Cluster-Based Economic Development

Transcription

1 Cluster-Based Economic Development Dr. Christian Ketels Institute for Strategy and Competitiveness, Harvard Business School President, The TCI Network INTER-COMP-INNO Conference Riga, Latvia 18 November 2017

2 Clusters Cluster-Based Policies Cluster-Based Policies for Competitiveness 2 Copyright 2017 Christian Ketels

3 An Established Concept. 3 Copyright 2017 Christian Ketels

4 with a Stable Set of Core Building Blocks Related Variety Proximity Critical Mass Collaboration & Rivalry 4 Copyright 2017 Christian Ketels

5 in a Changing Economic Environment Growing Firm Heterogeneity Rising Knowledge-Intensity Agglomeration Restructuring of Industries Accelerated Technological Change Convergence of Technologies New Business Models Lower Trade Barriers Globalization of Production Sites Globalization of Knowledge Networks Alignment of Business Environments Falling Transportation/ Communication Costs Dispersion Globalization of Markets Clusters are a stable feature of economies Clusters are constantly changing 5 Copyright 2017 Christian Ketels

6 Local Buzz, Global Pipelines: Growing Focus Strong local buzz through breadth of activities, quality of firms, research institutions, and business environment conditions, and rich local linkages Strong global pipelines through research networks, global value chains, and companies present in multiple locations 6 Copyright 2017 Christian Ketels

7 Research About Clusters Case Studies Cross-sectoral quantitative Studies Show nature of clusters Establish types of linkages that exist within clusters Identify patterns of cluster dynamics and their drivers Systematic comparison of clusters across sectors and locations Measurement of the overall importance of clusters Tracking of cluster evolution 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 performance Cluster Mapping 7 Copyright 2017 Christian Ketels

8 Wood Products Clusters in Europe Relative Employment Specialization Who are our peers and rivals? How does our performance stack up? What is our specific cluster profile? What competitive advantages do we offer as a location? Source: European Cluster Portal 8 Copyright 2017 Christian Ketels

9 3000 Strong Clusters Across Europe NUMBER OF STRONG CLUSTERS BY PERFORMANCE STARS 4 Stars 1 Star 3 Stars 46% of traded industry jobs 50% of traded industry payroll Stars for Specialization Size Wage/productivity Growth/Entrepreneurship 1600 with more than 7500 employees, accounting for 90% of jobs Source: European Cluster Panorama, Stars in the 20% leading regions by cluster category 9 Copyright 2017 Christian Ketels

10 Cluster are everywhere Clusters and Economic Performance Close to 40% of advanced economy employment are in industries that cluster Within these, strong clusters account for more than 45% of employment and 50% of wages Presence of Strong Clusters Prosperity Entrepreneurship Structural Change Wages Productivity Job growth Resilience Patenting New business formation Survival of new firms Job growth in new firms Path of structural change (emergence of new clusters) 10 Copyright 2017 Christian Ketels

11 Clusters and the Evolution of Regional Economies Singapore IT Labor/ HR-intensive Electronics Aerospace & Defense Water Technology Med. Devices Capital/ HR-intensive Petrochemicals Pharma Biotech Media & Design Services Financial Services Business Services Regional HQs Higher Education Logistics Logistics: Docks, Bunkering Logistics: Transshipment Logistics: Air Travel Tourism s 1980s 1990s 2000s COSTS PRODUCTIVITY 11 INNOVATION

12 Putting Clusters into Context (Creative) Skills Framework Conditions Clusters Innovation Systems Entrepreneurial Ecosystems Social Capital Complexity Urbanization 12 Copyright 2017 Christian Ketels

13 What Drives Prosperity? An Integrated Perspective What you have created How well you do it What you do How prosperous you are What you have inherited 13 Copyright 2017 Christian Ketels

14 Clusters emerge naturally Clusters emerge and develop in a context deeply affected by policy choices Collaboration within clusters provides benefits but requires purposeful collective action Policies for upgrading business environment What role conditions for policy? can be more effective if they are clusterspecific but require information sharing and collective action 14 Cluster-based policies enable informed decision making and collective action

15 Two Opposing Visions on Cluster Policy BETTER (Competitiveness) Long-term, systemic impact Low risk LEVERAGING CLUSTERS Short-term, narrow impact High risk CREATING CLUSTERS FINISH MORE (Agglomeration) 15 Copyright 2017 Christian Ketels

16 Organize Public Policy around Clusters Business Attraction Education and Workforce Training Export Promotion Market Information and Disclosure Clusters Science and Technology Infrastructure (e.g., centers, university departments, technology transfer) Setting standards Specialized Physical Environmental Stewardship Infrastructure Natural Resource Protection Clusters provide a framework for organizing the implementation of public policy and public investments towards economic development 16 Copyright 2017 Christian Ketels

17 Current Status of Cluster Policies and Programs Many countries and regions, especially within the OECD, have cluster-related policy programs Spending on cluster-related programs is meaningful, but only a modest percentage of total spending per policy area Funding is tilted towards existing strengths, but many efforts exist without established critical mass Cluster programs are often run by a range of ministries or agencies; there is limited coordination between programs Funding for strengthening collaboration is always a part; other elements differ significantly Design principles differ widely across many dimensions 17 Copyright 2017 Christian Ketels

18 What are Cluster Initiatives? Cluster initiatives are collaborative activities by a group of companies, public sector entities, and other related institutions with the objective to improve the competitiveness of a group of interlinked economic activities in a specific geographic region Upgrading of company operations and strategies across a group of companies Upgrading of clusterspecific business environment conditions Strengthening of networks to enhance spill-overs and other economic benefits of clusters 18 Copyright 2017 Christian Ketels

19 Heterogeneity of Design Principles Critical Success Factors for Cluster Initiatives Narrow model Activities aligned with the needs of firms Activities aligned with actions of partners Effectiveness of implementation Focus on networking Limited resources Limited impact Activities Context Cluster strength Business environment conditions Firm sophistication Collaboration culture, trust IMPACT Resources & Capabilities Quality of staff Budget and tools Governance Systemic model Cluster initiatives as key channel for delivering policy action Moderate operational resources, strong influence on other investment streams High impact possible 19 Copyright 2017 Christian Ketels

20 Core Latvian Support Programs, BUDGET ALLOCATION BY INSTRUMENT Demola Clusters Training Competence Centers Technology Transfer New Products 20 Copyright 2017 Christian Ketels

21 Modes of Cluster Policy Catalonia Korea Colombia Mexico Fund operation of cluster initiatives/ sectoral plans US Create/task backbone organizations to mobilize clusters Sweden Austria Deploy policy funds through cluster initiatives/networks Germany France Basque Use cluster initiatives/networks as organizational infrastructure for policy action Policy for Clusters Cluster-based Policy Sporadic: Create stronger linkages Tactical: Deliver programs more effectively Strategic: Choose & design better policies 21 Copyright 2017 Christian Ketels

22 Cluster-Based Delivery of Economic Policy Basque Country, Spain Institutions (1980s) Efficiency (1990s) Innovation (2000s-) Machine Tools AFM, 1992 Appliances ACEDE, 1992 Automotive ACICAE, 1993 Port Logistics UNIPORT BILBAO, 1994 Environmental Services ACLIMA, 1995 Electronics, Computing and Telecom GAIA, 1996 Energy CLUSTER ENERGIA, 1996 Aeronautics HEGAN, 1997 Maritime Industry ORO MARÍTIMO VASCO, 1997 Paper CLUSTER PAPEL1998 BioBasque, 2002 Audiovisual EIKEN, 2004 Transport and Logistics CLUSTERTIL, Copyright 2017 Christian Ketels

23 The Traditional View: Policies for Clusters Select clusters Focus policy action on them Economic impact Political zero-sum competition across sectors Not leveraging cross-cluster opportunities Limited size of even the strongest clusters limits impact Cross-cutting policy areas easily offthe-table Cluster efforts as new policy silo 23 Copyright 2017 Christian Ketels

24 The Traditional View: Policies for Clusters Challenges Select clusters Political zero-sum competition across sectors Cross-cluster opportunities remain unexploited Focus policy action on them Cluster efforts as a new policy silo Cross-cutting policy areas easily off-thetable Economic impact Limited size of even the strongest clusters limits impact Ultimately strong clusters need a strong region 24 Copyright 2017 Christian Ketels

25 Economic Development Through Clusters Key Leverage Points From policy for clusters to policy by clusters Clusters Cluster Organizations Dimension of competitiveness diagnostics Element of a regional strategy Platform for public-private dialogue Channel to deliver policy action From clusters to cluster portfolios From the selection of clusters to the integration of policy instruments From strengthening of individual clusters to enhancing the competitiveness of the region 25 Copyright 2017 Christian Ketels

26 Developing a Regional Economic Strategy Diagnostics Choice Action Plan What is the profile of our performance? What business environment conditions do we offer? What clusters do we have? How are they positioned? What business environment conditions do we want to offer? Which type of companies and skills do we aim to attract with these qualities? In what clusters? What are the priorities for action? Who is going to do what? How do we deploy our resources? What channels and platforms can we use? 26 Copyright 2017 Christian Ketels

27 Elements of a Regional Economic Strategy Outcome Ambitions Positioning The specific value the location provides as a place to do business in the national and global economy Business Environment Cluster Portfolio Activities to upgrade cross-cutting business environment conditions that are most critical for the location s value proposition Activities focused on existing and emerging clusters that draw most benefits from and emphasize the location s value proposition Implementation Architecture Responsibilities, resources, capabilities, and coordination 27 Copyright 2017 Christian Ketels

28 Regional Competitiveness Through Clusters and Vice Versa 28 Copyright 2017 Christian Ketels

29 Playing A Role Beyond your Cluster National policies affecting the cluster Related clusters across the country Peer clusters in other locations Regional Cluster Regional strategy Regional cluster portfolio 29 Copyright 2017 Christian Ketels

30 Clusters, Regions, and Structural Change The Challenge: How to achieve structural change towards higher value-added activities? The Old Answer: Identify growing markets and try to enter them (bio, nano, eco, ) The New Answer: Identify your assets, including your existing cluster base Actively pursue opportunities in areas adjacent to current strengths and leading towards higher value added Failure to succeed in intensely competitive markets without unique assets Longer-term development of sustainable competitive advantages 30 Copyright 2017 Christian Ketels

31 Cluster-Based Structural Transformation: Identification Business Environment Strengths Existing Cluster Portfolio Factor (Input) Conditions Access to high quality business inputs Human resources Capital availability Physical infrastructure Administrative infrastructure (e.g., business registration, permitting, transparency) Scientific and technological infrastructure Context for Firm Strategy and Rivalry Local rules and incentives that encourage investment and productivity e.g. incentives for capital investments, IP protection, corporate governance standards Open and vigorous local competition Openness to foreign competition Strict competition laws Related and Supporting Industries Availability and depth of suppliers and supporting industries Presence of Institutions for Collaboration (IFCs) that support productive coordination and collaboration among actors Demand Conditions Sophisticated and demanding local customers and needs e.g., Strict quality, safety, and environmental standards Consumer protection laws Textile s Leather and Sportin g Goods Appare l Agricultural Products Proces sed Food Tobacc o Forest Produc ts Fishing & Fishing Produc ts Entertainment Sporting, Recreation and Children s Goods Hospitality and Tourism Financial Services Publishing Education and Printing and Knowledge Creation Transportation and Logistics Chemi cal Produc Pharm ts a- ceutica ls Medica l Device s Analytical Information Instruments Technology Jewelr y & Precio us Metals Footwe ar Plastic s Oil and Gas Aerospace Vehicles & Defense Lightning & Communications Electrical Equipment Equipment Power Generation Busine ss Service s Heavy Construction Services Distribution Services Construction Materials Aerospace Engines Buildin g Fixture s, Equipm ent and Service s Automotive Furnitur e Prefabricated Enclosures Metal Manufacturing Production Technology Heavy Machinery Motor Driven Products Existing capabilities External intelligence (technology, market needs) is critical Assessment criteria Existing bridgeheads, market opportunity, leadership 31 Copyright 2017 Christian Ketels

32 Elements of a Regional Economic Strategy Levers to Drive Structural Transformation Upgrade existing clusters Develop capacity in specific knowledge domains Encourage entrepreneurship economy-wide Encourage exploration of related clusters with high productivity potential 32 Copyright 2017 Christian Ketels

33 An Example: Catalonia s Smart Specialization Strategy Leading Clusters Four Pillars Emerging Clusters Key Technologies Entrepreneurship Integration of national and regional policy instruments Existing cluster organizations and support mechanisms put into a broader context 33 Copyright 2017 Christian Ketels

34 Regional Strategy (RIS3) and Clusters: The Opportunity What RIS3 can offer: From individual cluster efforts to a regional agenda From strengthening strengths to enabling change What cluster efforts can offer: From what to do to how to do it and by whom From government driven to public private collaboration An effective regional strategy 34 Copyright 2017 Christian Ketels

35 New Partnerships to Drive Economic Development Old Model New Model Government drives economic development through policy decisions and incentives Economic development is a collaborative process involving government at multiple levels, companies, teaching and research institutions, and private sector organizations Cluster organizations are effective tools to organize public-private dialogue 35 Copyright 2017 Christian Ketels