August 26, 2008
I received a contribution to the debate about European clusters, which begins here with the post “A Cluster Policy for Europe?” The author of this answer, Olivier, being employed in an European institution, has good reasons to remain anonymous. His opinion does not express an official position. I thank him sincerely for his enriching the reflection on a would-be European cluster policy.
TO CLUSTER OR NOT TO CLUSTER: THE MYTH OF THE BRUSSELS VALLEY
Emerging as a new ‘buzz word’, clusters attract more and more attention from national and European policymakers, with the ultimate dream to replicate the Silicon valley success story as it is rightly pointed out in the blog contribution from Marc Foglia. Let me try to contribute to this discussion on the need for a dedicated European cluster policy.
“Brussels“, by Peter Guttierez
As a starting point, it is important to recognize that the European industry has been affected by various structural changes:
• Globalisation and geographical concentration of economic activities, especially in urban areas
• Structural changes affecting regions and modifying their competitive advantages
• Emergence of the so-called ‘open innovation and knowledge triangle’ paradigm’ stressing the need for networking and cooperation and reshaping the nature of the interactions between the various stakeholders
Assuming that an agreement could be obtained on the notion of clusters, it could be essentially described as a network of economic actors and institutions located in a limited geographical area and reaching a sufficient scale to develop specific services, resources, suppliers and skills. Proximity and inter-connections between the different actors of the clusters are critical to achieve economies of scale and sufficient critical mass in terms of knowledge production and diffusion of innovation. The attractiveness of the notion of cluster is closely connected to the so-called European paradox describing the low ability of Europe to commercialize the results of research into successful new products or services.
The location of highly innovative clusters in regions is an important factor to favour economic development and to improve competitiveness and the innovation capacity of this area. It is also an important ‘attractor’ for the location of new firms. But the creation of clusters could not be decided on top-down approach reflecting the ambivalence between natural and artificial clusters and the wide variety of clusters should be also pointed out. The benefits of clustering come essentially from agglomeration economies and economies of scale (better sharing of infrastructure and common resources, better efficient matching between employers and employees, and better dissemination and learning of new technologies) as well as reduction in the transaction costs of repeated interactions between the various entities of the cluster. But clusters have also costs due to congestion and rising land prices.
The design of a successful European policy for clusters should start by a proper identification of the basic ingredients needed for creating a living eco-system balancing competition and co-operation, facilitating mobility of production factors, especially the labour force, and achieving a sufficient level of openness to international competition. Without pretending to be exhaustive, a list of key ingredients might be identified to facilitate the development and the competitiveness of clusters:
• Institutional interconnections linking innovation actors and facilitating their interaction and cooperation;
• Capability to change and adapt to changing environment conditions and openness to cooperation;
• Market-driven approach and exposure to international competition, a well-diversified population of firms in terms of size and innovating potential which will facilitate inter and intra-industry spill-over ;
• Access to a sufficient pool of researchers and high-qualified staff resources;
• Availability and access to research infrastructure, incubators and science parks and efficient transfer of knowledge from university/research centres to the business sector ;
• Availability of financial resources covering the different stages of development of the innovation process;
• Connection to adequate transport and communication networks facilitating the diffusion of the innovation and the entry and exit within the clusters;
• Access to high quality urban infrastructure offering good quality of life for workers and firms.
ANTICIPATING FOR CHANGES
There is of course no ‘one-fit-all’ approach and the traditional risk, failure identified for industrial policy should not be under-estimated (notably the so-called ‘picking the winners and protecting the losers’). A public policy should be designed to ensure that a sufficient critical mass is achieved based on the concept of excellence and meritocracy. In addition, it should address the inadequate coordination between existing funding sources and initiatives implemented at national and regional levels. Finally, the support to clusters is also critically related to ensuring the conditions for the development and expansion of existing clusters, notably through the creation of efficient infrastructure, the promotion of workers mobility, the strengthening of the quality of the higher education and research system, as rightly pointed out by Marc Foglia. Finally the discussion on public policy on clusters should also integrate the existing trade-off between efficiency and social and territorial equity, especially for regions depending on one single sector of activities affected by economic crisis and industrial restructuring. Anticipating for changes to stimulate timely adaptation should also be integrated in any discussion on the design of a European cluster policy.Author : foglia