Public Policy and Cluster Development

The mechanisms and benefits of regional clusters have been investigated intensively and are beyond controversy. However, one open issue remains: the role of governmental policy in fostering universities as a key agent in... [ view full abstract ]

The mechanisms and benefits of regional clusters have been investigated intensively and are beyond controversy. However, one open issue remains: the role of governmental policy in fostering universities as a key agent in regional clusters. The aim of this paper is to address those issues by investigating German excellence clusters – established as part of the High-Tech Strategy 2020 initiated by the German federal government in accordance with EU’s “Horizon 2020 Framework Programme for Research and Innovation” – and corresponding regions. Since 2007, the German government, as well as, participating firms allocated funds worth 1.2 billion Euros in order to drive innovation within various industries. Hence, all of the selected 15 leading-edge clusters are meant to contribute to the sustainable development of Germany as an innovation and business location. This study evaluates the economic impact of German cluster initiatives on corresponding regions. Since these clusters, and thus the involved universities, received and receive outstanding public and private funds, they should also induce an outstanding economic performance in the particular region. The preliminary results show that cluster regions overperform, but that this performance can not only be explained by the impact of the governmental policy.