The terms sector and cluster are often used interchangeably, however, they have distinct meanings.
Both sector and cluster refer to groups of related industries or businesses. However, the key difference lies in the level of specificity. A sector is a broad category of the economy, while a cluster is a more narrow grouping of businesses that are geographically concentrated and interconnected.
For example, the healthcare sector encompasses a wide range of businesses that provide healthcare-related goods and services, such as hospitals, pharmaceutical companies, and medical device manufacturers. On the other hand, the biotech cluster in Cambridge consists of a network of companies, research institutions, and investors that focus specifically on biotechnology and life sciences.
And what about the terms industry and sector? These terms can be used interchangeably. However, the term industry tends to be used more narrowly and the term sector more broadly. For example, we tend to refer to the banking industry, that sits within the wider financial services sector.