What is a Cluster Development?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 01 October 2019
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Also known as a cluster initiative, a cluster development is a strategy that seeks to promote economic growth by methodically structuring an urban area or region with a balance of different types of businesses and educational institutions. The idea behind this type of economic clustering is to create communities that feature the types of services that are likely to attract consumers to settle nearby and patronize those establishments. As a result, the local economy stabilizes in terms of not only the flow of money through the community, but also in terms of keeping unemployment low and the standard of living within the area relatively high.

The actual creation of a cluster development will depend on what type of restructuring needs to be done within a designated area. For example, if a city wishes to utilize this approach as a means of revitalizing a downtown area, the cluster may focus on creating housing by converting older warehouses into loft apartments, introducing new restaurants and pubs into the area, and possibly also offering incentives that bring new employment and educational opportunities to the downtown sector. As a result, the economic activity of the area increases as the lofts are purchased and locals begin to patronize the entertainment options that now exist. At the same time, the presence of more businesses means the opportunity to find work near home, essentially creating a balanced mix that allows the area to be active around the clock.


A cluster development approach can also be taken in suburban areas. Here, the combination may include the introduction of new businesses, schools, and entertainment facilities in or near an existing residential area. Doing so can help to anchor the area, improve property values, and provide residents with opportunities that were previously not available in the area. As a result, there is less need to travel in order to enjoy the same amenities, or even to find certain types of work.

One of the strengths of the cluster development is that it tends to promote a degree of self-sufficiency for communities. Sometimes thought of in terms of being a green initiative, economic clustering can help reduce the demand for fossil fuels within the area, especially if local residents are able to use public transportation or even walk to local facilities for shopping, entertainment, school, and work. For this reason, the idea of cluster development is gaining increasing attention, especially in cities and towns that want to not only improve the economy but also improve the circumstances of people living in the area while also being more environmentally responsible.


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