Local/Regional Economic Development in South ... - Value Chains

These geographically concentrated developments, or Regional
Innovation Systems (see below), enable regions become
increasingly significant in creating environments
that promote corporate co-operations, business start-ups
and innovative service providers. Key regional priorities
are to provide a modern infrastructure, in order that both
knowledge and firms develop as complementary elements
to aid cluster formation. Furthermore, the private sector
needs to engage in the process as a partner, innovator and
moderator of clusters. Regional administration bodies
need to act as a service link in a value chain, to optimize
their interfaces with businesses, manage their own responsibilities
in a process-oriented manner and guarantee high
levels of service orientation.
Clusters provide new opportunities for SMEs
Through networking the development of clusters offers
SME-dominated economic structures the opportunity to
market themselves internationally. Regions of Europe that
were traditionally smaller, such as Northern Italy, Denmark,
Wales and Northern Spain have significantly improved
their international position through cluster formation.
A good example is the formation of an automotive
cluster in Austria. Fifteen years ago this cluster was formed
in one of Austria’s weakest regions both developmentally
and structurally, but as a result the region has prospered
and Austria has become a net exporter of automotive
products despite not having its own automotive production
industry.
A further opportunity provided by clusters is to strengthen
the marketing potential of SMEs and create new marketing
opportunities by enabling joint marketing of goods
and services.
Clusters enable new perspectives in regional policy
Cluster development offers a new framework for regional
policy, in which regional strengths are combined with supra-regional
systems, resulting in a new orientation toward
economic policy and regional actors. Limitations of
regional frameworks can be overcome, as well as region
being allotted new tasks as a result of cluster-related resources
and structures.
Clusters offer a new framework for the co-ordinated
use of new and old economic policy instruments
Clusters open up new perspectives and opportunities for
business development institutions, through developing
links between businesses and supporting service providers.
This means that various instruments that were conventionally
being used in isolation, such as innovation promotion
for individual firms and the development of regional
impetus centers, can be developed more effectively
in the context of clusters. Cluster projects are a positive
locational factor and provide an incentive for firms that
offer complementary products to a cluster core, to settle
in that same region.
Is this euphoria regarding clusters merited?
Despite the advantages of, and potentials offered by, cluster
development, their formation is a complex process, as
some of the following issues highlight:
• Each cluster is unique and even the cluster definition
itself varies according to the structural conditions of a
country and those involved.
• Clusters cannot be copied and their high level of
complexity and context dependency hinders replication.
• Clusters are not automatically successful or sustainable.
There are numerous examples of clusters that
have reached a point at which the dominance of large
firms, or too narrow a specialization of firms and service
providers, has caused their demise.
• The ability of economic policy to influence or maneuver
clusters is limited. Problems such as the lack of
necessary core business competencies or the absence
of a suitable co-operation culture within a particular
cluster cannot be eliminated through external interventions.
• Clusters are only viable if the firms involved are innovative
and healthy, therefore this approach is not
appropriate for rehabilitating or upgrading weak and
unstable firms.
•
Cluster development should bring about plausible
innovation and structural benefits for the SMEs involved,
and the beneficiaries of cluster formation
should not only, or primarily, be the leading or large
corporations. It is essential to prevent the SMEs from
becoming dependent on one or a few large corporations,
particularly in countries such as Austria and
many of South-Eastern Europe, whose corporate
landscape consists primarily of medium-sized enterprises.
“Clusterland” Austria
Since the mid-1990s the Austrian states have implemented
cluster-oriented policies, initially reluctantly, but once the
benefits had been felt, with great enthusiasm. This was
pioneered by the state of Styria, which formed an automotive
cluster. In just a few years Styria developed a dynamic
network of leading automotive firms, suppliers and business-related
innovation service providers. A high-profile
core team served as the engine for its development, comprised
of the three large automotive companies located
in Graz, the Federation of Austrian Industry and the Styrian
Business Promotion Agency (SFG). As a state-run
organization the SFG handles the state’s entire economic
development, operates an increasingly dense network of
technology centers and is responsible for attracting new
businesses. The cluster is also backed by the economic
policies of Styria. With this solid foundation and a timely