Clusters and the New Growth Path for Europe

This paper outlines elements of a conceptual framework that clarifies the role that clusters play relative to government policies and actions of individual companies in supporting the emergence of "High Road" strategies that lead to better New Growth Path–related outcomes. It then focuses on creating a new set of data that can start shedding light on the empirical relevance of this framework. The first main section of the paper draws on a new set of employment and wage data across European clusters. The data is used to analyze whether cluster presence is significantly correlated with higher wages, which, as an indicator of higher productivity, are likely to signal the presence of "High Road" strategies. We then take a closer look at the scale of the relationship relative to location-specific and other effects. We find cluster presence to be significantly related to higher wages, with the effect being moderate but meaningful. This suggests that cluster presence enhances the ability of economic activities to deliver high performance but is unlikely to be able to substitute weak business environment conditions. The second section then deploys a wide range of regional performance data collected for the European Competitiveness Index and the European Cluster Observatory. We create indicators for New Growth Path performance and its main dimensions and classify European regions by their performance patterns. This provides critical insights into the compatibility of the different economic, social, and ecological objectives pursued. We then relate these outcomes to the presence of strong cluster portfolios and strong business environment conditions. Both are most strongly associated with stronger economic outcomes, with lower impact on other dimensions of the New Growth Path. The third section creates a new dataset of cluster initiative intensity at the regional and cluster category level. It also classifies close to 1,000 cluster initiatives in Europe by their engagement in New Growth Path–related activities. We then deploy this data to test the impact of cluster initiatives on regional New Growth Path performance. Overall, we find evidence consistent with clusters playing a role in making "High Road" strategies more likely to emerge. We also find evidence that European regions differ in their strategies towards these goals, with some being able to pursue all three dimensions in parallel. Cluster initiatives widely engage in New Growth Path–related activities, indicating their potential as a tool in mobilizing joint action in these areas.