| On the world economic map, many successful regions have relied on clusters for their competitive advantage. Industrial clusters have attracted great attention for their competitive advantages obtained through concerted efforts, and have become an important economic model for corporate and regional development. In regional economic development, huge success has been observed in both high-tech industrial cluster and traditional industrial cluster.Industrial clusters have advantages in cost, market, and creativity; in addition, industrial clusters themselves are endowed with the advantage of magnitude, which will develop into regional industrial competitiveness. The strong competitiveness that industrial clusters have brought forth has fascinated many nations and regions. The public policy shapers, whether they are in the developed or developing countries, or in the center or in the periphery, have implemented industrial cluster strategies with the intention of reaping the benefit of their significant competitiveness. The development of industrial cluster has therefore become a new vehicle of public policy formulation. The advantage that is found in industrial clusters reveals the importance of the role of public policy in industrial cluster strategy; it is also the key element in public policy formulation.Industrial clusters are known for their geographical concentration, stability, elasticity, professionalism, as well as the inter-related supporting institutions, local network and creativity. Industrial clusters are established in the bottom-up and top-down processes in which they are affected by natural resources, transportation cost, economy of scale, externalities, as well as the support from related industries, foreign direct investment, entrepreneurship, institution and government policies.The formation of industrial clusters is basically a bottom-up process catalyzed and guided by the market. Cultivating and developing industrial clusters is a long process (all successful industrial clusters have taken shape after a decade or decades of development); seeking to establish an industrial cluster overnight to effectively promote local economic development is unrealistic, and thus should be avoided. "Patience" is in a sense the necessary condition for local governments who intend to develop their economy by exploiting the advantages of industrial clusters.Following the above analysis and reasoning, this dissertation undertakes to make research into the effect of public policies on industrial clusters. It focuses on both domestic and global industrial clusters, while both empirical and normal research approaches are employed on the basis of the industrial cluster theory, FDI theory and public policy theory.The following original points are worth noting:1. It gives a full account and a comprehensive and detailed analysis of the effect of public policies on industrial clusters. A very useful theoretical framework is constructed for the research of the impact of public policies on industrial clusters.2. It makes clear that the role of public policies lies in the creation of favorable environment, rather than the creation of industrial clusters themselves. Public policies need to emphasize the nurturing of the flourishing industrial cluster.3. It argues that the growth of industrial clusters is affected by level of production, elasticity in income, inter-connectedness of enterprises, as well as natural resources and FDI. which should together constitute the basis for making public policies relating to industrial clusters.4. It contends that public policies affecting industrial clusters should not ignoreexternalities, and the resulted incremental gains and sustained increase of production rate. In other words, agencies, when making public policies, need to take into consideration externalities of industrial development, rather than focusing on the development and the level of production of the industries only. For example, researches in universities have spill-over effect, which means that bot...
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