Clusters, economic performance, and social cohesion: a system dynamics approach

Abstract

Cluster policies pervade all regions of the world to promote employment growth, innovation and entrepreneurship. Yet, research mostly focuses on cluster economic performance, but less on regional social cohesion, which is important when economic growth coexists with deprivation, poverty and inequality. The paper’s aim is to understand both the economic and the social dynamics of clusters by developing a theoretical model based on system dynamics. It shows that clusters with positive economic performance do not necessarily lead to regional social cohesion. Multiple positive economic-related feedback processes can be mitigated by negative social-related feedback processes. Implications for academics and policy-makers are proposed.