In line with the new trend of the global economy, building innovative local clusters has become one of the core strategies to enhance economic development not only in the developed but also in the developing nations. Particularly the role and potential of localized innovation processes within clusters have been attracting considerable interests among scholars and policy makers alike. It is argued that the intensity and quality of competition is enhanced by the proximity of competitors in clusters. The paper argues how (...) to identify the tasks and strategies necessary in order to build locally embedded innovative clusters. (shrink)