An economic cluster is a dense network of companies and institutions in a certain geographic sphere. The cluster is composed of production companies, raw materials suppliers, services providers, companies in related fields, and public institutions (such as research, training and standardization institutions). The cluster contains three types of connections: (1)Vertical – a connection between provider and manufacturer along the production line; (2) Horizontal – a connection between manufacturers of complementary products; (3) Institutional connection – a connection between companies and public institutions.
Socioeconomic leapfrogging in Israeli residents' quality of life requires a leapfrogging of the country's regions. In order to advance quality of life within a region, it must develop abilities to compete in the global sphere. Doing so necessitates establishing an association of several organizations – such as local municipalities, private sector, and civil society organizations – within a specific region. This association requires basic national inputs, such as investment in infrastructure; but also depends on identifying the region's unique assets and mobilizing of economic activity around them. An economic cluster that is based on the region's unique assets is an appropriate structure through which to promote regional leapfrogging.
An economic cluster is a dense network of companies and institutions in a certain geographic sphere.