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Industrial Clusters and Micro and Small Enterprises in Africa
Box 8.6 (continued)
(RedLAC), which maintains a regional dialogue on competitiveness, clusters, and innovation for economic development in Latin America through the exchange of experiences and best practices. RedLAC is part of TCI, the global practitioners’ network for competitiveness, clusters, and innovation. What makes clusters so attractive for policy makers and practitioners in Latin American countries are the opportunities for collective efficiency and improved competitiveness that emanate from a combination of positive external economies, low transaction costs, and joint action. Source: Manuella Frota contributed this box.
Public policies do play an important role in cluster development by providing essential public goods. What is important is to carefully balance cluster-targeted policies with spatially blind, sectorally blind improvements in investment climates and provisions of public goods so as not to introduce excessive distortions to the economy. Such policies need to be designed to enhance the private sector incentives in investing and trading rather than go against them. Public-private dialogue is crucial in designing cluster strategies in this context. The following spatially blind, sectorally blind policies are particularly closely linked to the development of industrial clusters. Managerial Skill Development. While more targeted managerial skill development programs for industrial clusters have merit, such interventions must be complemented by a national effort to strengthen formal education, particularly secondary and vocational education. In building a stronger domestic private sector, education is critically important to developing a solid base of entrepreneurship in the country. Efforts should be made not only by the government but also by the private sector to build better linkages between higher education and private businesses that would help to make business a viable career option based on a better understanding of how the private and public sector labor markets interplay. Infrastructure to Improve Connectivity and Facilitate Cross-Border Trade. Improved connectivity by means of transport and communication infrastructure at the national level would significantly reduce the transaction costs of doing business. Infrastructure support to specific clusters should be complemented by national efforts to close the infrastructure gap and