1 Convergence, Clusters and Economic Performance∗

This paper evaluates the role of regional cluster composition in the economic performance of regional industries, clusters and regions. Except in narrow circumstances, the traditional distinction between industry specialization and regional diversity is misplaced, failing to capture the linkages among related industries or the importance of spillovers from proximate regions. Building on Porter’s (1990, 2001) concept of clusters, we offer a systematic evaluation of the relationship between regional cluster composition and the employment and patent growth of regional economic areas, clusters and industries. Our approach allows us to separately disentangle the impact of convergence from agglomeration. The cluster framework suggests three key spillovers influencing economic performance: within cluster, across linked clusters, and across common clusters in neighboring regions. Using newly available data from the US Cluster Mapping Project, the empirical analysis exploits a rich panel dataset at the industry-cluster-region level between 1990 and 2003. We specify growth models that simultaneously accommodate convergence and agglomeration effects. The convergence effects will dominate at the narrowest level (e.g., industry level), and the agglomeration forces are tested above that level of analysi