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ANNEX III(a)

DRAFT STRATEGY AND IMPLEMENTATION PLAN FOR THE COMESA SCIENCE AND TECHNOLOGY PROGRAMME

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TABLE OF CONTENTS

1 Introduction......................................................................................................................21.1 Background and Context.........................................................................................21.2 Approach to the Assignment...................................................................................2

2 Building Blocks for Strategy Development...................................................................32.1 Innovation Systems..................................................................................................32.2 Clustering Approach.................................................................................................42.3 Action Oriented Strategic and Learning Approach...............................................5

3 Roadmap for Strategy Development..............................................................................63.1 Establishment of the Institutional Framework.......................................................63.2 Capacity Building......................................................................................................73.3 Assessment of Regional Innovation Systems.......................................................73.4 Programme Development (Programming)..............................................................8

4 Outline of the Pilot Programme: Development of an Innovation System in the Agricultural sector.................................................................................................................9

4.1 Programme Objectives.............................................................................................94.2 Programme Structure.............................................................................................10

Assessment of Agricultural Innovation Systems............................................................10Innovative Clusters in Agriculture...................................................................................11Development of a Science and Technology Park..........................................................12Elaboration of a Comprehensive Science and Technology Programme.......................13

5 Implementation Plan - Action Matrix............................................................................145.1 Action Area Objectives...........................................................................................145.2 Implementation Plan – Action Matrix....................................................................15

6 Conclusions and Next Steps........................................................................................15


1 Introduction

1.1 Background and Context

1. Exponential growth in scientific and technical knowledge provides unique opportunities for Africa to solve its critical challenges related to meeting basic needs, participating in the growing economy, addressing ecological and climate change problems and improving governance1. African leaders have in recent years been placing increasing emphasis on the role of science, technology and innovation. Decisions taken (8th African Union Summit, 2007; 28th Meeting of the COMESA Council of Ministers, 2010) represent a clear expression of political will and interest in introducing specific reforms and actions to endorse the role of science and technology in regional development.

2. COMESA Member States recognize the importance of science and technology in socio-economic and cultural development and have agreed to cooperate in various fields as stated in the decision of the 2010 COMESA Summit on Science and Technology Development. The need for concrete projects that will deliver tangible results for the region is the greatest priority, while mainstreaming science and technology in all COMESA programmes and adopting a cost effective approach that does not financially overburden the Member States were also emphasized as equally important. Concrete proposals include the establishment of common science and technology parks, the establishment of an ICT Training and Skill Development Fund, the elaboration of a common curriculum for COMESA in ICT and the establishment of data bases of individuals that can assist in the implementation of science and technology initiatives.

3. The COMESA Committee on Science and Technology requested the preparation of a Strategy and Implementation plan for the COMESA Science and Technology Programme. The draft strategy and plan shall be discussed at the first meeting of the Committee which is scheduled for July 2011.

4. The strategy and implementation plan for the COMESA Science and Technology Programme will take into consideration priorities underscored in the decision of the 2010 COMESA Summit on Science and Technology, reflecting the need for concrete projects that will deliver tangible results for the region in the context of regional cooperation in the field of science and technology. The strategy will thus inform COMESA Member States in their future decisions. It will provide guidelines on where to make strategic investments that strengthen regional cooperation, improve scientific and technological research capabilities and are relevant to other Science and Technology projects in the region.

1.2 Approach to the Assignment

5. The goal of the assignment is to propose a strategy and an implementation plan for the COMESA Science and Technology Programme.

6. From a methodological perspective, there are two levels to be considered in dealing with the strategy and implementation plan design: technical preparatory work and consultation with stakeholders. The technical work level and consultation foresees the preparation of two sets of papers, namely The Discussion Paper on the Strategy and Implementation Programme and The Draft Strategy and Implementation Programme.

7. The Discussion Paper lays out a roadmap for the strategy and implementation plan for the COMESA Science and Technology Programme. The document proposes a set of policy options which are not ready-made solutions but rather orientation points which shall

1 C. Juma. Rebooting Development, Innovation Policy in the Age of Technological Abundance

PILOT PROGRAMME: POLYMER CLUSTER PLATFORMMateja Dermastia


further lead to an effective portfolio of programmes and projects to be implemented in close cooperation of COMESA Member States. It does not define specific instruments, allocate funding or create responsibilities, but it does set the political objectives and present the motivation why specific activities in the chosen direction are deemed important. As such it seeks comments from the members of the Science and Technology Committee on the views expressed by the author. Accordingly, an attempt to make the document comprehensive has not been made, as analyses, interviews or studies have not been conducted. Instead, various existing studies and best practices were taken into account while preparing the present document, which is primarily based on The Decisions of the 2010 COMESA Summit on Science and Technology for Development, on Calestous Juma’s book The New Harvest, Agricultural Innovation in Africa2 and the directions received from the Secretariat.

8. The document shall be presented at the COMESA Science and Technology Committee meeting, which is to be held in July 2011. Comments, suggestions, considerations will be collected and discussed and fed into the elaboration of the Draft Strategy and Implementation Plan. The Draft Strategy and Programme are expected to be ready by the end of July 2011. Once ready they are expected to form the basis on which to engage in an in-depth consultation and consensus building process with Science and Technology Programme stakeholders.

9. The discussion paper has been divided into 4 sections. The document starts with a brief presentation of the proposed building blocks of the strategy. An action-oriented strategy is proposed to gain and demonstrate positive experience that allows for mutual learning (section 2). The strategy proposed puts forward pilot actions in the agricultural sector which is comprised of an analysis of actors in agriculture innovation systems, cluster development, the development of the Science and Technology Park (section 3). The programme foresees the evaluation of actions and the assessment of lessons learned as an input for the elaboration of a comprehensive Science and Technology Programme. The fourth section deals with the implementation plan in an action matrix format. The document concludes by offering conclusions and recommendations regarding the Strategy and Implementation Plan for COMESA Science and Technology Programme.

2 Building Blocks for Strategy Development

10. Experiences in different regions as well as recent analyses and studies for Eastern and Southern Africa3 outline some general knowledge and important conclusions that should be considered as building blocks for the COMESA Science and Technology Programme. These key building blocks include innovation systems, clustering and an action oriented strategic and learning approach.

2.1 Innovation Systems

11. Innovation systems have received much attention in recent years due to the recognition of the critical importance of the process of disseminating and introducing innovation into the market. An innovation system may be defined as a network of institutions in the public and private sector whose activities and interactions initiate, import, modify and diffuse new technologies4. They can act as organizations that conduct research (including accessing results from elsewhere) and generate new knowledge or as organizations that

2 C. Juma. 2011. The New Harvest, Agricultural Innovation in Africa. OUP: New York.33 Institute for Innovation and Technology, Analyses of the Innovation System in Selected Countries, 2010 http://www.iit-berlin.de/sektionen/innovationssysteme-und-cluster-1/anis4 C. Freeman, The National System of Innovation in a Historic Perspective, Cambridge Journal of Economics, N.19, 1995.


support the commercialization of knowledge either by transforming it into market oriented and globally consumable innovations or by applying it in public services such as healthcare and education.

12. The challenge lays in strengthening the innovation capabilities of all actors and providing favourable conditions and infrastructure in order to build a coherent and strong national and regional innovation system.

13. The key differential of innovation intensive regions is not merely in the presence of main innovation actors, such as public research and education institutions, companies, government institutions, technology parks, incubators, etc., but rather in their relationships, the way they are coordinated or connected. Experience shows that innovation performance of a country or region broadly depends on the interaction among all actors in producing, distributing and implementing various kinds of knowledge and thus their ability to both cooperate within the global knowledge creation system and utilize new knowledge and technologies5.

14. From a policy perspective, the innovation system approach draws attention to the behaviour of local actors with respect to three key elements in the innovation process: learning, linkage and investment. In this regard, the ultimate challenge of science and technology policies is the development of a consultative relationship between universities, research institutions and the industry. This means cooperation between education and training institutions, on the one hand, and engineers and production managers on the other, leading to an increase in the stock of entrepreneurial knowledge. This further creates the need for the development of institutions which will be able to stimulate a continuous consultative relationship between buyers and sellers as well as institutions producing entrepreneurial knowledge and in addition develop business models which drive innovation, sustainable regional development and the well-being of local communities. Technological advances depend on managerial decisions. Policy measures should not focus on the creation of knowledge only, but should also support the development of systems that enable its faster dissemination within the economy.

2.2 Clustering Approach

15. Essentially, clusters are geographic concentrations of interconnected companies and institutions in a particular field. Clustering fosters the diffusion of industrial organization in which innovation is built directly into a process whereby firms establish their core capabilities and networks with other firms. Clusters as “open systems” of enterprises, universities and other research institutions increase the capacity to generate new knowledge and stimulate specialization of knowledge on the one side and share this knowledge on the other side. Clusters enable the flow of knowledge and information between enterprises and institutions through networking. They support development of new knowledge and accelerate the efficiency of knowledge transfer into products and services. They also increase the capability of cluster members to find and absorb available technological advances worldwide.

16. Clustered firms, research institutes, universities and governments can jointly explore the best possible combinations of technological, economic, social, cultural, and institutional configurations, gaining knowledge and experience. This in turn also enables them to simultaneously respond to climate change challenges and protect the environment. The support for cluster development has become one of the key policy tools across the globe for stimulating the development of infrastructure in support of business innovation. As evidence suggests, the expected effects of clusters on regional/national growth were to a larger

5 National Innovation Systems, OECD Report, 2005



extend obtained in cases, where support for clusters was developed in order to stimulate the development of inter- and intra-enterprise cooperation as a type of business model where innovation capabilities are built and enhanced through the interaction between enterprises within a cluster and among clusters.

17. There is evidence of the existence of so-called “natural” clusters in many COMESA member states. They build on spatial proximity, language, culture and other mainly geographically determined factors, in industries such as agriculture, mining and others. The potential of such clusters could be exploited, while supporting their development to the level of open and dynamic systems with the potential of positive external effects on the overall socio-economic development in the region. Existing cluster groups and initiatives on the national level could be used to develop a critical mass of knowledge and competencies as well as infrastructure in the region in specific sectors. Clustering among key actors and leaders would allow for an increase in potential, the development of models for a regional innovation system, the development of infrastructure and framework conditions and at the same time for the development of unique capabilities of the region to attract international knowledge, available technological knowledge and investments. This is of special importance for the region facing a triple challenge in catching up, harnessing and applying available technological knowledge for its socio-economic development (i.e. in agriculture, health, environmental protection, energy and water supply,…).

2.3 Action Oriented Strategic and Learning Approach

18. The development of innovation systems is a continuous process that requires a comprehensive and consistent strategy, shared and understood vision, clear priorities and an action plan. A pragmatic approach is essential for learning, adapting and demonstrating good practices, which aim at developing a system that is best suited to particular domestic circumstances, as well as building a broad regional consensus and trustful environment for policy reforms. Strategy development should go hand in hand with operational programmes in the selected priority fields.

19. The diversity of policy measures and support schemes, which aim at innovation, have been implemented in recent years worldwide, they reflect the diversity of framework conditions, cultural preferences and political priorities of different regions. There are no models to be copied. What is required is a general knowledge of the systems and models in comparable environments and the capacity to define local/regional potential and structures. As J. Stiglitz put forward: “… the best countries can do, is to experiment with various policy solutions and try to learn from best practices of other countries.”

20. An action-oriented strategy is needed to gain and demonstrate positive experience that allows for mutual learning. In light of these experiences, a system and different models can be developed ensuring the dissemination of practices throughout the region.

21. Setting up pilot projects in selected priority areas of concern is recommended as a way to develop a consistent strategy and policy programmes. While complex economic modelling and a forecasting framework could easily consume time and resources, the use of the pilot projects approach to narrow down the alternatives and focus on priority areas will ensure a clear, logical, and above all transparent process.

22. The selection of priorities or pilot actions depends on the institutional conditions of the region, the existing structures and competences, the degree of cooperation between actors, regional goals and priorities, etc. It is of most importance to select actions with the highest potential for spill over and demonstration effects that:


i. demonstrate the capabilities and competences to ensure short term results, visibility and learning possibilities in existing structures and institutions;

ii. address main challenges and social and economic goals of the region; and iii. support regional specialization and the potential for higher international visibility,

positioning and increasing attractiveness within the international technology and innovation system.

3 Roadmap for Strategy Development

23. The ambition of the Strategic Roadmap for the Science and Technology Programme is to articulate COMESA’s scientific and research action priority areas. The strategic objective is to strengthen COMESA’s Regional Innovation Systems in particular those of relevance for Member States and those which at the same time facilitate the adjustment processes with the aim of increasing the ability of the economy to attain growth on a sustainable basis for achieving higher living standards and social prosperity.

3.1 Establishment of the Institutional Framework

24. The development of the Science and Technology Strategy in the COMESA region demands first of all expressive political will and an institutional framework that will support and govern the process. It is essential to ensure a governance structure on the highest level both in individual member states and on the regional level in order for the actors to act as agents of change, actively promoting the acquisition of knowledge and investment in key areas of competitiveness, namely technology, innovation and entrepreneurship.

25. COMESA’s Decision outlines the recommendations for the establishment of an institutional framework by:

i. Creating a high-level Committee for Science, Technology and Innovation in COMESA;

ii. Establishing Offices for Science, Technology and Innovation at the highest level of Government in Member States; and

iii. Creating an Office of the Advisor on Science and Technology. 26. Institutions at both, national and regional level should be established with a clear task of leading the process of strategy development in a systematic and integrated manner. While forming the structures, further basic principles should be acknowledged with high political authority to ensure real commitment and support for the process as well as professional authority with respective members from the academia and business sector to ensure high recognition in the region. Taking into account the climate change challenge and preservation of the environment, promotion of green innovation systems can help the COMESA region’s pursuit of “green innovation” in order to move towards environmentally and socially sustainable, clean tech-based growth. Yet not all innovation systems are green and not all clusters are innovation systems. From a governance perspective, this means that there is need for governance structures that can manage horizontal cross-fertilization between clusters and can support both the use of emerging technologies and indigenous knowledge as well as the positioning of sectors in which clusters emerge as knowledge-intensive. In parallel, there is a strong need for organizations and individuals that are capable of assisting in the implementation and coordination of activities process.

27. Successful policy reforms and strategies require a public-private dialog, awareness raising and promotion of strategic orientation throughout the process of strategy development. An institutional framework is needed to actively promote the Decisions and the



Science and Technology Strategic Framework at the very beginning of the process, to build on the institutional network and to develop the platform for public-private consultation. 28. Promotion and consultation activities should be designed for institutions taking into account their local/regional environments, and should include:

i. Promoting regional academies of science, technology and engineering;ii. Promoting innovation and outstanding accomplishments;iii. Promoting international practices and models; andiv. Developing a consultation mechanism and discussion platforms with existing

innovation actors in the region.

3.2 Capacity Building

29. Local capacity building is an essential part of all other action areas. Special focus will be put on ICT trainings and curriculum. At a later stage, a specific needs assessment shall be conducted and specific curriculum and training shall be developed in order to support smooth implementation of the Science and Technology Programme and enhance research and innovation capacities.

3.3 Assessment of Regional Innovation Systems

30. The key to successful implementation of policy reforms and programmes is in precise and detailed programming, including a governance framework. Background studies and analyses show that this is a weak part of many existing strategies in the region.

31. It is important to develop the Strategy and the Science and Technology Programme through a process of learning, based on acquired knowledge of the situation and identified potential in the region. For that, in-depth analyses of the existing innovation systems in the region are needed.32.33. Studies have been performed in recent years in some Member States of the COMESA region6 that outline certain general knowledge and important conclusions about innovation systems. Institutions of higher education and science, policy development and implementing structures as well as innovation actors and institutions in the business sector are developed partially, on a different scale, with different intensity in different parts of the region. More detailed mapping of innovation actors, their capabilities as well as interactions among them are needed in order to identify key actors and fields of operation for the development of realistic and result oriented actions.

34. Mapping will provide Member States and the region as a whole with information needed to further structure the process for strategy development:

i. The decision on priority fields of operations for investment with the highest potential impact on development of regional innovation systems. The decision on pilot programmes in selected priority fields is recommended as the first step in the process in order to ensure optimal results, while simultaneously gaining knowledge of what works in the region and developing practical experience and models for the development of a comprehensive strategy;

ii. Identification of key actors to be involved in strategy and operational programmes development. Implementation is about bringing the right stakeholders to the table

6 Institute for Innovation and Technology, Analyses of the Innovation System in Selected Countries, 2010 http://www.iit-

berlin.de/sektionen/innovationssysteme-und-cluster-1/anis

http://www.iit-berlin.de/sektionen/innovationssysteme-und-cluster-1/anis

http://www.iit-berlin.de/sektionen/innovationssysteme-und-cluster-1/anis


and engaging them in the process of strategy development and implementation; and

iii. Identification of weaknesses and needs in the existing systems, which need to be addressed in the implementation process.

35. The result of this step should be the decision of the institutions in charge to implement the COMESA Science and Technology Programme based on strategic objectives, orientations and structures for further development of the operational programmes and policy actions. It represents the basis for the next step, forming target groups of key defined innovation actors and formulating the process of programme development.36.3.4 Programme Development (Programming)

37. Programming is a crucial step in particular when dealing with inter-institutional and integrated approaches to complex problem solving, aimed at providing an operational framework for pursuing the effective use of resources made available for a given sector.

38. Designing policy programmes requires full understanding of implementation practicalities. Many programmes have failed because of the implementation deficiencies and did not take into account the need to clearly define objectives, suitable and realistic implementing tools, effective coordination structures and a continuous learning system, which all prove to have significant impact on the strategy formulation and implementation process.

39. Policy programmes for strategy implementation should be carefully designed in a way to ensure:

i. clear understanding of the vision and objectives among all actors; involvement of key actors in the planning process; providing combination of the top-down and bottom-up approach;

ii. realistic and reliable implementing and management structures; further developing existing competencies and strengths of implementing agencies, designing management structures and processes;

iii. selection of implementing tools and measures that work and can maximize the effect; looking for cross-cutting measures, synergies and potential for spill-overs; and

iv. continuous learning; a monitoring and evaluation system that ensures regular inputs and feedback on the effectiveness of measures and the whole process.

40. The end result of this stage should be clearly defined operational programmes for the selected fields of operations. A smaller number of programmes is recommended at national and regional level as pilot programmes and a starting point for a result oriented implementation of the strategy. This is important for the maximization of the



investment potential in the short term, the acquisition of practical experience of what works for the region and the achievement of the promotional effect.

4 Outline of the Pilot Programme: Development of an Innovation System in the Agricultural Sector

41. The pilot programme is designed as a set of projects in the selected industry (sector). At this stage, we are proposing pilot actions in the agriculture sector since it is one sector with the highest potential for learning, spill-over and demonstration effects, because it:

i. ensures short term results, visibility and learning possibilities and demonstrates capabilities and competences of existing structures (“natural” clusters) and institutions;

ii. addresses main challenges, together with social and economic goals of the region;

iii. presents potential for regional specialization, higher international visibility, positioning within the international technology and innovation systems and attractiveness for international investment in science and technology; and

iv. involves different science and technology fields such as biotechnology, nanotechnology, information and communications technology, genetics, ecology and geographical sciences.

42. In-depth knowledge about the sector, elaborate studies7 existence of so-called natural clusters in agriculture and different development initiatives all further support this selection. 43.4.1 Programme Objectives

44. The aim of the proposed pilot programme is to develop models for the elaboration of a comprehensive strategy and master plan to harness science and technology while identifying potentials and challenges in the existing innovation systems in the region. A pilot case would provide the COMESA Science and Technology Committee with a good opportunity to gain valuable practical experience and learn about tools and approaches which are to be used in the comprehensive strategy and master plan.

45. The overall objective of the programme is to build capacity and infrastructure to support the development and application of advanced technologies in agriculture and to develop the region’s unique capabilities in science and technology related to agriculture and food production.

46. Specific programme objectives are to design and implement pilot actions to boost technological and innovation capabilities of key actors in the sector, including:

i. The development of innovative clusters in agriculture by encouraging existing “natural” clusters and initiatives with the aim of both increasing innovation capabilities of cluster members and the ability to access and absorb technological advances from the international environment as well as improving the overall framework conditions for the commercialization of R&D; and

ii. The development of a Science and Technology Park in agriculture with the aim of integrating knowledge and competences in science and technology linked to agriculture and fostering cooperation between R&D institutions and among R&D

7 C. Juma. 2011. The New Harvest, Agricultural Innovation in Africa. OUP: New York.


institutions and industry. The goal is to achieve a critical mass of competences in the region and thus increase the potential for international cooperation and the application of advanced technologies.

47. Pilot actions are designed as a combination of “bottom up” and “top down” approaches. Cluster development projects are suggested to build on existing cluster initiatives and local value chains in different regions. On the other hand, the Science and Technology Park is considered regional infrastructure developed in close cooperation of Member States. Locations for all pilot actions are to be decided upon the results of the in-depth analysis of the existing institutions and networks.

48. The pilot programme will be elaborated and developed through models developing framework conditions and infrastructure in support of science and technology adjusted to the situation in the region. The models will serve as blue prints and guidelines for the development of a comprehensive strategy and programmes for the development of innovation systems in other sectors and the region as a whole.

4.2 Programme Structure

49. The programme is structured in five interrelated sub-programmes:

a. In-depth analysis of the existing actors in agriculture innovation systems in the region;

b. The cluster development project: Innovative Clusters in Agriculture; c. Development of the Science and Technology Park; and d. Elaboration of the comprehensive Science and Technology Programme.

Assessment of agriculture innovation systems

50. Policy reforms and actions in support of science and technology first of all demand deep understanding of the structures, capacities and competences of local actors in a certain field, be it research institutions, universities, governmental agencies or enterprises. The capacity to harness and develop new technologies is determined by local research and business capabilities. Institutions of higher education and science, policy development and implementing structures as well as innovation actors and institutions in the business sector are developed in different scale and intensity in different parts of the region. What is important is to elaborate and understand their role and competences in knowledge creation, convergence between science and technology and especially their interaction in the whole process of initiating, importing, modifying and diffusing new technologies.

51. The aim of the programme’s sub-component is to analyse the existing structures and institutions operating in the field of agriculture and related fields of science and technology and to identify the potential agricultural innovation systems, using international models and practices relevant to Africa.

52. The system-based approaches have been developed based on experiences of different countries and regions with strong records in innovation. They have proved to be efficient mechanisms for understanding and developing policies in support of increasing capabilities for the use of new knowledge and technologies. The innovation system framework presents a demand driven approach based on an interactive process, with cooperation and participation of several players who are involved in the generation and application of knowledge. The analysis will not focus only on the supply of information, knowledge and technologies, but more on the processes, interactions, mutual learning and cooperation practices. The analysis will focus on three levels:



i. Mapping key actor operations, influencing development and access to knowledge and technologies related to agriculture – identification of networks of science and technology actors, including government institutions and structures;

ii. Assessing the demand and absorption capacity of individual and collective users of knowledge and technologies in agriculture – identification of networks of rural actors, farmers and producers and other institutions involved in agricultural innovation; and

iii. Identifying the existing and missing links between the two networks supporting transformation of knowledge and technologies into agricultural innovation.

53. An assessment of existing actors and interactions among them will present the basic input and information that will be used in designing other sub-programmes.

i. Identification of cluster initiatives to be selected as pilot projects in cluster development. The groups with the highest potential for the development of a strong network will be selected;

ii. Identification of key competences of science and technology actors in the region will allow for the decision on specific research topics and science and research groups that could develop into a regional Centre of Excellence; and

iii. Identification of potential and best opportunities for the development of a Science and Technology Park as common infrastructure to support the transfer of technologies into technology intensive products and services.

Innovative Clusters in Agriculture

54. The aim of the sub-programme is to set up pilot clusters in the agricultural sector in order to increase their innovation capability and to gain knowledge and experience in cluster development, to educate stakeholders about the cluster concept, and to promote the idea based on results among member states.

55. Various clusters in agricultural sectors have already been identified. As cluster studies indicate, the agriculture clusters in Africa are characterized by extreme fragmentation of the growers, livestock farmers, fishermen and a heavy concentration of powerful players upstream the value chain. Farmers have very limited knowledge and skills and very limited bargaining power in the whole value chain. They operate with little infrastructure and limited business support services. Performance is further hampered by inadequate transport and logistics infrastructure. Technology advancement has been put forward as a key mover of agricultural development in Africa but it depends on farmers’ decisions and consequently on knowledge, skills and financial resources which are all needed for the successful adaptation of new technologies. The complexity and interdependency of such systems require strong linkages and inclusive, flexible approaches, mirroring the network of scientific and commercial interrelationships that must be exploited to launch genuine green innovations by using renewable energy. Clusters could play a crucial role in the formation and dissemination of knowledge within the farmers and related industries. Clusters can further add value to unprocessed raw materials by promoting linkages across the agriculture sector, from growers, producers of fertilizers, crop handling, food processing, packaging, cooling, storage, transport, food safety and standardization.

56. It is recommended that several clusters are initiated. Mapping and a diagnostic study of the existing local networks is the first step, providing basic information for the selection of pilot cluster projects with the highest potential for spill over and learning effects. Pilot projects will be designed to facilitate cluster formation and development strategies. Since cluster stakeholders play a decisive role in the overall success of the approach, dedicated attention should be given to capacity building and training. Such trainings range from


fundamentals in managing cluster initiatives, trainings on quality issues and supply chain development. Strong emphasis should be on capacity building in ICT.

57. The most important work is to turn the cluster strategies into practice. The understanding of innovation is crucial thus accompanying measures should be recommended in order to increase the public understanding and to better understand ways to increase innovation capabilities within local communities. The identification and support for the development of innovative clusters foresees the following steps:

i. Diagnostic studies and design of pilot projects;ii. Formation of Leadership Groups to guide the strategy development process;

selection of participants primarily from the private sector, research institutes, universities and business support institutions;

iii. Strategy development, strategies and specific actions (short term, medium term)iv. Identification of central, regional and local government roles regarding funding

mechanisms, the role of national and international linkages, innovation capacity in the region, monitoring and evaluation; and

v. Implementation of cluster strategies.

Development of a Science and Technology Park

58. Science and technology are reflected in economic change through the transformation of knowledge into added value products and services. The creation and growth of small and medium sized enterprises and links between knowledge and business development is a top priority of development policies in all regions. The creation and successful development of SMEs requires a supportive environment, including friendly regulatory conditions, access to capital and services as well as enabling infrastructure.

59. Science and technology parks are an efficient policy tool which combines knowledge, competencies, resources and efforts and provides a comprehensive incentive system with strong synergies and external economic effects. Co-location of research, educational and technological institutions stimulates closer links and a flow of knowledge between knowledge providers and enterprises, in addition to stimulating development of new knowledge intensive services. The concentration of actors in similar and linked fields of operation also increases the attractiveness and visibility of the location or region for new investment, capital and financial institutions, as well as for young professionally trained people. Science and technology parks bring together the best groups and individuals in a particular research and technology field with the aim of increasing overall capabilities in the priority fields, cooperation between higher education and research institutions and the flow of knowledge generated from research to education. Thus they follow the demand-lead approach in the development of research agendas, involving end users and technology developers and increasing investment in science and technology in priority areas of high relevance for regional economies. Furthermore, they develop infrastructure supporting research and innovation and as a result increase potential for international cooperation in the field by achieving higher attractiveness for the inflow of knowledge, talents and investment.

60. Studies of the situation and innovation systems in agriculture disclose main deficiencies in the region that could be addressed by establishing Science and Technology Parks. Research policies and financing of science are fragmented while institutional arrangements drive education and research. This results in lower capabilities of both and unsatisfactory educational programmes. Investment in RT in agriculture is growing regionally and influencing productivity growth. It is however not focused and sufficient enough to increase the ability to acquire existing technologies and develop new solutions.



61. The aim of the sub-programmes is to identify and support the concentration of local knowledge and competences in agriculture and related science and technology fields and to design a pilot project. In-depth analysis of existing innovation systems and competencies in the region (Sub-programme1) will provide basic information about potential locations and areas of specialization for the pilot project. The proposed selection criteria focus on:

i. Relevance; importance for regional economic goals and priorities in the field; andii. Realism; assessment of the potential and capabilities for the development of

infrastructure, ensuring short term results, visibility and learning possibilities; Regional specialization; assessment of the potential for regional specialization, international cooperation and attractiveness for international investment, knowledge and talents.

62. The sub-programme involves the evaluation of potential areas and locations for the pilot project, based on the analysis of regional innovation systems and the evaluation of international models and best practices relevant to the region. The design of the project includes the identification of partners, the development of the strategy and programming documents according to the approach selected (e.g. public private partnership) and the development of the implementation plan:

i. Mapping of research and technology actors in defined priority fields ( Sub-component 1);

ii. Identification of key competences and the potential for international cooperation;iii. Design of pilot projects:

- Formation of the initiative group for the development of the pilot project with key science and technology leaders

- Assessment of potential regional and international partners- Identification of research and infrastructure development priorities - Assessment of potential sources of financing- Design of the organizational and management structure

iv. Implementation of the pilot project:

- Organization and management structures set-up- Design of research and development projects- Design of infrastructure investment projects- Design of demonstration projects in key technological areas.

v. Promotion and marketing strategy; and vi. Fund raising and investment agreements

Elaboration of a Comprehensive Science and Technology Programme

63. The aim of the pilot programme is to develop an innovation system in agriculture and at the same time learn and gain practical experiences based on which models for the development of a comprehensive Science and Technology Programme are to be devised.

64. The pilot programme should be designed and implemented in a way that ensures systematic evaluation and assessment of the acquired knowledge. Evaluation should be built in the programme throughout the process and should ensure:


i. Assessment of the processes, conditions and requirements essential for the implementation;

ii. Development of case studies on different pilot actions implemented for further dissemination and learning; and

iii. Development of benchmarking studies on key actions, i.e. cluster development, infrastructure development, incentive system, partnership structures, etc.

65. The evaluation should provide policy makers with a learning experience and should result in inputs for the strategy leading to a comprehensive Science and Technology Programme with a special focus on:

i. Defining overall objectives and priorities for the Science and Technology Programme;

ii. Priorities setting, selection criteria and decision making;iii. Programming requirements and processes;iv. Policy tools, models and instruments; and v. Monitoring and evaluation.

5 Implementation plan - Action Matrix 66.5.1 Action area objectives 67.

Action AreaAction Area 1Establishment of the Institutional Framework

Action Area 2 Capacity Building

Action Area 3Assessment of regional innovation systems

Action Area 4Programme development

Objectives

Setting up governance structures on MS and COMESA level

Strengthen capacity for S&T

Identification of key actors and fields of operations

Definition of Operational Programmes

Learning

PILOT PROGRAMME LEVELDeveloping an innovation system in agriculture

Learning and gaining practical experiences based on which models for the development of a comprehensive Science and Technology Programme are to be devised

Setting up governance and implementation structures for pilot programme

Individuals with right profile to support implementation

Assessment of regional agricultural innovation systems

Clusters in the agricultural sector

Evaluation of pilot programme

Identification of key actors in the agricultural filed

Science and Technology Parks

Models, tools for S&T Demonstration projects Comprehensive strategy



5.2 Implementation plan – Action Matrix

68. The matrix below presents a draft implementation plan in the format of an Action Matrix.

Year 1 Year 2 Year 3ACTION AREA 1: Establishment of the Institutional Framework

Office of the Advisor on Science and Technology

Science and Technology Committees and Advisory Offices at the highest level of Government in Member States.

Design promotion and consultation activities - Promoting regional academies of science, technology and

engineering- Promoting innovation and outstanding accomplishments- Promoting international practices and models- Developing consultation mechanism and discussion platforms

with the existing innovation actors in the region.

Promotion of and consultation on activities implemented at member State and COMESA level

Setting up data bases of individuals with the right profiles ACTION AREA 2: Capacity Building Develop common curriculum in ICT Central fund for ICT training and skills development

Identification of specific needs for skills formation

Common curriculum according to the identified needs

ACTION AREA 3: Assessment of Regional Innovation Systems- Mapping of science and technology actors and networks, and

support institutions- Mapping of private sector actors / industrial clusters / networks - Identifying the existing and missing links between two

networks supporting transformation of knowledge and technologies into innovation

Identification of priority areas

ACTION AREA 4: Programming Detailed programme for Pilot programmes Detailed programme for Pilot projects Setting up an implementation structure for programmes ACTION AREA 4 Pilot Programme Programme Action 4.1 In Depth Analysis of Agricultural Innovation Systems in the Region - Mapping of science and technology actors and networks, and

support institutions- Mapping of private sector actors / industrial clusters / networks - Identifying the existing and missing links between two

networks supporting transformation of knowledge and technologies into innovation

Program me Action 4. 2: Cluster Development - Diagnostic studies and design of

pilot projects - Formation of cluster leadership

groups

- Development of cluster strategies

- Roles and responsibilities of actors involved and funding mechanisms

- Setting up monitoring

- Implementation of key cluster initiatives


and evaluation mechanism

- Implementation of first joint cluster actions

Programme Action 4.3. Development of a Science and Technology Park- Mapping research and technology actors in defined priority

fields ( sub-component 1) - Identification of key competences and the potential for

international cooperation- Design of the pilot projects

- Implementation of the pilot project

- Promotion and marketing strategy

- Fund raising and investment agreements

Programme Action 4.4. Elaboration of the Comprehensive Science and Technology Programme

Evaluation - Assessment of processes, conditions and requirements

essential for the implementation- Development of case studies on different pilot actions

implemented for further dissemination and learning- Development of benchmarking studies on key actions, i.e.

cluster development, infrastructure development, incentive system, partnership structures, etc.

- Development models, tools & master plans for the elaboration of a comprehensive strategy

Comprehensive Strategy for S&T - Defining overall objectives and priorities for the Science and

Technology Programme- Priorities setting, selection criteria and decision making- Programming requirements and processes- Policy tools, models and instruments - Monitoring and evaluation.



6 Conclusions and Next Steps

69. The Discussion Paper lays out a roadmap for the Strategy and Implementation Plan for the COMESA Science and Technology Programme. Proposals and directions presented in this document follow The Decisions of the 2010 COMESA Summit on Science and Technology for Development.

70. The strategy proposed emphasizes the importance of a regional innovation system for disseminating and introducing innovation to the market. It is important to identify and strengthen the regional innovation system in different fields relevant to the region in a way that confronts the climate change challenge and minimizes the impact on the environment. New public-private partnerships and new agile institutions and action teams will be needed to implement key actions. This will require leadership and collaboration on a regional and international level. The clustering approach is suggested to promote close interactions between government, business, industry, academia and civil society, to promote the formation and dissemination of entrepreneurial knowledge.

71. The roadmap for strategy development puts forward 4 main actions to be taken, namely: Establishment of the institutional framework, Capacity building, Assessment of the regional innovation systems and Programme development. The assessment of the regional innovation system shall put forward priority fields of intervention. The number of programmes to be considered, specific objectives and contents, including execution and budget provisions for each programme shall be defined on the basis of the strategy. The elaboration and execution of detailed programming documents will fall under the responsibility of relevant institutions pursuing the Science and Technology Programme which are yet to be identified.

72. Despite the fact that it takes some time to adopt a strategy and allocate funds, this document recognizes the need for immediate strategic actions to be taken in specific areas to gain experiences, demonstrating good practices and developing models and tools suitable for the region. Taking into account COMESA’s decision and in-depth knowledge about the agricultural sector, the existence of natural clusters in agriculture and different development initiatives, the agricultural sector is proposed as the pilot one. The proposed approach to strategy development offers an opportunity to promote the transformation of the agricultural sector into an innovation system capable of supporting environmentally and socially sustainable growth of the region. In addition, the approach offers an opportunity to learn and gain practical experiences based on which models for the development of a comprehensive Science and Technology Programme are to be devised.

73. The approach presented in this document is pragmatic, responsive to local needs, cost effective, and assures quick results, creating leadership opportunities and motivation for both the private and public sector. By doing so, the decision makers at the COMESA level have an opportunity to come up with concrete projects that deliver tangible results and at the same time assure the development of a responsive institutional framework, the identification of priority areas and actions and the development of programmes in line with the needs of the region.

74. The Strategy and Implementation Programme is a high-level overall plan embracing the general goals and accepted procedures to carry out the activities of the "Harnessing Science and Technology for Development" programme. Thus it is recommended that the Science and Technology Committee follows the strategy development process through broader consultations with stakeholders. It is recommended that the Draft Strategy Paper and Implementation Plan are shared with key stakeholders in various meetings / workshops.


Such meetings / workshops strive to create an environment for interaction, exchange, colleting feedback, while simultaneously paving the way for a consensus on the strategy and means of its implementation.



ANNEX III (b)


Pilot Programme: Polymer Cluster Platform

11-(MD-rmm)


TABLE OF CONTENTS

I. Introduction......................................................................................................................2II. Background and Context................................................................................................3

Clusters and Clustering.....................................................................................................4Clusters in the COMESA Region......................................................................................5Science and Technology Parks........................................................................................6Cluster Platforms...............................................................................................................7Polymer Material and Technology Challenges................................................................8

III. Cluster Platform Road Map...........................................................................................11Overall objective..............................................................................................................11Specific Objectives..........................................................................................................11Main Actions.....................................................................................................................12

Science and Technology Parks......................................................................................12Support to cluster development.....................................................................................12Capacity Building and Regional - International Cooperation..........................................13Institutional Framework..................................................................................................13

Main Outcomes................................................................................................................14IV. Implementation Plan......................................................................................................14

Task 1: Identification of Parks location and Clusters.....................................................15Task 2: Designing Science and Technology Park Projects............................................16Task 3: Elaboration of Cluster Initiatives........................................................................16Task 4: Capacity Building...............................................................................................17Task 5: Regional and International cooperation.............................................................18Task 6. Establishment of the Institutional Framework....................................................18

Action matrix....................................................................................................................19



7 Introduction

1. Exponential growth in scientific and technical knowledge provides unique opportunities for Africa to solve its critical challenges related to meeting basic needs, participating in the growing economy, addressing ecological and climate change problems and improving governance. African leaders have in recent years been placing increasing emphasis on the role of science, technology and innovation. Decisions taken at the 8th African Union Summit in 2007 and at the28th Meeting of the COMESA Council of Ministers in 2010 represent a clear expression of political will and interest in introducing specific reforms and actions to endorse the role of science and technology in regional development.

2. COMESA Member States recognize the importance of science and technology in socio-economic and cultural development and have agreed to cooperate in various fields as stated in the decision of the 2010 COMESA Summit on Science and Technology Development. The need for concrete projects that will deliver tangible results for the region is the greatest priority, while mainstreaming science and technology in all COMESA programmes and adopting a cost effective approach that does not financially overburden the Member States are also emphasized as equally important.

3. This document proposes a strategy and an implementation plan for theCOMESA Science and Technology Program focusing on new materials and technologies to be used in sectors important for the COMESA. At the core of the strategy lays the development of a regional Cluster Platform focusing on polymer materials and technologies. The strategy is guided by the view that innovation is the engine of social and economic development and by the proposition that a comprehensive and coordinative approach to science and technology can do much more than scattered and ad hocactions. This requires deliberating an agenda which aims at creating innovation systems to foster interaction among government, industry, academia, and civil society – all of which are critical actors. By using the platform model COMESA Member States can in their efforts to improve access to and use of the most cutting edge technology utilize the large aggregation of knowledge and know-how that have been accumulated globally in the field of polymers and related science and technology fields such as nanotechnology, biotechnology, renewable energy sources and ICT. The main challenge and opportunity lays in polymers as a new sourcing alternative, providing an escape from oil and a transition towards natural sources of polymers which Africa already possesses (or can possess) in large quantities. Biopolymers (produced by natural resources) shall play an important role in agricultural, health, material, and soil science and in various industrial sectors in the 21stcentury. The proposed approach offers an opportunity to promote the transformation of various sectors, important for Member States, into knowledge-based systems capable of supporting environmentally and socially sustainable growth of the region. The approach offers an opportunity to learn and gain practical experience, and to elaborate blue prints for leveraging technological knowledge, harnessing science and technology, and mobilizing the required resources.

4. A network of Science and Technology Parks accompanied by various clusters shall be established in Member States and linked to the COMESA Polymer Network. Each “node” of the network could have a different focus and could target a different sector. Clustering among key actors and leaders shall allow for an increase in potential, the development of models for a regional innovation system, the development of infrastructure and framework conditions and at the same time for the development of unique capabilities of the region to attract international knowledge, and available knowledge and investments. By using such platform the COMESA region can become the testing ground for certain sustainable technological solutions. By aligning the infrastructure of Member States at the COMESA level resources shall be combined, various solutions tested from different aspects and


nanotechnology, biotechnology, renewable energy technologies, and ICT shall be put in use in the sectors with critical mass and potential. Furthermore the policy framework shall be harmonized and coordinated thus further assuring that the adopted cost effective approach does not financially overburden the Member States and Secretariat.

5. The intention is to execute the strategy through a set of Actions which comprised development of science and technology parks, development of clusters, capacity building and international cooperation and institutional framework. The elaboration and execution of detailed action plan will fall under the responsibility of relevant institutions pursuing the Science and Technology Program which are yet to be identified. Thus the very first step of the programme is selection of the location of science park(s) and identification of key actors to be involved into the action and to assure some budget for a field study to be conducted in order to prepare a detailed plan.

6. The document has been divided into 4 sections. Section 2 provides some background information, which the reader is expected to keep in mind while reading the document. It presents the concepts of clusters and clustering, science and technology parks, cluster platforms and the role of polymers in the 21st century, together with all of some practical examples of cluster. In order to avoid oversizing the document and assure clarity more case studies are presented in the Annex. Section 3 first provides the conceptual framework and strategy for the development of the cluster polymer platform. An action-oriented strategy is then proposed to gain and demonstrate positive experience that allow for mutual learning. Section 4 deals with the implementation plan and action matrix format. No analysis, studies or interviews with potential actors have been conducted at this stage. Thus the proposed implementation plan should accordingly be interpreted as an attempt to map critical elements of the implementation. As experiences indicate, it is only when a group of people goes through the process that it becomes possible to identify and adept concrete steps that need to be taken.

8 Background and Context

75.7. Innovation systems have received much attention in recent years due to recognition of the critical importance of the process of disseminating and introducing innovation into the market. An innovation system may be defined as a network of institutions in the public and private sector whose activities and interactions initiate, import, modify and diffuse new technologies8. They can act as organizations that conduct research (including accessing results from elsewhere) and generate new knowledge or as organizations that support the commercialization of knowledge either by transforming it into market oriented and globally consumable innovations or by applying it in public services such as healthcare and education.

8. The challenge lays in strengthening the innovation capabilities of all actors and providing favorable conditions and infrastructure in order to build a coherent and strong national and regional innovation system. The key differential of innovation intensive regions is not merely in the presence of main innovation actors, such as public research and education institutions, companies, government institutions, technology parks, incubators, etc., but rather in their relationships, the way they are coordinated or connected. Experience shows that innovation performance of a country or region broadly depends on the interaction among all actors in producing, distributing and implementing various kinds of knowledge and

8 C. Freeman, The National System of Innovation in a Historic Perspective, Cambridge Journal of Economics, N.19, 1995.



thus their ability to both cooperate within the global knowledge creation system and utilize new knowledge and technologies9.

9. From a policy perspective the innovation system approach draws attention to the behavior of local actors with respect to three key elements in the innovation process: learning, linkage and investment. In this regard, the ultimate challenge of science and technology policies is the development of a consultative relationship between universities, research institutions and industry. This means cooperation between education and training institutions, on the one hand and engineers and production managers on the other, leading to an increase in the stock of entrepreneurial knowledge. This further creates the need for the development of institutions which will be able to stimulate a continuous consultative relationship between buyers and sellers as well as institutions producing entrepreneurial knowledge and in addition develop business models which drive innovation, sustainable regional development and the well-being of local communities. Since technological advances depend on managerial decisions policy measures should not focus on the creation of knowledge only, but should in addition also support the development of systems that enable its faster dissemination within the economy. The emphasis is thus, first, on the development of 'social capital' in the form of partnerships between universities, research institutions and the business sector, inter-firm networks and, second, on business models of industrial innovation.

10. As it can be observed from various cases worldwide specialized infrastructure, such as science parks, technology parks, skill-specific training centers and improved logistics infrastructure, paves the way to a promising new type of linkages between local actors, providing more growth opportunities for local communities and facilitating corporation in an effort to reach global research and technology markets. In recent years, there has been a comprehensive debate about the role of clusters in their importance for regional competiveness and innovation systems and clusters proved to play an important part in regional innovation systems. Taking all actions mentioned above simultaneously of special importance for the region facing a triple challenge in catching up, harnessing and applying available technological knowledge in order to achieve its socio-economic development (i.e. in agriculture, health, environmental protection, energy and water supply,) and develop its unique competitive advantages.

Clusters and Clustering

11. Hundreds of cluster oriented policy measures and support schemes that aim at innovation have been implemented or are currently being prepared. The diversity of these measures and schemes reflects the diversity of framework conditions, cultural preferences, political priorities, collaboration practices, and even traditions of social dialogue in the respective environments. The evaluation of such innovation related programmes and initiatives prove their positive impact on the development of targeted industrial sectors, companies and societies as a whole. The results are indeed impressive, even in countries that have just started implementing such measures recently and plenty of evidence of positive impacts on national economies exists.

12. Essentially, clusters are geographic concentrations of interconnected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition. They include, for example, suppliers of specialized inputs such as components, machinery, and services, and providers of specialized infrastructure. Often clusters extend downstream to channels, customers and laterally to manufacturers of complementary products, as well as companies in related industries either through skills,

9 National Innovation Systems, OECD Report, 2005


technologies, or common inputs. Finally, many clusters include governmental and other institutions, such as universities, standard-setting agencies, think-tanks, vocational training providers, and trade associations – that provide specialized training, education, information, research, and technical support.

13. Clustering fosters the diffusion of an industrial organization in which innovation is built directly into the processes whereby firms establish their core capabilities and networks with other firms. Clusters as “open systems” of enterprises, universities and other research institutions increase the capacity to generate new knowledge and stimulate specialization of knowledge on the one hand and share this knowledge on the other hand. Clusters accelerate the efficiency of transferring knowledge into products and services. They increase the capability of cluster members to find and absorb available technological advances worldwide. However it should be emphasized that the driving force behind successful clusters is entrepreneurship, while the transformation of existing enterprises and the entry of new ones, present the vehicle of innovation and are as such an indispensable factor in achieving cluster competitive advantages.

14. Clusters enable the flow of knowledge and information between enterprises and institutions through networking. The pivotal factors of clusters are inter-firm networks with a range of local suppliers, customers, competitors, universities, research institutions, non-governmental and governmental organizations and their collaborative working relationship. The networks encompass both formal and informal relationships, based on shared norms, common knowledge, trust and institutional networks. Networking facilitates the generation of economic and non-economic resources needed to start and sustain a new business, enhances collaboration, increases the perception of opportunities, fosters information exchange, inspires a trustful culture as a precondition for sharing information, resources, and knowledge and encourages the motivation and decision to start a new business by providing role models. A precondition for clustering as a source of economic growth in the context of innovation and technology advances is the existence of a trustful relationship between enterprises and institutions in the cluster. Only in a trustful environment, a cluster will function as a “collective experimental laboratory” exploiting rich diversity of research and development areas and linked activities. This boosts creativity which in turn enlarges and enriches the existing base and deployment of knowledge leading to organizational or/and technological innovations.

Clusters in the COMESA Region

15. There is evidence of the existence of clusters in the COMESA region, among them the Ethiopian and Kenyan cut flower cluster, Kenyan metalwork cluster, the Lake Victoria fishing cluster in Uganda, The textile and clothing cluster in Mauritius and South Africa, the wine cluster in South Africa. Clusters build on spatial proximity, language, culture and other mainly geographically determined factors. Several regional innovation systems, which all present a strong base for cluster development, have been identified and among others include the cotton, maize, banana, cassava, tea and livestock industry. Recently, the Pan-African Competitive Forum launched a program to promote cluster-based competitiveness through the Lighting 1000 Fires project, which shall support cluster initiatives across the continent, while several donor projects have already targeted clusters beforehand. Cluster development has not yet been supported by regional/national clustering programs, while the infrastructure to support cluster development and innovation systems in the COMESA region is only now emerging.

16. The potential of existing and emerging clusters could be exploited, while supporting their development to the level of open and dynamic systems with the potential of positive external effects on the overall socio-economic development in the region. Existing cluster groups and initiatives on the national level could be used to build on a critical mass of



knowledge and competencies as well as infrastructure in the region in specific sectors. Before innovation products and processes result from successful cluster activity, initiating, building upon and intensifying cooperation structures. There is a strong need to create specialized institutions which will be able to stimulate a continuous consultative relationship between cluster actors as well as institutions producing entrepreneurial knowledge and support development of novel business models.

Science and Technology Parks

17. Science and technology are reflected in economic change through the transformation of knowledge into added value products and services. The creation and growth of small and medium sized enterprises and links between knowledge and business development is a top priority of development policies in all regions. The creation and successful development of SME’s requires a supportive environment, including friendly regulatory conditions, access to capital and services as well as enabling infrastructure.

18. Science and technology parks are recognized internationally as an efficient policy tool, providing a comprehensive incentive system that provides strong synergies and external economic effects. Basic incentives include access to and a lower cost for location, infrastructure and services. Co-location of research, educational and technological institutions stimulates closer links and a flow of knowledge between knowledge providers and enterprises, in addition to stimulating development of new knowledge intensive services. The concentration of actors in similar and linked fields of operation also increases the attractiveness and visibility of the location or region for new investment, capital and financial institutions, as well as for young professionally trained people.

19. Science and technology parks bring together the best groups and individuals in a particular research and technology field with the aim of increasing overall capabilities in the priority fields, cooperation between higher education and research institutions and the flow of knowledge generated from research to education. Thus they follow the demand-lead approach in the development of research agendas, involving end users and technology developers and increasing investment in science and technology in priority areas of high relevance for regional economies. Furthermore they develop infrastructure supporting research and innovation and as a result increase potential for international cooperation in the field by achieving higher attractiveness for the inflow of knowledge, talents and investment.

20. There is an ongoing debate about science and technology definitions in addition to frequent, but usually inconclusive debates about the predominant nature of benefits of science and technology parks location are. Some parks are basically real estate developments which attract technological companies, while others are designed and managed to encourage collaborative research and development activities and technology transfer among local universities and other park tenants, including shared access to specialized research laboratories and equipment. The lowest common denominator seems to be that such parks gather producers of high technology products and services, and provide the opportunity for a degree of institutional cooperation between universities and the industry. The principal objective of the parks is to provide services to the companies that comprise it. When a company is incorporated into a scientific and technological park, it among other things gains a series of services that accompany its growth and the access to public and private financing.

21. Support for cluster development and parks are both policy tools directed at speeding up the process of change so that growth becomes increasingly based on the exploitation of knowledge, new technologies, and availability of facilitating the adjustment process. Clusters and parks are complementary because they have the same objectives and stimulate


cooperation among their members and among other parks and clusters. It should however be noted that a territorial grouping of companies within parks, cannot be considered a cluster but as an initiator of cluster development (please see examples below). Subsequently, parks are considered an important part of cluster development, with numerous successful clusters that have emerged from science or technology parks acting as proof. Some most prominent cases are presented in the box below, while several other can be found in the Annex.

22. Silicon Valley is probably one of the best-known clusters based on silicon technology. The development of the cluster spur from Stanford University’s Science Park in California. The Science Park was founded in 1950 and in 1986 it already had over 80 occupant companies employing over 26000 people. Starting slowly the Park eventually drew in Eastman Kodak and Varian and accommodated new university-spawned companies such as Hewlett- Packard and Syntex, thereby fuelling its growth from both external and internal sources. In 1986 Silicon Valley, the regional expression of the ‘Stanford phenomenon’ already had more than 3000 advanced electronics companies providing over 200.000 jobs. Silicon Valley is the ultimate environment for testing new ideas, and it is something that people all over the world are trying to imitate with limited success.

Cluster Platforms

23. The platform models seem to have boosted in recent years where research has focused on transitioning beyond the fossil fuels based industrial paradigm towards a more knowledge based “green economy” embracing renewable energy, smart recycling and other clean technologies. Dr. Phil Cooke in a report Constructing Regional Advantage points out: ”While rigid sartorial policies at the regional levels can be at risk in a globalised competition, a platform approach offers a context better equipped to exploit multipurpose and generic technologies. Therefore, policy platforms, which help articulate an array of instruments from several policy domains, will facilitate the formation of necessary capabilities in regions without existing capabilities to construct regional advantage”.

24. Advocates of scientific and technical research in developing countries have found champions in innovation platforms of nanotechnology, biotechnology, ICT, geographic information systems. New materials, processing technologies, life science many times build on platforms and have recently become core topics of cluster-based development. Applications of such clusters span through many sectors and industries from agricultural, nutrition, chemistry / pharmaceutical, building industry textiles etc. The platform approach offers an opportunity to put technological convergence at the top of the regional innovation policies to enable more individuals, companies and research institutions to begin addressing opportunities for innovation and growth generated through technological advances. These are superior to the traditional catching up model. Platforms enhance technological advances and scientific research while expending storage, collection and transmission of global knowledge. One of Europe’s most successful innovation platforms is to be found at the Eindhoven, Leuven and Aachen triangle.

Eindhoven, Leuven and Aachen triangle, the three urban regions have common technology fields, but have their own specialties within the fields. On these technology fields,

cooperation between regions results in synergy and added value. The triangle Eindhoven, Leuven and Aachen (ELAt) is a transnational geographically concentrated area with the potential of becoming Europe’s top technology region. It constitutes an example of the improvement of the knowledge economy in



Europe via cross border and interregional cooperation. The regions combine technology in the filed of life science, telecommunications and e-security and merging them into new knowledge mainly used by clusters in such sectors as High Tech Systems, Automotive, Agricultural – Food and LifeTech.

Polymer Material and Technology Challenges

25. A polymer is a giant macromolecule, composed of a long sequence of small elementary units, joined together through covalent chemical bonds. The number of repeating units succeeding in the polymer backbone corresponds to the polymerization degree of the polymer. Once formed, the polymer can be represented as an extended chain, a spatial arrangement which can look disordered or having a regular geometric structure, depending on the chemical nature of the polymer itself.

26. The 20th century has been widely recognized as the “polymer century” with a huge development in the field of polymer science and technology resulting in revolutionary discoveries and industrial exploitation of polymer and polymer-related materials. Materials made of polymers are light, durable, resistant to deterioration, with an extensive range of application in different sectors: food, textiles, furniture, electronics, automotive, coatings, construction, enclosures, packaging, and many more. At the beginning of the 21st century, the overall importance of polymers is clear in both well established and emerging fields covering all areas of human activities, from everyday life with growing mass production to new innovative solutions aimed at improving and advancing specialized fields, such as the applications of polymers in medicine, pharmaceutical industry, renewable energy production and agriculture.

27. The third millennium thus possesses great challenges to the polymer scientific, research and industrial community. Apart from sustainable development of commodity and engineering polymers, many new areas of research have come about leading to the development of novel specialty polymers as high performance materials. Many scientific endeavors are focused on the advanced and emerging fields of great importance to the improvement of human life such as microelectronics, nanoelectronics and optoelectronics, sensors, energy storage, photovoltaics (plastic solar cells, color selective coatings), pharmacy (drug, vaccines or genes carriers), medicine and regenerative medicine (tissue engineering, spare parts of organs, bio-mimetic materials), porous media (catalysts, separation techniques, reagents, media, etc..), information technology, nanomaterials, polymer composites and nanocomposites with significantly improved or new properties, etc. Despite technology advances the main source of chemicals needed to manufacture plastics are still fossil fuels. These petrochemical plastics are very durable and can persist in the environment for many years after their disposal. As a result millions of tons of plastic end up in landfills, the ocean, and the shores, negatively affecting life on Earth in general. Thus, biodegradable polymers derived from renewable resources have attracted much attention in recent years. This reflects the highlighted importance of concerns about global constraints of climate change, ‘Peak Oil’ and the backlash arising out of rising environmental pollution.

28. Yet, the future of biodegradable polymers relies on their specific properties and improved processability, and aims both at extending their customer base and improving costs by demonstrating that biodegradable polymers are not only environmentally friendly (beneficial) materials but also an economically viable alternative to conventional polymers. In such processes the convergence of various technologies, namely nanotechnology, biotechnology, medicine, ICT, is playing a crucial role. These above mentioned challenges will be faced and solved by bringing together human capabilities from all over the world,


helping to realize the vision of an ongoing prosperous and rapidly evolving field of polymers in the 21st century. Some of challenges are presented below:

a. Biodegradable and biopolymers. Biodegradable polymers are characterized by an organic backbone subjected to a controlled degradation process, both natural and induced by microorganisms. Biodegradable polymers come in two forms: synthetic and organic (natural) polymers. The synthetic polymers are produced from feedstocks derived either from petroleum resources (non-renewable resources) or from biological resources such as natural monomers (lactic acid, glycolic acid, monomers from vegetable oils) or lignocellulosic biomass (renewable resources). During the last two decades, significant advances have been made in the development of biodegradable polymers. Biodegradability implies that the polymer is capable of degrading efficiently through natural processes. Biodegradable polymer materials have been developed in a variety of forms, and thus have potential uses in a range of industries. Many of these polymers are well suited for adhesive applications such as environmentally friendly packaging, recyclable envelope adhesives, carpet backing, and many other products that are eventually destined to end up in the municipal waste disposal facility. Biodegradable polymers are generally obtained via polymerization of agriculturally based raw materials. Such polymers are made from organic material that has the ability to regenerate itself and that can be produced again and again. This cycle of using organic material in products that can later break down and return to the earth only to be harvested again make them a renewable resource. These resources include plant materials such as corn, sugarcane, wheat, potatoes, reed, leaves and bamboo, just to name a few. In fact, they may even include animal fats, meats and other tissues. Bio-based polymers are those composed wholly or significantly of agricultural ingredients – renewable plant, animal, marine or forestry materials. Bio-based polymers can help increase energy independence by reducing the use of petroleum in manufactured products and they contribute to reducing the introduction of fossil carbon into the atmosphere further mitigating climate change impacts;

b. Polymers as superabsorbent materials. The lack of water and desertification are very serious problems. A valid aim to these problems could come from the use of superabsorbent polymers, because of their excellent properties. Super-absorbent polymers are unique functional polymers, which are capable of absorbing fluids up to several hundred times their weight. They have a high capacity for absorbing and gradually releasing water facilitating better plant growth under dry conditions. Superabsorbent polymers are already well established in various applications such as disposable diapers, hygienic napkins, cement, drug delivery systems and sensors. In such applications, water absorbency and water retention are essentials. Their use in agricultural applications has shown encouraging results; they have been observed to help reduce irrigation water consumption and the death rate of plants, improve fertilizer retention in the soil, and increase plant growth rate. Undoubtedly, in these applications, superabsorbent materials will replace traditional absorbent materials such as cloth, cotton, paper wadding, and cellulose fiber;

c. Polymers as functional materials for controlled release. The use of conventional agrochemicals produces undesirable side-effects such as their incorporation into the food chain and the contamination of the surrounding environment. Smart polymeric materials and smart delivery systems have been helping the agricultural industry combat viruses and other crop pathogens. Functionalized polymers have been used to increase the efficiency of pesticides



and herbicides, allowing lower doses to be used and to indirectly protect the environment through filters or catalysts to reduce pollution and clean-up existing pollutants. Polymer supported herbicides overcome the serious environmental problems of the conventional herbicides because they release the herbicide to the plant at a controlled rate in the quantities required over a specified period of time. Polymers are used for encapsulation of fertilizers and their controlled release. The advantage of encapsulated fertilizers as compared to the conventional ones is the fact that the speed of fertilizer release can be adjusted to the needs of plants for the entire period of their growth. However, increased biodegradability of membranes and systems to control time and quantity of delivery remain an issue to be solved. Microencapsulation is a rapidly expanding technology. It is the process of applying relatively thin coatings to small particles of solids or droplets of liquids and dispersions. Microencapsulation provides the means of converting liquids to solids, of altering colloidal and surface properties, of providing environmental protection and of controlling the release characteristics or availability of coated materials. Applications are also endless in food, medicine, pharmaceutical and textile industry;

d. Polymers based on lignocelluloses biomass and other renewable resources - functional polymers for a sustainable economy. Renewable resources, such as wood waste produced by the furniture industry, buildings, waste furniture, paper, plant straw, textile, and other lignocelluloses materials are used in a new innovative way in order to synthesize polymers;

e. Nanoscience and nanotechnology: nanocomposites with significantly improved properties for use in various fields, such as construction materials, adhesives, packaging, photovoltaics, etc. For the inorganic-organic composites, the improvement of mechanical, thermal and optical properties, durability, and resistance to various chemicals as well as reducing flammability are significant. The improvement of the properties such as stiffness, hardness, permeability for various gases, the absorption spectrum or refractive index (RI) can be achieved by using a very low amount of added inorganic or organic nanomaterials of different sizes and shapes, in the order of magnitude from less than one to a few percent. In the case of nanocomposites for targeted applications one can expect different functional properties, tailored to the size and shape of particles and their composition. The application fields are numerous, since a minute amount of the nanofiller can improve material properties significantly. These materials offer economies of scale and thus faster market penetration;

f. Polymers with high porosity for separation processes, water-cleaning processes, carriers for catalysts, membranes, thermoisolation, etc. Macroporous polymers in the form of monoliths, membranes or particles are used as carriers of catalysts and reagents in pretentious organic syntheses such as kiral sythesis etc. They are even more important in modern analytical and preparative HPLC chromathography as carriers of specific binding sites for various biomacromolecules such as viruses (viral vectors), DNA (plasmid DNA) and proteins (Immunoglobulin G and M, as well as pegylated proteins) and in biomedicine (tissue engineering, controlled drug release); and

g. Polymers as functional materials for biomedical purposes and health: carriers for controlled drug release based on dendritic polymers, polymers for tissue engineering, biocompatible polymers for implants, etc.


9 Cluster Platform Road Map

Overall objective

29. At the core of the strategy is development of a regional Polymer Cluster Platform. By using the platform model COMESA Member States can in their efforts to improve access to and use of the most cutting edge technology utilize the large aggregation of knowledge and know-how that have been accumulated globally in the field of polymers and related science and technology fields such as nanotechnology, biotechnology, renewable energy sources and ICT.

30. The aim of the Polymer Cluster Platform is to build capacity and infrastructure to support the development and application of advanced technologies and to develop the COMESA region’s unique capabilities in science and technology. The proposed platform offers an opportunity to promote the transformation of various sectors, important for Member States, into knowledge-based systems capable of supporting environmentally and socially sustainable growth of the region. The approach offers an opportunity to learn and gain practical experience, and to elaborate blue prints for leveraging technological knowledge, harnessing science and technology, and mobilizing the required resources.

Specific Objectives

31. A network of Science and Technology Parks accompanied by various clusters shall be established in Member States and linked to the COMESA Polymer Network. Each node of the network could have a different focus and could target a different sector. Clustering among key actors and leaders shall allow for an increase in potential, the development of models for a regional innovation system, the development of infrastructure and framework conditions and at the same time for the development of unique capabilities of the region to attract international knowledge, and available knowledge and investments. By using such platform the COMESA region can become the testing ground for certain sustainable technological solutions. By aligning the infrastructure of Member States at the COMESA level resources shall be combined, various solutions tested from different aspects and nanotechnology, biotechnology and ICT shall be put in use in the sectors with critical mass and potential. Furthermore the policy framework shall be harmonized a and coordinated thus further assuring that the adopted cost effective approach does not financially overburden the Member States and Secretariat.

Clustering activities, at the beginning represented mainly through Science and Technology Parks (red diamonds in the picture below) represent “cluster infrastructure” that will help knit

various elements of the cluster together: local companies get the benefits of research done at local universities, firms with market excess get those benefits in ways they had not before and start cooperation with local companies on new product development, joint marketing, etc. And to the extent that Science and Technology Parks shall also act as incubators for new businesses, they will be recruiting and preparing both people with ideas and people with business acumen, linking them together.



32. Specific programme objectives are to be designed and pilot actions are to be implemented in order to boost technological and innovation capabilities of key actors in the sector. These include:

a) The development of a Science and Technology Park in Polymer Materials and Technologies and related science and technology fields with the aim of integrating knowledge and competences in science and technology linked to clusters and fostering cooperation between different R&D institutions and among R&D institutions and the industry. The goal is to achieve a critical mass of competences in the region and thus increase the potential for international cooperation and the application of advanced technologies.

b) The development of clusters by encouraging existing “natural” clusters and initiatives with the aim of both increasing innovation capabilities of cluster members and the ability to access and absorb technological advances from the international environment as well as improving the overall framework conditions for the commercialization of R&D.

Main Actions Science and Technology Parks

33. The development of a Science and Technology Park aims at integrating knowledge and competences in science and technology and fostering cooperation between different R&D institutions and among R&D institutions and industry in the filed of Polymer Materials and Technologies and related science and technology fields. The main challenge and opportunity lays in polymers as a new sourcing alternative, providing an escape from oil and a transition towards natural sources of polymers which Africa already possesses (or can possess) in large quantities. Biopolymers (produced by natural resources) shall play an important role in agricultural, health, material, and soil science and in various industrial sectors in the 21stcentury.

34. The goal is to pool resources and combine efforts in order to achieve a critical mass of competences in the region and thus increase the potential for international cooperation and the application of advanced technologies. Strong expansion of the region’s applied technology resources will make it far easier for companies in all key sectors to access appropriate production technologies and marketing resources. Biotechnology could be put in front as a key tool to increase the outputs of the cropping sector and to explore the potential of biopolymers. Nanotechnologies can be fully exploited in combination with polymers in various sectors, for example in medicine. Support to cluster development

35. The aim is to set up pilot clusters in order to increase their innovation capability and to gain knowledge and experience in cluster development, to educate stakeholders about the cluster concept, and to promote the idea based on results among Member States. The goal is to promote commercialization of research and development and at the same time put in place initiatives for improvement and standardization of traditional products transforming them through innovation into products of higher value added.

36. The development of innovative clusters by encouraging clusters and emerging initiatives around science and technology parks aims at increasing both innovation capabilities of cluster members and their ability to access and absorb technological advances from the international environment as well as improving the overall framework conditions for the commercialization of research. This is crucial in order to help the COMESA region pursuit “green innovation” and move towards environmentally and socially sustainable growth.


Capacity Building and Regional - International Cooperation

37. The most important work is to turn the cluster strategies into practice and this cannot be possible without regional leadership and people employed or activated by cluster actors (i.e. firms, universities, business support institutions). Since cluster stakeholders play a decisive role in the overall success of the approach, dedicated attention should be given to capacity building and training. Such trainings range from fundamentals in managing cluster initiatives, trainings on quality issues and supply chain development as well as on specific technology issues and topics which might emerge as important development issues for a particular cluster. In many cases the needs of clusters facilitate the development of new programmes offered by universities and other educational institutions.

38. Capacity building aims at strengthening knowledge, skills, and expertise required for the implementation of initiatives. The main emphasis of the program should be to build up the capabilities of local staff, train them and do pilot projects in key regions to show them how it should be done. One of the results of the capacity building program shall be a data base of individuals with the right profiles that can assist in the implementation of Science and Technology Programmes.

39. Collaboration between clusters occurs if there is knowledge about potential partners and their complementary capabilities. To build critical mass, and assure access to global knowledge clusters have to reach out and link-up to other clusters in order to get access to new markets, research experts and knowledge infrastructure. By linking companies, centers of research and universities across borders, clusters are able to make better use of existing infrastructure and take advantage of economies of scale. Despite the existence of the COMESA, there are still a number of barriers that hinder the exchange and use of knowledge across borders. More information can help reduce the traditional barriers of language, legacy, and administrative rules and regulations that have limited cluster collaboration, and led to too little specialization and integration into COMESA’s and international value chains. At the same time, improved knowledge of the “real cluster landscape” could support efforts to formulate more evidence-based strategies and evaluate the success of their policy initiatives.

40. An international exchange of cluster actors, both within and outside of the COMESA would support the dissemination of best practices and lead to the development of new knowledge, skills and networks. Different types of mobility frameworks should target different cluster actors (including companies, academics and managers) with different aims (including increased business-to-business interactions, strengthened university-industry collaborations, professional development of cluster managers, investment promotion, policy learning etc.). Mobility programmes should facilitate not only the development of individuals, but should also provide clusters and parks with the opportunity of expanding their strategic network of contacts and scouting for active collaboration possibilities in the region and world wide. Clusters and parks will become more effective in forming international partnerships, and will become increasingly specialized over time. This will strengthen the level of cluster excellence and help develop trust between cluster actors internationally – creating the conditions necessary for the internationalization of commercial activities between clusters.Institutional Framework

41. Experiences indicate that when it comes to development the process itself tends to be more important than the specified outcome. What is needed is a flexible form of strategic collaboration between public and private sectors, designed to elicit information about objectives, distribute responsibilities for solutions, and evaluate outcomes as they appear. In any case, institutions on both the COMESA and Member State level should be established with a clear task of leading the process of strategy development and implementation in a systematic and integrated manner. While forming the structures, further basic principles



should be acknowledged by high political authorities in order to ensure real commitment and support for the process as well as professional authorities with respective members from the academia and the business sector in order to ensure high recognition in the region. There is a need for governance structures that can manage horizontal cross-fertilization between clusters and science and technology parks, support the use of emerging technologies and indigenous knowledge and position themselves in those sectors where clusters emerge as knowledge-intensive. In parallel there is a strong need for organizations and individuals that are capable of assisting in the activity implementation and coordination process.

42. Successful strategies require a public-private dialog, awareness raising and promotion of strategic orientation throughout their implementation. An institutional framework is needed to actively promote the Decisions and the Science and Technology Strategic Framework at the very beginning of the process, to build on the institutional network and to develop the platform for public-private consultation. Promotion and consultation activities should be designed for institutions taking into account their local/regional environments, and should include in particular mechanism for promoting international practices and models, as well as models developed within COMESA Member States and developing mechanism and discussions platforms with existing innovation actors in the region.

Main Outcomes

43. Main outcomes of the programme in the next 2 years has to defined in terms of:

a) Science & Technology Park locations identified b) Numbers of Science & Technology Park projects elaborated c) Numbers of clusters identified d) Numbers of cluster projects elaborated e) Number of business people trained, cluster and park mangers trained, f) Data base of individuals enable to support implementation established g) International cooperation established in the filed of polymer material and

technology (bilateral agreements of cooperation) h) Institutional framework established and Cluster Platform promoted (workshops,

seminars, study tours) and cluster platform established and running

10 Implementation Plan 76.44. Pilot actions are designed as a combination of “bottom up” and “top down” approaches. Cluster development projects are suggested to build on existing cluster initiatives and local value chains in different regions. On the other hand, the Science and Technology Park is considered regional infrastructure developed in close cooperation of Member States. Locations for all pilot actions are to be decided upon the results of an in-depth analysis of the existing institutions and networks.

45. The implementation plan foresees 6 tasks. Tasks 1 and 6 are closely linked as well as task 4,5 and 6. The Science and Technology Parks’ locations as well as identification of clusters shall be defined based on the assessment which is part of the task 1, but decision shall be taken as part of the task 6. The objective of Task 2 and Task 3 are to design Cluster platform, namely to design the Science and Technology Park projects and to elaborate cluster initiatives. Since cluster stakeholders, managers of parks and managers of clusters play a decisive role in the overall success of the approach; dedicated attention is to be given to capacity building and training (Task 4). In order to build a functional and dynamic cluster platform, full attention shall be given to networking activities at the COMESA at regional and


international level (Task 5). The task 6 is devoted to the establishment of the institutional framework of the cluster platform. Task 1: Identification of Parks location and Clusters

46. The main goals is to identify and select the location for the Park(s) followed by the identification of clusters and the determination of cluster structure in terms of actors and cluster opportunities. This comprised:

a) Mapping key actor operations, influencing development and access to knowledge and technologies – identification of networks of science and technology actors, including government institutions and structures.

b) Assessing the demand and absorption capacity of individual and collective users of knowledge and technologies – identification of networks firms, institutions, producers and other organizations involved in innovation.

c) Identifying the existing and missing links between the two networks supporting transformation of knowledge and technologies into innovation.

d) Mobilization of main actors to be involved into the projects

47. An assessment of existing actors and interactions among them will present the basic input and information that will be used in designing other actions.

a) Identification of potential and best opportunities for the development of a Science and Technology Park as common infrastructure to support the transfer of technologies into technology intensive products and services.

b) Identification of cluster initiatives to be selected as pilot projects in cluster development. The groups with the highest potential for the development of a strong network will be selected.

48. The selection process can be characterized by varying degrees of competition. Top-down selection can be done centrally and objectively, on the basis of a mapping exercise and other statistical methods. On the contrary, competence over selection can be left to local actors. Alternatively, a combination of top-down and bottom-up procedures can be adopted. It can take the form of a negotiated process between authorities in charge and cluster candidates, or the form of formal and transparent procedures like call for proposals.

49. Next step is the mapping and analysis of potential clusters with regards to the industrial structure in the target regions, the main actors, the value chains they are involved in, the needs and expectations of the industrial actors, innovation support measures already available in the regions, etc. Existing economic studies and reports shall be analyzed and various meetings and workshop shall be conducted in order to begin with a fast-paced diagnosis.

Typical actors for mapping within a cluster are presented in the figure below.



Task 2: Designing Science and Technology Park Projects

50. The aim is to identify and support the concentration of local knowledge and competences in polymer materials and technology and related science and technology fields and to design a pilot project. The design of the project includes the identification of partners, the development of the strategy and programming documents according to the approach public private partnership and the development of the implementation plan. The project plan should put forward:

a) Design of pilot projects:- Formation of the initiative group for the development of the pilot project with key

science and technology leaders - Assessment of potential regional and international partners- Identification of research and infrastructure development priorities - Assessment of potential sources of financing- Design of the organizational and management structure

b) Implementation of the pilot project- Organization and management structures set-up- Design of research and development projects- Design of infrastructure investment projects- Design of demonstration projects in key technological areas.

c) Promotion and marketing strategy d) Fund raising and investment agreements

Task 3: Elaboration of Cluster Initiatives

51. Once the initial selection of clusters has been obtained the following steps can be undertaken: Forming a joint private-public leadership team, conducting cluster specific analysis, developing action initiatives, identifying funding mechanisms and the role of national, regional, international linkages, and setting up the cluster’s organization.

52. For each cluster, a Cluster working group will be convened. Ideally, these cluster working groups should have about 50% private sector representatives, with the remainder composed of public sector officials and university/research/training representatives. The goal of the workshops is the development of a strategy and action plan, but this process should also generate leadership, a shared vision and increased levels of trust – a vital ingredient for genuine innovation and economic development.

53. Pilot clusters selected can be in different development stages: emerging, existing or mature, with or without a large driving enterprise, with university, research institutes, with


cluster management, existing export activities or with a potential to enter export markets. The development stage will influence the focus of cluster actions which are envisaged for companies and institutions from selected clusters. For example, whereas an emerging cluster might have to focus on activities, such as improved networking, mature clusters could focus on more advanced action initiatives concentrating on innovation activities. To this end our priority attention will be given to the cluster initiatives such as coordination, information, training and capacity building and to knowledge transfer. Guidance and coaching for the cluster leadership group is crucial in order to ensure early deliverables to cluster members, and to continue building and extending the arenas for collaborative engagement and sustainability.

Task 4: Capacity Building

54. The main goal is to build a sustainable platform to ensure the implementation of science and technology initiatives in the COMESA region. This will contribute to a better understanding of how to increase innovation capabilities of the COMESA region. It is intended for the interested public, sometimes not directly benefiting from the cluster approach, like regional policy makers, industrial centers, public authorities, firms, etc.

55. Training Needs and the Development of a Common COMESA Curriculum. The purpose of the program is to enable Member States to reach the same level of understanding of clustering from the innovation point of view and at the same time to support leadership and managerial and technical skills and knowledge needed for cluster development. Main target groups for training come from governments, local administration, managers of firms and knowledge institutions, as well as other targeted individuals with the potential for cluster managers and individuals who will play an important role in ensuring long-term success of the overall cluster approach.

56. Mentoring Programme. Mentoring Programme shall involve senior experts (mentors) and young trainees. The programme is to target the development of specific competences needed in cluster management as well as in science and technology park management.

57. Technical Assistance. The technical assistance program comprises of the preparation of feasibility studies, designing and elaborating of the Science and Technology park plans, elaborating cluster initiative plans and detailed action plans, giving advice on networking, funding, and organization. Technical assistance can be organized by the Secretariat in close cooperation with advisory offices in Member States.

Task 5: Regional and International cooperation

58. The COMESA Cluster platform focuses on the creation of a pool of resources and combines efforts in a common filed of science and technology, namely polymer materials


Emerging Existing Mature

Cluster Initiative Cluster Initiative

Cluster initiative Cluster initiative


and technologies. The platform requires close cooperation between Science and Technology Parks and clusters on national, regional and international level.

59. The Secretariat is well placed to enable the provision of data among Member States and partners outside the COMESA region. International exchange of cluster actors, both within and outside of the COMESA, would support the dissemination of international best practices and lead to the development of new knowledge, skills and networks. Such exchange can take the form of study tours, workshops, conferences, seminars etc. A specific toolbox facilitating cooperation among Parks and clusters and aiming for international networking and internationalization has to be launched.

60. Creating an open and interactive platform on which more detailed information on clusters and Parks could be registered and used by the clusters themselves is also an important step. The Secretariat should work together with Advisory Offices in Member States in order to expand the data available and to solicit the development of case studies of excellent-performing clusters in the international realm.

Task 6. Establishment of the Institutional Framework

61. Governance structure on the highest level both in individual Member States and on the regional level shall act as agents of change, actively promoting the acquisition of knowledge and investment in key areas of competitiveness, namely technology, innovation and entrepreneurship. The proposed model

62. The model of a regional network development institutional arrangement would involve three levels of key institutions and a funding structure:

a) An Office of the Advisor at the Secretariat / Advisory Board. The Office is to be staffed with professionals with a suitable profiles that will allow them to run the program and to support offices at Member State level. The first task of the Board would be to identify the locations of pilot Science and Technology Parks and clusters and to devise a detailed implementation plan. This should be done in close cooperation with the Science and Technology Committees and Advisory Offices at the Member State level.

b) Science and Technology Committees. Members of such a committee should come from the highest level of government, but the Committee should also include representatives of the private sector and key leaders from the public sector, educational institutions, and society.

c) Advisory Offices at the level of clusters / parks shall be created at the level of individual clusters. Such offices require staffing of highly talented individuals with the right profiles and are to be supported by international experts.

Action matrix Timeline ACTION 1: Science and

Technology parks ACTION 2: Support to Cluster development

ACTION 3: Capacity Building and international networking

ACTION 4: Institutional framework

Month

1-4

Task1: Identification of Parks location and Clusters - Mapping of key actors (science& Technology)- Assessing demand and absorption capacity (networks

of firms) - Existing and missing links

Task 6: Establishment of the institutional framework

Month

4-15

Task 2. Designing S&T Park Projects - Formation of the

initiative group - Assessment of potential

partners- Identification of

priorities - Assessment of potential

sources of financing- Design of the

organizational and management structure, research and development projects, and infrastructure investment projects. Demonstration projects in key technological areas.

- Promotion and marketing strategy

- Fund raising and investment agreements

Task 3: Elaboration of Cluster initiatives - Forming a joint private-

public leadership team, - Conducting cluster

specific analysis, - Developing action

initiatives, - Identifying funding

mechanisms and the role of national, regional, international linkages,

- Setting up the cluster’s organization.

- Office of Advisors at the Secretariat / Advisory Board.

- Science and Technology Committees at MS level

- Advisory offices at the level of Clusters / Parks

- Promoting cluster platform

- Promoting international practices and models

- Developing a consultation mechanism and discussion platforms with existing innovation actors in the region.

Month

6-24

Task 4: Capacity Building Task 5: Regional and International cooperation

- Training needs assessment & Curriculum

- Mentoring programme - Technical Assistance

- International exchange

- Interactive platform

Outcomes

- S&T Park locations identified

- Science & Technology Park projects elaborated

- Clusters identified - Cluster projects

elaborated

- Training curriculum- Actors trained, managers

trained - Mentoring programme- Pool of individuals

created that are enabled to support implementation established

- International cooperation established in the filed of polymer material and technology

- Regional Cluster Platform created

- Institutional framework established

- Cluster platform established and running

CS/TCM/CST/I/4(a)Page 39


ANNEX III (c)


Pilot Programme: Polymer Cluster Platform

International Practices and Experiences in Cluster Development

11-(MD-rmm)


The document present key issues related to cluster development as well as different practices and experiences in cluster development.

TABLE OF CONTENTS

1 The case of Cambridge...................................................................................................21.1 Background................................................................................................................21.2 Impact of the University of Cambridge...................................................................31.3 Support services for new businesses.....................................................................41.4 Access to financing...................................................................................................51.5 Conclusions...............................................................................................................61.6 Sources......................................................................................................................6

2 The Kyoto Life science cluster.......................................................................................63 Salmon Cluster in Chile..................................................................................................8

3.1 The development of the cluster...............................................................................93.2 Key success factors of the salmon cluster..........................................................113.3 Technology and innovation....................................................................................123.4 Sources....................................................................................................................12

4 The Catalan Clothing Industry......................................................................................135 Support to cluster development...................................................................................15

5.1 Cluster policy cases................................................................................................15France: Pôles de Compétitivité’....................................................................................16Japan, Industrial Cluster Project....................................................................................16Sweden: VINNVAXT......................................................................................................16

5.2 The clustering toolbox............................................................................................17Initiation of cluster – engaging of actors and forming cluster organization....................18Collective services and business linkages (improve capacity, skills and competitiveness in general)...........................................................................................19Collaborative research and development and commercialization..................................19Setting up implementing structure and organization......................................................19

6 Case Study France........................................................................................................216.1 Part I. Development and objective.........................................................................216.2 Part II: Objectives of the clusters development program....................................226.3 Part III: Cluster Program Development and Implementation..............................226.4 Sources....................................................................................................................28

7 Case Study: Japan.........................................................................................................297.1 The situation of the Industry and the Industrial policy in Japan........................297.2 The development of clusters and their strategic objectives...............................307.3 From strategic objectives to specific objectives.................................................327.4 Policy tools..............................................................................................................337.5 Implementation of the project................................................................................347.6 Sources....................................................................................................................35

8 Case study: Sweden......................................................................................................358.1 The situation of the Industry and the Industry-related policies in Sweden.......358.2 The development of clusters and their objectives...............................................358.3 Sources....................................................................................................................37


1 The case of Cambridge

1.1 Background

1. The Greater Cambridge area extends across a radius of about 25 miles outwards from the university city of Cambridge. The city of Cambridge itself has a population of about 106.000 and a travel to work area of around 500.000. The development of Greater Cambridge area from the early 1970s has been impressive – in 2001 around 360.000 people worked in the area, compared to 200.000 in 1971, meaning around 5.000 jobs per annum were created.

2. Today, being one of the leading European clusters, Cambridge area is a home to around 1000 high-tech ventures employing around 40.000 people and generating a turnover of around 3 billion £. Compared to only one listed company in 1990, today there are over 70 stock market listed companies. The cluster is characterized by particular strengths in health care & life sciences, IT and Communications industries, where so called “hard innovation” is important, while it is at disadvantage in media and other creative industries, where soft innovation is more important. One area, where Cambridge cluster may have capabilities to develop world class innovation is clean energy, which currently only represents a small fraction of companies in the cluster.

3. As a predominantly rural area, until the late 1960s the local economy was based around farming and food, with a core of technology and engineering businesses in the city. However, since the 1970s the area has been transformed into a world-leading high-technology cluster that has become widely known as the ‘Cambridge Phenomenon’.

4. In 1978, around 20 high-tech companies operated in the area. At that time, Barclays plc, one of the leading UK clearing banks, recognized that they could form the heart of a “mini-cluster”. The bank helped to form Cambridge Computer Group and made an employee available to assist start-ups with business advice and help in raising finance. By 1985, the number of high-tech companies had increased to 360 and the significance of evolution of high-tech industry in Cambridge was first published in a report “Cambridge Phenomenon” by Segal Quince Weeksteed.

5. While Cambridge cluster has developed from bottom-up, during the course of its development a number of initiatives have developed addressing the needs of local organizations, often based on the international best practices. Thus, it is not surprising that Cambridge has constantly been ranked as “excellent for its support of innovative businesses” by European Commission. Furthermore, it has been recognized as one of the world’s leading high-tech business clusters by publications such as Time, Fortune and Wired.

6. If the true strength of a cluster and its potential is assessed on the basis of number of venture capital investments, the significance of Cambridge cluster is further emphasised, since it attracted 7,8% of UK VC investments to the area representing 1% of UK’s population.

7. The development of the Cambridge cluster is attributable to some of the factors discussed in the following sections, namely the role of university, support services and availability of financing.


1.2 Impact of the University of Cambridge

8. The University of Cambridge is ranked first in Europe and second in the world according to the Times Higher Education World Ranking and is renowned for pioneering new ideas and ground-breaking research. Its effects on the local Cambridge Cluster is direct in the sense of technology transfer activities including corporate sponsored research, licensing and spin-out company formation, while indirect effects include creation of alumni networks, generation of entrepreneurial culture and, of course, its knowledge base.

9. University of Cambridge is the largest UK university in terms of research income, acquiring £270 million in 2004/05, when it also generated £20,3 million revenues from industry. The research output is an excellent source for knowledge and technology transfer. With a significant contribution of the University and its technology transfer office, Cambridge Enterprise, it has also been successfully commercialised. According to the Library House report, spin-outs from the University of Cambridge have attracted more VC investments, namely over £140 million, than any other university in EU or US, with the exception of Stanford University. Through its technology transfer mechanisms, University has formed strong links with local SMEs, corporations and non-commercial organizations, while it also has a direct economic impact on the surrounding area employing more than 12.000 people and supporting additional 80.000 jobs.

10. However, The Technopole Report (2006) argues that the role of the university could be more proactive in terms of creation of spin-outs, given the fact that university spin-outs in the region are 175, i.e. less than 20% of existing companies. Recommendations to the University in order to further stimulate spin-outs include strengthening the business plan competition, further support to i-Teams initiative, making better use of student projects, targeting international partners and seeking licensing opportunities, making more use of cluster businesses and technical consultancies.

11. The knowledge base created by the university is also an important factor in development of the cluster. The university turns out around 1000 PhD students annually and it is estimated that around 50% of those stay in the region. In addition, 12% of UK’s recently qualified PhD students are attracted to the East of England, which is dominated by the Cambridge cluster. Such a pool of PhD graduates is of utmost importance to the businesses seeking highly qualified and skilled labour, but also for creation of new ventures, since PhD students are involved in a large majority of spin-outs. Less tangible though still very important is the effect of alumni networks, one, because graduates from the university return to the Cambridge area, adding to the local skills pool and creating start-ups, and two, since successful alumni entrepreneurs make good role models for potential entrepreneurs. Also, alumni networks help to form links between the university and business. Further boost to the development of the cluster is provided by creation of relationship between university and the surrounding area through placement of around 500 students each year to some 150 companies in the cluster to complete engineering or management projects. Mobility of people between university and local companies in time fosters subsequent innovation and company development.

12. University also plays an important role in creating an entrepreneurial culture by teaching, workshops and organization of networking events and business plan competitions. These include:

a) A group Cambridge University Entrepreneurs, which organizes the most successful student run business planning and creation competition in Europe, as well as a range of other events (lecture series, pitching events...);


b) Centre for Entrepreneurial Learning, a more formal programme launched by the Judge Business School, which delivers a range of educational activities designed to inspire ideas and build skills, as well as organizes networking events (e.g. Enterprise Tuesday, where students can listen to successful entrepreneurs and investors, network and share innovative ideas);

c) CMI, The Cambridge – MIT Institute, established as a partnership between the University of Cambridge and MIT in 1999, which was granted £65 million over 5 years by the UK government with an objective to undertake joint research and education activities that will improve entrepreneurship, productivity and competitiveness in the UK;

d) Cambridge Network, co-founded by the University in 1998 with the aim to facilitate networking and interaction between the University, public research institutes and industry;

e) I-Teams, a programme which allows groups of up to 7 post-graduate students from different disciplines to work with real inventions from different University departments and determine the best way for their commercialization. The teams are guided by the labs’ Principal Investigators, the i-Teams Program Director and mentors from the local business community.

1.3 Support services for new businesses

13. Greater Cambridge has a wide range of business support services for new businesses covering finance, management and sales and marketing. The area is highly networked, thus a potential local entrepreneur should not have any problem accessing the information needed. Two major websites containing information on existing networks are the Cambridge Network and Technopole websites .

14. Specialist help is offered by a number of organizations, which include:

a) Cambridge Network (CN), founded in 1998 by University of Cambridge, Amadeus Capital Partners, Deloitte Cambridge office, NW Brown Group Limited and TTP Group, performs a range of activities in order to bring together industry, public research institutes and University. Its activities include the organization of a number of networking events, such as Open Meetings and more academic Open Lectures, Coffee Networking, lunchtime sessions at diverse business and science parks in order to spread the information about its activities, Special Interest Groups, and the Learning Collaboration scheme, enabling members to participate in professional training run in-house by other member companies. In addition to that, CN also provides a directory of its members, virtual press room, - a pool of press releases from all its members, job market, events diary and alike;

b) Eastern Region Biotechnology Initiative (ERBI) was set up to facilitate and accelerate growth of biotechnology in Cambridge and East of England. Their activities are similar to the ones of CN, however targeted to biotech companies. They include hosting networking events (annual bio-partnering exchange, attracting over 450 delegates including representatives from global pharma; regular network meetings based on a topic of current interest to the members; Special Interest Groups (SIG's), covering business development, clinical development, corporate governance, facilities management, finance, health and safety, human resources, IT, operations and security). It also provides specialized training courses and topical workshops, partnering and member promotion, publishes different publications (quarterly newsletter, a survey of trends in the regional biotech industry) and participates in regional and national initiatives related to biotechnology;


c) St. John’s Innovation Centre (SJIC) located in Innovation Park developed by St. John’s College, provides flexible office and workshop accommodation and business support for early stage knowledge based companies. In 2006, SIJC was accredited as an Enterprise Hub by East of England Development Agency. It works with around 300 pre-start and start-up companies per year. With an excellent cross-referral system with Business Link and Enterprise Agencies combined with a wide network of national and international contacts, SJIC can help companies find the answer to virtually any business problem they may have; and

d) Technology consultancies are a distinctive element of the cluster. They are a major source of spin-outs and are now becoming active in the seed and venture capital business. Cambridge Consultants is one of the most renowned consultancy companies in Cambridge offering technology consulting, product development and new venture incubation. They are technology provider, developing breakthrough products, creating and licensing intellectual property, and providing business consulting in technology critical issues. The company was founded in 1960 and has since played an important role in commercialization of new technologies and creation of successful high-tech companies. Other companies offering similar services include TTP Group, Sagentia and PA Technology.

1.4 Access to financing

15. Availability of finance to cover the needs of potentially viable businesses is critical to the success of Cambridge cluster, especially given the fact that it is constituted mainly of knowledge based high–tech businesses, which require external funding in order to grow to a reasonable size. Currently, there are 108 venture backed companies operating in the cluster, 36% of which are in the area of health care & life sciences, 24% in IT and 16% in communications. All together, about £600 million is committed into the cluster firms (The Cambridge Cluster Report – 2007).

16. A number of domestic institutional investors operate within the cluster, but foreign investors, particularly those of US, also play a significant role in providing financing to companies in the cluster. Top investors in terms of the syndicated amount invested are predominantly coming from the US, while in terms of number of deals domestic investors prevail. Investment in Cambridge is important also for UK’s venture capital market, attracting as much as 18% of all VC investments in the UK.In addition to institutional investors, Cambridge is known for angel investing. Early stage companies in Cambridge can obtain financing from three main angel groups, which, together with other early stage investors, have contributed to the development of a vibrant seed funding environment in the cluster. These groups are:

a) Great Eastern Investment Forum (GEIF): run by NW Brown, Cambridge-based financial services company, the group mainly invests in syndication with £5 million GEIF Ventures early growth co-investment fund, however, in some cases GEIF angels invest directly in companies without syndication from GEIF Ventures. Healthcare and Life sciences and IT sectors dominate in their portfolio; their average investment amounts to £70.000;

b) Cambridge Capital Group (CCG) has recently invested primarily in University spin-outs. Even though based in Cambridge, the group aims to attracting angel investors from outside Cambridge area to invest there;

c) Cambridge Angels invest primarily in companies based in and around Cambridge area, however, they have also participated in deals outside the sub-region, i.e. companies based in London; and


d) Initiated by UK government, Enterprise Capital Funds (ECFs) were launched after the first round of bidding in 2005, to address equity gap in seed finance. Out of 5 ECFs, two are managed by Cambridge firms: IQ Capital Fund (run by NW Brown) and Amadeus & Angels seed Fund (run by Amadeus Capital).

17. In spite of numerous funding sources, funding gap was identified in early development stage, when companies close to market require £250.000 to 500.000, thus, the efforts have been made by SJIC in connection with EEDA to introduce a mezzanine fund to finance such ventures without a pressure towards early exit.

1.5 Conclusions

18. Greater Cambridge has achieved a remarkable economic success in the past 35 years, in both – the absolute terms as well as relatively to other parts of UK. The impact of the cluster’s success extends beyond the boundaries of this sub-region, with significant spill over effect to other parts of UK. These include:

a) The attraction of inward investment to the UK; particularly investment in R&D activity;

b) The transfer and diffusion of technology raising the productivity of companies throughout the UK;

c) Supply of a wide range of innovative intermediate goods and services; andd) Being a role model to other economic development organizations with high-

tech ambitions.

19. The combination of different forces and factors has fuelled the growth, competitiveness and vitality of the sub-region. The major sources of the competitiveness of Greater Cambridge are claimed to be (PACEC, 2003) its innovative capacity, supported by a diverse science base and research infrastructure, the capacity to diffuse the knowledge across local economy through effective collective learning mechanisms creating a knowledge-based cluster and entrepreneurial business community, participating in local, national and international innovation systems and with access to advanced, high quality business services.

1.6 Sources

a) PACEC: The Cambridge Phenomenon – Fulfilling the Potential, 2003b) The Technopole Report: The Cambridge Cluster – The way ahead, 2006c) The Cambridge Cluster Report – 2007, Library House, 2007d) http://www.gcp.uk.net/business-support-consult.phpe) http://www.cambridgenetwork.co.ukf) http://www.ifm.eng.cam.ac.uk/ctm/teg/cambridgetechnopole.html

2 The Kyoto Life science cluster

20. Kyoto Life science cluster is a dynamic cluster of high tech-companies that emerged organically (not as a consequence of cluster initiative). Here characteristics of this cluster will be presented based on the case study including a sample of 29 firms , each having on average 5 employees which were established after 1998. The sample companies were focused on R&D and product development in analytical equipment, eco-biotechnology in industrial, human and eco-bio fields and medical devices. Particularities of this cluster are two: first, Kyoto Life science cluster had developed from bottom-up and not as a result of cluster initiative, and second, new start-ups have been emerging constantly throughout cluster existence.


21. The following factors were crucial for the bottom up development as well as for the dynamic entry of new firms. First, local initiative led to the creation of the regional development of goal oriented networks by local stakeholders in the region already in the mid-1990. They form innovative coalition, connecting respected, successful, often serial entrepreneurs (like in the Cambridge case), scientists and civic leaders, employers, workers, investors – economic agents with vested interest in local development. Social linkages within these networks were instrumental for start-ups. They were an important link for new start-ups in finding the necessary resources for starting a business at their early growth stage. Second, they contributed to the development of a solid regional innovation system - strong scientific infrastructure, informal entrepreneurial social networks, collaborative manufacturing, and strategic R&D activities in short, led to the development of a very simulative environment for entrepreneurial growth from which cluster was able to emerge and expand.

22. Innovative coalition of local leading entrepreneurs and city officials is embedded in the Kyoto Venture Forum (KVF), which evolved from a network of venture capitalists. Another important network instrumental for start-up financing is the informal finance network, the ‘pocket-money-finance’. In the later case an entrepreneur who wants to start a new firm relies upon his/hers broad social network for a number of individual investors. Entrepreneurs who receive backing from the KVF, the network of extremely capable and successful entrepreneurs will on the average have no difficulties to obtain bank loans. KVF also gives advice on different aspects of enterprise management to new start-ups. The informal finance network is an important source from which entrepreneurs secure seed financing from large number of investors, investing very small sum of money (up to 5000 $ on average). These investors are considered as supporters/friends of entrepreneurs.

23. To the above reasons, why Kyoto cluster was able to emerge from bottom-up (the availability of many quality scientific and technical resources, particularly those at the universities, the overall entrepreneurial environment through which new firms get connected to the local ones, the informal networks of firms and international reputation for high quality high tech products by firms of all sizes, particularly entrepreneurial start-ups) a specific cultural characteristic of the region must be added – trust. Networks are open and yet closed. They are open to outsiders, potential entrepreneurs from other regions, if it is believed that a trustful relationship can be established. However, this characteristic - open yet closed networks - can also have a negative effect. It can undermine the inflow of useful information, skills, knowledge etc. from outside.

24. The relationships developed in the Kyoto region explain why some regions which have some basic ingredients for high technology and life science clustering such as research-oriented universities, existing skilled workforce, incubators, different sources of capital and the like, are not able to translate these ingredients into sustained new business creation in growth sectors. The reason is that in such regions some other basic ingredients are lacking. These ingredients are informal social networks and/or coalitions. If such networks do not exist, cluster initiative can be a substitute for bottom-up cluster development. In the Kyoto case the key success factor from cluster perspective was the development of entrepreneurial social networks and resource environment which led to a successful and continuous new firm creation. These informal, supportive networks guide talented newcomers on the path to entrepreneurial success and facilitate local economic development. New start-ups were able to benefit from the innovative coalitions of local stakeholders, such as the Kyoto Venture Forum and the region’s vibrant system of “pocket-money-finance”.

25. The second reason is trust. Without the culture of trust informal networks could not really develop or be able to lead to results as presented above. Knowledge, information, resources in general are most effectively used in a trusting environment. And thirdly, the


local government has compensated the usual bias of national policies towards existing and preferably large companies which usually are the main beneficiaries of government subsidies and different development programs. Unfortunately, governments too often all over the world do not see and therefore neglect to them invisible vibrant segment of potential start-ups.

K. Ibata-Arens, The Kyoto model of Innovation and Entrepreneurship, Prometheus, Vol. 26, 2008

3 Salmon Cluster in Chile

26. Among Latin American countries, Chile is often cited as the top performer in the region. Its performance is particularly outstanding in natural resource based sectors, such as agro industry, fishing, and mining. These sectors are important for Chile’s economy not only in terms of jobs and exports, but also because they offer potential for transformation to more knowledge-based enterprises, with a greater focus on innovation and capacity building for developing higher value added products The emergence of new clusters in specific geographical regions is often seen as a key to Chile’s dynamic export performance. The salmon cluster in southern Chile is a representative example of a prosperous cluster.

27. The salmon industry has played a very important role over the years in boosting production and increasing Chile’s export volumes and values. Chile is currently the world’s second largest salmon and trout producer and exporter (2007), accounting for 36% of global production (compared with 21% in 1995). The country is surpassed only by Norway, with a global market share of 43.3%. Together, both countries account for almost 80% of world salmon and trout production. Chile is followed by the United Kingdom, with 7.6% of global production, and Canada, with 6.5%. The value of salmon and trout exports increased 4.5 times between 1996 and 2008, (from US$538 million in 1996 to more than US$2.3 billion in 2008), with an average annual growth rate of 13.2% over the period. The volume of exported salmon and trout rose 3.2 times during the same period, from 135,000 tons (1996) to more than 445,000 tons (2008), with a 10.5% average annual growth rate. Salmon farming and export value is concentrated on Atlantic Salmon. The species accounted for 61% of Chile’s total salmon export value and 51% of volume in 2008. Between 1990 and 2006, US$86 million was invested in R&D, funded almost equally by the public and private sectors. This means that in less than 10 years, R&D investment grew by more than 75%, reaching a total of US$24.8 million in 2006.

28. Chile’s salmon farming emerged in a territory known as the Tenth Region, which is located in the southern part of the country, 1000 km from Santiago. Around 80% of registered fish farming centres in Chile are located in the Tenth region, accounting for 85% of the total volume exported. As for the salmon only, this Region absorbs approximately 98% of the national production and 25% of the world production, with a direct and indirect employment of over 40,000. Chile’s performance in farmed salmon is remarkable since commercial farming started only 30 years ago. As a new and non-traditional activity, salmon farming industry was created virtually from scratch in so far as unlike other major exporters (Norway, UK, Canada), salmon is not a species native to Chile, and was previously unknown in the Tenth Region. It was introduced at the beginning of 1980s after considerable experimentation during which it was established that salmon could grow in Chile. Chile’s salmon case illustrates how the dynamic growth of aquaculture in Chile evolved in a geographically concentrated manner, resulting in a cluster. The cluster is currently composed of more than 500 centres of farming, 34 processing companies and nearly 150 direct suppliers. The transition from the early phase of emergence to a well-structured cluster entailed a process of building organizational and technological capabilities and creating institutions that supported interactions and knowledge flows between firms.


3.1 The development of the cluster

29. Three stages can be distinguished in the development of the cluster. During the first stage of initial learning, between 1978 and 1985, numerous public and private initiatives were encouraged, to establish the new industry. The stated played a role in the emergence of the salmon cluster as the Chilean government programs created spaces to experiment and evaluate the feasibility of salmon farming in Chile. The creation of a joint venture between Chile’s National Fisheries Service (Servicio Nacional de Pesca, SERNAP) and the Japan International Cooperation Agency (JICA) marked the beginning of a serious salmon farming program. This program which started with foreign technical assistance lasted until 1987. The second cooperation program involved the Production Development Corporation, known by its acronym CORFO, through its affiliate Fisheries Development Institute - IFOP and the Japanese agency JICA since 1988. These programs aimed at identifying suitable sites for salmon and trout farming in the Tenth Region. They also created opportunities to acquire ocean ranching and cultivation techniques, particularly those related to nutrition, disease control and fish transport. Although the initial natural resource conditions explain why salmon farming concentrated in the Tenth Region they did not assure automatic economic success. Indeed, salmon farming presented several technological challenges due to the salmon’s lifecycle, its nutrition requirements, disease issues and environmental management that Chilean producers needed to learn. Thus, at the very early stage of the cluster development technological issues emerged as a key element for the sustained cluster growth.

30. In this early stage of the salmon farming industry in Chile, the state practiced a decentralized approach that contributed to the formation of the cluster. It nurtured a quick flow of investment and ideas from the public sector to private firms. The public research program became a source for independent firm start-ups by new groups of entrepreneurs, who drew on the knowledge and skills developed in the public sector. Thus, several professionals who had worked in the government programs of SERNAP and IFOP formed their aquaculture companies for commercial purposes. This helped the transfer of skills from the public to the private sector. In addition, the government’s venture capital agency, Fundación Chile, invested capital to create a firm that transferred foreign technology and developed local know-how. The agency facilitated the transfer of aquaculture technology, such as the floating net pen used in Scotland and Norway and the adoption of new techniques, such as rearing in tanks instead of in the open river. Further, Fundación Chile acted as a technical consultant to private firms interested in entering the salmon farming activity, and conducted research continuously. The initial actions and ventures uncovered new business possibilities and had demonstrative effects on local firms. Producing farmed salmon became attractive and the number of domestic firms in salmon farming grew considerably in the 1980s. The first investors were mostly local entrepreneurs or Chilean economic groups from other sectors. While in 1980 there were three private enterprises, by 1985, there were 36. This first stage of cluster creation started to be successful in 1985, when the first 1,000 tons of product were exported (mainly fresh and frozen salmon). In addition to firms engaged in production, other firms entered the industry in the Tenth Region, to become involved in cage manufacturing, product processing, refrigerated containers and others. Thus, during the first stage activities were largely directed to building the basic physical and research infrastructure, developing the knowledge and technology to breed salmon under the conditions prevailing in Chile, and generating successful models that could be imitated by entrants into the market.

31. During the second stage of maturation of the cluster which lasted from 1986 to 1995, the imperative became the acquisition of productive capacities to maintain competitiveness in the salmon farming industry by standardizing the quality of the product and increasing production. Some of the challenges during this phase were confronted by means of collective actions, with impact at different levels in the value chain. Indeed, at the early


stages of the development of the salmon industry, Chilean firms had little experience producing salmon and did not have the competitive advantage of leading producers like Norway, Scotland and Canada. At the beginning the firms were small enterprises trying to produce for export markets. In the early stage of the cluster formation firms wanted to connect with foreign markets in which Chilean salmon was unknown. However, a single firm could not establish a strong Chilean brand due to the small size and insufficient resources of local salmon firms at that time. It is only by coordinating their activities that the small firms could reach the export volumes and conduct branding activities which were required to be globally competitive. Interdependence led firms to create rules and agreements to upgrade their product. Chilean firms established horizontal networks and alliances to improve their ability to compete at the international scale. In 1986, seventeen firms created the Association of salmon and Trout Producers of Chile – APSTC. Today, the association has more than 40 affiliated enterprises that account for 85% of salmon production. This organization led excellent collective actions such as the management of implantation and improvement of regulatory norms as well as campaigns to raise salmon consumption in particular markets. The APSTC emerged with the goal to ensure that foreign consumers would see Chilean salmon as a high-quality product and Chilean production as capable of producing significant volumes. Thus, the APSTC contributed to develop a reputation for Chilean salmon abroad. Through the association the firms established a framework to coordinate relations and facilitate the flow of ideas between firms. A quality certification that defined product standards emerged as a central agreement between firms. The standards classification and quality certification process guided product improvements of Chilean firms, which jointly developed the “Code of Standards for Chilean Salmon”, which defined the evaluation of each stage of salmon farming and processing. Different classifications (Premium, Grade I and Industrial Quality) were defined. The APSTC promoted the adoption of the quality seal that was given after an inspection conducted by private independent certifying companies. As firms increased their knowledge and improved their product quality, the cluster firms and the cluster itself grew significantly. The state supported these private initiatives of firms by providing financial support for the implementation of quality certification. The APSTC standards were later adopted by the SERNAPESCA, the public authority in charge of fishing regulation which made them into mandatory quality norms for any plant operating in Chile.

32. Besides standards and quality control, the APSTC addressed the issue of the sustainability of the industry, particularly the challenges of fish disease control, and environmental contamination from feed and chemical treatments. The issue of disease control required that firms address the problem jointly. The APSTC established the Salmon Technology Institute (INTESAL) in 1993, which was financed jointly with CORFO. INTESAL was created as a public/private (70/30) initiative to strengthen local technical skills and improve technology transfer. One of INTESAL’s main objectives was to improve production practices to reduce disease. The APSTC used the information obtained from the Institute to influence its member companies to establish the latest disease management and adopt sustainable production strategies.

33. Efforts to upgrade the cluster by promoting and marketing Chilean salmon abroad emerged during this period. Collaborative relations between firms led to innovations in approaching markets. For example, thirteen enterprises jointly commercialized and marketed their product abroad. This alliance aimed to improve the international market positioning of Chilean salmon.

34. By the mid-1990s Chilean salmon industry ranked second worldwide after Norway. The cluster formed and grew with mostly Chilean-owned firms which produced and processed salmon for exports and relied on imports of key inputs such as eggs, feed and pharmaceuticals produced by foreign multinational companies (MNCs). In the mid-1990s foreign multinationals invested in the cluster, through the acquisition of Chilean firms. This


marked the transition to the third stage of the cluster development, which has been going on since 1996. This third stage characterized as the globalization stage marks a rupture with the previous ones, as during this stage larger companies with better insertion in the world market became predominant. Globally competitive Chilean firms attracted foreign companies to invest in the cluster. By 2002, five of the top 10 exporting firms in Chile were foreign owned. As the largest multinationals from salmon-producing countries set up operations in the Tenth Region, they contributed to further the growth and to change the structure of the aquaculture cluster. Small firms increased their presence as specialized service providers. In the Chilean salmon cluster, the entrance of foreign multinationals does not represent the classic case of a cluster formed around one dominant foreign MNC. Rather, foreign direct investment followed indigenous industrial development efforts, which benefited from foreign technical assistance. During the third stage of the cluster development the aim has been to raise productivity through technology transfer (foreign missions) and biotechnology (genetic improvements and remedies for illnesses that affect fish). Several efforts were also made to improve the regulatory environment for the sector. Thus, for example, public policies introduced environmental controls, and a collective agreement on clean production was reached among the firms participating in the cluster, the salmon producers’ association and regulatory (CONAMA) and support (CORFO) agencies. New environmental regulation (RAMA) was also introduced. The technical mechanism to allocate resources shifted from that of direct subsidies, utilized in the early stages of the cluster, toward public funding allocated through competitive tenders. This was only possible because the cluster had evolved and matured.

35. In the third stage of the development of the cluster, MNCs and Chilean firms have become more interdependent and they increased the flow of ideas, capital, and other resources. Increasing foreign competition in the cluster put pressure on Chilean firms to move into areas where foreign firms have been dominant. Thus, foreign MNCs are a source of ideas to stimulate local firms’ technological development. For example, some Chilean firms have entered feed and egg production, which was the domain of the foreign firms in the early stages of the cluster. Alliances between local firms have been established to produce salmon food. Other Chilean firms began developing locally produced salmon eggs; which is a crucial industry input. This was made possible through innovations in biotechnology research. In fact, the increasing local-global interdependence is pushing Chilean firms to innovate in new areas. In the recent years the cluster has been characterized by: a growing number of mergers and acquisitions to achieve economies of scale, which is a worldwide trend; commercial sophistication with the development of new products with higher value added; and investment diversification towards shellfish in order to benefit from economies of scope.

3.2 Key success factors of the salmon cluster

36. The dynamic development of the salmon cluster in Southern Chile can be attributed to a combination of existing and acquired factors. The initial factors that facilitated the emergence of the cluster include: favorable natural hydrographical and environmental conditions for the salmon culture; counter-seasonality with respect to the other main producing countries and centers of consumption; proximity to the supply centers of fish food; availability of a workforce for salmon farming and processing and of university professionals; and entrepreneurial skills that were present in the region. Moreover, the administrative and economic legal framework did not hinder the expansion of the activity and there was a favorable regulation and public support with respect to sanitary matters, commercialization (ProChile) and technological transfer (CORFO, Fundación Chile). The role of the state was important in the initial stages of the cluster and public investment was available for capacity building and acquisition of foreign know-how.


37. Along with these factors that can be considered as “internal” to the Tenth Region and Chile in general, a set of external factors were acquired and transferred to the region. These factors include: technological learning through the development of local capacity; acquisition of know-how from abroad thanks to experts brought to the country during the learning phase and the continuing organization of technological missions of local companies, with support of the public sector; development of local supply of instruments and services such as food, vaccines, raft-cages, marine transportation; training of skilled human resources such as biochemists, ichthyopathologists, fish farming technicians, administrators specializing in fish farming by universities and professional training institutes, located primarily in the Tenth Region.

3.3 Technology and innovation

38. During the three stages of cluster development, innovation and the acquisition of the relevant technology played one of the key roles. In the emergence stage of the cluster, basic technology for salmon farming was acquired with the support of the public authorities and foreign technical assistance. In hatchery, the transfer and then local development, by means of licenses, acquisition of technology, and in the last stage, direct incorporation of branches of transnational companies, played a major role. In food production, adaptation and R&D was a crucial condition for survival. In “hard” technologies, acquisition, particularly in the case of equipment (e.g. lighting systems, biotechnological structures, software), was also important. Technology and innovation were also crucial in the second stage of the development of the cluster since the local producers needed to reach and keep competitiveness level of foreign companies in order to increase their production and exports. They needed to respect the quality standards and norms and to keep pace with the latest technological developments in the field. The reduction of the risks inherent to the industry: quality of genetic material, absence of diseases, and security of the farming environment (i.e. clean and healthy water) were some of the major challenges for the cluster. Moreover, there was a need to increase the profit margins, by means of higher returns of fish diets, of the duration and security of farming facilities, a better handling of harvesting periods, and a steady reduction of losses due to mortality during transport. Improvements in the processing plants have been made as a result of quality assurance programs. Innovation and technological upgrading remain one of the priorities for cluster firms in the third, globalization stage, as local and multinational companies work together to ensure the sustainability of the Chilean salmon cluster.

39. As a conclusion, it can be said that the experience of the salmon cluster has been characterized by remarkable joint actions involving a variety of private and public firms and institutions throughout all the stages of the development of the cluster. These cooperative actions were first mainly directed to promoting access to export markets and later, in the globalization phase, to addressing new priorities, typical of a mature cluster, such as science and technology, and environmental and regulatory issues. Innovation and technology played a crucial role in the upgrading of the cluster and enabled Chile to become a truly global player in the field.

3.4 Sources

a) Bas, T. G., Amoros, E., Kunc, M. (2008), “Innovation, Entrepreneurship and Clusters in Latin America Natural Resource – Implication and Future Challenges”, Journal of. Technology Management and Innovation, 3(4), pp. 52-65.

b) CORFO (2009), Salmon Cluster in Chile.c) Maggi Campos, C. (2006), “The Salmon Farming and Processing Cluster in

Southern Chile”, in Pietrobelli, C., Rabellotti, R. (eds.) Upgrading to Compete.


Global Value Chains, Clusters, and SMEs in Latin America, Inter-American Development Bank, pp.109-140.

d) Perez-Aleman, P. (2005), “Cluster formation, institutions and learning: the emergence of clusters and development in Chile”, Industrial and Corporate Change, 14(4), pp. 651-677.

e) Pietrobelli, C., Rabellotti, R. (2004), Upgrading in Clusters and Value Chains in Latin America. The Role of Policies, Inter-American Development Bank Sustainable Development Department Best Practices Series, MSM-124.

f) www.salmonchile.cl

4 The Catalan Clothing Industry

40. Being among industries in which labour represents a significant proportion of per unit cost, clothing industry has been among those industries first affected by increased participation of low cost economies. In spite of poor prospects for its future, companies in clothing industry in Catalonia have been able to establish themselves as the global players by opening their own routes to market. Most of these companies have been established in the last 20 years, with innovative strategies and support policies, which in the beginning were irrelevant to their success.

41. The Catalonia region was the first one in Spain to introduce a programme fostering the creation of manufacturers’ own routes to market through a series of seminars and supporting tools. Also, it started working throughout the entire value system and technologies involved to foster faster response to market, thus shifting from so called push strategy to so called pull strategy. In addition, Catalonia was the first region to help companies set up manufacturing plants in low cost countries.

42. The Catalan government has actively encouraged firms to open their own retail and has also created a comprehensive programme “Programa de Marques de Canal” to smoothen the transition to so called “total brands” (including retail and product) replacing multibrand retail. After successful implementation of this programme, it is in its second stage oriented towards internationalization.

43. While initiatives from the regional government first came in 1993, the real activity towards retail has started in 2003. As companies in the industry were going through a crisis, a number of dynamic spin outs led by workers emerged and a number of small to mid sized chains started its activity after the initiative. Today, there are 39 significant total brands, including Mango.

44. Since quick response to demand is at the heart of the success of Catalan clothing industry, large portion of production is still located in Spain. Delocalized is production of basic, non changing products. In order to provide quick response to market, the alignment of all players in the supply chain is critical. The Catalan government introduced an initiative to link entire supply chains of major retailers to speed up time to market and reduce errors.

45. The textile and clothing cluster is formed by around 2,600 companies, most of which are SMEs, and are all specialized in specific processes. There are also numerous agents present in the cluster – clients, suppliers, subcontractors and service providers (logistic services, marketing agencies, printing...). Local subcontracting is estimated to account for 40% of total production, implying high degree of interconnectedness among cluster companies.

46. Distribution is dominated by retail stores, while organized distribution (chains, franchises) has increased; e.g. Mango with 900 stores in 72 countries.


47. In addition to supporting integration with distribution, proposed cluster actions contributing to success of the Catalan Clothing industry include:

a) Creation of a Centre for textile innovationb) Reinforcement of informal collaboration with the national, regional and local

associationsc) Promotion of needs-based innovation projects linking clients and providersd) HR: trainings to encourage innovation and product designe) Set up of B2B online marketplacef) Implementation of ISO 9001 (quality certification)g) Information on available funding instruments and thus encouraged investment

in new technologies, contributing to increased productivity and competitiveness.

48. The so-called micro-cluster initiative helped Catalan government have a better coordination of different funding instruments at national, regional and local level.

Source:www.clusterobservatory.eu: Cluster cases: Catalan clothing industry


5 Support to cluster development

49. The core of policy actions lays in the development of specific measures and programs for stimulating enterprises capabilities to move quickly from low-cost production to high value added production of goods and services. What is crucial here is to shape the process of skill formation necessary for economic growth based on productivity advance and availability of entrepreneurial knowledge. Since technology advance is the key mover of economic growth and at the same time it depends on managerial decisions, the policy actions should not focus on the creation of knowledge only. In addition, they should also support the development of systems that enable faster dissemination of knowledge within the economy.

50. As evidence suggests, the expected effects of clusters on growth were to a larger extend obtained in cases, where support were focused on stimulation of the development of inter- and intra-enterprise cooperation as a type of business model where innovation capabilities are built and enhanced through the interaction between enterprises within a cluster and among clusters. The diversity of policy measures and support schemes, which aim at innovation and have been implemented in recent years worldwide, reflects the strong context dependency with regard to the institutional structure, collaboration practices and even tradition of social dialog. There are no models to be copied. A pragmatic approach is essential for learning, adapting and demonstrating good practices, which aim at developing a system that is best suited to particular local needs and circumstances, as well as building a broad regional consensus and trustful environment for policy reforms and actions. Simultaneous and coordinative actions of private and public sector prove to be crucial.

51. Support to cluster development in general results in specific cluster initiatives. In consequence, clusters’ initiatives can be understood as “organised efforts to increase growth and competitiveness of clusters within a region, involving clusters firms, government and/or the research community”10.

52. Research on innovative clusters indicates that excellent performance of clusters has been achieved due to the interplay of at least the following 4 factors:

a) Specific knowledge creation structure, characterized by a system of actual and potential inter-firm networking, both formal and informal.

b) Effective business services infrastructure, supporting the companies’ growth and global success.

c) Effective education and R&D infrastructure. d) High degree of internationalization in order to helps cluster to capture the best

know-how which is available globally, in locations beyond regional and national boundaries.

5.1 Cluster policy cases

53. To account for the crucial context-specificity of any clustering experience, the Document present three cases of cluster policy, selected for their pertinence with the cluster approach by using some of good practices in cluster development from Innovation context. They are France – ‘Pôles de Compétitivité’ programme, Japan, Industrial Cluster Project and Sweden Vinvaxt programme. In addition three case studies on concrete cluster are presented in order to demonstrate critical success factors of clusters and clustering. Short

10 Sölvell, Lindqvist & Ketels (2003) The Cluster Initiative Greenbook, http://www.cluster-research.org/greenbook.htm, Andersson et al. (2004) define clusters initiatives as “conscious actions taken by various actors to create or strengthen clusters

http://www.cluster-research.org/greenbook.htm


overview of the case studies are presented below, detailed presentations are presented in part II.

France: Pôles de Compétitivité’

54. The French experience developed in 2005 at the instigation of an inter-ministerial body in charge of territorial planning, the DIACT. A few Poles of Competitiveness constituted on the basis of strong interactions between business, R&D centres and higher education institutions were to be identified and funded through a generous programme of tax exemptions and subsidies. The objective was to reach international competitiveness through a critical mass of investments in innovation. In fact, a higher than expected number of Poles were selected, with, as a result, a shift in the initial objective in favour of more regional concern for industrial and business development. The French example is interesting for several reasons. First, Competitiveness Poles took advantage of the high political profile they were associated with. Also, the selection mechanism based on calls for proposals enhanced visibility and brought together actors who were not used to cooperate. The differentiated set of Poles eventually selected better reflected distinct needs and assets of regions (not to mention political expectations). Finally, the inter-ministerial governance of the initiative proved to be flexible enough to provide for adaptations when needed (for example, requiring that more SMEs be involved, simplifying application procedures, etc.).

Japan, Industrial Cluster Project

55. Industrial Cluster Development Project in Japan started in 2001. The Industrial Cluster Project (ICP) is designed and implemented by Japan’s Ministry of Economy, Trade and Industry (METI) and is being carried out in regions all over Japan. The ICP emerged as response of the government to the recognized severe situation of the industry as well as the need to revitalize regional economies and promote innovative behavior. ICP is known as a good practice from two points of view; successful combination of three kinds of policies, Industrial Location Policy, SME Policy, and Science and Technology Policy and combination of top-down and bottom-up approach, coordination between the national-level policies and local/regional policies.

56. The Industrial cluster project was carried out through the Regional Bureaus of Economy, Trade and Industry (RBETI), which are the regional offices of the Ministry of Economy, Trade and Industry (METI). They are the operational units that visit companies, universities and other agents, collect information about the conditions of industries, their needs and their evaluation of policies. 20% of RBETI employees (around 500 persons) are assigned to the project. They provide one-to-one services to local SMEs and other local actors. They work on creating partnerships between these actors and in particular between SMEs and university professors and researchers. In addition to the RBETIs, METI has assigned Industry and promotion organizations of the private sector to cooperate with RBETIs and jointly promote the Industrial cluster project. Such organizations have typically a fine knowledge of the industrial base in the region. By assigning RBETIs and private-sector organizations to jointly implement the cluster project, METI aimed at making use of a variety of competencies to develop successful clusters.

Sweden: VINNVAXT

57. In Sweden, the term “innovation system” is frequently used and has some overlaps with the term “cluster”. The Ministry of Enterprise, Energy and Communications has the overall responsibility for cluster policy in Sweden. Under this level, Vinnova, Swedish Agency for Innovation is responsible for cluster policies. In 2011 Vinnova Launched Vinnväxt programme which due to its overall success has become one of the best known initiative for the support of innovation systems and clusters.


58. According to the EC, this success is due to the many seminars that were conducted in the starting phase of the programme, which enabled the programme to learn from the trials and errors of other countries. A prerequisite for the programme is the active participation of players from the private, public and research sectors and from the political sphere.

5.2 The clustering toolbox

59. Three main fields of tools to support cluster development includes support for networks formation, support for business activities and promotion of collaboration with related organizations. Instruments used to support cluster development are of three distinct types: to engage actors, to develop collective services and business linkages and to support collaborative research and development projects. Engaging actors is frequently a prerequisite for participating in collective services or as a component of a collaborative R&D project. One review of clusters has identified three critical success factors for cluster development programme: networks and partnerships, strong skills base, and innovation and R&D capacity. Beyond these broad success factors, the need for instruments can vary across different cluster forms and stages of the cluster lifecycle.

Goal Tools (Instruments)

Initiation of cluster – engaging actors Identify clusters - Conduct mapping studies of clusters (quantitative and

qualitative)- Use facilitators and other brokers to identify firms that

could work togetherSupport networks/clusters

- Host awareness raising events (conferences, cluster education)

- Offer financial incentives for firm networking organisations

- Sponsor firm networking activities- Benchmark performance- Map cluster relationships

Cluster organization - Setting up cluster organization - Training of cluster managers

Collective services and business linkagesImprove capacity, scale and skills of suppliers (mainly SMEs)

- SME business development support- Brokering services and platforms between suppliers

and purchasers- Compile general market intelligence- Co-ordinate purchasing- Establish technical standards

Increase external linkages (FDI and exports)

- Labels and marketing of clusters and regions- Assistance to inward investors in the cluster- Market information for international purposes- Partner searches- Supply chain linkage support- Export networks

Skilled labour force in strategic industries

- Collect and disseminate labour market information- Specialised vocational and university training- Support partnerships between groups of firms and

educational institutions


- Education opportunities to attract promising students to region

Collaborative R&D and commercializationIncrease linkages between research and firm needs

- Support joint projects among firms, universities and research institutions

- Co-locate different actors to facilitate interaction (i.e., science parks, incubators)

- University outreach programmes- Technical observatories

Commercialisation of research

- Ensure appropriate intellectual property framework laws- Overcome barriers to public sector incentives in

commercialisation- Technology transfer support services

Access to finance for spinoffs

- Advisory services for non-ordinary financial operations- Public guarantee programmes and venture capital- Framework conditions supporting private venture capital

Initiation of cluster – engaging of actors and forming cluster organization

60. Programmes that bring actors together usually start with some form of a study such mapping of cluster and cluster competitiveness assessment, followed by development of strategic action plans (often called Cluster Road Maps). The goal is not only to bring cluster actors together but to get them organized around key issues by industry or a common theme that cuts across several industries. This enables the cluster to build up the levels of trust as business members begin working with each other rather than competing against each other. Building of common goals is a necessary element in cluster initiatives. Potential members of a cluster need tools to motivate participation and guide common action.

61. From above mentioned process cluster organizations can developed that are effective and sustainable on long run. Cluster office is mainly responsible for cluster development in term of daily activities, reduction of cost for individual approaches by cluster actors in terms of time and financial resources, building up scientific, technological competencies and enhancing efficiency of individual players and tha of cluster as whole. Cluster organizations can be defined as the legal entity engineering, steering and managing the clusters, including usually the participation and access to the cluster’s premises, facilities and activities. The organizations that manage clusters may take a variety of forms, including management companies, non-profit associations, universities and public agencies. There are several entirely different approaches to that being practised regarding cluster management. One approach consists of the cluster manager or the cluster organisation itself is being member of the cluster. In another approach the manager / organisation is no direct member of the clusters, but is entrusted with this responsibility by the cluster members. In a third variant an external service-provider (or business development or funding agency) takes the lead being appointed by a third party (which often funds or initiated the cluster setup)11. Cluster organization

62. Budget for initiation of clusters is often less than € 50.000 per year and last from 1 up to 3 years.

11 Institute for Innovation and Technology, Quality Enhanced Cluster Management, 2008


Collective services and business linkages (improve capacity, skills and competitiveness in general)

63. Collective services and business linkages aiming at to forming and straighten networks within cluster by promoting collaborative projects between clusters actors (firms, universities, institutes) in fields important for the cluster and promoting collective service. Initiatives include the strategic plans, studies and business plans and in addition joint actions in the filed of joint purchasing and marketing, partner search databases, participation in local trade fairs under a common label, or certification of standards. In more mature clusters initiatives support international market development, supply chain development and export promotion.

64. There are also tools that focus on Human resource development, such a trainings on ICT and other fields in line of cluster actors needs. Cluster can develop it’s own training and education programme or can take the opportunity to collaborate with a local educational institution on skill development.

65. Budget of such actions are in general around € 100.000 per year. Projects are designed in early stages of cluster initiation phase of cluster development and implementation is taken 2-3 years.

Collaborative research and development and commercialization

66. Collaborative research and development and commercialization actions aiming to support research and development investments in targeted fields important for cluster. The nature of initiatives span from “light” or one-off joint R&D projects to capital intensive “heavy” collaborative R&D programmes. Projects emerged from networks formed within cluster and / or could be initiate as a top down decisions in particular when sector for cluster development (for instance health, agricultural, industry) is selected as a priority and / or in key national industries.

67. Such projects encompassed development of new materials and new technologies, on utilization of advance technologies on key areas important for the cluster (for example development of new polymer materials for agricultural and health sector, promoting utilization of nano technologies in medical treatment, utilization of ICT technologies in heath service sector etc). The programmes include a range of instruments beyond funding collaborative R&D projects with firms to support commercialization. Universities in general have dedicated technology transfer and industry liaison officers to support the commercialization of university research. In various cases, these platforms are promoted through Science and Technology parks. The budget is around € 1 million for a sustained period of time (up to 1 years).

Setting up implementing structure and organization

68. International practices and studies on governance frameworks for cluster development are showing very different approaches and structures established. In general, some important principles and messages can be drawn:

a) Organization should reflect the overall objectives and focus of the cluster development. Organization framework for implementation of clustering policy programs is strongly dependant on whether clusters are selected top down or bottom up approach and or whether is supporting clusters in targeted areas / industries or more general.

b) Central coordination is an critical factor for successful implementation. Clusters programme can be implemented by different (national or regional) agencies,


however, they are all coordinated by central cluster policy unit, ensuring high political authority and at the same time, professional autonomy. Implementation agencies need support at the highest political level but also high level of autonomy that allows flexibility.

c) Dialog with private sector is essential in the whole process. Input and feedback about the effectiveness of measures from the business sector and other shareholders lead to continuous improvements. Program Steering Groups or Program Councils are usually organized at the different levels of the implementation.

d) Clear definition of targets and performance measurement system need to be set up at the beginning and monitoring and evaluation tasks implemented on regular basis. This is a precondition for the transparency in the implementation process and consequently for the accountability of the policy.

e) Internal organization needs to be set up in a way to ensure clear division between policy making, implementation and monitoring. State aid delivery system should be separated from the policy design and management unit. External evaluation and financial controlling system need to be independent.


6 Case Study France

69. The French experience developed in 2005 at the instigation of an inter-ministerial body in charge of territorial planning, the DIACT. A few Poles of Competitiveness constituted on the basis of strong interactions between business, R&D centres and higher education institutions were to be identified and funded through a generous programme of tax exemptions and subsidies. The objective was to reach international competitiveness through a critical mass of investments in innovation.

70. The French example is interesting for COMESA for several reasons. First, Competitiveness Poles took advantage of the high political profile they were associated with. Second, the geographic coverage is national but the implementation is regional. Also the selection mechanism based on calls for proposals enhanced visibility and brought together actors who were not used to cooperate. The differentiated set of Poles eventually selected better reflected distinct needs and assets of regions. The inter-ministerial governance of the initiative proved to be flexible enough to provide for adaptations when needed.

6.1 Part I. Development and objective

71. The initiative to establish “Competitiveness Poles” (“Pôles de Compétitivité”) was taken in 2005 by the CIADT (now CIACT ), a political inter-ministerial instance which oversees the Inter-ministerial Delegation for the Competitiveness and Planning of Territories or DIACT . The DIACT is the main administration responsible for regional policy – or to be precise, territorial planning. It is an inter-ministerial body under the joint supervision of the Prime Minister and the Ministry of Ecology and Sustainable Development and Planning (and formerly the Ministry of Interior and Territorial Planning) working in close contact with regional authorities (Préfets).

72. The initial objectives of the Competitiveness Poles were defined in terms of international competitiveness. The objective was to select a few poles with a global reach that could assert the international position of French firms in some specific markets or around certain technologies. This had to be realised through strengthened cooperation between companies, public research centres and higher education institutions within Competitiveness Poles. The Competitiveness Poles were thus expected to leverage on innovation through joint R&D projects.

73. Three reports published before or concomitantly with the initiative recognised the need for the country to move into higher technology sectors, and put forward the idea of grounding industrial policy at regional level more firmly. Also, it was proposed to gear innovation policy more explicitly at bigger firms, as indeed, following the “national champions” approach of the 70s, privileged targets of industrial and innovation policy had become SMEs. The creation of the Agency for Industrial Innovation (AII) in 2005 endowed with a budget of € 2 billion over 2005-07 is a direct consequence of this recommendation. It concentrates substantial financial resources on major R&D projects instead of spreading funding. The Competitiveness Poles have to contribute to this logic of reaching critical mass in support to innovation.

74. Eventually, however, Poles selected were far more than expected (see below), and not all internationally or even nationally competitive. A shift towards a more differentiated set of objectives attached to distinct types of Poles thus occurred. Beside the overall objective of innovation to improve international competitiveness, some less critical Poles were assigned objectives in terms of industrial critical mass at national or regional level.


6.2 Part II: Objectives of the clusters development program

75. A competitiveness cluster is a joint theme-based initiative for a given geographic area. It is an initiative that brings together companies, research centres and educational institutions in order to develop synergies and cooperative efforts. Other cluster partners may include local and national authorities and services catering to cluster members.

76. The aim of the initiative as a tool to reach overall development objectives is defined as:

“Clusters will use synergies and innovative joint projects to give their member companies a chance to be national and international leaders in their fields. It is about collaboration of actors and geographic concentration in the service of a more efficient innovation.”

77. The strategic objectives of competitiveness clusters are:

a) To develop competitiveness of French economy through increased innovation;

b) To boost local technological and creative industries;c) To attract businesses to France thanks to a higher international profile; andd) To stimulate growth and employment.

78. These strategic objectives are translated into more specific ones:

a) Develop partnerships between the various stakeholders, based on their complementary skills. The studies have shown that cross-fertilization of ideas of various stakeholders and the combining of complementary skills lead to increased innovation (strategic objective 1);

b) Construct shared R&D projects that can benefit from public funding. Shared R&D projects aim at increased innovation (strategic objective 1) and boosting local technological industries (strategic objective 2);

c) Promote an overall environment favourable to innovation (through knowledge sharing, training, …). This should contribute to enhance the attractiveness of France for foreign businesses (strategic objective 3) and boost innovation (strategic objective 1);

d) Encourage development of technology partnerships with partners abroad, which benefit cluster companies. This would lead to the development of a higher international profile (strategic objective 3); and

e) Attract investors to France (strategic objectives 3 and 4).

6.3 Part III: Cluster Program Development and Implementation

79. The initiator of the cluster programme is the DGE (General Directorate for Enterprises, Ministry of Economy, Finance and Industry). The geographic coverage is national but the implementation is regional. The main ministries responsible for the implementation of cluster policy are the Ministry of Economy, Finance and Industry and the Ministry of Interior. In addition, regional organisation DRIRE (Regional Directories for Industry, Research and Environment) are supporting clusters individually in R&D project elaboration and in financing. There are 22 DRIRE in France, one in each region.

80. The source of financing is the French state thanks to its ministries. 3-year budget is about 1,5 billion €.


81. The implementing agencies are DGE (Directorate General of Enterprises), in particular through the FCE (Competitiveness Fund for Enterprises); Oséo, AII, and ANR at the national level and DRIRE at the regional level.

82. The main stages of the development of Cluster Program (2003-2011)

a) Development of the Programme and policy measures

b) Call for projects for the designation of clusters (105 applications received)

c) Selection of projects (French government decided to grant an official label to competitiveness clusters, including 16 which already have, or will have a global vocation).

d) Implementation, support for development of clusters in two stages (three years each, from 2005 till 2011).

83. Results, some figures (from 2007):

a) 71 competitiveness clusters have been labelled

b) 5000 companies were cluster members in 2007 (80% of these were SMEs)c) 554 R&D projects have received public funding since 2005d) € 1,1 billion has been spent on R&D projects since 2005e) R&D projects represent a total of € 3,6 billionf) 12000 researchers take part in funded R&D projects.

Policy tools

84. There are four key policy tools for clusters: supporting the management structure of clusters, financing of R&D projects, priority financing through government agencies, and fiscal exonerations.

Tool 1 - The key policy tool – Financing R&D projects through the Unique Inter-ministerial Fund (FUI - Fonds Unique Interministériel)

85. A unique fund for the financing of collaborative R&D projects of competitiveness clusters was created by the ministries. It is a part of the Fund for the Competitiveness of Enterprises, of the General Directorate of Enterprises, Ministry of Economy, Industry and Employment.

Selection of projects

Approach: Tenders/call for R&D projects

Eligibility criteria

a) Projects selected by the governance structure of the poles


b) Collaborative and partnership-based R&D: at least 2 firms and one public laboratory or academic institution

c) Led by the firms that conduct their R&D work in France d) Projects aiming at developing new products or services, highly innovative and

destined to be introduced on the market within 5 years after the completion of the R&D project

Selection criteria

a) Degree of innovativeness of the projectb) Perspectives and possible outcomes in terms of value creation, activity and

employment, commercial perspectivesc) Strategic value for the cluster and for the firmsd) Quality of the partnershipe) Complementarity with other projects of the cluster that received public support,

namely by local communities

Methods of support

Subsidies:

a) 45% of the amount for the SMEs within the clusters, 30% for other firms (covering costs for employees involved in the R&D project and equipment)

b) 100% of marginal costs for public laboratories (employment of personnel that does not have the status of public official)

c) 40% for research institutions, whatever their legal status as long as they are financed primarily by public funds or as long as they accomplish a mission that is considered of general interest and that focuses on R&D.

d) The amount of support is a few million € (average: 2 M€)

Procedure (phase 1)

a) • Calls for projects per year to select the R&D projectsb) • Evaluation of the projects by the sectoral experts of the Ministryc) • Pre-Selection of a certain number of projects

Procedure (phase 2)

a) Completion of additional application forms for pre-selected projectsb) Thorough evaluation by experts (including external independent experts in some

cases)c) A selection committee makes the final selection of projectsd) Decision is made within 6 months after the completion of detailed applicationse) Conventions are signed with each beneficiary

Payment:

a) Initial payment at the moment the convention is signed: 5% for large firms, 20% for associations, 30% for laboratories and SMEs

b) Following payments : based on the progress of the project and the resultsc) Final payment based on the final report: at least 20%

Tool 2 - Fiscal exonerations

86. Fiscal exonerations are applicable to R&D projects on two conditions:


a) The project has to take place within the R&D zones of clusters, designated by a Décret of the State (legally recognized as priority R&D zone)

b) The R&D project validated and supported by the State

Instrument 1: Tax exoneration for the tax on firms /revenues (+ possibly a professional tax and local community tax)

= exonerations of 100% during 3 years, then 50% for the 2 following yearsApplies to firms involved in R&D projects financed by the Unique Inter-ministerial Fund (UIF) or by state agencies

Instrument 2: Lower social charges

Tool 3 - Financing the management structure of clusters

87. 11 million € are allocated each year to finance the management structures of competitiveness clusters. Each cluster has a governance structure which is typically that of a non-profit association. They were developed specifically for this programme with several oversight bodies: finance committee, scientific committee and strategy committee.

Tool 4 - Supporting R&D projects of clusters through the Government agencies

88. The government agencies involved are Oséo (targeting SMEs), Industrial Innovation Agency (targeting up-scale R&D of large industrial firms), CDC (a quasi-public bank), and National Agency for Research (targeting mainly public research and educational institutions). Each of the agencies has a specific scheme to support projects that take place within clusters. For example, Oséo-Anvar that targets SMEs has developed the following tools:

a) Support to the R&D projects stemming from Competitiveness clusters. Different instruments are put into work: Support for the preparation of the partnership, feasibility study, new firm creation, facilitating creation of relationships between SMEs and large firms, SMEs and public laboratories ; and

b) Providing additional financing for R&D projects supported by the Unique Inter-ministerial Fund.

89. The following figure presents the different actors that take part in the financing of R&D in France.

Industrial Innovation A

gency (A

II)Financing

of im

portant R

&D

projects in

large firm

s

OSEO-ANVAR (targeting SMEs)

National Agency for Research(ANR)

Ministries: Unique inter-ministerial fund, within the Fund for the Competitiveness of firms (FCE)

(Clusters Eurêka and Competitiveness clusters)

Towards the market

Call for projects,

NetworksR R I T

Public research

Size of projects

Competitiveness clusters

Towards fundamental research

Involvement of public labs

OSEO-BDPME


Figure 1 - The support of public actors to the industrial R&D in France and competitiveness clusters

Source : Direction Générale des Entreprises (DGE)

77. Cluster characteristics and management 90. Poles are often driven by large firms and have not made SME participations a high priority (the focus is on existing firms, not start ups). Attempts have been made to correct this initial features and central authorities encouraged the Poles to include more SME. There is an average of around four HEI and four research organisations in a Pole. In general participants had not collaborated together before (except in the cases in which SPL became Poles of Competitiveness).

91. In the first stage, Poles have a governance structure typical of a non profit association with a finance strategic and scientific committees, including local and regional government actors, and companies. Poles are presided by a business person who is to be supported by a management team. Critique says the governance structure is complex, and efforts have been made to simplify it. The collaboration between large and small firms is deemed to be a challenging task.

92. Request for funding were initially to be applied separately to funding sources. Following expressions of disapproval for heavy procedures, a one-stop-shop approach was adopted (managed by the Business Division of the then Ministry of Finance Economy and Industry). The risk is that the procedure is too centralised, making difficult access by SMEs. 78. A National Club of Poles was to be created to enable exchanges of knowledge and experience between Competitiveness Poles.

Evaluation and monitoring

93. In France, the Government launched a call for proposals for the evaluation of competitiveness clusters after the first 3-year period. The Government asked for the following:

94. Evaluation of national measures in favour of competitiveness clusters


a) The study has to evaluate the efficiency and the adequacy between the measures and actions and the initial objectives of the programme. It aims to show what changes could be made to improve the impact of the programme.

b) A comparative study with similar countries is to be done on the framework conditions and measures in order to evaluate French measures targeting clusters.

c) The conclusions and recommendations of the study have to reflect on the nature and the ways of support provided to clusters, the overall organisation of the programme, the distribution of roles between different actors and the coordination at the national level.

95. Evaluation of each cluster

a) For each cluster, the evaluation should analyse the creation of clusters and its elements, and it should evaluate the efficiency of the functioning and actions comparing to objectives. It should lead to recommendations for improvement.

b) Evaluation should highlight success factors, best practices and errors to avoid.c) The conclusions of the evaluation should help the government in its decision to

confirm, modify or invalidate the label “competitiveness cluster” of each cluster and of its classification in one of three cluster categories (world-class, aiming-to-become world class, national cluster).

d) For the clusters for which the relevance and viability are confirmed the conclusions of the evaluations are to serve to specify the conditions for their consolidation and/or their development (deployment of strategy, evolution of cluster management, collaborative projects, governance structures, strengthening of the territorial embeddedness, improvement of international visibility …). The contract was won by CM International and The Boston Consulting Group. The evaluation took place in the beginning of the year 2007. The following methodology was applied.


Evaluation methodology for French clusters by CM International and The Boston Consulting Group

Two levels of evaluationEvaluation of national measures targeting competitiveness clusters

Evaluation of each competitiveness cluster

Relevance/coherence- Means used with regard to pursued

objectives- Relevance of three categories of

clusters - Coherence with other measures

targeting R&D and innovation- Taking into account sustainable

development objectivesImplementation

- Analysis of measures and tools (selection and financing)

- National coordination mechanisms, regional management approach

- Monitoring and evaluation of clustersFirst effects

- Results that positively effect cluster dynamics and results per theme

- Attractiveness of territories- Impact on the synergies between

actors

Specific analysis for each pole, taking into account the previous collaboration relations, local and international context, dynamics of actors:

1. Economic strategy of the cluster2. Evolution of the scope of the pole

2005-20083. Management and governance4. Involvement of SMEs and creation of

synergies5. Development of R&D projects6. Synergies enterprises-research-

academic institutions7. Territorial embeddedness and

network effect8. Commercial and international

visibility9. Human resources and training10. Projects that create cluster dynamics11. Taking into account sustainable

development objectivesPropositions for improvement, possible evolution scenario

Detailed report for each clusterTransversal evaluation of clusters and detailed recommendations

Source: CM International and The Boston Consulting Group

96. In addition, each cluster prepares an annual report in which the results in terms of R&D projects, financing, management, international development and other topics are addressed.

6.4 Sources

a) Blanc, C. Pour un écosystème de croissance, Rapport au Premier Ministre, 2004.b) La documentation française (http://www.ladocumentationfrancaise.fr/)c) Competitiveness clusters web site (www.competitivite.gouv.fr)d) Ministry of Industry web site (www.industrie.gouv.fr)e) La France, puissance industrielle. Une nouvelle politique industrielle par les

territoires, la Datar, 2004.f) France, STI Outlook 2002 – Country Response To Policy Questionnaire, OECD.g) OECD, Competitive Regional Clusters: National Policy Approaches, OECD 2007.h) Policy report France, www.clusterobservatory.eu

7 Case Study: Japan 79.


97. This case study presents the Industrial Cluster Development Project in Japan, which started in 2001. The Industrial Cluster Project is designed and implemented by Japan’s Ministry of Economy, Trade and Industry (METI) and is being carried out in regions all over Japan. The Industrial Cluster Project (ICP) emerged as response of the government to the recognized severe situation of the industry as well as the need to revitalize regional economies and promote innovative behaviour. Industrial Cluster Project is known as a good practice from two points of view; successful combination of three kinds of policies, Industrial Location Policy, SME Policy, and Science and Technology Policy and combination of top-down and bottom-up approach, coordination between the national-level policies and local/regional policies.

7.1 The situation of the Industry and the Industrial policy in Japan

98. During the last 20 years, major changes have been taking place in Japan’s industries. The 1990s, the so-called “lost decade” witnessed the burst of the economic bubble, and the following severe deflation and the financial system uneasiness. From the late 1990s to date, the government has tackled the nonperforming loans problem and promoted financial system reform as well as pursued a set of policies on regulatory reform and also engaged in a structural reform under the aim ‘shift from the public to the private sector’ in order to generate private demand through eliminating regulations and systems that impede the vitality of the private sector.

99. During the 1990s, the hollowing-out process was accentuated and the industries were in a difficult situation. South-East Asia and especially China have been increasingly attracting Japanese firms, in particular major companies that traditionally provided subcontracting work to small and medium-sized firms (SMEs). The industrial base of Japan, constituted of thousands of SMEs was therefore threatened by this process.

100. In parallel with this severe situation in the industry, Ministry of Economy, Trade and Industry’s (METI – former MITI) SMEs-related policy measures have also experienced changes in the 1990s (SME Agency, 2002). Until the beginning of the 1990s, the SMEs-related laws aimed primarily at protecting the SMEs and the industrial agglomerations from the hollowing-out phenomenon. The laws were based essentially on egalitarianism and protective measures. In other words, they aimed at protecting the weak firms rather than encouraging the strong ones. There was little support for innovative SMEs. In 1995, the Temporary Law Concerning Measures for the Promotion of the Creative Business Activities of Small and Medium Enterprises was enacted. This was the explicit beginning of the fundamental change. Under this law, the Ministry of Economy, Trade and Industry (METI) established the Japan Association of New Business Incubation Organizations (JANBO) as a part of its industrial location policy. Its purpose was to support and promote regional platforms, which are the coordination systems for regional actors such as SMEs managers, university professors, researchers, entrepreneurs, business consultants and local officials. In addition, in 1999, the Small and Medium Enterprise Basic Law was radically revised (the new version is commonly called the New Basic Law). Its key goals are the following: promoting innovation and start-ups, strengthening the management base, and facilitating adaptation to economic and social changes. Innovation, start-ups, adaptation thus emerged as key words of the new orientation in the SMEs-related policies.

101. The objectives of the industrial policy of Japan:

a) Strengthen the competitiveness of the Japanese economyb) Promotion of structural reformc) Development of innovation throughout the countryd) Development of new businessese) Promotion of self-sustaining development of local economy.


Therefore, the key words and priorities of the Japanese policies are: competitiveness, structural reform, innovation, new business development.

102. The Industrial Cluster Project emerged in the context presented. By engaging in the project METI was recognizing the severe situation of the industry as well as the need to revitalize regional economies and promote innovative behaviour. The Industrial cluster project is being implemented since 2001.

7.2 The development of clusters and their strategic objectives

103. For METI, cluster means “having businesses and universities form, in regions all through Japan, broad-area networks for partnerships: 1) between businesses, universities and government agencies; 2) between businesses; and 3) between different industries; and having the networks, which allow participants to use their intellectual and other resources together, achieve conditions where new industries and businesses are created”.

The objective statements are the following:

104. The Industrial cluster project aims at creating industrial clusters that have three main properties: 1) chain reaction of innovations - a wave of innovations spreading all through Japan; 2) optimization of industries and strengthening of their tolerance to changing environment;3) brand-building (the region is regarded as a brand) for accelerating formation of international clusters or enhancing their quality.

105. The strategic objectives of clusters are:

a) development of business environment to promote innovation;b) creation of new businesses;c) synergistic effects with local industry promotion (each town/prefecture/region in

Japan has units dedicated to promoting local industries).


The main stages of the cluster development

Period Time range

Title Description

1 2001-2005 Industrial cluster launch period

Based on actual conditions of clusters and policy needs, about 20 programs are launched with the national government playing a central role in their advancement. In collaboration with clusters developed autonomously by local governments, “visible networks” are formed that will become the base of industrial clusters.

2 2006-2010 Industrial cluster development period

Specific businesses will be developed while continuing to advance network formation. At the same time, management reorganization of companies and creation of venture companies will also be promoted. Projects will be reviewed and new projects will be launched flexibly as required.

3 2011-2020 Industrial cluster autonomous growth period

While further promoting network formation and specific business development, independence of industrial cluster activities in the financial aspect should be strived for, aiming at autonomous development of industrial clusters.

Source: METI, 2005.

106. The key elements in the cluster programme

a) The initiator of the cluster programme is METI (Ministry of Economy, Trade, and Industry).

b) The geographic coverage is national. c) METI is responsible for the programme.d) The source of financing is the Japanese state. The budget is around 57 billion

yen / year (around € 400 million).e) The implementing agencies are Regional Bureaus of METI (RBETI), together

with Project Promotion organizations (from the private sector).

The industrial clusters: A few figures

107. 19 clusters were selected when the project was launched


Source: METI

7.3 From strategic objectives to specific objectives

108. As mentioned in the previous section the strategic goals of clusters are: 1) development of business environment to promote innovation; 2) creation of new businesses; 3) synergistic effects with local industry promotion (each town/prefecture/region in Japan has units dedicated to promoting local industries).

109. These strategic objectives can be declined into more specific ones:

a) Promote innovation by “new fusion” of industry, academia and government (leads to accomplishing the strategic objective 1).

b) Promote industry-government-academia collaboration system (in order to accomplish strategic objectives 1 and 2)

c) Support launching businesses, support new business development (leads to accomplishing strategic objectives 1 and 2)

d) Promote management innovation (corresponds to strategic objective 1)e) Collaboration with local industry promotion policy (corresponds to strategic

objective 3).


7.4 Policy tools

Policy tools (Measures and instruments) and funding in JapanField Measures Instruments

Supp

ort

fo

r

netw

ork

form

atio

n

Network formation (formation of collaboration ground)

Budget: 10.3 billion yen /year

1) Establishing organisation that promotes cluster formation, networking with related organisations (base organisation2) Dispatching coordinators to participating companies and universities3) Information transmission by web site and mail magazine4) Holding industry-academia collaboration exchange, joint meeting for announcing the results, symposium and seminar5) Developing database of companies, researchers and supporters

Supp

ort f

or b

usin

ess

activ

ities

Support for R&D (development of collaboration activities)

Budget: 41,3 billion yen / year

1) Promotion and collaboration of R&D by public fund (projects of regional bureaus of METI, New Energy and Industrial Technology Development Organisation, National Institute of Advanced Industrial Science and Technology, and other ministries)2) Promoting utilisation of research results (meeting for announcing the results, technology matching, dispatch of specialists, etc.)3) Support for protection and strategic use of intellectual property (establishment of regional intellectual property strategy head quarters, etc.)

Strengthening incubation function (support for starting business)

Budget: 5.2 billion yen / year

1) Developing incubation facilities2) Fostering incubation managers3) Network formation between incubation organisations and incubation managers

Support for market cultivating (commercialisation of products developed)

1) Holding business matching meetings and exhibition of products2) Collaboration with trading firms3) Establishing distribution system4) Market cultivation through coordinator5) Support for cross-industrial collaboration business6) Promoting trade and interchange with overseas markets (local-to-local industrial exchange project, etc.)

Prom

otio

n

of

colla

bora

tion

with

re

late

d or

gani

satio

ns

Collaboration with financing institutions (management support)

1) Collaboration with local financial institutions (holding of Industrial Cluster Support Finance Conference, bridge loan and low-interest lean by business collaboration, establishment of venture fund)2) Establishing local venture capital3) Holding meetings for announcing business plans

Fostering human resources

Fostering highly specialised human resources (manufacturing personnel, technology management specialists, judging personnel, etc.)


7.5 Implementation of the project

110. The cluster programme was designed and is being financed and implemented by METI. The annual budget is around 5.7 billion yen, which is approximately half a billion US dollars. In addition to financing the project, METI designs different activities to promote the project.

111. It is carried out through the Regional Bureaus of Economy, Trade and Industry (RBETI). They are the operational units that visit companies, universities and other agents, collect information about the conditions of industries, their needs and their evaluation of policies. They also take initiative in having local organizations of independent administrative agencies work in cooperation to form industrial clusters (these are the so-called “local initiative industrial clusters”).

112. 20% of RBETI employees (around 500 persons) are assigned to the project. They provide one-to-one services to local SMEs and other local actors. They work on creating partnerships between these actors and in particular between SMEs and university professors and researchers.

113. In addition to the RBETIs, METI has assigned Industry and promotion organizations of the private sector to cooperate with RBETIs and jointly promote the Industrial cluster project. The private-sector organizations deal with local SMEs more easily than the governmental bodies, even the regional ones. In addition, such organizations have typically a detailed knowledge of the industrial base in the region. By assigning RBETIs and private-sector organizations to jointly implement the cluster project, METI aimed at making use of a variety of competencies to develop successful clusters.


7.6 Sources

a) METI (2006), Industrial Cluster Project, Brochure.b) METI (2005), Industrial Cluster Study Report.c) METI (2001), Industrial Cluster Project, Brochure.d) SME Agency (1996, 1997, 1998, 1999, 2000, 2001, 2002), The White Paper on

Small and Medium Enterprises en Japan, METI, Tokyo.e) METI website (www.meti.go.jp)f)Industrial cluster project website: www.cluster.gr.jpg) OECD, Competitive Regional Clusters: National Policy Approaches, OECD 2007.

8 Case study: Sweden

8.1 The situation of the Industry and the Industry-related policies in Sweden

114. After almost a decade of economic crisis, the Swedish growth policy agenda went through important changes towards the end of the 1990s. Having focused heavily on fighting the large public budget deficits during the first half of the 1990s, the policy agenda shifted to include more of growth policy measures, such as instruments found in industrial and research policy. The policy reformulation took place against the background of almost three decades of comparatively slow growth in Sweden and increasing regional economic imbalances. Two main axes emerged in the new process: The first, focusing on creating an increased co-ordination of growth and research policies through a considerable reorganisation of the Swedish structure of R&D funding, and the second, focusing on stimulating regional economic growth through the implementation of a new layer in Swedish growth policy, the “regional growth agreements”, launched in 2000. In Sweden, there are currently 21 counties, and these counties represent the regional level.

115. The objectives of the industry and research-related policies of Sweden are the following:

a) Stimulating growth with more jobs in more and growing businessesb) Dynamic development in all parts of Sweden (reduction of disparities between

regions)c) Enhanced innovation and Research and Technology Developmentd) Sustainable development (Environment and enterprise).

116. Therefore, the key words and priorities of the Swedish policies are: growth, regional development, innovation, sustainable development.

8.2 The development of clusters and their objectives

117. In Sweden, the term “innovation system” is frequently used and has some overlaps with the term “cluster”. The Ministry of Enterprise, Energy and Communications has the overall responsibility for cluster policy in Sweden. Under this level, Vinnova, Swedish Agency for Innovation is responsible for cluster policies. Vinnova focuses on innovation and knowledge spill-overs. Vinnova implemented the programme “Vinnväxt”. Due to its overall success, this programme is by far the internationally best known initiative for the support of innovation systems and clusters.

118. According to the EC, this success is due to the many seminars that were conducted in the starting phase of the programme, which enabled the programme to learn from the trials and errors of other countries. A prerequisite for the programme is the active


participation of players from the private, public and research sectors and from the political sphere.

119. Two features of Vinnväxt are generally seen as explaining the expected success of the programme: the ambitious planning phase, including pilot cases and the above mentioned international seminars; and the long term set up of the programme. Vinnväxt is committed to support the innovation systems/clusters for ten years, with the aim to make them self-sustainable after this period.

120. The objective statement of this programme is the following: Promote regional sustainable growth through the development of internationally competitive research and innovation environments, within specific areas of growth.

121. The strategic objectives are the following:

a) Build powerful innovation systems, when the support period is over (after 10 years).

b) Create innovation systems that will be able to fully compete on the international innovation arena

122. The main stages of the cluster development

a) 2001: Beginning of Vinnväxt programmeb) 2003: Three winners were selectedc) 2004: Five winners were selectedd) Every 3,5 years: Action plans of the winners of the tender are evaluated

123. The key elements in the cluster programme

a) The initiator of the cluster programme is the VINNOVA (under Ministry of Enterprise, Energy and Communications).

b) The geographic coverage is national. c) VINNOVA is responsible for the implementation of the programme.

Organisational set-up at the programme level is the following: Programme council with representatives from the business world, R&D and public authorities.

d) The source of financing is the Swedish state through VINNOVA. The budget is 75million SEK / year (around 7,7 million € / year).

124. The specific objectives of the Vinnväxt programme are the following:

a) Build the infrastructure of the innovation systemsb) Support the development of the innovation system (research activities, research

and development strategies, …)c) Improve the specialisation of staffd) Improve conditions for knowledge spill-over.

125. Accomplishing these specific objectives would lead to reaching the strategic objectives of the programme.

126. The specific objectives of the Vinnväxt programme are the following:

a) Mobilise actors and resources in a region, along the particular needs and interests of that specific region (should help to accomplish the strategic objective 1).


b) Create new knowledge based on the experiences of existing clusters and spread that knowledge to other clusters and national authorities (should lead to accomplishing the strategic objective 2)

c) Develop tools to analyse and evaluate clusters in Sweden (should lead to accomplish strategic objectives 1 and 2)

d) Promote the image of Sweden and Swedish regions to generate investments in clusters (corresponds to the strategic objective 3).

Clusters Selection process

127. The selection process is based on applications. It is a competition where the best regions win financial support for up to ten years. The aim is that all the winning clusters should be very powerful innovation systems when the support period is over, that is, after 10 years.

Selection criteria

128. Triple helix participation is required for funding; all initiatives had to be supported not only by academia and business but also by regional policy makers. The regions that have the best innovation projects and innovation strategies are selected. In addition, regions have to be able to finance at least 50% of the funding. The winners have to hand in a status report every six months.

Cluster participants

129. Several companies, universities and institutions are involved in each initiative with different degrees of engagement.

Cluster governance

130. Not all the clusters supported by Vinnvaxt had a formal governance structure prior to the call for proposals and some never formalised their institutional status. A number of different organisational forms were applied, ranging from informal networking and non-profit associations to the establishment of centres or corporations

8.3 Sources

a) Sweden, STI Outlook 2002 – Country Response To Policy Questionnaire, OECD.b) OECD, Competitive Regional Clusters: National Policy Approaches, OECD 2007.c) Policy report Sweden, www.clusterobservatory.eud) Vinnova web site (www.vinnova.se)e) Nutek web site (www.nutek.se)

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