This paper studies how firm performance is influenced by the strength of the industrial cluster (or industrial district) in which it is located. The paper presents estimates of firm-level employment and patent growth models for a range of '5-digit' aerospace industries in the UK. In these models, employment in the firm's own sector and employment in other sectors is taken as a measure of the strength of the cluster. Strong positive clustering effects are found in many sectors, but nevertheless some clustering effects are negative. Entry into clusters of this industry is also examined and some sectors are found to attract new entry while others are only attracted.
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