Clusters enhance the economic performance of the enterprises within them. In Italy it has been shown that being located in a cluster increases the profitability of firms on average by between 2 and 4 per cent. This is because clusters create agglomeration economies. Firms clustered together in the same industry gain from specialised labour pools, business services and finance. And ideas and information flow more easily within clusters, stimulating innovation.
Clusters are also important socially, because they are places of co-operation and networking.
In clusters, firms often co-operate with each other, for example in selling and transporting output. They also co-operate with a wide range of other local players such as universities, trade associations, chambers of commerce and local public administrations. Together they can create a healthy competitive environment that benefits everyone. In an increasingly dynamic and open economy, clustering helps small firms compete on an equal footing with large firms. But there are also important challenges for clusters.