Archive for the ‘Israel’ Category

Victoria goes cluster route

February 24, 2004

In 2003, the Department of Industry, Innovation & Regional Development (Victoria, Australia) released a very good discussion paper ‘Clusters – Victorian businesses working together in a global economy’ (40 pages).

It proposed a strategic policy framework to select, fund and evaluate clusters in Victoria. We were invited to comment on the document prior to policy decisions by the Victorian Government.

The DIIRD document usefully explains that clusters do not engage in anti-competitive behaviour – they are seen as open systems which encourage competition. Their purpose is not to fix prices, misuse market power by limiting competition, or engage in anti-competitive practices.

Cooperation via information sharing, R&D or export promotion – for the purpose of improving the firms’ competitiveness, not limiting competition.

Other interesting points follow.

Clusters commence and grow in different ways. No model applies to all circumstances.

Clusters may begin by exploiting a natural strategic location, specialised skills, exceptional research institutes, good infrastructure or as a result of the activities of a successful company.

Michael Porter notes that many clusters in Massachusetts owe their birth to the research conducted at the MIT and Harvard University. The Dutch transportation cluster grew out of the waterways of Rotterdam, its central European location and the city’s long acquired maritime skills.

Israel’s irrigation clusters began in response to adversity: desert land was irrigated and turned into agricultural land in order to feed the population.

Finland’s environment cluster emerged in response to pollution problems.

The golf equipment cluster of San Diego grew out of the technology developed by the aerospace cluster. The Omaha telemarketing cluster owes its existence to its central time location, easy to understand accent and a demanding customer in the US air force.

Clusters develop organically over time. However, Singapore (E-commerce) and Ireland (digital hub) are building clusters by attracting FDI with government support. Singapore is building an e-commerce hub around Hewlett Packard, mainly by encouraging the formations of new SMEs.