What is the difference between a sector and a cluster?

A sector refers to a broad category of the economy that encompasses various industries sharing similar characteristics, such as agriculture, manufacturing, or services. In contrast, a cluster is a more specific grouping of interconnected businesses, suppliers, and associated institutions within a particular sector that are geographically concentrated. Clusters often foster innovation and competitiveness by facilitating collaboration and resource sharing among companies. While sectors provide a macro view of economic activity, clusters focus on localized networks that drive economic performance.