Today's economic map of the world is dominated by what are called clusters: geographically concentrated critical masses of unusual competitive success in particular fields. Clusters are not unique, however; they are highly typical. Therein lies a paradox: the enduring competitive advantages in a global economy lie increasingly in local elements - knowledge, relationships, motivation - that distant rivals cannot match. Untangling the paradox of location in a global economy reveals a number of 'key' insights about how companies continually create competitive advantage. What happens inside companies is important, but clusters reveal that the immediate business environment outside companies plays a vital role as well. The role of locations has been overlooked for a long time, despite striking evidence that innovation and competitive success are geographically concentrated in many fields.