, private industry, and universities. Joakim Stymne, chief economist of Kaupthing Bank and chair of the Timbro think-tank argues that "it is the rivalry and competition between [firms] that creates dynamic clusters," not state supported collaboration between companies. It is crucial to keep the role of policy incentives in a proper perspective.