"Today's economic map of the world is characterized by what [Michael] Porter calls
clusters: critical masses in one place of linked industries and institutions — from suppliers to universities to government agencies — that enjoy unusual competitive success in a particular field. The most famous examples are found in Silicon Valley and Hollywood, but
clusters dot the world's landscape. Porter explains how
clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation; and third, by stimulating the formation of new businesses within the
cluster. Geographic, cultural, and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance."
(Porter, M.,
Clusters and the New Economics of Competition,
Harvard Business Review, 1998, visited 2010-09-28)
"Porter discusses the geographic clustering of industries within nations.
He points to many examples where strong national industries are highly concentrated within their home nations (e.g., the U.S. motion-picture industry in and around Los Angeles, the German cutlery industry around Soligen and the Swiss chemical industry around Basel)."
(Barrows, D. and J. Cotsomitis, "International Trade and Investments", in Wesson, T., (ed.), Canada and the New World of Economic Order, 2007)