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Journal article
Does light touch cluster policy work? Evaluating the tech city programme
Max Nathan
October 2020
Paper No' :

JEL Classification: L53;L86;O31;R30;R50

Tags: clusters; economic development; synthetic controls; technology policy

Cluster policies are popular with policymakers, but we know surprisingly little about their effectiveness. This paper evaluates the causal impact of a flagship UK technology cluster programme that uses 'light touch', market-orientated interventions. I build a simple framework and identify effects using synthetic controls plus placebo tests to handle programme endogeneity concerns. I implement this design on rich workplace-level microdata from the Business Structure Database, alongside a range of other administrative sources. I explore mechanisms through further tests for timing, cross-space variation, scaling and churn. The policy grew and densified the cluster, but has much weaker, partial effects on tech firm performance. I also find most policy 'effects' began before rollout, raising questions about the programme's added value. More careful policy design could make future interventions more effective.