TCILatinAmerica15 Equipos de trabajo para la economía creativa
TCILatinAmerica15 New Industrial Policy and Economic Development:What Role Can Cluster Efforts Play?
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Transcript of TCILatinAmerica15 New Industrial Policy and Economic Development:What Role Can Cluster Efforts Play?
1 Copyright 2013 © Christian Ketels
New Industrial Policy and Economic Development:
What Role Can Cluster Efforts Play?
Dr Christian H. M. KetelsPresident, TCI Network
Institute for Strategy and Competitiveness Harvard Business School
18 June 2015
2 Copyright 2013 © Christian Ketels
The Evolution of Industrial Policy
• Subsidies for firms/industries
• Creating new winners?
• Backing losers!
Old Industrial Policy
• Sector-specific upgrading
• Structural change into related fields
New Industrial Policy
FAILURE
• Generic, cross-sectoral policies
• Helping all?
• Helping few enough!
FrameworkConditions
PARTIAL SUCCESS
?
3 Copyright 2013 © Christian Ketels
The Evolution of Industrial PolicyTwo Competing Motivations
Upgradingproductivity
Moving intomore attractive
sectors
Sectors/Industries as the objective
Sectors/Industries as a tool/channel
What you doHow well you do it
4 Copyright 2013 © Christian Ketels
The Evolution of Industrial PolicyIssues for Emerging Economies
• The industrial composition differs systematically between more and less advanced economies
• Structural transformation is a critical part of the economic development process
Achieving structural transformation• Strategic approach
– Import-substitution policies– Export-led strategies, global value chains
• Strategic intent– Creating scale: Big push, strategic industrial policies– Creating capabilities: Linkages, economic complexity/product space
5 Copyright 2013 © Christian KetelsSource: Observatory of Economic Complexity
Product Space AnalysisColombia, 2012
• Where are you currently strong?• What related areas are opportunities?
• How do you get to the most central parts of the product space?
6 Copyright 2013 © Christian Ketels
“Where you compete”: Understanding the Nature of Structural Change
• Sectorial composition is related to the stage of economic development
BUT
is sectorial composition a driver, a symptom, or an outcome?
• Emerging evidence suggests that sectorial composition is largely endogenous to business environment quality
• Use data on sectorial composition as a diagnostic tool
• Upgrade business environments to enable structural change
• But be careful about adopting sectorial composition as a policy target
7 Copyright 2013 © Christian Ketels
Using Cluster Data as A Diagnostic Tool
• Overall share of employment in traded clusters
• Share of employment in strong clusters
• Share of employment in strong clusters gaining share
• Job creation/change of market position in strong vs. weak clusters
• Market position and profile of strong clusters
• Linkages among strong clusters
Strength of Core Clusters
Strength of Cluster Portfolio
Dynamics of Cluster Portfolio
820150510–Jerusalem Competitiveness Presentation Copyright 2015 © Professor Michael E. Porter
Traded versus Local ClustersExample: The City of Jerusalem
Tel Aviv Haifa Israel Jerusalem
59.47%
52.78% 52.67%
45.03%
Employment share of Traded Clusters
Sour
ce :
Cent
ral B
urea
u of
Sta
tistic
s
Copyright 2015 © Christian Ketels 9
Performance of Strong ClustersExample: The Great Lakes-St. Lawrence Region
• Strong clusters are those that reach critical mass in employment (top 25% in LQ)
• Strong clusters have in the Great Lakes-St. Lawrence Region suffered disproportionate employment losses, unlike the experience in other regions
• This has been true across many cluster categories, but especially in those that have been hit the hardest in overall employment
• These outcomes suggest fundamental challenges in the market positioning of many of the Region’s traditional clusters
Strong Clusters Elsewhere0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,0002003
2013- 9.8%
- 2.0%
Employment in…
10 Copyright 2013 © Christian Ketels
Cluster-Based Economic Development
Upgrade existing clusters
Mobilizerelated clusters
Improve general
business environment conditions
11 Copyright 2013 © Christian Ketels
Cluster-Based Economic DevelopmentPrinciples
• Scope defined by groups of related industries
• Geography-conscious, concentrating activities in specific locations with critical mass and capabilities
• Based on public-private collaboration, with clear division of roles
• Focused on competitiveness upgrading through improvements in company sophistication, cluster linkages, and business environment conditions
12 Copyright 2013 © Christian Ketels
The Role of Cluster Initiatives
• Channel to deliver government programs• Workforce skill development
• Internationalization
• Access to finance
• SME Management support
• Technology transfer/extension
• Platform to discuss policy priorities• Inform government about market realities and company needs
• Inform companies about budget realities and government tools
• Requires robust organizational platform with capabilities, funding, independence, and integrity
13 Copyright 2013 © Christian Ketels
Core Partners for Cluster Initiatives
• Multinational companies
• Leading local companies
• Business groups (chambers of commerce, industry associations)
• Academic institutions
• National economic development agencies
• Regional economic development agencies
• Political leaders
14 Copyright 2013 © Christian Ketels
Clusters, Cluster Initiatives, and Performance
CLUSTERPRESENCE
CLUSTEREFFORT
ECONOMICPERFORMANCE
+ =
+ =
+ =
15 Copyright 2013 © Christian Ketels
Cluster-Based Economic DevelopmentPolicy Tools
Existing Clusters Potential Clusters White Space
Needs
Tools
• Strengthen collaboration
• Address specific business environment weaknesses
• Integrate policies
• Explore market opportunities
• Connect potential parts of the cluster
• Address specific barriers for growth
• Enable entrepreneurs to test ideas
• Create an environment where new ideas can emerge
• Present economic base
• Opportunities given context
• Unknown
• Cluster efforts
• Cluster-oriented strategies with dedicated funding
• Creation of networks
• Removal of barriers
• Limited funding tied to performance
• General entrepreneurship environment
Specific Characteristics ofPolicies for Potential Clusters
• Accept and manage risk
• Create clear exit mechanisms
• Encourage exploration of market opportunities
• Make knowledge generated widely available
• Support projects, not institutions
• Be flexible on geographic and industry boundaries
16 Copyright 2013 © Christian Ketels
• Pull; react to market signals• Support all clusters with critical mass,
willingness to act, and a plausible strategy
• Push; amplify weak market signals (and react to new signals)
• Apply strong market discipline to avoid rent capture
• Pull; react to market signals• Support and help coordinate regional efforts
Cluster Policy Across Different Levels of Government
Established Clusterswith national importance,
often with presence in multiple regions
Established Clusterswith regional importance
Potential Industrieswith limited current
presence and no clear regional concentration
• Pull; react to policy signals• Compete by providing best bus.
environment for potential industries
National Government
Regional Governments
17 Copyright 2013 © Christian Ketels
Challenges – The Three C’s
• Capacity in government
• Capacity in the private sector
• Political economy
• Incentive effects of policy tools
• Global market context
Capacity
Capture
Context