Agglomeration offers both static, cost-based advantages and dynamic, innovation-related benefits to participating firms. These ideas have informed regional development policy from the growth poles/centres of the 1950/1960s to the contemporary focus on clusters. Although such policies imply the theoretical prospect of regional diversification by exploiting supply-chain and information-based/knowledge-based relationships, in practice they tend to promote regional specialisation. The experiences of many old industrial areas emphasise the risks of specialisation as advantages mutate into liabilities (territorial lock-in). These experiences are ignored in much of the clusters discourse which often lacks historical perspective. This paper provides such perspective by reflecting upon the relationships between the dynamics of industry evolution, agglomeration, and regional development policy with reference to the chemical industry on Teesside in North East England.
- COMPETITIVE ADVANTAGE
- SUNK COSTS