Homegrown solutions: Fostering cluster formation

The 1980s ushered in a new era in technology and economic development policy as a result of increasing competitive pressure. Start-up companies built around commercializing new technologies developed in public or private labs were seen as a means to reinvigorate economies and renew industrial competitiveness in high-technology fields. This article considers the perspective of the small innovative firm and the question of what small technology-intensive firms want from state economic development programs. Drawing on a review of the literature and a series of case studies of cluster development, this article presents a set of stylized facts and policy recommendations.