Cluster Firms' Relocation: A Literature Review and Reflection on Regional Governments' Policy of 'Releasing the Cage for New Birds

Abstract

The phenomenon of cluster firms' relocation has garnered significant attention in the literature, particularly in the context of regional economic development strategies. This literature review synthesizes existing research on the motivations, drivers, and consequences of cluster firms' relocation, shedding light on the complex dynamics that influence firms' decisions to move within or across regions. By examining studies from various disciplines such as economics, geography, and urban planning, this paper identifies key factors contributing to firms' relocation decisions, including cost considerations, access to resources, market opportunities, and regulatory environments. Moreover, this review critically evaluates the implications of cluster firms' relocation for regional economies, exploring its impacts on employment, innovation ecosystems, and industrial agglomeration dynamics. Drawing on the concept of "releasing the cage for new birds," a policy approach advocated by some regional governments to facilitate the entry of new firms and industries, this paper reflects on the effectiveness of such policies in mitigating the negative consequences of cluster firms' relocation while fostering the emergence of new economic activities and clusters. By synthesizing empirical findings and theoretical insights, this review contributes to a deeper understanding of the complex interplay between firm mobility, regional policies, and economic development strategies, offering implications for policymakers, practitioners, and scholars interested in fostering sustainable regional growth and resilience.