Clusters and Industrial Agglomerations Some lessons from GIFIP survey in Serbia (synthesis of a working paper) By S. Alessandro Napoli, Informest;

Policies encouraging development of SMEs: Why? Better utilization of endogenous resources Territorial stability of investments (reducing of shocks) Markets require more and more small series and customized products (scale economies have a sense only in some sectors; decline of fordistic model) Flexibility, fast adaptation to markets’ changes

SMEs If isolated: Not competitive

SMEs’ clusters encouraging policy SMEs’ networks (competition and cooperation) SMEs’ sharing of work: specialization and flexibility (adaptation to fast changes on market conditions)  Increasing of competitiveness of SMEs  Encouraging of creation of a system of local suppliers as a factor of attractiveness of FDIs

Which clusters? Competitiveness is based on the best use of local comparative advantages, actual and potential (links with “historical” know how of places; characteristics of local labor markets) Mutual trust: a key factor to increase competitiveness (consequences of proximity) A territorially based organization of production (see the Italian “Distretti Industriali” – industrial agglomerations)

Clusters in Serbia and in Vojvodina: a first evidence from GIFIP survey; different models: (1) Artificial clusters: no relations among enterprises and other members; crucial role of a promoting body; sometimes goals not clearly identified Latent clusters: already existing territorially based organization of production; no managing body, no “institutionalization” Horizontal clusters: companies and other members put together their capacities to create a critical mass (e.g. to increase capacity of penetration to foreign markets)

Clusters in Serbia and in Vojvodina: a first evidence from GIFIP survey; different models: (2) Clusters with a leading company: other SMEs are suppliers of a leading company (no independent bodies managing the cluster development) Integrated clusters: already existing significant input-output horizontal and vertical relations among members; presence of a managing body.

Missed clusters Inter-sectoral, covering the entire chain (design, production, marketing and promotion, logistics and distribution)

Main goals of a Cluster Development Policy in Serbia To encourage and boost territorially based organizations of production as alternative to scale-economy based large companies (mostly obsolete) To valorize local potential and mobilize entire society to objectives of economic development (important role to be acknowledged to local powers and institutions for socialization) To increase capacity to flexibly respond to quick change of demand, both domestic and international

A multi stage approach: phase 1: encouraging creation of structures of common interest or development of a leading company (an example based on development of a leading company)

A multi stage approach: the final model: everybody is in relation with everybody