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and retina scan. South Carolina’s cluster initiative targets the auto industry and Utah is gaining ground in the software and information technology . Many governments around the world, if not funding their country’s clusters directly, offer all sorts of incentives, such as tax breaks, subsidies (money grant), and special policies to attract businesses into a region. The Chinese government has established Special Economic Zones (SEZs) within which cities are allowed to operate under liberal economic policies and flexible governmental measures in order to attract business. The Malaysian government encourages the growth of the palm oil industry with generous tax and investment incentives. The Small Business Administration (SBA) , an agency of the U.S. government, has invested in 56 regional clusters through its Clusters Initiative program. These include energy, manufacturing, agriculture and advanced defense technologies clusters. They seek to attract businesses to a cluster with initiatives that include special financing and collaborative business networks. The overall goal is to ensure America’s ability to compete globally . From Russia, to Bangalore, to Vietnam, governments around the globe are jumping on the cluster bandwagon. Cluster Benefits Studies have shown that there are plenty of benefits to companies located within an industry cluster: • increased innovation from competition within the cluster. • more effective collaboration through the exchange of ideas, knowledge, and expertise. • access to a specialized labor force as a result of the talent attracted to the cluster area. • assurance of a reliable supply chain from specialized suppliers attracted to the cluster. • specialized infrastructure , such as power substations, housing, and public transportation. • establishment of a network of connections with local universities and research labs . • positive relationships with local government and community leaders. • the possibility of tax benefits or economic incentives offered by local or state government. Cluster Boom Industry clusters have racked up impressive statistics proving that they do, in fact, increase productivity and the ability to compete globally:  Silicon Valley refers to the area in and around the San Francisco peninsula where the personal computer industry began. It is the global heart of the tech industry. Silicon Valley tech companies account for 30% of the area’s employment and have contributed more than $3 trillion to the worldwide economy.  Greater Boston’s Route 128 is referred to as America’s Technological Highway. For years, Route 128 competed with Silicon Valley for tech dominance. Route 128 companies have inspired a new and booming tech industry cluster in Cambridge, Massachusetts. SLIDE 8J PRODUCT PREVIEW

131 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY

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