Clusters and regional development: Some cautionary observations from the semiconductor industry

In this paper, we investigate the transactions-costs assumptions which are embedded in different understandings of industrial clustering. By carefully examining these assumptions we then proceed to investigate the extent to which industrial structure is related to questions of innovation. In order to do this we examine the case of the global semiconductor industry. After describing in detail the structure of the industry, we then employ a Geographical Information System in order to map the locations of the various plants and establishments which are part of three major multinational semiconductor producers. These unique mappings allow us to challenge some widely held views concerning the nature of the relationship between industrial structures, firm types and regional development.