Is Distance Dead? High-Tech Clusters Analysis And Policy Perspectives

Clusters are found in a wide variety of traditional industries, and both the agglomeration and location of fi rms in the manufacturing sector are frequently studied by students of industrial policy. Among the industries of the so-called ‘new economy’, however, there seems to be a paradox. On the one hand, high-technology fi rms are knowledge-based; therefore transportation costs have been drastically reduced, and commercial transactions are often not physical, but consist of intangible and intellectual outputs and factors. On the other hand, clusters and spatial proximity still have crucial importance for fi rms in this new generation of industries. The popular perception that decreasing communication costs may reduce the importance of agglomeration is based on the idea that improving communication capabilities allows the decentralisation of many productive activities and may lead to the decline of clustering processes (The Economist, 1995; Bairstow, 2001). There are a number of factors that must be considered in order to explain the inconsistency between this perspective and reality. These considerations include the nature of the innovative process, the importance of tacit knowledge, the extremely high level of risk, the relevance of a highly specialised and skilled labour force, and the peculiar industrial structure that characterises the ‘new economy’ sectors. This chapter refers to different relevant literatures, offering, in its fi nal remarks, a selection of what we believe are the main policy issues.