20th TCI Anniversary Commemorative Book: The past, present and future of clusters

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20 Years of TCI network/the Past, Present and Future of Clusters

Transcript of 20th TCI Anniversary Commemorative Book: The past, present and future of clusters

20 Years of TCI network/the Past, Present and Future of Clusters

20 Y

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20 Years of TCI network/the Past, Present and Future of Clusters

When the TCI Network was founded two decades ago, it was a bold initiative by a group of individuals from different countries and organisations that shared one common belief: that the cluster-based approach towards economic development and competitiveness emerging at the time based on the work of Michael Porter and others had huge potential, and was something to be brought closer to a wider group of practitioners. Two ideas played a particularly strong role in their thinking:

* First, that the focus should be on practice, i.e. on how to translate the concept of clusters into real programs, organisations, and impact on the ground.

* And second, that the network should be organised on a global level, because the concept had global relevance and the experiences gained anywhere around the world were valuable.

The fact that we are in 2017 coming together in Bogota, Colombia, to celebrate the 20th anniversary of the TCI Network is a testament to the power of these ideas, and to the dedication of our founders and those that followed to develop the organisation. The TCI Network is strong,

with a robust secretariat in Barcelona, with a dedicated board of 14 individuals from all parts of the network, and with local groupings in Latin America, in Oceania, and in Asia, a deep base in Europe, a growing presence in North America, and important linkages into Africa. We all have been lucky to benefit from this willingness to come together and invest in a common platform; we are particularly indebted to the hosts of our annual conferences that are showcased in this book.

The TCI Network has stayed true to its founding ideas, but it has also seen important changes over the years. In the beginning the focus was on consolidating and communicating the cluster approach to a wider community, moving beyond the initial group of practitioners. Over time, the main mission of TCI became helping these practitioners to refine and develop their cluster-based activities, and to place cluster efforts into the broader context of innovation and competitiveness policies. Practically, this has seen TCI move beyond the global conference as an annual window into the world of clusters and provide activities around evaluation, peer reviews, mentoring, staff exchange, disseminating of academic research, and more. TCI has also become active in advocacy, sharing the experience of its members with

Dear TCI friends,

20 years of TCI Network | the Past, Present and Future of Clusters 2

Christian KetelsPresident TCI Network Board of directors

international organisations and policy makers. New activities are being launched as members identify areas of common interest. Partnerships are developed with other networks working on related issues. And the footprint of activities around the globe is continuously deepening.

What will the future hold? This book tries to explore some of the issues facing clusters, cluster policies, and cluster initiatives. The need for finding new avenues for enabling sustainable growth is urgent as ever. Many traditional approaches based on macroeconomic management or economy-wide enhancements of the business environment have proven to be often insufficient. The interest in location- and sector-/issue-specific initiatives is larger than ever. But the pitfalls in moving from abstract new ideas to effective implementation are manifold.

I am convinced that the TCI Network has a huge contribution to make to these discussions in the coming years. Our focus on practice is what is critical to move towards real impact, and our global scope is right for the economy that we live in. The cluster framework remains a uniquely powerful tool to understand location- and sector-specific sources of competitiveness, and to mount effective public-private action to enhance performance. But to seize this opportunity we cannot stand still. We will need to find new ways

Let the next decades begin!

to engage our members and the broader group of economic development professionals we are part of, grounded in a more robust business model. And we need to be a driver and part of the wider efforts to develop the framework for cluster-based economic development further, incorporating new ideas and new realities of the global economy. As a network, I am sure we can do this.

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Dear cluster practitioners, policymakers, researchers, and businesspeople,

Even though clusters, as geographic agglomerations of specialised industries, have existed for centuries, the focus on cluster policy and practice (through cluster initiatives) is much more recent. The past two decades have been marked by a growing interest in territorial competitiveness and an increased focus on the part of nations and regions in pursuing sustainable and accelerated economic growth. Modern industrial policies and productive development agendas, based on cluster initiatives and other tools for the promotion of local economic development, have become mainstream, as a complement to more traditional approaches to competitiveness based on horizontal agendas which aim at improving the business environment for all sectors of the economy.

Colombia is no stranger to this global phenomenon, and through its National Competitiveness, Science, Technology, and Innovation System, it has recently designed and implemented a set of policies, in particular, a National Productive Development Policy that seeks to diversify and upgrade its economy, as a way to address its stagnating productivity challenge. In contrast to past efforts, which privileged a “top-down” approach, these new policies emphasise a “bottom-up” one, through which not only sectors and/or strategic areas are prioritised at the local level, but it is at the local level where much of the action and agendas are taking place, undertaken by local private, public, and research/academic actors.

This change in paradigm, along with a growing global trend of implementing cluster initiatives to catalyse local and regional competitiveness, has resulted in a multiplication of efforts in various regions of the country in using clusters as the main tool for implementing local productive development agendas. To date, the Colombian Cluster Network (Red Cluster Colombia) has mapped nearly 90 cluster initiatives throughout the country in the last few years. This has made Colombia a Latin American leader in the implementation of such agendas.

In particular, Bogota has been working on two sets of complementary initiatives, in which the Bogotá Chamber of Commerce has a leading role that provides the basis for one of the most interesting and profound productive development agendas, not only in Colombia, but also in Latin America. Firstly, Bogota has been implementing its Research and Innovation Smart Specialisation Strategy (RIS3), through which actors from both the public and private sectors and from academia, are focusing resources and efforts –in particular those related to science, technology and innovation– on five strategic areas that are totally aligned with the comparative advantages and vocation of the city and the region: Bio-Pole, which includes sectors and clusters related to the life sciences; Bogota Creative Region, including sectors and clusters of the creative and cultural industries; Business Services, which includes activities and clusters such as financial services,

20 years of TCI Network | the Past, Present and Future of Clusters 4

MÓNICA DE GREIFFPresidentBogotá Chamber of Commerce

KPO, and BPO; Advanced Knowledge Hub, which seeks to enhance Bogota’s education and research capacities; and Sustainable City-Region, which addresses regional sustainability challenges through entrepreneurial solutions.

At the same time, Bogota and its surrounding region has been implementing the most ambitious cluster-based development agenda in the country. Bogota is currently working on 16 cluster initiatives, aligned with its RIS3, through which efforts are directed at identifying and addressing bottlenecks that limit the competitiveness of the following economic agglomerations: Apparel, Jewellery, Footwear and Leather products, Electric Energy, Construction, Business and Events Tourism, Gastronomy, Graphic Communication, Cosmetics, Financial Services, Software and IT, Dairy, Health, Pharma, Creative and Contents Industry, and Music.

What is happening in Bogota and in the whole of Colombia with regards cluster-based development agendas was surely one of the reasons why TCI chose this city to host this special edition -the 20th- of its Global Conference. It was precisely due to TCI’s 20th anniversary that we decided to put together this commemorative book, through which we aim to both derive lessons from the past 20 years of the cluster concept and, more generally, of local competitiveness agendas, and to look at the future and at what the next 20 years will bring in terms of these discussions.

The latter is very exciting, especially -but certainly not exclusively- for a country like Colombia, entering a new era of post-conflict. In an ever-changing world facing complex challenges, such as a stagnant productivity, climate change, and social and economic inclusion, a cluster-based approach promoted by the regions, will be crucial to successfully addressing these challenges.

Thus, this book is just an initial quota for an on-going discussion that the TCI network shall foster and nurture. We truly hope you enjoy it.

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Contents

Introduction

TCI Global Conference/TESTIMONIALS/CONFERENCES

p.8

p.32 p.34 p.38

The past

Clusters Cluster policy

Cluster initiatives, associations and organisations

Clusters and Cluster Policy in the

next 10 Years

p.32

p.31

p.30

p.40 p.42 p.44 p.48

p.70p.68

p.52 p.58 p.60 p.63

The present

Conclusions and key

takeaways

The Future

References

Cluster mapping

Cluster evaluation

Snapshots of cluster initiatives around the world

Cluster landscape and challenges in Latin America

Global trends shaping cluster context

The cluster concept and beyond

Modern cluster policy

Cluster initiatives, associations and organisations

ANNEX 1/TCI Board

p.40

p.66

p.50

TCI Global Conference/TESTIMONIALS/CONFERENCES

20 Years of TCI 820 years of TCI Network | the Past, Present and Future of Clusters

TCI Global Conference1st/

Barcelona, ES / 1998

Nuts and bolts of cluster developmentHOST: TCI Network

#TCI1998 Barcelona Professionals from +30 countries attended @tcinetwork, first global conference sharing practice & knowledge about #cluster development

#TCI1998 @MichaelEPorter inaugurated @tcinetwork headquarters in #Barcelona: the first global network of #cluster practitioners was established

The first conference in Barcelona led to the

establishment of TCI (The Competitiveness

Institute, at that time) as a professional

organisation. This was a particularly meaningful

event as it gathered, for the first time, a

large group of pioneers working in cluster

development all over the world. As the

main theme “The Nuts and Bolts of Cluster

Development” suggests, the discussion cantered

on the state of the art of a new approach to

regional economic development that combined

strategic analysis with action-oriented initiatives.

As part of this initial movement, Catalonia was

especially proud to host this first conference.

TESTIMONIAL Alberto Pezzi

TESTIMONIALS / CONFERENCES9

TCI Global Conference

TCI Global Conference

2nd/

3rd/

Varese, IT / 1999

Glasgow, UK / 2000

The challenge of mature and emerging clusters HOST: TCI Network / Club dei Distretti

Clusters in the new millennium HOST: Scottish Enterprise

20 years of TCI Network | the Past, Present and Future of Clusters 10

The second conference was held in Varese, northern Italy, a territory that is particularly

rich in natural clusters/industrial districts. The discussion focused on clustering as

a global phenomenon and the theme “The Challenges of Mature and Emerging

Clusters” showed a growing need to adapt cluster development methodologies

to diverse contexts and to different stages of development. The conference

introduced, for the first time, a closer look at clusters through benchmarking cluster

visits, and, since then, clusters tours have became a key element of TCI events.

TESTIMONIAL Alberto Pezzi

#TCI1999 Varese The challenge of mature and emerging #clusters at @tcinetwork 2nd global conference: global defies for local communities

www.distretti.org co-organised #cluster benchmarking visits at #Lumezzane and #Biella clusters #TCI1999 Varese

As one of the first regions in the world to actively embrace the concept of cluster development,

Scotland was proud to host the 3rd TCI conference to share experience, insights and learning on

leading policy and practice in cluster development. The conference brought new people, ideas

and connections to Scotland and played an important role in shaping our approach to cluster

development, and a long-term investment in stimulating and supporting the growth sectors.

In the years since then, the principles of cluster development have remained strong at the heart

of our collective activity. We work collaboratively to identify our sectors’ competitive advantages,

agree on strategies and actions to help address common challenges boost, the competitiveness

of our clusters, and capitalise on shared opportunities for broader long-term economic growth.

TESTIMONIAL Madeline Smith

#TCI2000 Glasgow was recognised as a huge success to #Scotland and played an important role in shaping our approach to #cluster development

@tcinetwork has been alongside us on our #cluster journey in #Scotland, stimulating our initial thinking, informing our long term fundamental approach & helping continually refresh and update our ideas #TCI2000 Glasgow

TESTIMONIALS / CONFERENCES11

TCI Global Conference4TH/

Tucson, US / 2001Clusters and the new economy HOST: Greater Tucson Strategic Partnership for Economic Development

This was the first conference in the Americas, not forgetting the 1997 gathering in

Chihuahua, MX, that lead to the inception of TCI-The Competitiveness Institute.

Tucson, Arizona, had been at the forefront of cluster-based economic development

for over a decade and the conference helped us to showcase Arizona’s knowledge

economy clusters before an international audience. Regional clustering was

being adopted in all corners of the world as a basis for economic and business

development and the practices of clusters were evolving fast. Only one month

after 11S, discussions focused on the relationship between the new economy and

regional clusters. The rise of the new economy was supercharging existing clusters,

powering the development of new clusters, fostering ties between clusters, and

providing opportunities to link clusters in the developed and developing worlds.

TESTIMONIAL Bob Breault

#TCI2001 Tucson was a great opportunity for analysts and decision makers from around the world to learn from the #Tucson #cluster experience

#TCI2001 Tucson showed how big impacts of the new economy were being felt in the dynamic interplay of regional #clusters

20 years of TCI Network | the Past, Present and Future of Clusters 12

#TCI2002 key outcomes: measurement and evaluation as the next big challenge; moving from analysis to implementation; facilitating a better understanding of how clustering concepts can help government transform itself

TCI Global Conference5TH/

Cairns, AU / 2002Connecting clusters HOST: Queensland Government / Cairns Region Economic Development Corporation

The conference reaffirmed the positive contribution that industry

clusters make to the development of host countries and regions.

At a time of heightened global investor uncertainty, governments

and business must work collaboratively to minimise common

risks and to strengthen pathways to trade and investment.

Delegates agreed that the specific benefits of the cluster

approach include the achievement of the critical mass required

for business development, effective infrastructure development

and effective marketing; providing a vehicle for ‘people to people’

connections (intangible relationship building); capitalising on the

strengths of a group of firms without compromising the initiative

of individual members; driving outcomes in innovation, trade

and investment. We did not, however, influence national policy!

It was a memorable conference. The dinner was held on

‘Double Island’ to showcase the magical environment of

the region. The ferry broke down and we had to finish the

journey in small tender boat. It was quite an adventure!

TESTIMONIAL Tracy Scott-Rimington

#TCI2002 many of the Australian delegates made professional and #cluster connections that have endured to the current today

TESTIMONIALS / CONFERENCES13

TCI Global Conference6th/

Gothenburg, SE / 2003Innovative clusters, a new challenge HOST: VINNOVA / NUTEK / ITPS / ISA

The City of Ottawa and its many

conference partners were honoured

to host the 2004 conference and to

follow in the footsteps of TCI’s family of

successful host cities. The conference

offered a chance to meet the research,

government and business leaders

who helped to transform Ottawa’s

economy, creating new opportunities

for growth through collaboration and

partnerships. The program followed

eight different tracks in order to

deepen in key areas of cluster activity.

Those members pursuing the same

categories of interest were engaged in

continuous dialogue throughout the

conference, in miniforums, and they

were provided with track facilitators

with a vast amount of cluster knowledge

and experience to guide them through

the conference and achieve results.

TESTIMONIAL Michael Murr

#TCI2004 offered a chance to meet the research, government and business leaders who helped to transform #Ottawa’s economy creating new opportunities for growth through collaboration and partnerships

#TCI2004 conference program followed eight different tracks; facilitators with a vast amount of #cluster knowledge and experience guided participants through the conference and to achieve result

20 years of TCI Network | the Past, Present and Future of Clusters 14

TCI Global Conference7th/

Ottawa, CA / 2004Building innovative clusters for competitive advantage HOST: City of Ottawa

The 2003 conference in Gothenburg brought together participants from different professional

environments involved in various ways in innovative clusters and innovation systems. The conference

provided methodologies and deep understanding on how to boost collaboration for innovative

clusters, innovation being a key factor of competitiveness, with reference made to human resource

development and skills training, and to the role of the education system and universities. A highly

interactive program was organised with top roundtables on the forefront of clustering, mini forums

on the practice of cluster strategies, learning workshops with real cases of mature clusters and action

workshops for emerging clusters. The cluster visits, academic summit and introductory course on

basics of clusters, made up a program that met the needs of participants with varied interests and

backgrounds. The Cluster Initiatives Green Book (Sölvell, Lindqvist, Ketels), a reference on the state of

the art of cluster practice at that time and a key publication on clusters, was presented in Gothenburg.

TESTIMONIAL Lars Eklund

Each session of the #TCI2003 Gothenburg conference was a combination of a keynote speech (inspiration), a moderated roundtable (practice) & focussed workshops (learning and action)

The #Cluster Initiatives Green Book (Sölvell, Lindqvist, Ketels) was presented at #TCI2003 in Gothenburg

TESTIMONIALS / CONFERENCES15

TCI Global Conference8TH/

Hong Kong, HK / 2005Enter the dragon: China's emergence and international competitiveness HOST: The Hong Kong Institute of Economics and Business Strategy

The main focus of the 2005 conference was on China and its impact on the

world. China’s emergence onto the world stage created unprecedented

opportunities and challenges to business people and policy makers from

all over the world. China had become a market, an investment location,

a production platform and a competitor. Many of the sessions in the

program referred to China’s rise along with a relevant amount of the more

traditional TCI issues including a stream on rethinking competitiveness.

TESTIMONIAL Michael Enright

Cluster study visits during #TCI2005 included tours to #Guangdong and #HongKong to learn how Greater Pearl River Delta came to dominate industries locally and globally

#TCI2005 in #HongKong was an opportunity to make contacts with Chinese counterparts and to make linkages with Asian clusters

20 years of TCI Network | the Past, Present and Future of Clusters 16

At that time, the French government had just launched a national cluster policy,

balanced with the various local/regional initiatives from the early 2000s. The

conference gathered 437 participants from 62 countries, visiting 8 cluster tours,

and debating the topic of “Governance and business involvement in cluster

initiatives”. The outcome shed light on the fact that governance is a matter

of power, trust and interdependence. Business involvement depends directly

on the size of companies. As the event took place in the Palais de la Bourse,

in the heart of the city, the participants were able to walk to all the different

venues, and even dance at the very first TCI party following the gala dinner!

TESTIMONIAL Frédéric Miribel

Governance and companies as cornerstones of #cluster initiatives was the focus of #TCI2006 conference in #Lyon

#TCI2006 in Lyon beat all the records of participation with 425 participants from 65 countries

TCI Global Conference9th/

Lyon, FR / 2006Governance and business involvement in cluster initiatives HOST: Chamber of Commerce and Industry of Lyon

TESTIMONIALS / CONFERENCES17

TCI Global Conference

TCI Global Conference

10th/

11th/

Portland, US / 2007Collaboration, innovation and sustainability HOST: Oregon Economic Development Department

Cape Town, ZA / 2008Clusters meeting the challenge of globalisation HOST: Trade & Industry Development / Economic Development / Tourism in Capetown

20 years of TCI Network | the Past, Present and Future of Clusters 18

The Oregon Economic Development Department and our many partners in Oregon

and Washington were committed to the success of the 2006 conference and they

invested effort, creativity and expertise into holding a memorable 10th Anniversary

event. The conference attracted economic development departments in nearly

all 50 U.S. states and big international delegations. We brought in strong industry

sponsorship and engaged industry in the conference and the topic of cluster

development, which was important for our state. Participants particularly valued

the chance to learn about Portland, one of the cities that had boosted initiatives to

combine sustainability with economic growth, and its business results. Sessions about

climate change, long-term competitiveness, and the impact of entrepreneurship

were part of the program. There was local and organic food to be enjoyed!

TESTIMONIAL Amy Keiter

#Portland's success in combining sustainability with economic growth and its positive business results could be tested at #TCI2007 #Green Building Walking Tour

Boeing, IBM, Intel, Wal-Mart explained their business strategies in local clusters to improve local competitiveness #TCI2007 #Portland

Being the first TCI conference in Africa, TCI2008 in Cape Town placed a particular emphasis

on the role of cluster initiatives in emerging economies, and the sharing of lessons between

cluster practitioners from both developed and developing economies. Sessions with a

regional focus on Africa, Latin America and India, and the programme was made up of

topics such as commodity dependence, inequality and marginalisation, land reform, skills

and professional development through clusters. Cape Town offered a great opportunity for

attendants to meet with colleagues, policymakers, researchers, business entrepreneurs,

cluster managers and facilitators and to engage in lively discussions in a superb atmosphere.

TESTIMONIAL Nigel Gwynne-Evans

The welcome reception at the top of Table Mountain with its spectacular sight of #CapeTown sunset was the meeting point for delegates of TCI and the international #cluster community at #TCI2008

#Cluster practitioners from developed and developing economies sharing experiences in lively discussions in a superb atmosphere in #TCI2008 #CapeTown

TESTIMONIALS / CONFERENCES19

TCI Global Conference12TH/

Jyväskylä, FI / 2009Learning clusters - adapting to the new competitiveness scenario HOST: Regional Council of Central Finland

Our goal when we designed the 2009 conference was to use the

thousands of years of experience of the TCI members to jointly

create new solutions to develop competitiveness and manage

global change. Vision and leadership, the added value of clusters,

interaction and learning in networks, innovation processes in

clusters and the aptitude to identify new business opportunities

were common themes for all clusters. But we mainly wanted to

stress learning as a key tool with which to deal with challenges

and we played with the idea of clusters as networked learning

organisations - learning clusters. With that purpose in mind, we

created a unique learning process for the conference where the

expertise from the conference participants was key. We particularly

asked them not to cling on to sectorial thinking when placing their

presentations, but instead think of what challenge or solution

their case represented and where it best fitted in the conference

process: sharing information, identifying patterns, finding new

models or testing new solutions. Delegates coming to Central

Finland could obtain ideas and inspiration from speakers from

different disciplines, an innovation developer, a futurist, a journalist,

and even a philosophy professor and experience different session

formats, from clinics to an outdoor seminar and a sauna immersion,

all documented in a daily newspaper. The TCI crowd enjoyed the

Kalevala magic night wearing their countries’ traditional costume!

TESTIMONIAL Anna Korpi

Learning #clusters, clusters as networked learning organisations was the inspriation to design #TCI2009 in #Jyväskylä #CentralFinland

Delegates at #TCI2009 in #Jyväskylä #CentralFinland could get ideas and inspiration from speakers from different disciplines, an innovation developer, a futurist, a journalist and even a philosopher

20 years of TCI Network | the Past, Present and Future of Clusters 20

TCI Global Conference13TH/

Delhi, IN / 2010Competitiveness, innovative clusters and prosperity HOST: Institute for Competitiveness India

Delegates from across the globe attended the TCI2010 conference to share their

thoughts on competitiveness, economic development, and the benefits of cluster

formation. Some of the highlights of the forum included cluster tours in Delhi

(IT & Automotive Cluster) and Noida (Media Cluster), Industry focus sessions on

automobiles, IT, Education, Climate Change, etc. and interesting panel discussions

on competitiveness and poverty, public policy implications of competitiveness,

etc. Over 80 eminent speakers attended the conference, including Michael

Enright, Klaus Haasis, Brian Roberts, Wolfgang Lehmacher, Torger Reve, Ana

Korpi, Michael Steiner, and Janamitra Devan (World Bank), among others.

TESTIMONIAL Amit Kapoor

#TCI2010 in #Delhi was an experience to remember, an immersion on Indian #clusters and a bridge to find paths for prosperity through #collaboration

#TCI2010 in #Delhi was one of the most multi-cultural conferences TCI has held, with a good representation of the developing world from Africa, Asia and South America

TESTIMONIALS / CONFERENCES21

TCI Global Conference14th/

Auckland, NZ / 2011Competitiveness at the edge HOST: ATEED-Auckland Tourism, Events and Economic Development

The TCI2012 conference in the

Basque Country explored the

theme of ‘constructing place-

based competitiveness in times

of global change’. The focus was

on understanding how firm- and

cluster-level strategies combine

in the construction of place-based

strategies that ensure sustainable

competitiveness, issues that continue

to shape debates in the Basque

Country today. Over 450 delegates

met in Bilbao and San Sebastian, and 7

cluster tours provided an opportunity

to share experiences and reflect on

the competitiveness trajectory of

a territory with strong tradition in

cluster policy. Hosting the conference

and continued active engagement

in TCI is helping to evolve and shape

that trajectory into the future.

TESTIMONIAL James Wilson / Mari Jose Aranguren

Remember this? In 2012 we met in the #BasqueCountry for our #TCI2012 conference, hosted by @orkestra & @Irekia #clusters #competitiveness

Cluster pioneers: Looking back to #BasqueCountry #TCI2012, bringing together cluster policy shapers from around the world to share their vision

20 years of TCI Network | the Past, Present and Future of Clusters 22

Hosting the TCI2011 conference in Auckland provided an opportunity to connect and make new friends

from many places around the globe. We needed our economy, our business people and our sectors to be

globally relevant and internationally connected. We were inspired by experts, we gained insights, and

made new connections from visiting delegates and workshop leaders. In turn, we shared some of our

world-class people, businesses, and clusters. The three Cs: clusters, collaboration and connectedness

are the key messages we took from the week, and we look forward to the conference being a catalyst

for a more competitive, globally relevant Auckland. Without doubt, the Conference was a timely

reminder on how cluster-based competitiveness can fit into broader economic development policy and

we appreciated the efforts of TCI members in drawing together a submission to the Auckland Plan.

TESTIMONIAL Tony Caughey

The Kia Ora newsletter recaps top "kiwi"moments at #TCI2011 in #Auckland, as the Powhiri Maori Welcome and the yacht racing on #Auckland harbour, a fantastic plan to break the ice and to forget about the jetlag

Did you know that #TCI2011 won a bronze medal at New Zealand Sign and Display Awards for its networking exhibition area? The ‘New Zealand Lounge’ was designed to create a New Zealand inspired space for delegates to network and enjoy breaks

TCI Global Conference15th/

Basque Country, ES / 2012Constructing place-based competitiveness in times of global change HOST: Orkestra - Basque Institute of Competitiveness

TESTIMONIALS / CONFERENCES23

TCI Global Conference

TCI Global Conference

16th/

17 th/

Kolding, DK / 2013Designing the future - Innovation through strategic partnerships HOST: The Region of Southern Denmark / REG X

Monterrey, MX / 2014Creating shared value through clusters for a sustainable future HOST: SEDEC - Nuevo Leon Economic Development Secretariat, Nuevo Leon State Government and Nuevo Leon Clusters

20 years of TCI Network | the Past, Present and Future of Clusters 24

The TCI2013 conference in Kolding, Denmark, was an important ingredient in the

further development of the Region of South Denmark’s cluster programme, the

development of the clusters in South Denmark and cluster development in Denmark

in general. Social media was used throughout the conference to bring new partners

together. Among others, the Glasgow School of Art tweeted that they were

looking for partners to develop an exchange program for students. An opportunity

seized by the Kolding School of Design, which is a key actor in the South Denmark

Design Cluster. The two cluster organisations Offshoreenergy.dk and Wellfare

Tech in South Denmark also obtained a number of new contact points to potential

commercial links with Brazil, Abu Dhabi, Austria and Australia, among others.

TESTIMONIAL Lotte Langkilde

The @tcinetwork song was unofficially presented at #TCI2013 in #Kolding Find out the lirics @tcinetwork

The Every Encounter Equation= short presentations+interactive discussions+social media was put into action at every parts of the #TCI2013 conference in #Kolding

The TCI2014 conference in Monterrey, Nuevo Leon, addressed the question of how clusters

contribute to creating shared value among organisations and in regions and communities.

The future economic, social and environmental development depends on the capacity

of organisations to operate under a model of across-the-board value creation. The role

of clusters supporting this effort is critical in creating a satisfactory long-term outcome.

The TCI2014 conference provided a unique opportunity for global delegates to advance

the understanding of shared value creation and to work towards practical solutions.

TESTIMONIAL Manuel Montoya

Participants at the C2C meetings in #TCI2014 #Monterrey found potential partners and explored opportunities of cooperation in international projects

The #clusters in #NuevoLeon had a main role in the whole #TCI2014 organisation; they also hosted cluster visits where they openly shared their achievements and also difficulties in the daily life of the #cluster

TESTIMONIALS / CONFERENCES25

TCI Global Conference18TH/

Daegu, KR / 2015Clusters in a creative economy. New agendas for companies and policy makers HOST: KICOX - Korea Industrial Complex Corporation

The theme of “Clusters in a Creative Economy. New Agendas for Companies and

Policy Makers” led to a variety of discussions on clusters in a creative economy

and to opportunities to exchange experiences of international cluster policies. The

TCI2015 conference announced that the Republic of Korea’s industrial complex

is growing into a global industrial cluster, not a mere agglomeration of industrial

complexes. In addition, the conference provided a forum to discuss future cluster

development strategies by sharing the Republic of Korea’s progress through a

successful industrial complex policy and cluster strategy. Finally, TCI2015 had become

a new leap forward for leading global cluster collaborative networks around Asia.

TESTIMONIAL Hyeyoung Cho

#TCI2015 in #Daegu was the best attended @tcinetwork conference ever with 900 participants from 86 countries

The first #cluster stories of TCI series Why Cluster Matters were recorded during #TCI2015 in #Daegu

20 years of TCI Network | the Past, Present and Future of Clusters 26

TCI Global Conference19TH/

Eindhoven, NL/ 2016Global changes - Challenges for innovation clusters HOST: Brainport Development NV and Wageningen UR

The TCI2016 conference in Eindhoven was a very fruitful and interactive conference with innovation

clusters being the focal point of attention. Brainport Development organised it together with

Wageningen University & Research to strengthen, in particular, high tech and food clusters in the

Southeast of the Netherlands and also to learn and discuss cluster policy. We welcomed more than

500 people, among policymakers, cluster managers, entrepreneurs, opinion leaders, academics and

visionaries. There were cluster tours, worldwide top speakers and many highly interactive working

sessions, all accompanied by pleasant informal and culinary moments. Within our region, we have

strengthened our cluster network and position by attracting financial partners and organising cluster

meetings before the conference, with public parties, educational parties, and cluster organisations.

TESTIMONIAL Joep Browers

Exchange of experiences on innovation #clusters in surprising formats was the key at #TCI2016 to learn from practice in #Eindhoven

The #TCI2016 conference app provided high engagement from participants in #Eindhoven to learn, connect, interact, and share.

TESTIMONIALS / CONFERENCES27

TCI Global Conference20th/

Bogota, CO / 2017The future of clusters through cross-country & cross-region collaboration HOST: BogotÁ Chamber of Commerce

20 Years of TCI 2820 years of TCI Network | the Past, Present and Future of Clusters20 years of TCI Network

With twenty years gone by, the TCI2017 conference marks a milestone

for TCI and for cluster policy and practice. The fact that it has been

two whole decades since the first TCI conference obliges us to take a

look at what has occurred during this time and draw some conclusions,

but at the same time reflect upon the future of the cluster concept,

clusters and competitiveness policy and practice, and TCI as an

organisation. Moreover, this special edition of the conference coincides

with anti-globalisation sentiments, as well as nationalistic and populist

movements, making themselves felt in different parts of the world.

This makes the task of strengthening collaboration between regions

and between countries even more important. With 3 tracks aiming at

better policy, better practice, and better business, this Conference also

seeks to construct a bridge between modern industrial policy literature

and practice and the competitiveness and cluster framework, as well

as deepening TCI’s relationship with other multilateral organisations.

Finally, given the special anniversary, TCI2017 will remain in the

memory of its participants as having hosted the greatest party ever.

TESTIMONIAL Marco A. Llinás

29 TESTIMONIALS / CONFERENCES

20 years of TCI Network | the Past, Present and Future of Clusters

Clusters and Cluster Policy in the next 10 YearsJames R. Wilson, Anastasiia Konstantynova and Mari José Aranguren

James R. Wilson is Senior Researcher at Orkestra, faculty at Deusto Business School and a Director of TCI Network; Anas-tasiia Konstantynova is Researcher at Orkestra; Mari José Aranguren is Director of Orkestra and Professor of economics at Deusto Business School.

The authors would like to acknowledge the input of members of the TCI Board of Directors who participated at an ideas workshop held in Barcelona in June 2017 (see Annex 1), the contributors of specific inputs that are included in the section ‘The Present’, and the valuable comments on earlier drafts of this chapter from Daniel Gómez, Christian Ketels, Marco Llinás, Diego Peña, Jorge Ramírez and Patricia Valdenebro. Any inaccuracies or errors are our own.

30

Introduction/Reflecting on the future of clusters and cluster policy

1. KETs represent a group of technologies that have a wide range of product application, and provide the technological basis for innovation across a wide range of industries. See: https://ec.europa.eu/growth/industry/poli-cy/key-enabling-techno-logies/description_en

TCI Network was founded during the early years of cluster policy. Following the publication of Michael Porter’s hugely influential Competitive Advantage of Nations, the 1990s were a time when ‘clusters’ was first becoming established as a key construct for guiding competitiveness policy. Since then, the cluster concept has demonstrated remarkable staying power and reach, such that today clusters are a cornerstone of contemporary competitiveness policy the world over. The vast majority of countries and their constituent regions offer some form of support for and/or analysis of clusters as a core element of their competitiveness, industrial, and development policies. In line with this, a huge number of cluster organisations and initiatives have been established throughout the world.

Clusters and cluster policies have not remained static over the last quarter of a century, and TCI Network has been in the vanguard of analysing, debating, and shaping their evolution by bringing together key players from the academic, policy, and practitioner spheres. As socio-economic contexts, systems, and processes continually change, so do the structure of clusters, the challenges facing them and the types of policy support required. Indeed, in the last few years

especially, rapid developments in digital, bio, nano, and other key enabling technologies (KETs)1 have started to disrupt many traditional economic structures and associated policy instruments, and new economic and social challenges are potentially changing the significance of clusters and the future of cluster policies. As TCI Network celebrates its 20th

anniversary, it is an opportune moment to look forward and reflect on what the future holds.

This chapter aims to reflect on and discuss the main trends, challenges and opportunities facing clusters and cluster policies over the next 10 years. It is structured in three main parts. Firstly, there is a reflection on where we have come from, summarising the past trajectory of the cluster concept and its translation into a key policy tool and the focus for so many cluster initiatives around the world. A series of cases are then used to characterise the present state of cluster analysis and cluster initiatives.

Finally, we explore what the future may hold for clusters, cluster policy and cluster initiatives/organisations. The chapter is concluded by summarising some of the main takeaways.

31 INTRODUCTION

The pastUnderstanding the past is an important starting point for reflecting on and shaping the future. When it comes to clusters we can turn to morethanaquarterofacenturyofclusteranalysisandsupportmeasures, documented by thousands of publications (see Graph 1) and practical experiences in cluster mapping, cluster initiatives, cluster policy, and cluster evaluation.

Clusters Today’s cluster concept can trace its roots back to Alfred Marshall’s insights on the advantages of agglomerations of economic activity in ‘industrial districts’ at the end of the 19th Century. Towards the end of the 20th Century Giacomo Becattini and others built on the industrial district concept to explore the experiences of Italian regions.2

The idea of a unique ‘industrial atmosphere’, generated where firms in similar activities are located close by, has since inspired a large number of regional case studies aiming to understand the advantages of spatial proximity. These findings are reflected in different ways in concepts such as industrial complexes, innovation poles, local and regional innovation systems, local production

systems, networks, local high-tech milieu, learning regions, ecosystems, and of course clusters.3

By far the most influential development of Marshall’s agglomeration logic in terms of practical application and policy reach is Michael Porter’s definition of clusters, seen as “geographicconcentrationsofinterconnectedcompanies,specializedsuppliers,serviceproviders,firmsinrelatedindustries,andassociatedinstitutions(e.g.universities,agencies,andtradeassociations)inparticularfieldsthatcompetebutalsocooperate” (Porter, 1998, p. 197).

Taking on board widely-acknowledged ‘positiveexternalities’ derived from spatial agglomeration –such as tacit knowledge spill-overs, labour market pooling, reduced transaction costs, and

2.See, for example: Pyke et al (1990) or Becattini (1990).

3.See, for example: Asheim (2001), Asheim & Gertler (2006), Cooke & Morgan (1998), Keech et al (2012), Scott (1998).

Here we aim to summarise this rich knowledge base so as to build common ground for reflecting on future scenarios for clusters, cluster policies, and cluster initiatives.

A quarter of a century of cluster knowledge

GRAPH 1

ARTICLES PUBLISHED, TOTAL, BETWEEN 1991 -2017

20 years of TCI Network | the Past, Present and Future of Clusters 32

Source: Own elaboration, based on data from Google Scholar (www.scholar.google.com).

economies of scale— Porter’s clusters have a distinctive emphasis on the coexistence of competitive pressures alongside cooperative dynamics. They are also distinguished as ‘traded’ or ‘local’ clusters. Traded clusters reflect activities that serve markets (or have potential to serve markets) beyond the regions where they are located, and that are therefore exposed to international competition. Local clusters meanwhile serve only local markets. While local clusters play a strong role in providing employment and in supporting the development of the region’s traded clusters, it is the traded clusters that account for most research & development (R&D), generate higher-wages, higher-skilled employment, and have higher levels of productivity. Traded clusters might therefore be seen as the ‘engines’ of regional competitiveness.

In terms of practical understanding and application of the cluster concept, there is considerable heterogeneity. Clusters can vary in size (e.g. based on number of establishments, companies, employees) and in form (e.g. hub & spoke, satellite platforms, state-anchored),4

they can be present in different sectors and value chains (e.g. from core industries like automotive, wood and furniture, via agricultural products, to service oriented activities), and of course in very different regional and national contexts. The evolution of clusters also depends on trends in anchor sectors and specific industry life-cycles, and the appropriate geographic scale of clusters can vary significantly depending on the activity (ranging from metropolitan areas, to sub-national regions, to cross-regional, national or even cross-national geographies5).

4.See Markusen (1996).5.The importance of

geographical proximity for cluster dynamics makes it difficult to talk about clusters at a national scale, other than in small countries. However, clusters might be supra-regional or supra-national to the extent that they often cross administrative boundaries.

5,587

1991-2000 2001-2010 2011-2017

Industrial clusters

Cluster iniciative

Cluster policy

7,75034,750

THE PAST33

Evolution of cluster policy uptake

Cluster policyAs the benefits of industrial agglomerations and clusters –in their different interpretations— became understood, public policies towards clusters started to emerge. Porter’s emphasis on clustersasapracticaltoolforpolicy-makerstomapandbuildstrategiesforterritorialdevelopment was particularly influential, and clusters have become to be seen as a ‘way of thinking’ about regional economic development. They encourage policy-makers to consider the interaction of a wide range of elements in the regional competitiveness environment, which has significant potential advantages in terms of more joined-up, cost-efficient and strategic public policy for competitiveness. The rapid uptake of cluster policies can be traced in three main phases, which are reflected in Graph 2.

GRAPH 2

The broadness of the cluster concept, along with its links into related concepts, has resulted in considerable heterogeneity in cluster policy. Different cluster policy programmes operating in distinct contexts use a range of instruments to address a variety of specific policy goals, all under the general premise of fostering relationships and actions that support the competitiveness of clusters. In this sense, cluster policy might best be seen as an ‘umbrella term’ that encapsulates a fairly wide range of policy measures that share core common elements. Under these common elements,

cluster policy experiences vary in terms of level of application (e.g. (sub/supra) regional, provincial and city), type of actors driving design and implementation (e.g. from top-down to bottom-up initiatives), funding sources (e.g. innovation, regional, competitiveness, industry, investment, etc. programmes), and specific goals and objectives (e.g. exports, growth, innovation, business environment, internationalisation, etc.). Looking to more recent history, clusterpolicieshaveintegratedwellwiththeemergenceofmodernindustrialpoliciesaimingto

20 Years of TCI 3420 years of TCI Network | the Past, Present and Future of Clusters

Phase 1: Pioneers

Phase 2: Entrepreneurs

Phase 3: Mainstream

1990s mid-1990s to mid-2000s from the mid-2000s

Pioneercountriesandregionsgetacquaintedwiththeclusterapproachandtakefirsttrialsteps(suchasmappingclusters,buildingworkinggroups,andencouragingnewinstitutions)todevelopcompetitivenessorinnovationpoliciesbasedonthisnewapproach.Theseactivitiesarebasedonatrial/testapproach,withtheaimofexploringpotentialadvantages.

Firstresultsfrompioneerexperiencesgeneratedastrongimpulseforspreadingclusterpolicy.Encouragedbysomepositiveresultsandinterestfromclusterpolicybeneficiaries,butstillwithlimitedexperiencearoundkeysuccessfactors,‘entrepreneurs’inmanyregionsandcountriesadvanceclusterpolicythroughexperiment-basedimplementation.

Previousexperienceshavenowestablishedthecornerstonesofsuccessfulclusterpolicy,anditbecomesincreasinglymainstreamed.Extensivenumberofclusterpolicystakeholdersillustratesbenefitsfromjointclusteractivitiesandclusterbasedpolicysupport.Itbecomesthenormforcountriesandregionstohavesomeformofengagementwithclustersaspartoftheircompetitivenesspolicy.

reigniteproductivitygrowth (Lin & Monga 2017; Crespi et al. 2014; Warwick 2014; Wade 2012). Cluster policy differs from traditional industrial policies in that it builds on sets of activities, targeting the development of whole value chains rather than specific sectors. However, its emphasis on cooperative relationships among triple helix agents from business, research and government fits very well with the focus of modern industrial policies on public-private-research interaction determining the prioritisation of economic activities (Rodrik 2004; Foray 2014). Indeed, clusters have played

key roles in emergent smart specialisation strategies (Aranguren & Wilson 2013; European Commission 2013), where they support the ‘soft’ capacity of public policy to address coordination failures that present barriers to efficient allocation of targeted innovation efforts. More generally, cluster policies provide a pool of 25 years of practice and experience with public-private-research interaction that are being integrated into modern industrial policies, enhancing trust and confidence in their effectiveness to boost productivity, competitiveness, and territorial development.

35 THE PAST

This pool of experience is particularly important because cluster policies, as all competitiveness policies, are strongly context dependent. The appropriate mechanisms to support clusters depend on both regional and cluster specifics, which condition their design and implementation.Yet getting this support right has been demonstrated to strengthen economic development in various ways, and in particular through the capacity of cluster policy to facilitate constructive public-private engagement that provides valuable intelligence for optimising other competitiveness policies. Graph 3 highlights some stand-out challenges and stand-out learnings from past experiences with cluster policy.

GRAPH 3

Some specific challenges and learnings from 25 years of cluster policy

Three stand-out challenges

1

Identification, selection and prioritisation of clusters for support, especially with regards to embryonic or emerging clusters;Source: Author´s elaboration built on re-

viewed literature (with specific reference to European Commission, 2016).

20 years of TCI Network | the Past, Present and Future of Clusters 36

Three stand-out learnings for “good policy”

12 23 3

Balancing use of appropriate quantitative and qualitative indicators within suitable methodological frameworks that can support the design, implementation, and evaluation of cluster policy;

Practical implementation of cluster support mechanisms: public vs private driven, scale and scope of clusters, appropriate organisational form to support.

Cluster policy can play a key role in improving policy efficiency in other areas, especially when integrated in an overall framework for competitiveness environment development.

Detailed and in-depth analysis of clusters, markets, and policy-related factors have proven to facilitate prioritisation of clusters to support;

Establishment of shared vision and understanding among cluster policy-makers, implementers and recipients via constructive and comprehensive dialogue;

THE PAST37

Cluster initiatives, associations, and organisationsOver 20 years of experience with cluster policy has also illustrated the varietyofdifferenttools,instrumentsorinitiativesthatcanbeusedforclusterdevelopment. Porter identifies a broad range of intermediary ‘institutions for collaboration’ –including chambers of commerce, industry associations and university alumni associations– that can have important impacts on cluster competitiveness. The 2003 Cluster Initiative Greenbook (Sölvell et al. 2003) –based on qualitative (around 20 case studies) and quantitative (results of 250 responses from a Global Cluster Initiative Survey) analysis– made the more specific term “clusterinitiative” popular. Cluster

2017

Beg. 2000s

Non-institutionalisedSource: Own elaboration, based on reviewed literature

Cluster association/

CMO

Cluster initiative

graph 4

Cluster initiatives

Importance as a tool in

cluste

r pol

icy

initiatives are referred to as ‘partnership projects to promote cluster competitiveness’ or ‘a tool to ‘lubricate’ clusters and make them more dynamic.’

Graph 4 illustrates how the general vision and understanding of the precise role and form of cluster initiatives has evolved over the last 20 years, with a tendency towards more-formally institutionalised forms6, and increasing use of the term ‘cluster association’ or ‘cluster managing organisation (CMO)’ to describe such organisations. While initially cluster initiatives tended to have a loose structure of working groups or volunteer based initiatives dealing with cluster specific issues, in recent years these have evolved towards legally registered entities with well-defined organisational structures, activities, and strategies.

For example, in one of the first references to a “cluster initiative”, Lagendijk (1998) referred to the “initiation of different activities based

20 years of TCI Network | the Past, Present and Future of Clusters 38

6.By ‘more-formally institutionalised’ we mean institutions that are registered in the official public register as a legal public/private or public-private entity and exhibit the typical characteristics of a formal organisational de-cision-making structure.

A cluster initiative is /

Sölvell, Lindqvist, & Ketels (2003): partnership projects to promote cluster competitiveness

ESCA (2010): cluster managing organisation - a management agency that coordinates activities of cluster participants

OECD (1999): new forms of governance and incentive structures based on networks and partnerships

Enright (2000): specialised organisations associated with regional clusters

institutionalised

on promotion of cluster concept”, noting the advantages of bringing together bottom-up and top-down processes, and therefore giving a new role for public policies in the frame of territorial development. This fits well with later work (OECD 1999) that explains the origin of cluster initiatives “in a trend towards new forms of governance and incentive structures based on networks and partnerships” (p. 8). Among a number of practical experiences and academic viewpoints gathered in the OECD publication, cluster initiatives were still not clearly defined in terms of institutions or organisations. Based on a survey in 2000, however, a definition emerged as “specialized organisations associated with the regional clusters (e.g. associations of firms, specialized institutions, or specific cluster organisations)” (Enright, 2000, p. 14), with a large number of such organisations identified. Over subsequent years the attention given to cluster initiatives has increased, and they are often referred to as cluster associations

or cluster management organisations to reflect their increasingly formal institutionalisation. The growth and institutionalisation of cluster initiatives was largely driven by increasing demands from cluster actors on their operational capacities, and was pushed in particular in Europe by cluster benchmarking methodologies developed by the European Secretariat for Cluster Analysis (ESCA), which later introduced certification attributing clusters with bronze, silver, and gold labels. Nevertheless, still today we can find cluster initiatives around the world of all types: formal and informal; hierarchical and flat; and offering all kinds of activities for their (non-)members. Regardless of the juridical or organisation form, what they broadly have in common is the aim of “bringing different types of firms and organisations together around one supply chain or one common resource or technology, thus improving economic integration as well as fostering communication and the transfer of knowledge between firms” (OECD 1999).

THE PAST39

The present

As means of characterising the current ‘state of clusters’ this section presents a series of short cases and snapshots from around the world, contributed by different TCI Network members. They aim to reflect the current state of art in both cluster analysis and in cluster policy and cluster initiatives.

The section begins with a reflection on the state of art in cluster mapping (from Christian Ketels) and cluster evaluation (from Madeline Smith, James Wilson and Emily Wise). It

Cluster mapping*When TCI was founded, much of the analysis of clusters was based on case studies. These studies had the advantage of reflecting the richness of clusters and their dynamics. They provided deep learning on specific clusters and developed a conceptual framework for describing them. What they were not able to do, however, was to test the general validity of the cluster framework and to quantify the empirical role that clusters played in the overall economy.

In the late 1990s Michael Porter launched at his Institute for Strategy and Competitiveness the first cluster mapping to address these concerns head on. Its ambitious goal was to derive data-driven, comprehensive, and transparent cluster definitions that allowed the comparison of individual clusters across locations and assess their overall role in the economy. The definitions were based on the evidence of

local spill-overs and externalities revealed in actual co-location patterns of industry-specific employment across the United States.

The results were powerful. The data distinguished local from traded industries, two parts of the economy that are both important but subject to very different competitive circumstances and with different levels of prosperity generation capacity. They showed that groups of related traded industries concentrate geographically, with concentrations in ‘strong’ clusters driving higher performance. And they revealed how regions have each their own distinct cluster portfolio, with strong clusters as a key driver of regional performance (Porter 2003).

With more and better data becoming available, the definitions were increasingly refined. The key break-through was to identify a small number of transparent design choices that had to be made while leaving the remainder of the

continues with a collection of snapshots characterising cluster policies and initiatives around the world (The Netherlands, Russia, Republic of Korea, and Australia), drawn from TCI Network’s video-blog series on “Why clusters matter.” Reflecting the celebration of TCI Network’s 20th global conference in November 2017 in Bogota, Colombia, the section concludes by bridging from the present into the future with a specific reflection from Jaime Echeverri on the cluster landscape and associated challenges in Latin America.

* Written by Christian H.M. Ketels (Harvard Business School, USA).

20 years of TCI Network | the Past, Present and Future of Clusters 40

cluster definition process to be driven entirely by the data (Delgado et al. 2016). The emerging cluster data was then used to explore issues like the relationship between cluster presence and employment growth, entrepreneurship, resilience, and regional prosperity (Delgado et al. 2016; Ketels & Protsiv 2013).

Comparable data sets were first created for the United States (US), followed by the European Union (EU) and Canada. They capture economic activity (measured by employment, establishments, and payroll) by cluster category for different levels of geography (US: county, metropolitan area, economic area, state; EU: NUTS7-2 and higher; Canada: Census Metropolitan regions, provinces). A range of other countries, including Mexico and the Republic of Korea, have recently started efforts based on this methodology.

Governments have drawn on this work to launch cluster portals that make this data available

for policy and economic development practice. In the United States, the Economic Development Administration (Department of Commerce) supported the 2014 launch of the US Cluster Portal8. The European Commission hosts the EU Cluster Portal9 on its site since 2015; the first version had been launched in 2007. These portals provide comparable ‘open data’ on the cluster composition of regional economies and the geographic footprint of specific cluster categories across regions.

What’s next? Research has only just started to explore the data available. Policy and cluster practice have to learn how to best use this data, and how to integrate it with other sources of data related to cluster-specific business environment conditions and market dynamics. The next two decades of cluster mapping promise to be at least as exciting as the two previous ones!

7.NUTS (Nomenclature of territorial units for statistics) is a hierarchical system for dividing up the economic territory of the EU.

8.www.clustermapping.us9.http://ec.europa.eu/

growth/smes/cluster/index_en.htm

“Policy and cluster practice has to learn how to best use this data”

“Data distinguished local from traded industries, two parts of the economy that are both important but subject to very different competitive circumstances”

41 THE PRESENT

Cluster evaluation* Given the popularity of clusters in the policy sphere, there is significant demand to better measure and understand their impacts. This has led to considerable debate in the recent years among cluster practitioners and academics around the topic of cluster evaluation.

No ‘generally accepted standards’ for evaluating clusters have been established among practitioners. Regions and countries working with cluster policies each develop their own approach, seeking to provide evidence on the impact of supported clusters on companies and regional development so as to motivate continued investment in cluster efforts.

Most monitoring and evaluation of cluster programmes is based on tracking quantitative outputs of cluster efforts10, and typically fall short of demonstrating the impacts of cluster policies, for example by comparing with control groups. They also struggle to adequately capture the more qualitative elements so essential for successful clusters, such as the

role of trust-building and leadership. They therefore tend to give only limited insights.

Academic analysis has also struggled to overcome the challenges of cluster policy evaluation and has been unable to have much influence on practice. Until very recently most academic analysis tended to fall into two camps: qualitative case studies highlighting the relevance of contextual elements; or evaluations seeking to quantify direct effects in terms of specific, narrowly-defined outcomes, often captured with imperfect data/indicators.

Given the limitations of any one methodology, there is an emerging consensus on the need to use mixed methods (Aranguren et al. 2014; Schmiedeberg 2010; Wolfe & Gertler 2004), capable of integrating different approaches such as social network analysis (Smith & Brown 2009; Giuliani & Pietrobelli 2016) or participatory evaluation (Aragón et al. 2014). The emergence of such new approaches offers exciting possibilities, but they are often ignorant of the data-collection possibilities that exist in practice or the specific needs of cluster practitioners (after all, evaluation learning should be useful to practitioners, not a burden). As such, there remain significant gaps between theory and practice around cluster policy evaluation, including:

* Written by Madeline Smith (Institute for De-sign Innovation, Glasgow School of Art, UK) James R. Wilson (Orkestra and Deusto Business School, Spain), and Emily Wise (Lund University, Sweden).

10.These approaches could measure in terms of critical mass (number (#) of actors engaged), linkages (# and type of new linkages established within and outside of the cluster), innovation (# of articles, patents, new collaborative innova-tion projects between knowledge institutions and industry, etc.), com-mercialisation (# new products and services), and/or entrepreneurship (# new companies). In addition, information on financial leverage and “case stories” on the cluster’s contribution to broader systemic developments (e.g. investments in new RDI infrastructure, attraction of foreign talent, etc.) may be collected.

20 years of TCI Network | the Past, Present and Future of Clusters 42

“No ‘generally accepted standards’ for evaluating clusters have been established”

To move forward with these challenges there are strong arguments for better blending academic expertise and analysis with the real-time and evolving experience of policy makers and practitioners that are ‘closer’ to the most relevant data (Smith et al. 2016). This is something that the TCI Network Cluster Evaluation Working Group11 is working to address, bringing together participants from academia and policy in a series of dedicated workshops (in Scotland, Northern Ireland, Poland, Spain, and Norway) as well as at TCI

11. http://www.tci-ne-twork.org/evaluation

annual global conferences. Already this has resulted in the development and validation of an evaluation framework based on the notion of what would expect to be found in the ‘perfect cluster’, alongside a specific survey question bank that is being used to promote future comparative analysis around the human elements that drive clusters. These dynamics should provide strong foundations for future advances, and are a prime example of TCI Network members collaborating to better inform and enhance cluster practice.

1 2 3 4 5

A need to improve how we capture the more qualitative ‘human element’ (or cooperative dynamic) that is essential for understanding the processes and linkages between actor groups that help build, grow, and evolve successful clusters.

A need to convert emerging academic analyses into the development of pragmatic indicators/approaches that have feasible data requirements in practice.

A need for a better understanding of the selection and combination of techniques and tools as appropriate to different circumstances.

A need to develop approaches capable of dealing with complexity from the interactions that exist across policy levels, instruments, and initiatives.

A need to place stronger emphasis on policy learning, rather than the more common narrow focus on audit.

“There are strong arguments for better blending academic expertise and analysis with the real-time and evolving experience of policy makers and practitioners”

THE PRESENT43

Snapshots of cluster initiatives around the world

The Netherlands

The snapshots presented below are based on the transcripts of interviews and articles by different TCI members, and highlight the importance, relevance, and state of art of clusters and cluster policies in their countries and regions. We include here only a handful from many more examples that can be found online in the “why clusters matter” series at www.tci-network.org/.

“They started a project together, where they tried to investigate the challenges they could share and master together”*7 years ago some small and medium enterprises (SMEs) in high tech industries, mostly suppliers of large companies as ASML Holding, were wondering about their future. They were uncertain whether their position in the value chain of those large OEMs (Original Equipment Manufacturer) would even exist in 5 or 10 years, so they started a project together called “mastering the future of manufacturing”, where they tried to investigate the challenges they could share and master together. They even needed a second project, which took another 2 years to get those challenges right and well formulated. But at the end those 7 companies talked about the results of the project with the large OEMs in our region.

These 7 companies started a new cluster that was supported by Brainport Development as a development agency. In 2 years they attracted

almost 100 other manufacturing companies, small and bigger ones, and they started a shared agenda which they still work on today. In this agenda they have 3 kinds of programmes. The first two are a technology programme and a labour market and unemployment-related programme. They started their own training programmes together with existing school programs and started what is now called Brainport Industry College. The third project is getting into international markets. Most of the suppliers in this cluster work for the large OEMs in our region, companies like ASML, FEI, NXP, Phillips Health. Since a few years they went out together to Germany, US, to find new OEMs that allow them to work with them.

This story of 7 companies that started 7 years ago and form now a cluster of almost 100 companies is a success story that is worth sharing with you.

* Joep Browers, Brainport Development; video transcription “Why clusters matter?”, recorded during the 18th TCI Global Conference, in Daegu, Republic of Korea 5 November 2015.

20 Years of TCI 4420 years of TCI Network | the Past, Present and Future of Clusters

Russia

“Helped to enhance comprehensive support

to emerging industries and to build an innovative

ecosystem around them” *

Russian cluster policy started in 2010, and in only 5 years more than 200 cluster initiatives emerged.

It helped to enhance comprehensive support to emerging industries such as IT, biotechnology, waste technology, clean technology and to build an innovative ecosystem around them.

The second goal of the cluster policy in Russia is to revitalise old traditional agglomerations in

* Evgeniy Kutsenko, Higher School of Economics in Moscow, video transcription “Why clusters matter?”, recorded during the 18th TCI Global Conference, in Daegu, Republic of Korea, 5 November 2015.

aerospace, automotive, nuclear, petrochemical, chemicals etc., and it is important to extend value chains and diversify into new markets.

And the third important goal is to boost the competitiveness of small and medium enterprises in traditional sectors, like wood, furniture, food production, jewellery, where financing collaborative projects is one of the main instruments.

45 THE PRESENT

REPUBLIC OF Korea

“Significantly contributed to the facilitation of the industry-academia- research cooperation and businesses of SMEs.”*

In 2005 KICOX (a governmental organisation specialising in the management and support of industrial parks) adopted the cluster concept and launched the Program for Competitiveness Improvement of Industrial Clusters (Cluster Development Program) to leverage clustered businesses to build the network of resident enterprises and partnerships among adjacent universities, research organisations, and business support organisations. The Cluster Development Program aims to create synergism and improve competitiveness of each sector by enabling resident enterprises to build organic partnerships with universities, research organisations and

business support organisations located in areas adjacent to the parks. Through technology transfers, the businesses can solve technical problems and reinforce tech competitiveness. Industrial parks have played pivotal roles in local economic growth through the Cluster Development Program. As businesses of specific industries were continuously clustered, parks were evolved into clusters specialised in specific industries. The Program also significantly contributed to facilitation of the industry-academia-research cooperation and businesses of SMEs.

* Based on the article “Benefits of adopting a cluster approach in the Republic of Korea, by KICOX - Korea Industrial Complex Corp”, written by Kicox for TCI Newsletter12, 28 August 2015.

12.http://www.tci-network.org/news/954

20 Years of TCI 4620 years of TCI Network | the Past, Present and Future of Clusters

Australia

“We hope to see some good strong competitive

clusters in the future.”*

Clusters in Australia have had a chequered history; we have some strong clusters that started around 20-25 years ago, particularly around South Australia.

Over the years sometimes the clusters are in and sometimes are out. Just recently we found there is a renewed interest in clusters in Australia. The strong clusters that have been there for a long time have survived with their own means, through their memberships, and

have wonderful business outcomes for their members. And there are a lot of smaller cluster initiatives that perhaps struggle more without government support at any level, and some of these drive, some of them don’t go ahead.

We are now looking forward to a brighter future with clusters in Australia –we now have some strong interest coming through from our Federal government and we hope to see some good strong competitive clusters in the future.

* Tracy Scott-Rimington, Regional Development Australia, Brisbane, video transcription “Why cluster matter?”, recorded during the 19th TCI Global Conference, in Eindhoven, The Netherlands, 9 November 2016.

47 THE PRESENT

Cluster landscape and challenges in Latin America*

Growth in Latin America has been unequal. One of the factors to help breach inequality gaps between countries and regions within them is associated to the capacity to create new wealth based on the intellectual and social capacities developed by their citizens. To do so, long-term social agreements and common objectives that motivate leadership and guide common purposes and efforts will have to be established. In this sense, the cluster initiatives can serve as

This will require the construction of synergetic capital in the form of the articulation of different forms of capital associated to collective constructions of future visions that are social, cultural, economic and institutional. This will mark differentiating elements in the path of the region’s progress and cluster-based development strategies that demand a confluence of interests and of continuity. The evidence shows that the regions that take a chance on the impulse of strategic clusters advance more quickly.

Corporate ecosystems contribute to consolidating the economy and increasing company competitiveness, at the same time as they allow the resources available for common purposes to be maximised. Interaction with universities, technological institutions, social organisations and governmental entities is good practice in cluster strategies that will contribute to the development of countries and their regions. The clusters will gradually become the step required to connect the social actors: companies, academia and the government.

Private initiative is the best way to drive a society’s progress, and cluster strategies where market opportunities and the demands of innovation and collaboration come together will allow greater generation of individual value and the creation of collective wealth for the continent. In addition, private leadership facilitates the continuity of mid- and long-term processes. There will be greater openness in companies to collaborate and create shared value within their regions.

Develop social capacities to work

in medium and long-term perspectives.

Construction of institutional,

social and corporate fabric.

Private leadership.

1 2 3

Seven challenges:

20 years of TCI Network | the Past, Present and Future of Clusters 48

A cluster-based development strategy facilitates the focus of productive development policies in that it can contribute more aptly given the strategic choices made for regional economies. To do so, sound public policy in Latin America for the development and drive behind cluster initiatives may lead to a structural advance in its path to development.

an efficient instrument to help develop regional strategies to leverage their growth based on their strengths.

A society is what it knows how to do. Thus, societies that learn and become more sophisticated progress more quickly. Development strategies based on clusters make this new reality possible for the continent.

In this sense, Latin America will face seven challenges during the next decade in order to set the bases for the establishment of cluster strategies and initiatives on the continent:

Sharing good practices shortens learning periods, fosters trust, creates greater wealth, and promotes collective intelligence. In Latin America, the level of advancement in cluster strategies is unequal and structuring mechanisms to share learnings creates better conditions for the development of businesses. During the next decade bridges will be built between the industries of different regions and nations where the clusters will serve as interlocutors and promoters of interregional collaboration.

A multipolar world facilitates connections with global value chains and this relationship will generate new specialised knowledge, opportunities and development to drive the multiple cluster initiatives on the continent.

The development of cluster initiatives requires professionals that can facilitate the structuring and development of the strategies and that guarantee a good management of such initiatives. Above all, it requires specialised institutions that can deliver their services pertinently.

* Written by Jaime Echeverri (Medellin Chamber of Commerce, Colombia).

Collaboration and knowledge

transfer between

countries.

Connection with the best international

practices.

Professional and institutional

skills building.

Construction of public

policy.

4 5 6 7

THE PRESENT49

The Future

Building on the past trajectory of clusters and snapshots of the present state of clusters in different parts of the world, this section asks where clusters and cluster policies are heading in the future. An important input to the analysis in this section are the reflections undertaken

Global trends that are shaping the overall context in which clusters and cluster policies are taking place. These include trends associated with ICT and the digital revolution, as well as the delicate interplay between local and global dynamics in search for higher productivity.

Trends relating to the cluster concept itself and encouraging us to re-think clusters and beyond. These reflect, above all, the changing boundaries of clusters as technologies, markets, and value chains evolve.

1

2

Graph 5

Images from Barcelona workshop

by the Board of Directors of TCI Network at a workshop held in Barcelona in June 2017 (see Annex 1 map and the quotations highlighted on the following pages). This workshop brought together a wealth of cluster knowledge and experiences from around the

20 years of TCI Network | the Past, Present and Future of Clusters 50

Trends relating to modern cluster policy, as clusters increasingly become the key channel for organising public-private engagement in the context of new forms of industrial policy (e.g. around smart specialisation strategies).

Trends relating to cluster initiatives/associations/organisations, including the broadening of stakeholders, the evolution of the roles played by cluster organisations, and associated changes in the desirable skill-sets of cluster managers.

3

4

world to discuss the current and future trends shaping clusters and cluster policy development.

The analysis presented here combines these reflections with our own insights and a range of other documentary sources. Our aim is not

to be comprehensive, but rather to explore ideas that may provoke ongoing reflection, future discussion, and analysis among the cluster community worldwide. To facilitate this, the reflections are structured around four broad groups of trends/issues (see Graph 5).

51 THE FUTURE

The emergence, evolution and impacts of new technologies

The first macro-trend refers directly to the growinginfluenceofnewkeyenablingtechnologies(KETs)associated with engineering and scientific developments. In reference to UNIDO (2013), the following technologies will drive the manufacturing and production processes of the future: photonics, biotechnology, nanotechnology, micro-technology, advanced materials, and Information and Communication Technologies (ICT). For example, developments in nanotechnology build novel improved physical, chemical, and biological properties of phenomenon and processes, and therefore potentially impact on the production of almost any manufacturing good.

Following UNIDO (2013), the specificities of these technologies are in their multidisciplinary and trans-sectoral nature, which can be associated with high-knowledge intensity, high R&D costs and rapid innovation cycles. They therefore tend to have a disruptive influence on work and production patterns, value chain building, and international cross-sector connections. Moreover, the changes

facilitated by these technologies impact not only on production costs and timescales, but also on the way products and services are conceived, generated, and delivered between suppliers, buyers, and to end-customers. The changes are complex and unpredictable in nature, and they create a disruptive ground for innovation and new forms of value chains that will have repercussions for (in particular ‘traded’) clusters and cluster policies.

As to ICT or digital technologies, McKinsey (2016)13 has suggested a “neweraofdigitalglobalization” that will affect all public and private actors, from large multinationals, SMEs, and start-ups, to individuals, government, and other organisations. We should expect that this will also shape new forms of clusters, cluster ecosystems, and their boundaries. Some of the influences can be seen in online platforms and spaces (e.g. Amazon, Facebook, Twitter, Alibaba, EBay, etc.), through which all kinds of information are relatively easy accessible in a short period of time, and through which networking is possible with any partner situated in almost any corner of the world. This is making negotiations and decision-making extremely fast and global in reach, as well as more inclusive, as almost any kind of company can enter and participate in global commerce, reaching suppliers and/or customers worldwide. Digital technologies also impact on the reach and complexity of supply chains and influence

Global trends shaping cluster context There are transversal,macro-levelorglobaltrends that are already shaping the overall context in which clusters and cluster policies are taking place, and are likely to continue to do so over the next decade. In particular, two groups of trends stand out. The first group is related to the emergence, evolution and impacts of new technologies. The second group reflects the interplay between global and local dynamics in the drive for businesses and places to boost productivity and ensure sustainable prosperity.

20 years of TCI Network | the Past, Present and Future of Clusters 52

product life-cycles, making them shorter, more flexible, responsive and faster in integrating new technologies and innovations (UNIDO 2013).

Combined with other advances in new technologies, such as Additive Manufacturing (AM) and Artificial Intelligence (AI), digitisation can become a ‘game changer’, revolutionising traditional production and manufacturing systems. These trends are likely to radically alter the geography of production (e.g. by removing much of the imperative for locating manufacturing in places where labour is cheap). Indeed, in a recent article for McKinsey (2017)14, Bromberger and Kell suggest that AM offers benefits over traditional production methods that in the long run can completely remodel the way products are designed and built, as well as distributed, sold, and serviced. Thus, the “factoriesofthefuture” are potentially very different to those of the past; according to the Economist (2017)15 the sports producer Adidas is planning to apply 3D-printing technologies in new fully-automated factories, which will allow the company not only to bring products to market faster and with lower-cost, but also to make products tailored to individual customers’ own designs, something that is currently costly and time consuming. This will in turn affect the local and international patterns of trade, cluster, and value chain building.

Changes in manufacturing associated with the digital revolution are often grouped under the term “Industry4.0” or “DigitalEconomy/Industry”16. Following Smith et al. (2016), there are three main dimensions of change in relation to Industry 4.0: technological change, social change, and change in the business paradigm. In the last dimension the main challenge has been seen in facilitating SME participation in digitalised/automatised supply chains, which are often associated with high costs and risks, reduced flexibility, and reduced strategic independence. This is one area where clusters and cluster policies could play an important role in responding to and shaping the impacts of these emerging technologies.

As technologies revolutionise production, they also impact on the character and form of jobsandlabourmarkets. As forecast by the World Economic Forum (2016) in their report on The Future of Jobs, one of the main trends in the era of these new technologies will be the massive dislocation of jobs from specific industries, regions, and occupations. A central challenge, in which clusters need to play a key role, will be finding strategic place-based responses to newly emerging forms of work (e.g. the ‘gig’ economy) that maintain both economic competitiveness and social cohesion. Indeed, cluster policies and cluster organisations

“More ‘online clusters’ with the groups of similar interests online”

“Cluster organisations must exploit ICT and stay ahead of trends”

13.https://www.mckinsey.de/files/mgi_digital_glo-balization.pdf

14.https://www.mckinsey.com/business-functions/operations/our-insights/additive-manufactu-ring-a-long-term-ga-me-changer-for-manu-facturers

15.https://www.economist.com/news/briefin-g/21724368-recent-ad-vances-make-3d-prin-ting-powerful-competi-tor-conventio-nal-mass-production-3d

16.This describes the orga-nisation of production processes based on technology and devices autonomously commu-nicating with each other along the value chain (Smith et al. 2016).

THE FUTURE53

will need to be continually alert to the way in which production and labour relations are changing, so as to act in ways that ensure the greatest socioeconomic benefits from them.

Technological developments are also inevitably changing the ways in which clusters and cluster organisations themselves operate, something that is already being reflected in the embracing of virtual platforms by the cluster community. Examples include:

European Collaboration Platform17, an online community where cluster practitioners (and beyond) share information and connect theme-specific cluster initiatives around similar interests, needs, calls, etc.

Virtual C2C Matchmaking in area of Advanced Manufacturing (Interreg Europe Clusters3 project)18, resulting in online introductions and discussions between project partner regions’ cluster initiatives

Balancing local and global dynamics and challenges

The second macro-trend recognises two related but distinct pathways for clusters associated with ongoing globalisation processes. On the one hand, globalisation facilitates and encourages greater internationalisation of local production systems through their integration into global value chains. On the other, globalisation emphasises the importance of locally-embedded clusters as valuable sources of tacit knowledge generation and as a focus for responding to challenges that are inevitably locally-rooted.

Easier and cheaper transportation, along with advances in ICTs, have facilitated increasing connectivity and mobility of economic activity. In this context, traded clusters can’t avoid having an international outlook, and we are seeing increased international cluster-cluster collaboration, as well as the emergence of ‘mega-clusters’ that cross borders.19 Such trends led Buciuni & Pisano (2015) to ask “can Marshall s clusters survive globalization?” They explored the influence of global production on the future evolution of manufacturing clusters. Despite the high mobility of manufacturing they find that some of its sectors are actually very sticky, and conclude that factors such as tacit knowledge, adaptation to technological change between suppliers and buyers, and human resource pooling are likely to continue to give local clusters advantages in many activities. Moreover, increased local consciousness around the rooting

19.For example the Bio Innovation Growth Mega Cluster or ‘Big C’, which brings together activities in Belgium, The Netherlands, and Germany (http://www.era-ib.net/sites/default/files/big_c_innovation_cluster.pdf)

20 years of TCI Network | the Past, Present and Future of Clusters 54

Looking forward, we would expect the structureofclustersandthebehaviourofclusteractors/institutionstocontinuetoreflectemergingtechnologicaldevelopments. This seems likely to include: a widening of the scope of cluster relationships and connectivity; making more and more sophisticated use of online spaces and platforms that connect cluster actors within and between clusters; embracing the potential of ‘big data’ analysis to improve cluster policy decision-making and implementation; and using online tools and data to shorten the detection and response time to emerging trends, for example around potential skills shortages.

Twitter communications and LinkedIn groups with different cluster, value chain, and competitiveness-related issues.

17. https://www.clusterco-llaboration.eu/

18.https://www.interregeu-rope.eu/fileadmin/user_upload/tx_tevprojects/library/file_1502179920.pdf

of economic activities –witness the rise in the use of ‘local labels’ and persistent talk of a ‘backlash’ against globalisation– also provides a counterforce to the increased possibilities for mobility.

This trend of ‘backtolocalalongsidebeingglobal’ is likely to persist and intensify over the next decade. It implies that businesses and policy-makers need to be aware of the delicate balance between strengthening local dynamics and building international connectivity. Clusters –as key bridges between firms and territories– are well-positioned to navigate this balance between local and global dynamics. From a policy perspective many of the market/government failures to which cluster initiatives respond are only identifiable and addressable at the local level. Yet clusters also provide a lever for tackling from the ‘bottom-up’ pressing socioeconomic challenges at the global level, such as the widespread stagnation of productivity growth, the degradation of the natural environment, and the extent of inequality both within and between places that is leaving large groups of people behind.

Indeed, a key strength of cluster-based approaches to territorial development is their adaptabilitytodifferentcontextsandchallenges. They facilitate the understanding of existing territorially-embedded opportunities and challenges in a way that enables the design and implementation of a strategy based on territory-specific conditions. This also makes them highly adaptable to the nuances of specific challenges, such as the continued misbalance between places in terms of economic, social, and technological development (see Table 1).

“Back to Local” “More localised clusters: (i) urban agendas (ii) unique clusters, (iii) multi-level clusterisation”

“Interest in international/global – growing building of mega clusters”

“Clusters have the way to implement and understand the trend ‘think global act local’”

THE FUTURE55

Indicator Difference One of the highest One of the lowest

Characteristics Ratio High/Low Indicator Value Country Indicator Value Country

GDPpercapita,2015(current,$) 336 101,909.8 Luxembourg 303.7 Burundi

Incomeshareheldbylowest20%,2012

5 10.20 Ukraine 2 Haiti

Hightechnologyexports(%ofmanufacturedexports),2012

489 48.9 Philippines 0.1 Samoa

Birthsattendedbyskilledhealthstuff(%oftotal),2014

6 100 Armenia 15.5 Ethiopia

Improvedwatersource(%ofpopulationwithaccess),2014

2 100 Japan 48.6 Angola

Improvedsanitationfacilities(%ofpopulationwithaccess),2014

9 100 Singapore 11.6 Togo

Source: Based on World Bank Database (www.worldbank.org).

TABLE 1

Selected indicators reflecting economic and social differences worldwide

20 Years of TCI 5620 years of TCI Network | the Past, Present and Future of Clusters

UnitedNationsIndustrialDevelopmentOrganisation(UNIDO) technical assistance projects based on export cluster promotion (e.g. Cosmetics cluster in Colombia).

Efforts to bridge these differences continue, with international and national (non-) government organisations trying to facilitate the development of lagging territories through technical assistance, information, and awareness-raising campaigns. In recent years, clusters have provided a basis for a significant amount of economic development assistance, reflecting the growing bank of positive experiences with the cluster approach and with cluster policies. Some of the examples of such initiatives are:

Cluster policies and cluster initiatives will continue to play a key role in future efforts to bridge the development gaps between different territories, based on their capacity to develop context-specific strategies to strengthen productivity. However, we would expect them

to play strongerrolesindevelopingandpursuingagendasofinclusivegrowth, that also tackle inequalities within regions, and in contributingtootherpressingchallengesthattietogetherlocalandglobaldynamics, such as climate change.

TCINetworkregionalchapters in different parts of the world, e.g. Latin America Chapter, Oceania Chapter, Asian Chapter.

WorldBankactivities ranging from publications such as Clusters and Competitiveness: A Practical Guide & Policy Implication for Developing Cluster Initiatives (2009)20 to projects in cluster development (e.g. 2015 project launch on agricultural cluster development in Uganda).

UnitedNationsFAOreport (2012) on Agro-based clusters in developing countries: staying competitive in a globalized economy21 presenting some cases of cluster development across Latin America, Asia and Africa.

20.http://siteresources.worldbank.org/INTRA-NETTRADE/Resources/cluster_initiative_pub_web_ver.pdf

21.http://www.fao.org/docrep/012/i1560e/i1560e.pdf

57 THE FUTURE

The second group of trends refers to changes in the cluster concept itself, as it adapts to a continually changing environment that is being shaped by the general trends discussed above, in particular, the emergence and evolution of new KETs. These trends are provoking changesintheboundariesofclusters,bothintermsofactivityandintermsofgeography. This, in turn, is likely to generate a progressive adaption and evolution of the cluster concept.

The cluster concept has never been static. Particularly in recent years, an evolution in cluster practice has taken place, from interpreting clusters as being predominantly based around specific value chains, to interpreting clusters as being increasingly transversal(e.g. related to specific technologies or markets). The European Cluster Panorama 201622, for example, analyses 10 emerging industry clusters in areas such as advanced packaging, biopharmaceuticals, digital industries, experience industries, logistical services, and mobility technologies. Thus, while clusters have always broken down sectoral barriers, they have begun to do so in new ways, and their boundaries have changed and continue to change.

This trend is likely to continue over the next decade, as KETs continue to foster the cross-fertilisation of many existing value chains, and to create new value chains. As one TCI Board member argued at the Barcelona workshop, while the old cluster model was pre-occupied primarily with collaboration in the business-to-business (B2B) supply chain, the current model takes a wider ‘ecosystem’ perspective of the value chain, and next steps will increasingly look to bridge between value chains. Another way of looking

The cluster concept and beyond

at this is in terms of increasingrelationshipsbetweenclusters, from B2B to C2C (cluster-to-cluster) collaboration, or of ‘platforms’ that bring together clusters in ways that facilitate more effective cross-fertilisation of ideas. Either way, the boundaries of existing clusters will become more blurred and are likely to change in line with new types of relatedness of activities.

Cluster boundaries are also likely to evolve in terms of geography, both as a response to changes in the relatedness of different activities and as new ICTs continue to make it easier to collaborate across different kinds of distances. Physical proximity will still be very important, as elements such as tacit knowledge flows, pools of specialised human capital, and trust-building for deep, strategic collaboration will remain critical. However, the combination of digitalisation, additive manufacturing, and artificial intelligence look likely to changethesignificanceofproximityinsomeaspectsofproductionrelationships.

Indeed, we are already seeing changes in the workplace in many types of activity, for example, with trends towards different types of contractual arrangements, working-from-home and the growing significance of piecework. These types of changes are likely to have impacts on how we define and work with clusters in terms of proximity in the future. Moreover, changes in how economic activities cluster together and in the types of relationships required for their continued success will have knock-on effects with regards to the practice of mapping and analysing clusters, designing and implementing cluster policy, and the day-to-day of cluster organisations.

22.See Ketels & Protsiv, 2013.

20 years of TCI Network | the Past, Present and Future of Clusters 58

THE FUTURE59

Tailoring to specific territorial needs via a portfolio of cluster policies

The heterogeneity of different cluster perspectives, approaches, and practices implies that cluster policy should not be seen as a unique solution to territorial economic development. Rather, we should consider selecting a combination from a portfolioofdifferentclusterpolicies which can be adapted to specific territorial, activity, historical and development contexts. Experience with cluster policy implementation has illustrated the importance of taking into account the specific and evolving economic, social, technological, and other characteristics of each territory. There is a large variety of success stories and experiential learnings that could be integrated into modern and updated cluster policy design in order to ensure that the mix of policy elements is tailored to the specific context.

Indeed, a future evolution of cluster policy that integrates the multitude of existing

Modern cluster policyThe third set of trends refers explicitly to the future of cluster policy. It is widely acknowledged that there is no “one size fits all” policy, and this is reflected in the wide set of tools and instruments that are currently employed in different places. In this regard, and as recognised for example in TCI Network’s (2015) memorandum to the European Commission, one of the central challenges for cluster policy lies in theadaptionandcoordinationofpolicymeasureswithin

cluster policy experiences in different settings into a structuredportfolioofpolicyinstrumentsthatcanbeselectedfrominordertotailorpolicytolocations’specificneedscan be envisaged. Such a policy portfolio would offer a structured but adjustable roadmap for cluster policy design, implementation, and evaluation that can be adapted to any territory and align with overall modern industrial, innovation, development, and/or competitiveness policy programmes. In this way, cluster policy could be shaped by (i) selecting a policy portfolio; (ii) tailoring selected instruments to territory-specific needs; (iii) monitoring policy implementation; and (iv) identifying emerging strategic clusters that may require re-adjustments to the policy mix.

andacrossterritories. In this context, we identify three main trends that are likely to shape cluster policy development over the next 10 years: the increasingly sophisticated tailoring of cluster policies to specific territorial contexts; the deeper harnessing of the power of cluster engagement for fuelling modern industrial policies; and the co-opting of cluster policies to contribute to addressing wider policy agendas.

“Cluster policy circles: (i) policy portfolio, (ii) connecting, (iii) monitoring-time to turn the policy, (iv) strategic clusters”

20 years of TCI Network | the Past, Present and Future of Clusters 60

Harnessing the power of cluster engagement for new industrial policies

Clusters have already become keychannelsfororganisingpublic-privateengagementaroundnationalandregionalcompetitivenessstrategy in many places. But this process is multi-dimensional and requires further development in order to harness its full power to impact on competitiveness. In particular, for clusters to have maximum impact they must be built on a combination of (i) private-private, (ii) public-private, and (iii) public-public relationships.

Most cluster policies are strongly focused on the first type of collaboration among firms and other private agents. Increasingly, however, they seek to foster stronger and more effective relationships also between firms and public agents, and among different public agents (e.g. different government departments). Such relationships can play an important role in developing strategic policy intelligence that goes well beyond the cluster policy itself, and in particular can play a key role in fuelling modern industrial policies.

In this regard, Ketels (2017) notes the similarities between competitiveness policies based on clusters and modern industrial policies seeking to foster structural transformation. In particular, they share an overall focus on “microeconomic structures and systems, moving beyond macroeconomic, economy wide, or single-factor microeconomic explanations of prosperity and development” (ibid, p.2). Moreover, the specific focus of cluster policies on strengthening a range of elements in the microeconomic competitiveness environment means that clusters and cluster organisations are in a uniquepositiontodevelopandconveypolicy-relevantinformation about those elements and about relevant resource, market, and technological trends. This intelligence can be invaluable for developing effective, forward-looking policy in a wide range of areas, from infrastructure to education, and from health to innovation. This capacity of clusters has meant, for example, that they are playing key roles in the

development of territorial smart specialisation strategies across Europe and beyond (e.g. in Colombia). The family of new industrial policies, of which smart specialisation is a part, breaks from old industrial policies essentially through stressing that prioritising support for economic activities is not the job of government alone, but must emerge through new forms of private-public interaction. In this sense, modern industrial policies stress the need for soft spaces that address coordination and information asymmetries and facilitate the effective targeting of specific economic activities as route to boosting innovation and productivity.

Clusters have already begun to play a key role in this new dynamic, offering a‘space’forpublic-privateengagement, but there is much still to be learned and much more that can be done. Greater sophistication in how this space is used to improve policy in a whole range of areas, implying better public-public interaction as well as better public-private engagement, is likely to be a key trend over the next decade.

“Cluster policy went from (i) What: “only” to facilitate collaboration to (ii) How: increment policy dialogue and deliver actions/action agenda”

“Clusters/governance: (i) public-public, (ii) public-private, (iii) private-private”

THE FUTURE61

Cluster policy as an inclusive tool in wider policy agendas

Related to the idea of better harnessing the power of cluster engagement in the context of new industrial policies, cluster policy is also likely to be increasingly seen as aninclusivetoolthatiscapableofservingawiderpolicyagenda,beyondcompetitiveness. In the coming years we are likely to see a shift from ‘policies for clusters’ to ‘policies through clusters’.

The environment where policy-makers operate is dynamic, uncertain, and complex, implying that specific policy challenges cannot easily be solved by means of only one isolated policy instrument or institution. The challenge in most policy areas today is to find and continually adapt the most appropriate mix of policies to respond to evolving challenges. Cluster policy is quite uniquely useful in this context as an ‘umbrella policy’. It provides spaces that bring together a wide range of private and public actors in ways that can facilitate the articulation of policy mixes for policy challenges related to competitiveness and beyond.

For example, environment-related policy challenges, such as waste disposal, have several roots; over-consumption and production, and technologically challenging packaging characteristics that reduce re-cycling capacities, just to mention two. Thus, dealing with such challenges requires involving institutions not only along the whole value chain, but also along multiple value chains. This might include government departments dealing with environment, industry, and trade; private sector actors that range from large international companies to small businesses and from raw material suppliers via logistics companies to producers and retailers, and finally consumers from various parts of the world. This is where clusters and their institutions come into play; they can create platforms bringing together a critical mass of key firms and institutions, which can help build coherent responses to these global challenges through joint action.

In this regard, there is an opportunity for cluster policy to evolve to take on more of a social

foundation. This reflects recurring debates at TCI conferences over the last few years regarding the scope for clusters to addresschallengesthatgo‘beyondGDP’. It is also in line with smart specialisation debates that suggest the power of harnessing the engagement of business, research, government, and civil society to find responses to so-called ‘grand societal challenges’.

Clusters, being based on territorially-rooted collaborative relationships, are very well positioned to contribute to these challenges. However, most practiced approaches to cluster development are purely productivity-focused and place the firm and other triple-helix actors at the centre of their policy objectives. This often leaves little explicit space for working on the broader social impacts of clusters in their territories. Yet in the context of clear interest amongst cluster practitioners, policy-makers, and international organisations in integrating a wider social/community perspective to economic development challenges, we are likely to see an evolution in cluster approaches in response to these demands.

Recent conceptual developments such as Porter and Kramer’s (2011) notion of ‘creating shared value’, may provide a bridge towards greater understanding of the potential of clusters to contribute both to business competitiveness and social goals. Konstantynova and Wilson (2017) also suggest the possibilities of looking back to Giacomo Becattini’s (1990; 2002) vision of industrial districts as communities of people with their own system of values and institutions capable of simultaneously shaping the development of firms and territory.23

More generally, it seems likely that theclusterpolicyofthefuturewillbeincreasinglyseenasandusedasaplatformfromwhichtoaddressmultiplepolicychallenges24 that are not only private sector driven, but that also respond to technological developments and innovations required to solve complex societal issues at local and global level. To quote one of TCI Board member at the Barcelona workshop: “Clusters can be set as a ‘one size tool’ for all kinds of challenges.”

23.In an interview for the global cluster practi-tioners network – TCI Network – in 2006, Becattini argued that the central characteristic of an industrial district is a “local society that specialises”, while the central characteristic of a cluster is the “territo-rial concentration of a certain type of activity” (http://www.tci-ne-twork.org/news/1173).

24.See also TCI Network (2015).

20 years of TCI Network | the Past, Present and Future of Clusters 62

Broadening stakeholders Cluster initiatives have traditionally been built around the three pillars of the ‘triple helix’, seeking above all to foster collaborative relationships among firms, government, and research institutions/universities. These characteristics are reflected in most cluster-based institutions and their governance structures (e.g. advisory or management boards). However, as cluster policies and the activities of cluster initiatives have matured, evidenceisemergingforthebenefitsandadvantagesofbroadeningthestakeholderbase.

On the one hand, a broadening of stakeholders can be envisaged within the traditional triple helix, ensuring that clusters remain industry-driven but changing the structure of stakeholders in line with the changing boundaries of clusters discussed above. It seems likely that clusters will become more transversal and service-oriented, for example, which requires different types of stakeholder relationships. On the other hand, the increased complexity of territorial challenges, the broadening of cluster policy agendas, and the key role that cluster initiatives can play in territorial smart specialisation strategies also suggest a trend for the broadening of cluster stakeholders

to include a ‘quadruple helix’ (adding civil society as fourth actor), or even a ‘quintuple helix’ (reflecting, for example, environmental concerns). Moreover, in the words of one TCI Board member, cluster initiatives will need increasingly “flexible structures to accomplish more complex challenges.”

The beginnings of this trend can be observed as cluster initiatives increasingly collaborate with each other in flexible ways and are creating global/regional networks or working groups that open up engagement to NGOs and international organisations, for example. We can expect this trend to become stronger over the next decade, with cluster organisations engaging the participation of various kinds of actors, from their traditional core, to NGOs (national and international), financial institutions, other cluster initiatives, and maybe even independent sector/area specific individuals. This would imply an evolution not only in the membership structure of cluster initiatives, but also in their organisational forms. From permanent teams led by cluster manager(s), cluster initiatives may develop towards more “on demand” facilitation groups with permanent interaction through online platforms, for example.

Cluster initiatives, associations and organisations Finally, we turn to trends related to cluster initiatives/ associations or organisations. These are one of the central instruments within cluster policy, and discussions at the Barcelona workshop highlighted three sets of trends that may shape these initiatives over the next decade, each of which is strongly related to the evolution in clusters and cluster policies set out above.

“Industry driven: More and more focus on offering high return on investment to business leaders to keep interest”

“More service oriented and transversal clusters across different industries”

THE FUTURE63

Cluster initiatives as one of the central actors of territorial change

As cluster initiatives become more institutionalised, with clearer but also more flexible organisational structures, their role as a key bridge between business and government needs and interests is converting them into centralactorsofterritorialchange. It is expected that this trend will be further strengthened over the next decade.

The experience, understanding, and expectation of what can be achieved by cluster initiatives to drive forward cluster development and related territorial economic development has escalated over the years. With each generation of cluster initiatives their operationalisation has improved, supported by initiatives such as the European Secretariat for Cluster Analysis (ESCA) and the European Cluster Collaboration Platform (ECCP). In the coming years it is expected that cluster initiatives will continue to increase their professionalism, and further strengthen their activities, structure, and strategies in order to be more efficient and sustainable over a longer period of time.

This will leave them in an even strongerpositiontocontributetoterritorialstrategyprocessesaskeypartnersofgovernmentpolicy-makers,

“Clusters overtake current government diplomatic challenges as business vehicles for international collaboration and partnership”

for example around smart specialisation dynamics and modern industrial policies. We may even arrive at a situation where the local-global, cross-sectoral, and technological capabilities of cluster organisations overtake government capacity in a wider range of territorial challenges. Finally, as cluster initiatives deepen their expertise in specific activities, value chains, and their interaction with territorial challenges, companies might be interested in integrating this experience into their operations by e.g. inviting cluster managers to their managing or advisory boards.

20 years of TCI Network | the Past, Present and Future of Clusters 64

Cluster facilitators, do you have a good one?

The figureofclustermanagerswithinclusterinitiatives/organisationshasbecomeincreasinglyprofessionalised. In particular, it has evolved from a profile with cluster/sector/industry experience, to a profile that also has excellent communication, cultural, and project management skills; one that is able to understand and bring together the needs and interests of different stakeholders, acting above all as an excellent facilitator.

While in the early days of cluster initiatives there was limited experience available of cluster development, after more than 25 years of practice the expertise is wide-ranging. As an example, one could look at the number of participants in annual TCI Network conferences, which have been growing in number over the years (from groups of around 50 experts in the late 90s to currently bringing together more than 500 –including policy makers, practitioners, and academics). Moreover, aside from TCI Network, knowledge on clusters has been shared via multiple direct and indirect forms, e.g. the teaching activities of the more than 100 institutions collaborating in Harvard Business School’s Microeconomics of Competitiveness programme; networks and institutions such as the European Foundation for Cluster Excellence (ECSA), or Red Cluster Colombia; along with information accessible via online courses, publications, peer-to-peer exercises, etc. Fast and open access to key findings on clusters and cluster management good practices has led to the building of an excellent range of experts in cluster policy management.

With this large pool of resources to support strong cluster management comes much higher expectations on cluster facilitators and what they can achieve. In the next few years it is expected that the openness of knowledge networks and range of training opportunities will further strengthen the professionalism of cluster managers. However, to meet increased expectations newskillsetswillberequired that respond to some of the other trends in clusters and cluster policy discussed above. For instance, the capacity to work across traditional sectors and knowledge of the

“Understand that facilitators need to have professionalism in technical and organisational capacity building and expertise”

significance of particular KETs are likely to become more important, as is the capacity to engage not only with businesses but also with the public sector and third sectors. Cluster facilitators will also need the skills to understand the potential of ICTs for enhancing the speed and responsiveness to business needs and connecting clusters internationally, for example.

THE FUTURE65

Conclusions and key takeaways

Clusters as a concept and as a way of thinking about policy have, in fact, been extremely resilient over the last quarter of a century. Even though the global economy has changed quite radically during this time, the importance of location-specific competitiveness advantages, of geographic proximity, of connections across related activities, and of the need to organise collaboration around common agendas, have all

Time Past Present Future

Cluster

Main focus on B2B collaboration around value chains

Broader focus on value chain ‘ecosystems’Increasing connections and cross-fertilisation between value chains

Productivity-centred approachBeginnings of concern with broader ‘beyond GDP’ impacts

Exploring social roots of clusters as route to solving societal challenges

Clusterpolicy

Cluster programmesMoving towards tailored policy instruments

Structured portfolios of cluster policies

Bottom-up or top-down driven processBridge between market and government interests

Platforms for deep business-research-government interaction

Business and cluster developmentDriving territorial competitiveness and innovation

Responding to complex local/global challenges

Clusterinitiatives

Leading companies from their sectors, engaging SMEs, researchers and government

From entrepreneurs, SMEs to top business players, including leading research centres, government and sector related NGOs

Quintuple helix participants, including cluster initiatives from other sectors, active individuals and global networks

Working groups of most active and leading companies and institutions in their sector

Well organised and structured institutions with clear managerial structure

Interactive online platforms, led by several top experts in their field

Clustermanager

Experts in value chains, sectors, competitiveness

Business or policy originated experts with cluster specific knowledge

Facilitators acting as (cross-)sector CEOs bridging knowledge between business and policy

held strong. These elements are likely to still be present in another decade or another quarter of a century. However global trends related to new technologies and to the interplay between local and global dynamics, especially in the context of social challenges, are likely to influence what clusters look like, how cluster policy is configured, and the roles that cluster organisations play.

By way of a summary, in Table 2 below we present a simplified overview of some of the main characteristics of clusters, cluster policy, cluster initiatives, and cluster management, as they have evolved and look likely to evolve into the future.

TABLE 2Clusters and cluster policies: past, present and future

After reflecting on the past, present, and future of clusters, cluster policies and cluster initiatives, it is perhaps most revealing to ask what won’t change in the future.

20 Years of TCI 6620 years of TCI Network | the Past, Present and Future of Clusters

Takeaways: Trends creating opportunities

Finally, in Table 3 we present the main takeaways from our discussion on future trends likely to shape clusters, cluster policy, and cluster initiatives, framed in terms of opportunities for the cluster community looking forward.

TABLE 3

General trends

Cluster concept

Cluster policy

Cluster initiatives

Playing stronger roles in developing and pursuing agendas of inclusive growth and contributing to other pressing social challenges that tie together global and local dynamics.

Generating policy tools that exploit the potential of clusters to be used as a platform from which to address multiple policy challenges: from policies for clusters, to policies through clusters.

Reacting to the impacts and opportunities coming with a range of emerging technologies in ways that ensure the greatest socioeconomic benefits from them.

1

2

3

4

Understanding and responding to the changing activity boundaries of clusters, and finding new and better ways to detect, map and analyse emerging clusters.

Exploring new spaces (online platforms, incubators, etc.) that foster productivity, innovation and competitiveness by bridging collaboration dynamics across clusters, enabling the exploitation of emerging activities in the intersection of existing ones.

Understanding and responding to the changing geography of clusters, as new technologies change the significance of proximity in some aspects of production relationships.

Identifying and prioritising clusters and cluster policy instruments into a structured portfolio of cluster policies that is aligned with modern industrial policies and facilitates a tailored cluster policy approach in practice.

Enhancing the role of clusters as a space of public private, private-private and public-public engagement, enabling the development of more efficient and effective regional competitiveness strategies.

Finding ways to broaden the stakeholder base of clusters without losing efficiency and effectiveness in the functioning of cluster initiatives.

Upgrading the professional level of cluster initiatives and cluster managers, and increasing their contribution as key partners of government policy making in territorial development strategies.

Understanding and pre-empting the evolving skill-sets that cluster managers will require in order to address the new challenges facing clusters.

67 CONCLUSIONS AND KEY TAKEAWAYS

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CONCLUSIONS AND KEY TAKEAWAYS69

ANNEX 1/TCI Board/2017

Alberto Pezzi (Treasurer)*ACCIÓ – Catalan GovernmentSpain

Vincent Dugre*Prologic enr.Canada

Marco Llinás*Bogotá Chamber of CommerceColombia

Frédéric Miribel*Invest in Lyon – ADERLYFrance

James WilsonOrkestra-Basque Institute of CompetitivenessSpain

Manuel MontoyaAutomotive Cluster of Nuevo LeonMexico

Merete Daniel Nielsen*Cluster Excellence DenmarkDenmark

Madeline SmithInstitute of Design Innovation, Glasgow School of ArtUK

20 Years of TCI 7020 years of TCI Network | the Past, Present and Future of Clusters

* Board Members physically present at the Barcelona workshop. Patricia Valdenebro (CEO, TCI Network), Leire Oiarbide (Network Cordinator, TCI Network) and Juan David Castaño (Bogotá Chamber of Commerce) also participated in the Barcelona workshop.

Christian Ketels (President)*Harvard Business SchoolSweden

Klaus Haasis (Secretary)ask klaus! & Combine Innovation GmbHGermany

Hyeyoung ChoKICOX - Korea Industrial Complex Corp.Republic of Korea

Werner Pamminger*Business Upper AustriaAustria

Tracy Scott-Rimington*Regional Development Australia – BrisbaneAustralia

Danka MilojkovicCluster HouseSerbia

71 CONCLUSIONS AND KEY TAKEAWAYS

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