2/10/2013: Clusters Resilience in Downturns

Interesting research paper from CEPR on the resilience of firms clusters to the downturns. The DP 9667 "Are clusters more resilient in crises? Evidence from French exporters in 2008-2009" by Philippe Martin, Thierry Mayer, and Florian Mayneris (September 2013) looks at two types of clusters: traditional clusters and incentivised clusters.

Per abstract [emphasis mine]:

• "Clusters have already been extensively shown to favor firm-level economic performance (productivity, exports, innovation etc.)."
• "However, little is known about the capacity of firms in clusters to resist economic shocks."
• "In this paper, we analyze whether firms that agglomerate in clusters and firms that have been selected to benefit from the "competitiveness cluster'' industrial policy, implemented in France in 2005, have performed better on export markets during the recent economic turmoil."
• "We show that, on average, both agglomeration and the cluster policy are associated with a higher survival probability of firms on export markets, and conditioning on survival, a higher growth rate of their exports."
• "However, these effects are not stronger during the 2008-2009 crisis; if anything, the opposite is true."
• "We then show that this weaker resilience of competitiveness cluster firms is probably due to the fact that firms in clusters are more dependent on the fate of the "leader", i.e. the largest exporter in the cluster."

Note: couple of things to note as a potential lesson to be learned:

1. Make clusters more horizontal, rather than vertical, to reduce excessive dependency on one 'leader' firm.
2. The above is probably even more critical of a consideration for clusters involving partnering of smaller firms with larger MNCs.