On Relationship between Industrial Clusters and Regional Economic Development

Geographical concentration of industrial clusters is a common spatial economic phenomenon, which results from the followings: division and cooperation, local labor market, the mechanism of learning-by-doing and innovation. As a result, increasing in labor productivity inside cluster is endogenous and shown up by the characteristics of increasing returns to scale. As for regional economy,because of the intra-industrial and inter-industrial relationship, increasing returns to scale has been shown up not only in enterprises level but also in industry level. Furthermore, the feature of increasing returns also has been shown up in regional macro-economic level. Regional multiplier and input-output analysis may be used to evaluate the regional economic effect. Formation and development of industrial clusters rely on market mechanism as well as the regulation of the government, which is a so-called 'visible hand'. Reasonable and effective regional policies may promote harmonious interaction between industrial clusters and regional economy so as to enforce the competitiveness of industries and regional economy.