Simulating the Evolution of Localised Industrial Clusters - an Identification of the Basic Mechanisms

Localised industrial clusters have received much attention in economic research in the last decade. They are seen as one of the reasons for the economic success of certain regions in comparison to others. This paper studies the evolution of such industrial clusters. To this end, a spatial structure of regions is set up and the entry, exit, and growth of firms within these regions is modelled and studied with the help of simulations. Several mechanisms that are often stated to be important in the context of localised industrial clusters are explicitly modelled. The influence of these mechanisms on the geographical concentration of industries is studied.