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Theory of a Flowchart Approach to Industrial Cluster Policy

Discussion Papers


by KUCHIKI Akifumi
September 2005


A flowchart approach to industrial cluster policy emphasizes the importance ofthe ordering of policy measures. The flow of policy implementation is to establish an industrial zone, to invite an anchor company, and to promote its related companies to invest in the industrial zone. This article delineated "a flowchart approach to industrial cluster policy" by proposing sufficient conditions for forming industrial clusters typical in the manufacturing industry in Asia to enhance regional economic growth. The typical industrial cluster policy was theorized by defining an industrial zone as "quasi-public goods", and it was shown that the policy enhances economic growth under a production function of "increasing returns to scale" of an anchor company. Critical amounts of the production of "scale economies" that are used by the related companies to decide whether or not to invest in clusters were also shown.

Keywords: flowchart approach, industrial cluster policy, sufficient conditions, regional economic growth, quasi-public goods, increasing returns to scale, scale economies.
JEL classification: O14, R12, R58.

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