State economies have distinctive structures and governors must use their states' unique advantages. Clusters are geographically bounded concentrations of similar, related or complementary business, with active channels for business transactions, communications and dialogue, that share specialized infrastructure, labor markets and services, and that are faced with common opportunities and threats. States have several policy options to promote clusters:

• Organizing service delivery around clusters;
• Targeting investments to clusters;
• Strengthening networks and building bridges; and
• Developing cluster-specific workforce training programs.

Clustered firms derive "hard" benefits from efficient business transactions, wiser investments and reduced expenditures as well as "soft" benefits from learning, benchmarking, and sharing that expand knowledge and lead to innovation. They also benefit from a greater number of tailored services including bankers, accountants, consultants and marketing companies. Clusters improve networking connections, develop specialized workforces, and help firms compete together instead of against one another.

State economies are the sum of the regions they contain. The NGA Center provides governors with the tools for structuring economic development policies to foster the growth of their economies building on regional strengths. States focus on regional clusters, industrial sectors, occupational areas, or growth companies depending on circumstances.