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development, because the capacities of local governments are weak. � Assign a qualified operator for the clusters. As an external party, ADB can go to any of its member countries and encourage cooperation, for example, by means of institutionalizing a roundtable discussion. � Equip urban planners and get them involved in the process. � Prepare a road map that shows how activities will be sequenced and how coordination of different sectors is to be done. � ADB can complement the top-down and bottom-up approaches to cluster development by strengthening existing businesses and creating new ones. � Disseminate knowledge and good practices on cluster development. � ADB and its developing member countries need to address cross-cutting infrastructure weakness, provide innovative SME financing, and create an institutional structure to focus on competitiveness beyond the life cycle of specific administrative boundaries. B. Financing CCED The following suggestions were made on how to finance the adoption of CCED: � Establish a policy on financing scheme for clusters, which takes into consideration the positive correlation between tax revenues and price of commodities within the value chain framework. � Similar to what is being done by the Inter-American Development Bank (IADB), ADB may consider linking up cluster projects with loans. ADB will negotiate with the government what kind of loans is needed for a specific purpose, and then a competitive bidding process will be put in place in which different cities and regional governments compete for loans based on the potential productivity of investment. � Create a pool of money for SMEs to invest in sustainable development. � For ADB to direct its lending operations to supporting public-private partnerships in the establishment of special-purpose vehicles for promoting industrial clusters, common facility centers for the effective integration of SMEs into cluster networking, business support services for enabling SME clusters to thrive in an <strong>international</strong>ly competitive environment, and sectoral innovation systems at the regional level that promote incremental innovation at the firm level (e.g., R&D). � ADB is supporting and should be supporting cluster initiatives either as a sole financier or under cofinancing ventures. But the majority of the funding has to come from the private sector. ADB will only be a catalyst. A good cluster design or program will leverage commitments both from the government and the private sector. � Link public inputs to performance, require business plan for infrastructure projects financed by ADB (e.g., what entities exist around the road), look for product clusters instead of industries, and find out what entrepreneurs need and then make investment decisions. Some participants also suggested or commented on the following: (i) relocating clusters in Dhaka presents a big challenge—the transition should be gradual, the supply chain needs to be relocated as well, and the government may consider asking support from ADB; (ii) ADB needs to implement technical assistance to remove the knowledge gap and build capacities on CCED; and (iii) prioritize infrastructure projects relative to the conditions of the local economy. In closing the panel discussion, Mr. Lindfield stated that a key area where ADB could help was in the analysis of clusters, including how to empower them. On project development 14
arising from this analysis, he suggested that ADB must give it a thorough consideration given that ADB has started to think more about integrating private sector and public sector projects. A big challenge for ADB is the issue of supporting the soft side of CCED. IX. CLOSING Dr. Choe closed the <strong>conference</strong> by reiterating that CCED was a very useful and flexible tool for making informed decisions. CCED could show the strengths of industries, gaps in the sector, and how to match those gaps with the right investment. SMEs comprise about 90% of industries in Asia, and about 60% of the labor force is found in SMEs. Since SMEs are private, collaboration between the private sector and the government is very important for the local economies to develop. Dr. Choe said that the <strong>conference</strong> was not the end, but only the beginning of discussions and efforts to institutionalizing CCED. She ended by thanking everyone for their contribution to the <strong>conference</strong>. Dr. Vinanchiarachi, the keynote speaker, added that ADB has a niche to capture in fostering inclusive growth through the development of SMEs and industrial clusters. In addition to what ADB can do in terms of lending operations (see Section VIII, B: Financing CCED), Dr. Vinanchiarachi said that ADB could also (i) work directly with regional development agencies in dynamic industrial locations on funding innovative projects which make positive impacts on poverty alleviation, (ii) provide grants to institutions establishing an inventory of modern industrial applications and to programs seeking effective transfer of technology in terms of acquiring, assimilating, adapting, learning and inventing something new that suits a given country-specific context; and (iii) provide a one-time grant to firm-level innovations making an impact at the regional level in terms of value addition. 15
Page 2 and 3: TABLE OF CONTENTS Page Acronyms 3 E
Page 4 and 5: EXECUTIVE SUMMARY The International
Page 6 and 7: I. BACKGROUND Cluster is a local ag
Page 8 and 9: though functional specialization an
Page 10 and 11: VI. SESSION 2: EXAMPLES OF ECO-CLUS
Page 12 and 13: VII. SESSION 3: PROMOTING LOCAL ECO
Page 16 and 17: Annex A: Conference Agenda INTERNAT
Page 18 and 19: Annex B: List of Participants INTER
Page 20 and 21: Annex B: List of Participants Count
Page 22 and 23: Annex B: List of Participants Count
Page 24 and 25: Country DMC Government Official Vie
Page 26 and 27: Department Staff Internal Evaluatio
Page 28 and 29: Annex C: Profile of Speakers and Pa
Page 30 and 31: Annex C: Profile of Speakers and Pa
Page 32 and 33: Annex D: Welcome Remarks by Directo
Page 34: Annex E: Opening Address by Managin

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