How the government promotes a cluster development?

Government approaches to the development of clusters

Different countries apply various ways of government participation in the development of clusters. They vary and depend on the principles of economic management, which each country adheres to, and its capabilities. However, there are some common features.

The North American approach in general implies a policy of weak federal government intervention in the cluster development process.  There is no official state policy in relation to clusters.

The Western European approach generally pursues an active government intervention in the economic development process — the development of cluster policy at the government level, inclusion into the program documents, state stimulation of the development of ties between cluster members (universities, business, foreign companies, etc.).

The peculiarity of cluster development in Asian countries is a combination of purely Asian features (great strength of Eastern traditions, active government assistance in the expansion of national producers and the promotion of domestic goods to foreign markets, etc.) with the characteristics of Western European and North American clusters.

 

Types of cluster policy in regions

According to the program documents adopted in the Kyrgyz Republic, clusters development is an important part of state and regional policy. There are following types of cluster policy in the regions, which differ in the level of intervention of the state, local authorities in the process of cluster development in the regions.

Catalytic (accelerating the process) cluster policy is when stakeholders come together with a limited technical and financial support for the implementation of the cluster creation project. For example, the provision of communication platforms, facilitating the consolidation of cluster members for joint actions, including cooperation of members with each other.

A supportive cluster policy is when catalytic measures supported by the investments into regional infrastructure, education, and training cluster development promotion. This can include the institutional environment creation, ways to stimulate their development.

Directive cluster policy is when the policy supported by the targeted programs aimed at transforming the specialization of regions and cluster creation. This includes measures to identify the prerequisites for the creation of clusters in the territories, assessment of their impact on the territory and the social sphere, support the cluster initiatives necessary for the region.

An interventionist cluster policy is when the government takes responsibility for financial and administrative support for the clusters development (transfers, subsidies, active administrative control over firms within a cluster, etc.). This may include the identification of regional cluster participants, the establishment of strong relations between them, the elaboration of a general development strategy within the VAC framework, the effective and diverse support for the cluster investment projects, etc.

 

Risks of the cluster policy implementation in the regions

There are a number of risks that can reduce the effectiveness of the cluster policy implementation in the regions. These include:

  • Lack of leaders of initiative groups and effective managers, lack of methods and experience. There is an extreme shortage of cluster development specialists. The usual knowledge of even experienced specialists may not be enough.
  • Wrong choice of priority areas and/or groups of enterprises for support. This may be due to errors in the diagnosis and design of the cluster operation scheme, cluster quantitative analysis, inaccurate assessment of the anchor enterprise capacity.
  • Wrong design, increase of the cluster beyond the optimal size, inconsistency of cluster policy measures to existing problems. This may be due to the desire to involve a larger number of participants in the cluster, which deteriorates the possibilities for the coordination and implementation of common projects, as well as an incorrect assessment of the designed cluster, the conditions for its sustainability and attractiveness.