3rd International Cluster Conference3rd International Cluster Conference
Clusters and Cluster Initiatives:Clusters and Cluster Initiatives:Recent Developments and Current Challenges
rafmozart@terra com [email protected]
Dr Christian H. M. Ketels
Institute for Strategy and Competitiveness, Harvard Business SchoolPresident, TCI Network
An Old Concept….
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…with a Stable Set of Core Building Blocks…
Related Variety Proximityy y
Critical Mass
Collaboration
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…in a New Economic Context
Rising Knowledge-Intensity
Falling Transportation/Communication Costs
Lower Trade Barriers
Agglomeration Dispersion
Globalization of production sitesAccelerated Technological Change
gg
g g
Globalization of markets
Clusters are becoming more Clusters are a critical facet
of modern economies
gspecialized
Clusters are becoming more
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Clusters are becoming more connected
Research About Clusters
Case Studies Cross-sectoral quantitative Studiesq
• Show nature of clusters • Systematic comparison of clusters • Show nature of clusters
• Establish types of linkages that exist within clusters
across sectors and locations
• Measurement of the overall exist within clusters
• Identify patterns of cluster dynamics and their drivers
importance of clusters
• Tracking of cluster evolutiondynamics and their drivers
• Develop hypotheses on the impact of clusters on firms and regions
• Empirical tests of the impact of cluster presence on regional and firm level economic performanceg firm-level economic performance
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“Cluster Mapping”
Clustermapping.US
Project Background Project Background -- Methodology Methodology -- Data Sources Data Sources -- PartnersPartners
ClustersClusters • Covers all sectors and regions
Regions Regions
regions• Puts cluster data in the
context of regional data
Other Examples
• European Cluster
OrganizationsOrganizations
• Allows systematic comparison across locations
European ClusterObservatory
C di Cl t D tgg
Research Research -- Policy Examples Policy Examples -- Case Studies Case Studies -- News News
• Easy-to-use interface to engage practitioners
• Organizational registry to
• Canadian Cluster Data Portal
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Organizational registry to enable collaboration
Clusters and the Nature of Competition
Traded vs. Local Share of the U.S. EconomyEMPLOYMENT
INCOME
36% 64%
51% 49%
PATENTS 91% 9%
Local IndustriesTraded Industries• Present everywhere at
similar levels• Serve exclusively the local
• ‘Spiky’ across space; 2/3s of all traded industry employment is in strong clusters Serve exclusively the local
market• Little exposure to cross-
regional competition
g• Serve national and global markets• Exposed to competition from other
regions and nations regional competition • Important for jobs, but
lower wages; growth potential limited by size of
regions and nations• Critical for prosperity through
higher wages, productivity, and innovation; growth potential set by
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potential limited by size of the local market
innovation; growth potential set by the global market
Clusters and Regional SpecializationChi IL IN WI
Boston, MA-NHEducation and Knowledge CreationFinancial ServicesIT and Analytical InstrumentsBi h ti l
Chicago, IL-IN-WIDistribution & E-CommerceTransportation and LogisticsFinancial ServicesUpstream Metal Manufacturing
Denver, COBusiness ServicesMedical DevicesHospitality and TourismOil and Gas Production
Pittsburgh, PAUpstream Metal ManufacturingCoal MiningElectric Power GenerationVulcanized and Fired Materials
Biopharmaceuticals
Seattle, WAAerospace Vehicles and DefenseIT and Analytical InstrumentsWater Transportation
San Jose-San Francisco, CAIT and Analytical Instruments
New York, NY-NJ-CT-PAFinancial ServicesMarketing, Design and PublishingPerforming ArtsM i d S d R di
pFishing and Fishing Products
L A l CA
IT and Analytical InstrumentsBiopharmaceuticalsVideo Production & DistributionMarketing, Design & Publishing
Music and Sound Recording
Raleigh-Durham, NCLivestock ProcessingVulcanized and Fired MaterialsLos Angeles, CA
Video Production & DistributionApparelMusic & Sound RecordingMedical Devices
Vulcanized and Fired MaterialsTextile ManufacturingEducation and Knowledge Creation
San Diego, CARecreational & Small Electric GoodsBiopharmaceuticalsWater TransportationMarketing, Design & Publishing
Atlanta, GATextile ManufacturingApparelCommunications EquipmentBusiness Services
DallasAerospace Vehicles and DefenseOil and Gas ProductionCommunications EquipmentTransportation and Logistics
Houston, TXOil and Gas ProductionConstruction Products & ServicesUpstream Chemical ProductsEnvironmental Services
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Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Director. 8
Clusters and Economic Performance
Presence of Strong Clusters
Prosperity Entrepreneurship Structural ChangeProsperity Entrepreneurship Structural Change
• Wages • New business formation
• Path of structural change(emergence• Productivity
• Job growth• Resilience
formation • Survival of new firms• Job growth in new
change(emergence of new clusters)
Resilience• Patenting
gfirms
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Putting Clusters into Context
FrameworkInnovation Systems
Framework Conditions
(Creative) SkillsSkills
Entrepreneurial EcosystemsClusters
ComplexitySocial Capital
Complexity
Urbanization
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Urbanization
• Clusters emerge naturally • Clusters emerge and develop in a ffcontext deeply affected by policy
choices
• Collaboration within clusters provides benefits but requires purposeful collective actionpurposeful collective action
• Policies for upgrading business What role for policy?What role for policy?environment conditions can be more effective if they are cluster-specific but require information
What role for policy?What role for policy?
p qsharing and collective action
• Cluster-based policies enable
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Cluster-based policies enable informed decision making and collective action
Two Opposing Approaches to Cluster Policy
BETTER (Competitiveness)• Long-term impact• New model of public-
private collaboration
• High risk• Traditional• Traditional
‘industrial policy’
FINISHFINISH
MORE (Agglomeration)
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The Case for Cluster PolicyLevers
Create Platforms Create Platforms Organize Public Organize Public
Path
for Joint Action for Joint Action within Clusterswithin Clusters
Policy around Policy around ClustersClusters
dependency
Local Local ExternalitiesExternalities
Information asymmetries
Coordination failures
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Current Status of Cluster Policies and Programs
• The European Cluster Observatory lists more than 2000 cluster initiatives and related organizations; many other countries and international organizations, too, deploy significant efforts
• The highest number of cluster initiatives (absolute, per employee) is in information technology and biotechinformation technology and biotech
• Most OECD countries and many regions have cluster-related policy y g p yprograms
S di l t l t d i i f l b t l• Spending on cluster-related programs is meaningful, but only a modest percentage of total spending per policy area
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Cluster Initiatives: The Track Record So Far
• Large number of initiatives, many • Significant heterogeneity of impactLarge number of initiatives, many have shown sustainability over time
• Visible strengthening of networks d l l it f ll ti
Significant heterogeneity of impact
• Benefits for broader regional economic performance hard to
tifand local capacity for collective action
• Significant engagement of
quantify
• Government remains dominant funder of the majority of cluster g g g
companies, including private sector investment
• Positive impact on firm performance
j yinitiatives
• Tendency to strengthen existing structures; less successful in• Positive impact on firm performance
for participants in collaborative projects initiatited through cluster iniatives
structures; less successful in enabling structural change
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iniatives
Cluster Initiatives: Organisational Models
Membership Organization
Government Government Existing Existing Economic DevEconomic Dev ClusterCluster
AgencyAgency Economic Dev. Economic Dev. OrganizationOrganization InitativeInitative
Service Provider
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Critical Success Factors of Cluster Efforts
S tti• Cluster with critical mass of existing
economic activitiesSetting • Broader policy environment focused on competitiveness upgrading
• Capabilities of the Cluster Initiative Manager
ExternalInternal
Organization
p gand her/his staff
• Robust funding model• Governance structure that supports a private• Governance structure that supports a private
sector logic driving the organization
Activities• Strategic action agenda grounded in fact-driven
analysis of the relevant market and the cluster’s competitive position
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competitive position• Operational effectiveness in individual activities
Current Cluster Policy Priorities in the European Union
CLUSTER DATAEXCELLENCE
EMERGING INTERNATIONALIZATIONEMERGING, CROSS-SECTORIAL
DOMAINS
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DOMAINS
The ‘Bleeding Edge’: Three Issues for Cluster-Based Economic DevelopmentThree Issues for Cluster Based Economic Development
• Emerging clusters• Emerging clusters
• Impact assessmentp
• Clusters and competitiveness
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What is Different about Cluster-Based Economic Development?Cluster Based Economic Development?
Cluster vs.Cluster vs.Narrow
Industries
RegionalPerspective
Public-PrivateCollective PerspectiveAction
CompetitivenessFocus
Build on Strengths
Policy Designwith Firm
Involvement
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The TCI Network: A Global Community of Practice in Cluster-Based Economic DevelopmentCluster Based Economic Development
www.tci-network.org
www.tci2015.org
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g