Assessing the Industry Cluster Approach to Economic Development: Identifying Challenges to Growing Puerto Rico’s Digital Economy

As many regions in the United States are thriving in the information age, experts in Puerto Rico are left wondering how to get the island up to speed with its mainland counterparts. In the 1990’s, high-tech output has grown four times faster than the economy as a whole1. In the U.S., information technology industries now comprise 8.2 percent of GDP – up from 4.9 percent in 1985 – and are expected to account for approximately 15 percent of GDP in 2020 2 . Although high-tech development overwhelmingly occurs in America’s metropolitan areas, cities in Puerto Rico have barely contributed to this growth. The top 114 metro areas in the U.S. contain 67 percent of jobs, yet they account for 81 percent of all high-tech development3.

This dense concentration of activity is an indication of industry clustering, the dominant trend in high-tech industry growth. Most industry clusters have emerged on their own, even though a growing number of regions are now enacting economic development policies designed to foster industry cluster formation and expansion. Some have advised that this is the best approach for Puerto Rico to take in order to spur community renewal and revitalization. However, as policy makers in Puerto Rico commit to this strategy they must fully assess the benefits and drawbacks of industry clusters, identify the implementation challenges for Puerto Rico, and work towards decreasing the obstacles for the success of the approach.

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