Industrial clusters and competence building in the globalizing learning economy Presentation at Technical University of Lisboa October 2003 Bengt-Åke Lundvall Aalborg University, Denmark

Structure of my lecture Four questions: What is an industrial cluster? Why do clusters emerge? Do clusters promote growth and competitiveness? Can clusters be created and promoted by industrial policy? General conclusion: Clusters are important when designing policy but we need to see them in the broader context of the national system of innovation.

What is a cluster? –Several formally independent firms and organisations that do similar things or contribute to the production of similar products and that are located together. –’Located together’ will in the first part of my lecture refer to a region - at the end I will discuss nation-wide clusters. –Raises two questions: Why do different firms doing similar things locate close to each Why do they remain separate firms – why not integrate into one single firm

Why do clusters emerge The key response is that specialized competence is local because: Competence is built over time through interactive learning requiring proximity. There are increasing returns in the production and use of knowledge. Gives advantage to first mover regions. Some of the knowledge that matters for the economy is tacit. It is embodied in people, organizations and networks. And: The firms do not integrate into one firm because their competence building would suffer from too little diversity.

Do clusters promote growth and competitiveness? Clusters do promote economic growth because the interactive learning they promote gives strength in competence-based international competition. Clusters speed up the learning along a trajectory but might get into troubles when confronted with a shift in trajectory. Therefore a need to combine close internal interaction with openness to the outside world.

Can clusters be created and/or promoted by industrial policy? Key support refers to competence building –Technological infrastructure including science parks –Learning to learn in education –Mixing formal education with practise –Labour market institutions supporting upgrading of skills –Promotion of learning organisation in firms + benchmarking –Creating more space for local managers to take decentral decisions also in multinational firms

Two dilemmas Infant industry argument is relevant but protection must not lead to ’featherbedding’ and creation of monopoly – cf Japanese ’controlled competition’ Integrating universities in the innovation system is relevant but must not lead to complete loss of autonomy (should produce ’unforeseen new knowledge’ and function as ’central banks for reliable knowledge’)

Renewal of clusters Collaboration with industry: Surveillance of the cluster dynamics to foresee crises Surveillance of markets and technologies Organising cluster participants in regional society – cf. Norcom.

The limits of the cluster perspective Not all important interactions and relationships are at the regional level –network analysis shows that most innovation collaboration takes place nationally rather than regionally or internationally. A conservative bias in the cluster approach – it is easier to see and support existing clusters than to find and build new ones. Therefore it is useful to combine the cluster perspective with analysis of the national system of innovation.

Analysing the national system of innovation Analyze at the national level : Specialization in trade and production – locate clusters in the economy. Institutions, Human resources, Technological infrastructure. How firms organize competence building internally and in external interaction. Define strengths and weaknesses of the NSI – and threats and opportunities. Develop policy strategy in dialogue between scholars, industrialists and policy makers.

Concluding remarks Combining cluster analysis with analysis of the national system of innovation is useful: On this basis new emerging clusters may be found and established - for instance by establishing missing links or by combining competences that so far have been separated or underutilized. Cluster analysis (moving along the road-view) and analysis of the national system (helicopter-view) need to complement each other in order to avoid that policy and firm strategies become too ’path-dependent’.