7. Why focus on cluster development

7. Why focus on cluster development

Cluster-based development has gained acceptance worldwide, due to its innovative approach of looking at enterprises as a part of the local system that influences the growth and competitiveness of all the stakeholders who are a part of the cluster. More than 50 countries (both developed and developing) are known to have undertaken cluster-based development initiatives. Some of the known organisations that have fostered cluster development initiatives are United Nations Industrial Development Organization (UNIDO), International Labour Organisation (ILO), International Finance Corporation (IFC), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), etc. UNIDO has been the front-runner in developing cluster-based development approaches that have now been replicated in several developing countries across the world.

7.1 Who benefits from cluster development?

The benefits in terms of higher productivity and increased innovation can be felt by all firms in the cluster. The implications for the existing firms are to examine the relationships that they have with other firms in the cluster and consider the services they offer.

• Are professional services firms specialised enough to cater to the particular needs of firms in the cluster or do the latter need to go elsewhere for specialised advice? • Can manufacturing firms fit into the supply chain of firms located in the cluster, thereby reducing the need for their customers to go elsewhere to source their inputs? • Are universities and other higher education establishments providing people with the required skills for the firms in the cluster? • Are public bodies providing the infrastructure which firms need if they are to be competitive?

The whole point of cluster policy is to examine all of the cluster’s needs and encourage other partners to examine how they can link up with firms in the cluster either through standard commercial trading relationships or through non-trading relationships. All firms, public bodies, educational institutions, etc., need to consider what linkages they could forge with the cluster.

While the economic development of a cluster is an important goal of any planned intervention, it is important to note the ‘BR agenda’ in the process. Helping a cluster exhibit ‘responsible behaviour’ has to form a part of the agenda. Thus, the development process is to be tuned accordingly. This leads to advantages to the workforce in the cluster in terms of improved ‘quality of life’ (through access to health care and clean/safe working conditions, for instance); to the community around the cluster (in terms of improved quality of ground water, for instance) and to society at large (safer natural environment, for instance). More on promoting ‘responsible business behaviour’ is deliberated on in the subsection below.