Cluster Development Theory

Cluster Development Theory suggests that regions thrive when companies, research institutions, and related organizations are geographically close, creating a "cluster." This proximity promotes collaboration, innovation, and competitiveness by enabling easy knowledge sharing, specialized labor pools, and supply chain efficiencies. Essentially, when similar or complementary businesses and institutions co-locate, they stimulate each other’s growth, leading to economic development and innovation within that area. The theory emphasizes the importance of fostering these interconnected ecosystems to boost regional prosperity and technological advancement.