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During the 1990s, most European countries have increased their interest in the direction of industrial districts, clusters and local production systems as an integral part of their industrial policy. At the same time, there have been significant changes in the consideration of industrial policy in Europe. The aim of this paper is to analyze two basic approaches in the development of cluster initiatives in the formation of cluster policy.

This paper analyzes two basic approaches in the development of cluster initiatives in the formation of cluster policy: top‐down and bottom‐up approach. The analysis also points to the diversity of national approaches in terms of policy clusters, but in the same time at some common trends.

The development of cluster policy is still at an early stage in most countries. There are also significant differences among the countries of Eastern and Western Europe. Among those countries that have adopted the policy of the cluster after 2000, are mostly small countries in terms of population and/or geographical size of countries in Eastern Europe.

Policies that encourage cluster formation have to be developed, particularly in developing countries and countries in transition that are seeking their place in the international market.