This refers to a group of related successful industries in a specific geographical location. An example of a cluster is the many computing and software firms centered in Silicon Valley.

This is Porter’s collective term for the main determinants of competitive success in a nation. The strength of the diamond, and the connections within it, determine the likelihood of firm success in an industry.

This term refers to the effects (that is, the costs or benefits) of an agent’s action beyond those that accrue to the agent themselves. For example, a firm polluting a local river in the process of production is a negative externality.