Clustering as a specific form of industrial organisation is nothing new. In fact, over a century ago, in 1890, Marshall  in his treatise on concentration of specialised industries in particular localities  or, what he termed 'industrial districts’ had discussed about economics of agglomeration. Conventional studies on the subject in the neo-classical tradition focused on scale economies and linkages in physical production. Evidently such analyses were inadequate in capturing the complex nature of the evolving forms of industrial organization. The modern concept of industry clusters was popularized by M Porter in Competitive Advantages of Nations (1990). Porter developed what he called the “Diamond of Advantages” in which he identified four key determinants of industry competitiveness:  factor conditions, home demand conditions, related and supporting industries, and industry strategy, structure, and competitiveness.  Porter claimed that the competitiveness of a region is based on the competitiveness of the industries, which is enhanced if an industry is embedded in a deep network. Many have used this “diamond” as a framework for assessing the competitiveness of regional industries and identifying local industry clusters. 

Defining cluster

There is no single correct definition of an industry cluster.  The basic definition of an industry cluster is a geographical concentration of industries that gain performance advantages through co-location.  There are two basic types of industry clusters

• Vertically-integrated cluster: made up of industries that are linked through buyer-seller relationships. 
• Horizontally-integrated cluster: includes industries which might share a common market for the end products, use a common technology or labor force skills, or require similar natural resources.

Drivers of  Growth

• Competition among rival firms
• Agglomeration economies
• Labor force skills 
• Technology transfer
• Knowledge transfer
• Social Infrastructure

Later the CD approach became popular in many countries such as Italy, USA, France UK etc. Havard Business School has prepared more than 800 cluster profiles from 52 countries these profiles are available   at  
http://data.isc.hbs.edu/cp/index.jsp

Reference: UNIDO, Institute for Strategy and Competitiveness - Harvard Business School