TCI2013 Clusters and Regional Competitiveness


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By Christian Ketels, Harvard Business School, USA and TCI President, presented at the 16th TCI Global Conference, Kolding 2013.

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  • One additional point: help clusters to self-discover
  • TCI2013 Clusters and Regional Competitiveness

    1. 1. 1 Copyright 2013 © Christian Ketels Regions, Competitiveness, and Clusters Christian Ketels Business Summit: Strategic Innovation Partnerships 4 September 2013
    2. 2. Regions, Competitiveness, and Clusters Dr Christian H. M. Ketels TCI, HBS 2013 TCI Conference Kolding, Denmark
    3. 3. 3 Copyright 2013 © Christian Ketels
    4. 4. 4 Copyright 2013 © Christian Ketels Why the Traditional Focus on Central Government? Nation = Laws Nation = Money Nation = Markets
    5. 5. 5 Copyright 2013 © Christian Ketels Supporting Economic Growth Macroeconomic Management (DEMAND) Microeconomic Upgrading (SUPPLY) Sustainability Stimulus Policy Framework Policy Action
    6. 6. 6 Copyright 2013 © Christian Ketels What Action to Take – and Where Capital Knowledge Institutions Evolution of Classical Approaches Emerging New Insights • A range of factors matters; there is no ‚silver bullet‘ • Individual factors are interdependent in their impact on prosperity • The location-specific context is critical to identify key levers to enable growth
    7. 7. 7 Copyright 2013 © Christian Ketels Why the New Focus on Regions? Region = Linkages Region = Local Knowledge Region = Cluster
    8. 8. 8 Copyright 2013 © Christian Ketels Why Regions Should Be Concerned about Clusters
    9. 9. 9 Clusters Drive Regional Economic Performance Prosperity Entrepreneurship Structural Change Positive correlation between share of regional employment in strong clusters (breadth of clusters; related cluster strength) and: • Wages • Productivity • Job growth Positive correlation between share of regional employment in strong clusters (strength of related cluster) and: • New business formation in new/existing industries • Survival of new firms • Job growth in new firms Path of structural change (emergence of new clusters) in regional economies is driven by legacy of composition (portfolio of existing clusters) e.g. Porter (2003), Greenstone (2008). Delgado/Porter/Stern (2012), e.g., Delgado/Porter/Stern (2011), Lindqvist/ Wennerberg (2008) e.g., Neffke et al (2009); Boschma et al. (2013)
    10. 10. 10 Copyright 2013 © Christian Ketels Clusters Enhance the Value of Good Business Environments 0% 2% 4% 6% 8% 10% Industry Cluster Industry Cluster WEAK Business Environment STRONG Business Environment Specialization measured by employment LQ Impact of higher employment LQ on wages Source: Ketels/Protsiv, 2013
    11. 11. 11 Copyright 2013 © Christian Ketels Performance Functional Type/Density Cluster Networks Provide Social Capital Business Environment Quality Government Capacity Cluster Size Geographic Location Natural Assets Culture/ Social Capital
    12. 12. 12 Copyright 2013 © Christian Ketels In What Ways Can Regions Leverage Clusters?
    13. 13. 13 Copyright 2013 © Christian Ketels The Role of Different Levels of Government The Old View National Government Regional Government SETS THE LEGAL CONTEXT MAKES INVESTMENTS PROVIDES TOOLS EXECUTES
    14. 14. 14 Copyright 2013 © Christian Ketels The Role of Different Levels of Government The New View National Government Regional Government SETS THE LEGAL CONTEXT MAKES INVESTMENTS PROVIDES TOOLS EXECUTES LEVERAGES ATTRACTS MOBILIZES
    15. 15. 15 Copyright 2013 © Christian Ketels How Regional Government Can Leverage Clusters LEVERAGE • What dimensions of the business environment to strengthen? • Use cluster data to identify critical mass • Use cluster groups to get insights MOBILIZE • What networks to mobilize? How? • Use cluster data to identify presence • Use clusters to define a scope that matters to companies ATTRACT • What skills, firms, investors to attract? How? • Use clusters to identify targets • Use clusters to sharpen the message
    16. 16. 16 Copyright 2013 © Christian Ketels Lessons • For national government – acknowledge regional diversity • For regional government – have a comprehensive strategy • For companies – take the initiative • For cluster initiatives – use and serve (also) the region
    17. 17. National Government: Align Cluster Policies With Regional Characteristics Competitiveness • Business environment quality • Company Sophistication • Cluster presence Capacity • Social capacity • Technical skills of the public administration Political power • Size • Legal competences Profile • Geographic location • Sectoral specialization Select objectives • Mobilize existing clusters • Test potential of emerging clusters • Channel to upgrade business environment/companies • Strengthen trust Create or use policies • Design regional policies • Draw on EU/national policies Set the scope • Set number of clusters • Set financial budget Characteristics of the Region Characteristics of the Cluster Policy
    18. 18. 18 Copyright 2013 © Christian Ketels Regions: Integrate Clusters into a Broader Strategy Business Environment Cluster Portfolio Positioning • Identifies, communicates, and strengthens the specific value proposition of the location • Accelerates growth in those fields where the location has strengths • Enables the emergence of new clusters from existing clusters • Improves the economic platform for all clusters and companies
    19. 19. 19 Copyright 2013 © Christian Ketels Companies: Drive Cluster Initiatives • Initiate/ Convene • Co-Finance • Participate in activities • Propose relevant clusters • Define cluster action priorities • Drive activities Government may Firms should
    20. 20. 20 Copyright 2010 © Christian Ketels Cluster Initiatives: See the Region Behind the Cluster Context for Firm Strategy and Rivalry Related and Supporting Industries Factor (Input) Conditions Demand Conditions • Sophisticated and demanding local customers and needs – e.g., Strict quality, safety, and environmental standards – Consumer protection laws • Local rules and incentives that encourage investment and productivity – e.g. incentives for capital investments, IP protection, corporate governance standards • Open and vigorous local competition − Openness to foreign competition − Strict competition laws • Access to high quality business inputs – Human resources – Capital availability – Physical infrastructure – Administrative infrastructure (e.g., business registration, permitting, transparency) – Scientific and technological infrastructure • Availability and depth of suppliers and supporting industries • Presence of Institutions for Collaboration (IFCs) that support productive coordination and collaboration among actors Plastic s Oil and Gas Chemi cal Produc tsPharm a- ceutica ls Power Generation Aerospace Vehicles & Defense Lightning & Electrical Equipment Financial Services Publishing and Printing Entertainment Hospitality and Tourism Transportation and Logistics Information Technology Communi- cations Equipment Medica l Device s Analytical Instruments Education and Knowledge Creation Appare l Leather and Sportin g Goods Agricultural Products Proces sed Food Furnitur e Buildin g Fixture s, Equipm ent and Service s Sporting, Recreation and Children’s Goods Busine ss Service s Distribution Services Fishing & Fishing Produc ts Footwe ar Forest Produc ts Heavy Construction Services Jewelr y & Precio us Metals Construction Materials Prefabricated Enclosures Textile s Tobacc o Heavy Machinery Aerospace Engines Automotive Production Technology Motor Driven Products Metal Manufacturing Business Environment Qualities Regional Cluster Portfolio
    21. 21. 21 Copyright 2013 © Christian Ketels • There is a new role for regions that gives them a central responsibility in upgrading competitiveness • Clusters are a critical tool and organizing principle for regions to play this role • National government, regional government, companies, and cluster initiatives have key tasks to make clusters work for regions