Many economic activities, especially research and development, still rely on face-to-face communication and the geographical linkages among industries are beneficial to technology sharing and in decreasing unnecessary expenditures. It is observable that the salient role of
research and development in today’s knowledge economy heavily relies on geographical linkages, the localization of learning networks, and face-to-face communication. Hence, these predicaments make the clustering of high-tech industries plausible and are in fact popularly practiced all over the world. Specifically, this research discusses the effects of the clustering in the technology industry and its innovative variants in Taiwan. It is hypothesized that variants in Taiwan’s technology industry and innovation are interfacing with each other instead of working independently. The relationship between the clustering of Taiwan’s
technology industry and innovation is investigated through 3SLS. The results show that clustering of the technology industry and innovative production are positively correlated. That is to say, clustering of the technology industry is beneficial to the industry itself and moreover
is also beneficial to the development of innovative practices in the industry. As a result,clustering in Taiwan’s technology industry is observably speeding up.