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Creative Clusters and UniversitiesTerry Flew

To be published in Daniel Araya and Michael Peters(eds.),

Education in the Creative Economy

, Peter LangPublishers, 2010 (forthcoming).The Cluster Concept in Economics and Geography

For much of its history, economics as a discipline has tended to work with a limitedunderstanding to the significance of space. Models of economic equilibrium have veryoften assumed that markets operate, as the geographer Doreen Massey put it, ‘like angelsdancing, on the head of a pin’ (Massey, 1984: 52). Where the question of where economicactivity takes place, the focus was commonly on the economic development of nations,most famously articulated by Adam Smith in

The Wealth of Nations

. The macroeconomicrevolution that followed the publication of John Maynard Keynes’

General Theory

in1936 was focused upon the flows of goods, services, people and money between nations,in line with the orientation towards the nation-state that came to characterize the socialsciences from the late 19

th

century onwards (Taylor, 1996).1

One of the few major economists to have given explicit attention to questions of whereeconomic activity takes place was Alfred Marshall. In his

Principles of Economics

, first published in 1890, Marshall addressed this question with particular reference to thechanging industrial geography of 19

th

century Britain. In the first instance, industrieslocate near those parts of the country where the physical raw materials are most available(such as steel mills near coal mines), but the patronage of wealthy individuals andgovernments could also attract skilled people to a city or region, as with artisans andtailors moving to be near particular courts. He observed that the concentration of a particular region on a single industry had advantages and disadvantages. The advantagesare that labor markets develop in such places and what we today term tacit knowledge isfostered by the clustering of a particular group of workers in a region. As Marshall put it:When an industry has chosen a locality for itself, it is likely to stay there long: sogreat are the advantages which people following the same skilled trade get fromnear neighborhood to one another. The mysteries of the trade become nomysteries; but are as it were in the air, and children learn many of themunconsciously. Good work is rightly appreciated, inventions and improvements inmachinery, in processes and the general organization of the business have their merits promptly discussed: if one man starts a new idea, it is taken up by othersand combined with suggestions of their own; and thus it becomes the source of new ideas. And presently subsidiary trades grow up in the neighborhood,supplying it with implements and materials, organizing its traffic, and in manyways conducing to the economy of its material (Marshall, 1990 [1890]: 225).2

The obvious disadvantage is that the economic fortunes of the region are very muchhostage to developments in that industry. Over time, cities tend to develop a more diverserange of activities, and improvements in transport and communication further this trend, because even though they make it easier to move goods from one place to another (thereby promoting regional specialization), they also make it easier for people to movefrom one place to another. What Marshall observed in 19

th

century Britain was not somuch the movement of the population from agriculture to manufacturing, as the use of large-scale machinery meant that growth in output was steadily less dependent uponadditional supplies of labor, but rather the growth of service occupations and industries,that cluster around growth centers. The rise of services, for Marshall, ‘tended to increasethe specialization and localization of industries’ (Marshall, 1990[1890]: 230), as they canmake a region less vulnerable to the cyclical fluctuations and the rise and fall of particular manufacturing industries.Marshall’ observations on regional specialization were not widely taken up byeconomists, partly because they opened up the thorny question of what happens toequilibrium economic models if we allow for falling costs and increasing returns to scale,which would make monopolies more prevalent and challenge assumptions that the pricemechanism operates primarily to ration scarce goods and services (Warsh, 2006). TheFrench economist Francois Perroux developed the concept of

growth poles

to assist policy-makers to understand how particular regions developed economic dynamism based upon industrial specialization, and Swedish economist Gunnar Myrdal developedthe concept of

cumulative causation

to explain why particular regions could experienceeon-going growth based upon the agglomeration of industries and skilled labour, which3

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