Cluster Programs in LAC The IDB Experience

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Cluster Programs in LACThe IDB Experience
Conference Changing Paradigm of Cluster
Development Learning from Global
Experiences New Delhi, 20th-22nd February ,
2014 Gabriel Casaburi Competitiveness and
Innovation Division (CTI) Inter-American
Development Bank
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Presentation Structure

1. Clusters Projects in LAC
2. The role of institutions supporting cluster
   development
3. Knowledge products
4. Challenges Ahead

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Presentation Structure

1. Clusters Projects in LAC
2. The role of institutions supporting cluster
   development
3. Knowledge products
4. Challenges Ahead

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IDB-financed cluster programs in LAC
Guatemala Program to Support Strategic Investments and Productive Transformation
Dominican Republic Program to Support Competitiveness Policy II
Compete Caribbean
Barbados Competitiveness Program
Local Cluster Competitiveness State of Pernambuco
Strengthening of the Entrepreneurial Activity Program Estado de Bahía
Cluster Competitiveness Support Program for Minas Gerais
Paraguay Cluster Export Support Program
Competitiveness of Business in Local Production Systems in São Paulo
Norte Grande Competitiveness Program
Uruguay Clusters Competitiveness and Value Chains
San Juan Cluster Program I II
Argentina SMEs Credit Access and Competitiveness Program
Mendoza Cluster Program
Río Negro Clusters Competitiveness Program
Argentina Agro-based cluster support program (part of a larger Agricultural Development Program)
Argentina Technological Innovation Program II III
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Cluster Programs at IDB
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Clusters Projects in LAC
Typical project structure

• Objectives To solve the restrictions that affect
  the competitiveness of firms which are part of
  clusters and value chains, related mainly to lack
  of public or club goods.
• 2. Activities
• Mapping Selection of clusters
• Raising awareness and Strategic Planning
• Implementation of an Action Plan derived from the
  Strategy
• Monitoring and Evaluation

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Clusters Projects in LAC

• Activities Map/Selection
• Based on a loose definition of cluster, adapted
  to the local conditions and particular policy
  goals
• The current projects followed different
  strategies
• Support the majority or all of the tradeable
  sectors in a given territory
• Establish criteria and competitive tendering
  between potentials clusters
• Request an international consulting firm to
  propose a list of the clusters with the highest
  growth potential (or export, employment, etc)
• Based on some agreed criteria, clusters are
  selected during the program preparation phase

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Clusters Projects in LAC

• Strategic Planning
• Raising awareness and mobilization of businessmen
  in the cluster
• Joint diagnosis of the competitive position of
  the cluster
• Benchmarking
• Cluster Strategy Plan Vision, mission,
  objectives, results, indicators, activities
  schedule, etc.
• Action Plan Specific actions to achieve the
  agreed goals for the whole cluster

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Clusters Projects in LAC

• Activities Action Plan
• Training and capacity building to promote
  inter-firm cooperation
• Horizontal Projects Financing of public or club
  inputs and promotion of collective actions for
  the cluster as a whole
• Other activities for groups of firms in the
  cluster, consistent with the strategy managerial
  and strategic advise, technical assistance, RD,
  export promotion, marketing, logistics, etc.

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Presentation Structure

1. Clusters Projects in LAC
2. The role of institutions supporting cluster
   development
3. Knowledge products
4. Challenges Ahead

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Institutional Support to Clusters
Key players in each instance

• Executing Agency. Generally it is an executing
  agency in a Ministry or Development Agency (e.g.
  CORFO)
• Strategic Committee. Includes representatives of
  the private and public sector to monitor the
  strategic direction of the program.
• Cluster Governance. It serves several purposes
• As a representative of the cluster vis-à-vis the
  program
• As the body the clusters stakeholders use for
  collective decision-making

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Institutional Support to Clusters
Cluster Governance

• It is the most complex part in the institutional
  setting of these programs
• The most successful cases are those where a
  promotion program finds an existing cluster
  leadership (an active business chamber, for
  example)
• In horizontal clusters (many firms in the same
  sector), the governance is based in the local
  business chamber of this sector.
• In those with multiple links (as in
  agroindustrial value chains), a great deal of
  initial efforts goes into creating a governance
  structure that represents the whole chain,
  overcoming pre-existing conflicts.
• There are different examples of public-private
  interaction in this instance, some are integrated
  only by businessmen, others involve other local
  institutions development agencies, universities,
  technical institutes or local governments

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Presentation Structure

1. Clusters Projects in LAC
2. The role of institutions supporting cluster
   development
3. Knowledge Products
4. Challenges Ahead

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Knowledge Products

• I. Publications
• IDB prepared a set of studies on these issues
  that are in different stages of preparation for
  publication in 2013-2014
• Case studies of Cluster programs in the Southern
  Cone
• Regional Innovation Systems in LAC (with OECD)
• Five case studies in each of five LAC countries
  on public-private cooperation for productive
  development policies
• Our coming Flagship publication (Developmen in
  the Americas) for 2014 will be on productive
  development policies, and will contain a couple
  of chapters dealing with clusters and value
  chains
• A book planned for 2014 that will put together
  the research and lessons learned across the IDB
  on cluster-based programs

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Knowledge Products

• II. Training
• Course on Local Economic Development (LED),
  organized by MIF and oriented to ejecuting
  agencies of small programs
• Course on skills for public-private interaction
  in subnational levels, focused on cluster
  managers, regional development agencies staff
  and practitioners of LED
• The Washington Competitiveness School
• Development of manuals and course materials
• III. Learning Communities
• The IDB promotes its creation and its use to
  share learning and lessons learned among
  practitioners.
• IV. Program Evaluation
• The Bank created a cluster evaluation toolkit to
  improve the design, monitoring and evaluation of
  cluster programs
• It presents a comprehensive vision that includes
  a more mainstream approach, with econometric
  models, System Network Analysis and case studies

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Presentation Structure

1. Clusters Projects in LAC
2. The role of institutions supporting cluster
   development
3. Knowledge products
4. Challenges Ahead

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Challenges Ahead
General Challenges of Cluster Programs in LAC

• To consolidate an incipient institutional
  structure that is highly demanding in terms of
  public management skills and the ability to
  successfully integrate conflicting interest
• The monitoring and evaluation system should make
  sure that these types of microeconomic
  interventions generate the expected results in
  the short, medium and long term.
• To support flexibility of design and management
  that allows to adapt tools in the overcrowded PDP
  landscape of LAC, distinguished by a vast
  heterogeneity
• To strengthen and consolidate a learning
  community which allow us to share the lessons
  learned among programs in the Region, and thus
  minimizing mistakes and rapidly disseminating
  best practices

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Challenges Ahead
Challenges for the execution of Cluster Programs
in LAC

• This type of programs are very complex to
  implement as they involve a great number of
  actors, and also forces the public sector to deal
  with lots of different private sector actors
• These characteristics, added to a slow maturity
  process of these programs (6-8 years), create
  huge challenges for the public sector that is
  subject to the political cycle
• The program designs must minimized execution risk
  by keeping project structure as simple as
  possible and involving civil society actors in
  order to
• Facilitate and speed up management of the program
• Provide a stability and strategic continuity for
  the program to compensate possible political
  volatility

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