11.2.2 Why are clusters important?

In the last decade, clustering has come to light as a new concept for economic development. A large number of countries and regions are inspired by cluster theories and use elements of it to promote progress1.

Even if clustering, as an economic development strategy is still a new phenomenon there are European cluster success stories that show the important positive effects which can be obtained when cluster concepts are implemented correctly. In particular, many industries of Northern Italy are recognised as models for clusters, these include furniture and shoe making in the Veneto region and ceramics in Emilia-Romagna. A second cluster stronghold is Austria. In the regions of Styria and Upper Austria regional economic development is completely cluster-based. A particularly strong cluster in both regions is the automobile sector2. This component presents the case study of the textile and Clothing Cluster in Catalonia (Spain) as an example.

The success stories show that clusters, by increasing the competitiveness of single firms, provide macroeconomic benefits, some of which are:

  • Raising attractiveness of regions clusters will help to stimulate competence development in the region as well as motivate people not to migrate. This will also have a positive effect on inner investments in the region as it creates a positive job effect and can inspire other companies to move into the region.
  • Increasing need-orientation of business supporting servicesclusters work well in the field of RDT (Research, Development and Transfer of Innovation) and as a result involve research institutes and universities. Therefore, they contribute to further develop the regional competence and research infrastructure.
  • Protecting employment and promoting entrepreneurship – the production sector in Europe is a large provider of jobs and contributor to the GDP; much of this comes from SMEs supplying the large end producers.3

Clusters are generally built up by the local business actors, who want to take advantage from the synergy of several factors existing in the region: the presence of customers and providers, the access to skilled human resources and know-how, the availability of specific raw materials and infrastructure, low transaction and communication costs due to geographical proximity, the proximity of universities, training centres and research institutes, and the presence of financial institutions and other private and public organisations.4

The physical proximity of the factors mentioned above encourages the creation of formal and informal relationships among companies, higher education and research institutions, financial organisations, public actors and other local organisations, where information can easily flow and disseminate5.

Easier contacts are established with public administrations, allowing them to adapt the infrastructure of the cluster to the business and/or market requirements. All these contribute to encourage the innovation process.

To ensure their survival in these competitive environments, cluster firms are obliged to develop innovative strategies and to build in the necessary capacities to implement them. Innovation is not just the only preserve of universities or research centres; it is mainly the result of a series of businesses initiatives and experimentation. In a cluster, enterprises voluntarily or involuntarily learn from each other and copy each other.

At a higher level, clusters have proved to be attractive to the regions hosting them. They contribute to their economic growth and social wealth. As Porter stated, prosperity depends upon the productivity with which a region allocates its resources (manpower, natural resources, infrastructure, etc) to produce goods and services and productivity rises because of innovation.

As it has been said before, clusters can form the perfect environment to enhance competitiveness and productivity by allowing firms to take advantage of:

  • specialised suppliers
  • local know-how
  • information
  • skills
  • education

The proximity of customers, competitors, suppliers, universities and research institutions provided impetus the creation and exchange of information and increases opportunities for innovation. These in turn favour the growth, the high employment, and the attractiveness of the regions.6

Please stop and think: after reading almost all of the component which areas do you think clusters can have a positive effect? What is the situation regarding clusters in your region? Do they exist?

1 www.innovating-regions.org/
2 lbid
3 lbid
4 http://ec.europa.eu
5 lbid
6 www.innovating-regions.org/