Microeconomics of Competitiveness:
Firms, Clusters, and Economic Development
Industries tend to cluster in distinct geographic districts,
with individual cities specializing in production of narrowly related set
of goods. — Alfred Marshall (1842-1924)
Local and regional economies are the building blocks of a region's and the nation's
competitiveness. While sound macroeconomic policies, stable legal and political
systems, and factors of production affect the potential for competitiveness, wealth
is actually created at the microeconomic (local and regional) level.
The health of a region depends on its ability to produce high-value goods and
support high-wage jobs. Such activities are typically concentrated in clusters within
regions. According to Michael Porter of the Harvard Business School, clusters are
geographic concentrations of interconnected companies, specialized suppliers, service
providers, and associated institutions in a particular field that are present in
a region. The strategies of firms, the vitality of industry clusters,
and quality of the business environment in which competition takes place are what
ultimately determine a nation's or a region's competitiveness and prosperity.
Clusters arise because they increase the productivity with which companies can
compete. The development and upgrading of clusters is an important agenda item for
governments, companies, universities, and other institutions.
The Robert H. Smith School of Business will be offering a graduate course on
Microeconomics of Competitiveness, based on the course platform
developed by Professor Michael Porter and his colleagues at Harvard Business School