Clusters Theory

Clusters Theory suggests that geographically concentrated groups of related businesses, suppliers, and institutions enhance economic performance. Being close together fosters collaboration, innovation, and knowledge sharing, which can lead to increased productivity and competitive advantages. This proximity allows for easier networking, quicker exchange of ideas, and access to specialized talent and resources. The theory explains why many industries and innovation hubs, like Silicon Valley or automotive regions, develop geographically focused clusters, as the concentration of related entities creates a dynamic environment that drives growth and technological advancement.