Competitive Regional Clusters: National Policy Approaches


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Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 I Chapter 5 I Chapter 6 I Part II
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ISBN Number: 9789264031821
Publication Date: 
May 2007
Pages: 350
Number of tables: 46
Number of graphs: 29


Competitive Regional Clusters: National Policy Approaches

Many nations and regions are struggling to maintain their competitive edge in the context of globalisation. The regional specialisations built up over decades are transforming rapidly. Many regions that were historically production centres in a given sector are losing out to lower-cost locations and reorienting to higher value-added niches. Yet even some of these upstream activities are being off-shored. How durable are the competitive strengths on which regional economies are based?

National programmes to promote cluster-based approaches -- linking firms, people and knowledge at a regional level -- are being used to meet the challenge. Evolutions in regional policy, science and technology policy and industrial/enterprise policy are converging on the objective of supporting clusters at the regional level. Nevertheless, policy makers face a series of difficult choices given limited resources. For example, they may focus on the leading regions and sectors that drive national economic growth and technological breakthroughs or the lagging regions that need to reorient their economies to preserve jobs and diversify. This report analyses the objectives, targeting, instruments and inter-governmental role sharing used by 26 programmes in 14 OECD countries.

Chapter 1. Why Are Cluster Policies Popular, Again?

At both the national and regional level, the key concepts that underlie the cluster approach continue to be at the centre of policy formulation. In some cases, the policy interventions are explicitly called cluster policies. In many others, the main features of the cluster concept are present but the term cluster is not used. These programmes have the objective of reinforcing regional specialisation by supporting linked industries in a geographical location and by emphasising stronger interactions among different public and private actors. To better understand why there is renewed interest in clusters, this chapter reviews:

  • Clusters and related concepts: moving beyond definitions. The origins of the cluster concept are not new, but there are many variations on the definition of what constitutes a cluster, a regional innovation system and other related concepts.
  • Theoretical cluster benefits and risks. Clusters offer a number of potential benefits, beyond lower production costs, that lead to innovation and productivity growth. Nevertheless, there are risks to consider regarding public support of clusters.
  • Globalisation and the nature of clusters. The effectiveness of regional strategies depend on the ability of clusters to evolve and fit into useful niches in global value chains.
  • From theory to policy. Given that the most touted examples of cluster success are market driven, what role can public policy play? There are general justifications for public policy, such as market failures and systemic failures, but the policy context remains more challenging.

Chapter 2. Where Do the Programmes Originate?

Policies that support regional specialisation and clusters are at the intersection of several different policy families, which helps explain the increased policy interest. These policy families include: regional policy, science and technology (S&T) or innovation policy and industrial/enterprise policy. The goals, programmes and instruments used in these policy areas may serve to support regional specialisation by favouring greater linkages among firms and research institutions. The orientation of the policy family behind the cluster policy serves to frame the objectives, targets and scope of the policy (see Table 2.1). In some cases, the policy may be clearly flowing from only one policy source within the country, but in most cases it is integral to one policy strand but clearly related to others.


Chapter 3. How do programmes pick participants?

The economic rationale for government intervention underlies the different choices regarding programme targets. Those targets may be places, sectors or specific actors or groups of actors (see Figure 3.1). They could also be a combination of these different target categories. The targets then need to be clearly identified to ensure that the resources available for the programme are adequate and that goals are achievable. The choice of selection mechanisms is a key first step and needs to be consistent with the objectives. This chapter will discuss the following themes:

  • Policy targets: what is the real problem? An understanding of the true nature of the problem will help in determining the most appropriate policy targets.
  • Identification methods: analytic and strategic choices. Three general approaches to identifying programme participants include: (1) a statistical method, such as a mapping study, (2) through a lower level of government or (3) through a process of self-selection, such as a call for proposals.
  • Selection mechanisms: matching programme goals with targets. The selection mechanisms used include both competitive and non-competitive procedures.



Chapter 4. What Instruments Do They Use and How?

The instruments to implement policies and programmes supporting regional specialisation and clusters seek to capitalise on the theoretical benefits described in Chapter 1. This chapter discusses:

  • Categories of instruments. Most programmes focus on one or several families of instruments to (1) engage actors, (2) provide collective services and/or (3) promote collaborative research. Several innovation-focused programmes also include instruments to promote entrepreneurship and new firm creation.
  • Programme duration and funding. In general, the funding patterns in terms of annual spending per cluster and funding duration map to these three families of instruments, ranging from budgets of less than 100 000 EUR per year per cluster for two or three years to one million EUR or more for up to ten years.
  • Building synergies through linkages. Several countries have linked instruments through different programmes across parameters, such as the product lifecycle or the cluster initiative’s stage of development, to offer a full range of cluster support instruments.

Chapter 5. Who Does What? Governance

The level of government best suited to initiate, implement or fund a policy depends on the governance frameworks as well as the nature of the policy. In the case of regional specialisation and clusters, there are economic rationale for all levels of government (local, regional, national and in some cases supra-national) to support such policies. Furthermore, different levels of government have available different sets of competencies and tools and in turn reap different degrees of benefit.

  • Central level co-ordination is becoming increasingly important with the proliferation of policy families that could potentially support regional specialisation and clusters. Country strategies at the central level include inter-ministerial or inter-agency committees designing programmes and overarching national plans that include these programmes.
  • The articulation of national and regional roles in these policies is clearly dependent on the institutional frameworks. Unitary countries may simply develop the programme at the national level while federal countries and certain unitary countries may have to rely on financial incentives to engage their more autonomous sub-national regions.
  • Strategies to develop policy coherence across levels of government for cluster policies include several co-operative approaches to policy sharing with respect to initiating, funding and implementing a programme. There exist a number of common missed opportunities in terms of coherence both at the same level of government as well as across levels of government.
  • While all programmes seek to work with private sector actors, some are more successful than others in ensuring their active participation.

Chapter 6. What Have We Learned?

There is a long list of challenges to evaluating the effectiveness of policies to promote clusters and regional specialisation. There is a lack of agreement on how to define a cluster. The public financial resources allocated to most programmes are often modest, especially relative to the ambitious goals. Classic problems of causality in evaluation are exacerbated in the context of clusters and their ultimate impact on regional development. Nevertheless, based on some programme evaluations and a review of these OECD programmes there are definitely lessons to be learned. This chapter focuses on:

  • What are we evaluating? There are several possible aspects that one could evaluate, such as the cluster’s existence and performance, the cluster initiative and policy impacts.
  • Lessons learned. This review of different OECD programmes reveals that there are lessons to be learned for programme design that could help at least improve the likelihood that the programmes will be successful in their ultimate goals.
    • A first set of lessons learned concerns the degree to which these programmes are appropriate, realistic and flexible enough to achieve their goals.
    • A second set of lessons learned relates to policy coherence within and across levels of government.
    • A third set of lessons learned is about the risks involved in such policies, which are often related to insufficient private sector engagement.
  • Future research. Many questions remain regarding the appropriateness and effectiveness of policies to support clusters.

Part II

Part II of this publication is a series of case studies for 14 countries that cover 26 programmes or policy approaches that have a cluster-based focus. A summary of these programmes is found in the Table below.






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