LOGIC FOR CLUSTER DEVELOPMENT Over 1,000 cluster development initiatives are underway across Europe , each focussing on their region ’ s traded economy – the activities that attract wealth to the region . As the European Commission highlights , clusters matter 3 . They account for one in four jobs , particularly the better paying jobs . The international evidence is clear : regions that are home to dynamic clusters , and the companies that are rooted in such clusters , do better 4 . Clusters are an essential block in building a modern economy .
In many countries , the levers in addressing competitiveness are moving from grants and tax breaks to softer interventions – vocational training , mentoring , common services . Place-based initiatives , centred on the development of clusters and their supply chains , often coordinate such support . Cluster development focusses on the region ’ s competitive advantage ; it is not about ‘ inventing ’ clusters .
Cluster development brings together similar businesses within a geographic area , along with relevant business support organisations . It supports groups of companies as they engage in new areas , new markets , develop new products and processes and engage with new technologies .
RESOURCING CLUSTER DEVELOPMENT As an intervention , cluster development requires resourcing . In most countries , it is the regions that have taken the lead in identifying , prioritising and then engaging around their clusters . In many parts of Europe , regional support for cluster development has been in place for two decades and more . National support has typically come in later , strengthening the regional initiatives .
Funding for cluster development is needed at two levels :
• Firstly , on kick-off , to support a small cluster organisation , which could as a minimum be a part-time cluster manager . As cluster development is not a quick fix , this support needs to be in place for a minimum of three years . Strong clustering initiatives have co-funding from several sources . For many of Europe ’ s clustering initiatives , co-funding from public agencies
Pictured above and opposite : The Sunshine Coast ’ s Food & Agribusiness Network cluster
is around $ 250,000 to $ 1.5 million annually , covering a cluster development organisation and small-scale activities .
• Subsequently , as collaborative projects emerge , more substantive resourcing is required for project implementation , drawing on existing business support programmes and organisations . As is described later , projects could include training , market development and precompetitive RandD .
IDENTIFYING YOUR REGION ’ S CLUSTERS Strong regions are built on specialisations . No region can be all things . Clarity and agreement is needed on the region ’ s strengths .
The clusters that merit engagement are likely to already have a critical mass of businesses servicing customers from beyond the home region . The physical area covered by the cluster needs to be geographically close – close enough to meet for a beer after work , at the most a one-hour drive . Proximity facilitates trust . While innovation has a tight geography , not all components are necessarily located within a cluster ’ s functional region .
Descriptors such as ‘ Advanced Manufacturing ’ and ‘ Technology ’ don ’ t lead to development agendas of substance . However , many Australian clustering initiatives may well start broad , such as agriculture , food , tourism , engineering or creative and then over time focus on the hot spots within such clusters . Transformational projects are likely to be centred on narrow specialisations , such as fermented foods , mountain biking , marine engineering , film and TV , medtech or fintech . A regional strength comes with overlapping clusters , such as food and tourism , or food and food processing machinery .
A first step in garnering agreement on the regional clusters is to comprehensively assemble the hard data on the region ’ s traded economy – the activities that are already attracting wealth : employment data , # jobs , # firms , exports , value added / employee . Caution : take care with published statistics – clusters are broader than sectors and they frequently extend over regional boundaries .
This ‘ hard data ’ may not be sufficiently granular to surface the niches where the region is really successful . It needs to be complemented with insights from those with an overview of the regional economy . This could include economic development organisations and chambers of commerce , politicians , bankers , accountants , freight forwarders and training providers . Each may well have strong preferences . It is important to include those who could have resources to support emerging projects . From the hard data and insights , a collective decision is needed on which should be the early cluster pilot ( s ) for development .
ECONOMIC DEVELOPMENT JOURNAL VOL 15 NO 2 2022 21