The SIC system is based on a four-digit industry coding system and groups industries by sectors such as Wholesale Trade, Services, and Manufacturing. Today, new driving industries like biotechnology, software, environmental technology, and communications do not fit into classic SIC sector definitions of the Manufacturing or Service sectors. The use of clusters as a descriptive tool for regional economic relationships provides a richer and more meaningful representation of local industry drivers and regional dynamics than the one provided by the traditional Standard Industrial Classification system. Firms within a cluster exhibit strong inter-relationships. The flow of goods and services between geographically concentrated industries in a cluster is stronger than the flow linking them to the rest of the economy.
Clustering facilitates collaboration to overcome shared problems and obstacles.
This can be done directly by the formation of industry associations, or indirectly through regional legislation. Even though some firms may be competing, certain collaborations, such as providing industry-relevant training, are still beneficial. Common goals and geographic concentration leads to the development of specialized skills, institutions, and alliances within the cluster agglomeration.