Not all clusters are dynamic Direct scarce resources to dynamic clusters. Strategically in nature, and the evidence Focus resources on upgrading firms within focus on suggests static clusters dynamic clusters, in particular on skills dynamic either are survivalist or development and logistics. ‘die’. clusters Dynamic clusters are Focus on dynamic clusters in exporting to associated with end global and regional markets. Assist dynamic markets which help firms Support clusters selling into regional and clusters find upgrade and grow. Selling global value chains to upgrade their firm appropriate into national markets is competitiveness. end markets better than local markets, but exporting to regional markets helps firms learn as a step to penetrating global export markets. Direct policy support at dynamic clusters as well as those which serve wider markets. Prioritise Take account of the nature of entry barriers clusters for or preferential entry incentives in external action There is no scientific markets. method for determining Accept there are limits to the number of which clusters are most clusters receiving support. suitable for policy Base prioritisation on the existing institutional prioritisation. capacity to provide appropriate support. Resist pressures to support clusters exerted by regional and industry lobbies since not all clusters can be supported. External economies supporting the cluster Identify key Typically, autonomously development will require specialised support, developing clusters will external such as in the deepening of skills and better benefit from a range of economies and links to external markets. external economies which infrastructure By their nature, these clusters will also face explain their dynamism. bottlenecks infrastructural constraints, such as with regard to power, water and accommodation. These collective actions often require Clusters are strengthened external institutional support from both the Identify the when their firms engage in public and private sector to ensure they are constraints to joint collective action (e.g. successful. collective purchasing and marketing). Be aware that the dynamism of clusters may action and act These require developing also be inhibited by institutions which, close trust relations on them however well-meaning, act to limit beneficial between cluster members. collective action.
Strategically focus on dynamic clusters Not all clusters are dynamic in nature, and the evidence suggests static clusters either are survivalist or ‘die’. Direct scarce resources to dynamic clusters. Focus resources on upgrading firms within dynamic clusters, in particular on skills development and logistics. Assist dynamic clusters find appropriate end markets Dynamic clusters are associated with end markets which help firms upgrade and grow. Selling into national markets is better than local markets, but exporting to regional markets helps firms learn as a step to penetrating global export markets. Focus on dynamic clusters in exporting to global and regional markets. Support clusters selling into regional and global value chains to upgrade their firm competitiveness. Prioritise clusters for action There is no scientific method for determining which clusters are most suitable for policy prioritisation. Direct policy support at dynamic clusters as well as those which serve wider markets. Take account of the nature of entry barriers or preferential entry incentives in external markets. Accept there are limits to the number of clusters receiving support. Base prioritisation on the existing institutional capacity to provide appropriate support. Resist pressures to support clusters exerted by regional and industry lobbies since not all clusters can be supported. Identify key external economies and infrastructure bottlenecks Typically, autonomously developing clusters will benefit from a range of external economies which explain their dynamism. External economies supporting the cluster development will require specialised support, such as in the deepening of skills and better links to external markets. By their nature, these clusters will also face infrastructural constraints, such as with regard to power, water and accommodation. Identify the constraints to collective action and act on them Clusters are strengthened when their firms engage in joint collective action (e.g. purchasing and marketing). These require developing close trust relations between cluster members. These collective actions often require external institutional support from both the public and private sector to ensure they are successful. Be aware that the dynamism of clusters may also be inhibited by institutions which, however well-meaning, act to limit beneficial collective action.