I think you are spot on about the importance of clusters but my opinion is that it is local government rather than pan-European level interaction that can help. A good example is Innovation Warehouse in London (www.theiw.org) which benefits from an attractive rent deal from the Corporation of London to provide start-up incubator space. The Corporation also sponsors an Angel investor group. It is a buzzing place!

I do not think there needs to be an equivalent of Silicon Valley in Europe, much though the press like to keep announcing one or other city as Europe's Silicon Valley (London and Stockholm have been cited recently). Language and business practises mean one location cannot solve provide all the answers. Even in the US, tech is spread around with clusters around Austin, Boston, Seattle, and so forth.

Excellent Point Laja - It just happened over the past 150 years. Southern Germany with Mercedes, Audi, BMW, Porsche is globally understood as an Auto Cluster, Bordeaux and Chianti as Wine clusters, Paris for Fasion, London for Finance and so forth. I'm from Slicon Valley and just live and breath startup in Berlin right now - it is an enormous energy in this city.

Supporting this idea of clusters is a strategic initiative for many reasons. Here are some based on a study about Silicon Valley:
- Education system gravitates towards the cluster and improves faster than any other which in turn fuels that cluster again.
- Idea exchange is so much faster and barrier about IP protection is coming down very rapidly.
- The local around the cluster becomes used to be a test bed for new products which provides faster feedback amd again fuels product improvement even before the first production unit hits the market

The list is long but the essence is that the EU should support that concept and tier down those old mental country borders. Just imagine if the EU supports two or three clusters per industry segment to fuel a tiny bit of competition but otherwise enable high concentration of knowledge and experience :)

Axel
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Synergy and economies of scale!
Clusters are indeed a powerful tool and a critical link in the value chain of a healthy innovation ecosystem.

Industrially-led clusters are an efficient way for promoting innovation, supporting start-ups and helping entrepreneurs! Synergies are built between members in the same technology domain, economies of scale are created through infrastructure sharing and most importantly: new ideas are discussed even over lunch time!

A great example of a successful cluster? The Greek CORALLIA Cluster - our home! Check it out: www.corallia.org

There are a lot of clusters (e.g. open innovation campusses) in the Netherlands concerning advanced materials, automotive, chemistry and so on.

I know that regional development agencies are often a supporter in these, because it generates regional jobs etc. The EC can help by providing help to partaking organizations with best practices, help in expanding investments in the clusters and so on.

Difficult subject. Cluster is a nice word, but to define the perimeter of a cluster is not easy. A geographical reference can be useful for the vineyards, but for innovative districts geographical location does not make sense. If Europe wants to become a knowledge society, we must draw logical perimeters, based on indicators (very difficult to define). Must be identified organizations with innovative capabilities and rewarded through tax cuts (of significant value, not just formal) with an ex-post analysis of the results obtained, regardless of their geographical location, of their legal form, their mission.
This would lead to a map of innovative organizations, updated annually, which would provide a benchmark for other European organizations. Once defined and established this map (ie once validated indicators and criteria for inclusion) you can think of specific funds - intended only to organizations included in this map for at least 24 months - to be used to guide the lines of development and research according to EU policies.
This action requires a certain courage, as well evidenced by the proposed document (page 14), we have a few indicators, we can see the effects on employment, but we can not clearly identify the strategic organization for the production and maintenance of the cluster, ie those that attract big business and justify the establishment of production sites across Europe, rather than relocate.

Empower customers instead of merely talking about it. Clusters are not driven from the supply-side because they want to drive innovation, but demand-side through choice so innovation must occur to remain competitive.

In Europe the demand-side is dis-empowered by hampering standards, bad security making citiznes transparant, bureaucratic control-centric government and regulation with the either enforce dis-empowerment or talk abouit principles with lots of words but no enforcement.

Europe COULD be strong because we are still focussing on the right market principles - consumers instead of laisez-faire. This has become much more important in the digital age, were kartel structures can be enforced through technology.

Kartels dont innnovation - they have reduced competition and LESS innovation as their primary objective. When you standardise the technology as in dictating the solution, competition can only occur on price, but nobody can restructure the industry.

Very important issue. Among the problems in Europe is duplication of efforts spread out over to many locations without focus. The Smart specialization initiative tries to address this...http://s3platform.jrc.ec.europa.eu/home

I do agree with Carsten's point about the value of face-to-face contact. Our cluster in Sheffield, UK has not only a geographical perimeter but also an age perimeter: for ages 14-19.
It’s called the Young Entrepreneurs Club (http://www.facebook.com/BiGYEC) and mostly relies on peer learning. By providing regular sessions after school with one or two guest speakers and plenty of time to chat, eat and drink, we create a setting where young people feel comfortable about sharing their successes and failures and where they can help each other. The striking thing about this age group is how open they are to new ideas and advice and how ready they are to help others, rather than see them as competitors.
And what they don’t know about using the internet and social media to promote their business is scarcely worth knowing!

I like the ecosystem metaphor, but am less persuaded of the utility of 'designed' ecosystems as instruments of industrial policy. I want to note 3 points: i) evolution; ii) complexity; iii) the importance of failure; and iv) clustering from the theoretical standpoint. Sorry if this is a bit techy - just wanted to jump in with both feet to see whether this is the right place for such ideas.

The creation of a local (not necessarily geographic) filière seems like an evolutionary process; an interplay of variation (creativity, accidents), selection (evaluation, market testing) and heredity (imperfect imitation, continuity). For instance, the evolution of conventions seems useful to explain the emergence and persistence of business and service models; Europe's not been very good at innovation in either sense.

The commercial and innovation ecosystem is complex - thus it displays emergence, self-organisation, synch, etc. In particular, it may show self-organised criticality, functioning best on the boundary of disruptive change (e.g. the robust-yet-fragile status of competitive markets (with 0 profit) and rainforest ecosystems where slim margins are overcome by dense webs of dependency. Policy may need to resist the urge to protect and preserve, and may need to pay more attention to the structure and dynamics of partnerships and other interactions than the fate of individual firms, technologies, services and business models.

This applies particularly to failure. Any sensible system of risk-taking must have failure; otherwise it simply competes for low-hanging fruit. In a big world full of risk-averse countries and sectors, this is a starvation diet. SMEs in particular, must be allowed to fail - if the best innovations and human capital survive in the ecosystem, that is collective success.

In this context, clustering needs careful attention; 'small worlds' (which combine high clustering with short path lengths throughout the system) have particular properties, but local 'stars' (or core-periphery systems dominated by big 'hubs') may have short paths, but cannot be considered clusters (peripheral firms are only sparsely connected except through the dominant 'hub').

One final point; access to finance is critical, but the conditions under which it is provided and the risks coming from increasingly automated and ultra high-speed financial networks must be measured and efficiently allocated in a flexible way. Europe is a long way from this - so is the world as a whole.

Now a comment hopefully 'on point' - especially for clusters, it is useful to have a clear and common understanding of competitiveness. The EU has discussed this at length; the recently-completed FI3P project analyses competitiveness barriers associated to the Future Internet (and recent actions to strengthen it). Economies of scope may dominate economies of scale, and dynamic clusters that form and reform in response to rapidly evolving opportunities may outperform institutionalised clusters built on (be definition) slow-moving industrial policies - especially those that try to pick winners or subsidise regions rather than those that seek actively to promote competition.