Promoting Competitiveness in Practice - Economic Growth - usaid

Summary
Overall, we see some positive developments at the firm level and the cluster level. Most notably,
in a number of cases, we see businesses making changes that bring them closer to their
customers and the market – and we believe that bodes well for increased competitiveness over
the long term. We also see emerging signs of cluster development. In some cases, firms are
beginning to recognize the value of collective action and change the way they engage each
another -- to their mutual advantage in the market.
Lessons Learned and Best Practices
The assessment of results focused specifically on the experience in Mongolia and Campeche.
However, in order to understand the lessons learned from promoting competitiveness, the team
drew upon not only these two cases, but also its comprehensive review of USAID experience in
26 countries and its review of the experience outside of USAID. Each lesson is described below,
along with the operational implications that emanate from the lesson. As such, the lessons and
best practices are intended not only to summarize the key findings of this assessment but also to
provide practical guidance to shape on-going and prospective cluster-based initiatives.
The most important determinant of success is the “sweat-equity” investment of the cluster.
For a competitiveness initiative to develop successfully, cluster members must be committed and
willing to devote time, resources and, most importantly, “sweat-equity” for the good of the
industry as a whole. Cluster members first must take the time to thoroughly sort through the
challenges facing their industry and then collectively define common ground and a common
vision. With disparate parts of the cluster coming together for (in many instances) the first time,
this issue identification and strategy development process takes time – time that cluster members
must be willing to invest and time that USAID and its contractors must be willing to “give.”
Related best practices include:
• In the absence of significant dedication by cluster members to the principles above,
USAID and its contractor must refrain from substituting themselves as the cluster leader.
• In such circumstances, USAID and its contractor must assess why the cluster is not
demonstrating signs of commitment and consider one of these options: (i) address the
underlying issues before proceeding with a cluster initiative; (ii) significantly modify the
nature of the project away from the organizing theme of cluster-based competitiveness; or
(iii) halt assistance to the cluster.
The private sector must own and drive the process of cluster development.
There is no doubt that the economic policy framework of a country is important for creating the
conditions for competitiveness and growth. However, growth itself is generated by firms, not by
public sector institutions that formulate economic policy. Therefore, successful cluster-based
competitiveness initiatives are fundamentally private sector driven – with links to the public
sector. They are not public sector driven with links to the private sector. This is not to say that
engaging the public sector is not important for a cluster-driven competitiveness initiative. It is;
but companies – through clusters – need to sit in the driver’s seat because it is their decisions and
investments that will directly propel sustainable growth. Related best practices include:
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