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Beyondsupporting individual technology firm startups, states are increasingly lookingto support interrelated "clusters" of firms that reinforce innovationin a region around specialized industries, much as the car industry grew up inDetroit, the film industry in Los Angeles, finance in New York City, and as aparadigm of the high-tech economy, Silicon Valley became a source ofongoing computer-related innovation.

Statescan play a critical role in promoting such clusters beyond supportinguniversity research and funding new startups by identifying key local assets,facilitating relationships among firms, deepening the talent pool, andencouraging investments that reinforce those cluster needs—a pointemphasized by the National Governors Association in a recent report, Cluster-BasedStrategies for Growing State Economies.

Recentexamples include “life sciencesclusters”, such as Massachusetts Gov. Deval Patrick’s ten-year $1billion MassachusettsLife Sciences Initiative and  newhubs of "clean tech" alternative fuel clusters in Silicon Valley.

Statesneed to avoid the danger of quickly endorsing the latest technology fad and handingout tax credits without real returns or accountability provisions, rather thancarefully assessing their own local strengths and supporting the specializedindustries that can give their regional businesses a unique advantage in theglobal economy.

Resources:

NationalGovernors Association - Cluster-BasedStrategies for Growing State Economies