The aims of this study are to: (i) explore the factors contributing to the successful formation of industrial clusters and the overall effects of industrial clustering on productivity; (ii) gain an understanding of the organization and networking of industrial clusters; (iii) examine the flow of human resources between clusters in Chinese Taipei, the US and China, focusing on the drivers of the ‘brain circulation’, along with its contribution to technological innovation; and (iv) highlight the interrelationships that exist between industrial clustering and innovation.
In part (i), drawing on the empirical evidence from the Hsinchu Science-based Industrial Park (HSIP), we find that outsourcing is generally adopted by firms within the clusters since this enables them to access the major markets and to save on R&D costs through production specialization. The experiences of HSIP also support the assertion that entrepreneurship, skilled labor and market access are essential ingredients for the formation of a cluster. In order to determine whether common mechanisms exist to bring together these three ingredients and produce a winning formula, we have attempted to compare the experiences of HSIP to those of Silicon Valley in the US, as well as the experiences of the industrial clusters in Penang and the Kelang Valley in Malaysia, Hamamatsu in Japan, and Shanghai in China. Our studies have also shown that industrial clustering improves the productivity of individual firms, in part (i). We have been able to gather evidence with statistical robustness to support the role played by Porter externality and Marshall-Romer in industrial clusters. Although these two externalities differ in nature, they can exist simultaneously in a cluster. If firms in a cluster are more productive than those outside the cluster, it naturally follows that firms that locate too distant from the cluster will be driven out of the industry by competition. This, of course, is the main driving forc