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Industrial innovation: Direct evidence from a cluster-oriented policy

Research output: Contribution to journalArticle

  • Oliver Falck
  • Stephan Heblich
  • Stefan Kipar
Original languageEnglish
Pages (from-to)574-582
Number of pages9
JournalRegional Science and Urban Economics
Issue number6
DatePublished - Nov 2010


Can local industrial policies increase local firm competitiveness? Cluster-oriented policies targeted at selected industries have just such a goal and are very popular among politicians, despite the controversy surrounding these policies in academia. Thus, it would appear useful to discover if cluster-oriented policies are effective. This paper evaluates the cluster-oriented policy introduced in Bavaria, Germany, in 1999. The policy's goal was to foster innovation and regional competitiveness by stimulating cooperation. Using difference-in-difference-in-differences estimates, we find for different innovation measures that the cluster-oriented policy increased the likelihood of becoming an innovator in the target industries by 4.6 to 5.7 percentage points. At the same time, R&D expenditures decreased by 19.4% on average for firms in target industries, while access to external know-how, cooperation with public scientific institutes, and the availability of suitable R&D personnel increased. (C) 2010 Elsevier B.V. All rights reserved.

    Research areas

  • Difference-in-differences, Difference-in-difference-in-differences, Cluster policy, Industrial policy, SPECIALIZATION, SPILLOVERS, GEOGRAPHY, CITIES, LABOR


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