Creating new industries and service clusters on Tyneside

Cluster policies have become an increasingly important component of the European Structural Funds, and are likely to become more so as cost pressures on these policies increase with European enlargement. However, the policy appeal of clusters is based on a range of factors, not merely their low cost. Moreover, benefits identified in a limited number of exemplar regions have been assumed to also hold for clusters in less well-performing regions. This short paper identifies the potential benefits which clusters can bring to a less favoured region beyond aspiring to the creation of a new ‘Silicon Valley’. The paper aims to tease out some of the important caveats of which local authorities seeking to promote cluster-based economic development need to be aware.