Monday, October 24, 2005

are clusters a rubbish focus for intervention or economic development?

Been thinking about Clusters recently after some stuff that was said in an internal workshop.

I used to work at Scottish Enterprise, and serviced a lot of teams there as a private consultant in the late 1990s. I wasn't impressed with their clusters approach. What they did:

- identified some Scottish clusters
- spent ages (and big consultancy $$$s) mapping the clusters, mapping weaknesses etc
- spent ages meeting and connecting folks in the cluster together
- did a few specific interventions
- identified some cluster gaps as R&D, invented public sector research labs to specifically service the cluster

What was achieved? after investing in cluster teams and a huge research effort (in my opinion, the research was very patchy - good for some cluster teams, bad in others) - not a lot I reckon. This is because I think the effort and approach was misplaced.

I'd like to express some of my own theories about clusters:

#1 they are no respector of government or administrative boundaries. They operate across all artificial and formal boundaries. Especially in open markets.
#2 very few examples of successful, self-contained, highly localised clusters
#3 very few clusters created out of thin air
#4 very few clusters created in less than 10 years (take note RDAs!)
#5 must have some kind of comparative advantage for cluster presence (take note again RDAs!)

OK, ok they are engines of growth in certain parts of the world, and Porter's analysis of competitiveness is compelling. But as an economic development tool I think its not been well applied, at all.

Its big use is in understanding the economy and your locality's place in it. If this leads to some intelligence interventions, then that might be a good thing. If it tells you that you are one the outer spoke of a cluster, a branch plant zone etc, that's useful.

But that kind of analysis is very sophisticated indeed. How many RDAs do you know that intelligently create and target interventions? hardly any I'd say. The clusters approach is way too complex and sophisticated for the average RDA and RDA staff member I'd say. That's why, if you are SE, you spend £5 million on Porter's consultancy company to come and tell you about clusters.... heehee.

Anyhow, just a thought. I have to say that I am both sceptical and open minded about clusters, but they are not the panacea for everyone. And if I hear anyone say the "Anytown XXXX cluster" again, I will probably develop a nervous tic.

My big message - you can't have a highly localised cluster. They aren't valid. Don't try and create one.


At 4:52 pm, Anonymous DavidH said...

There's a difference between 'organic' clusters and the clusters created by RDAs.

Sometime back in the mists of time I read Porter. If I remember rightly he started with Sassuolo and worked from there.

He pointed out that Italy was full of clusters. OK, I once met a guy from a village which boasted 36 lens grinding businesses. But as I understand it, Sassuolo was there because the marble was there for its craftsmen to work on. And the lens grinders were there because of the water or something.

And Silicon Valley is there because there was already a pool of hippies and geeks (I use the term with considerable affection) in the area because of the sixties. Man.

Which is kind of a long-winded way of repeating your point #3 - "very few clusters created out of thin air".

But having said all that, Sophia Antipolis was "created", and would work even betterer than it does if it weren't for French taxes, because it's a pleasant place for a techie to hang out and get paid a lot. And even if the techies don't want to go there, you can still get them to work for you online and occasionally turn up to lecture.

Well, since creating a genuine working cluster out of thin air would require the social engineering skills of Stalin, it's not going to happen. There has to be some sort of organic base, and a reason for its existence.

God, I ramble on. Feel free to edit this.


At 5:27 pm, Blogger Angry Economist said...

Yes I have been to Sophia Antipolous! - but what is the cluster industry there - not being awkward, just I am not sure what industrial specialism exists or has been created.

I am just sceptical as to whether all the RDA effort and hot air spent on Clusters achieved anything, other than glossy brochures and RDA Directors with wistful quotes alluding to a fantastic future in grey goo or something like that...

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