O E OECD Reviews of Regional Innovation C OECD Reviews of Regional Innovation D R Competitive Regional Clusters e Competitive v ie NATIONAL POLICY APPROACHES w s o Regional Clusters In today’s globalising world, many nations and regions are struggling to maintain their f R competitive edge. The regional specialisations built up over decades are transforming e g rapidly. Many regions that were historically production centres in a given sector are io NATIONAL POLICY APPROACHES losing out to lower-cost locations and reorienting to higher value-added niches. Yet even n a some of these upstream activities are being offshored. How durable are the competitive l In strengths on which regional economies are based? n o v National programmes to promote cluster-based approaches − linking fi rms, people a t and knowledge at a regional level − are being used to meet the challenge. Evolutions io n in regional policy, science and technology policy and industrial/enterprise policy are converging on the objective of supporting clusters at the regional level. Nevertheless, policy makers face a series of diffi cult choices given limited resources. For example, they may focus on the leading regions and sectors that drive national economic growth and technological breakthroughs or the lagging regions that need to reorient their economies to preserve jobs and diversify. This report analyses the objectives, targeting, instruments and inter-governmental role sharing used by 26 programmes in 14 OECD countries. It will be of interest to policy makers, researchers, fi rms and others active in promoting innovation and competitiveness. C o m p e t it iv e R e g io n a The full text of this book is available on line via these links: l C www.sourceoecd.org/regionaldevelopment/9789264031821 lu s www.sourceoecd.org/industrytrade/9789264031821 te r Those with access to all OECD books on line should use this link: s www.sourceoecd.org/9789264031821 SourceOECD is the OECD’s online library of books, periodicals and statistical databases. For more information about this award-winning service and free trials, ask your librarian, or write to us at [email protected]. ISBN 978-92-64-03182-1 -:HSTCQE=UXV]WV: 04 2007 06 1 P www.oecd.org/publishing OECD Reviews of Regional Innovation Competitive Regional Clusters NATIONAL POLICY APPROACHES ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. Also available in French under the title: Examens de l’OCDE sur l’innovation régionale Vers des pôles d’activités dynamiques POLITIQUES NATIONALES © OECD 2007 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to OECD Publishing [email protected] or by fax 33145249930. Permission to photocopy a portion of this work should be addressed to the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, fax 33146346719, [email protected] or (for US only) to Copyright Clearance Center (CCC), 222 Rosewood Drive Danvers, MA 01923, USA, fax 19786468600, [email protected]. FOREWORD Foreword N ations and regions are struggling to remain competitive and adapt in the context of globalisation. The regional specialisations built up over decades are transforming rapidly. Many regions that were historically production centres are losing out to lower-cost locations and are reorienting their activities to higher value-added non- manufacturing industries or R&D-intensive manufacturing niches. Yet, given that even some of these upstream activities have begun to be off-shored to lower-cost OECD and non-OECD countries, the question for policy is how durable are the competitive strengths on which regional economies are based. The public sector response has been an increased attention to the importance of linking firms, people and knowledge at a regional level as a way of making regions more innovative and competitive. This new approach is visible across a number of different policy fields. Evolutions in regional policy, science and technology policy and industrial/enterprise policy are converging on the objective of supporting clusters at the regional level. Why are cluster-based policies popular, again? The report does not seek to engage in a debate about the definition of clusters or related concepts. Furthermore, there are still many unanswered questions regarding the effectiveness of policies to promote clusters in such a diverse range of regions and sectors. Many of the latest programmes do not even use the word cluster but they still share many of the same broad goals. Therefore, the purpose of this report is to identify trends and best practices in cluster- based approaches with respect to programme objectives, targeting, instruments and inter-governmental role sharing. This report is part of the work by the OECD Territorial Development Policy Committee on competitive and innovative regions. Upcoming publications include a companion volume to this publication focused on regional-level strategies in conjunction with Nutek, the Swedish Agency for Economic and Regional Growth, as well as a series of Regional Innovation Reviews. OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007 3 ACKNOWLEDGEMENTS Acknowledgements. This publication was co-ordinated and drafted by Karen Maguire and Andrew Davies of the OECD Secretariat under the supervision of Mario Pezzini, Head of the Regional Competitiveness and Governance Division. Anna Rimmerfeldt of Nutek provided valuable comments. The authors would like to thank the participating countries for their assistance in developing the case studies as well as Nutek, the Swedish Agency for Economic and Regional Growth, for its support of this project. Suzanna Grant and Erin Byrne prepared this report for publication. 4 OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007 TABLE OF CONTENTS Table of Contents Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Part I Synthesis Report Chapter 1. Why Are Cluster Policies Popular, Again?. . . . . . . . . . . . . . . . . 23 Introduction and key points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Clusters and related concepts: moving beyond definitions. . . . . . . . . 25 Theoretical cluster benefits and risks. . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Globalisation and the nature of clusters. . . . . . . . . . . . . . . . . . . . . . . . . 34 From theory to policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Chapter 2. Where Do the Programmes Originate? . . . . . . . . . . . . . . . . . . . 39 Introduction and key points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Regional policy: capitalising on local assets. . . . . . . . . . . . . . . . . . . . . . 41 S&T/innovation policy: from research to economic growth . . . . . . . . 46 Industrial and enterprise policy: supporting groups not firms. . . . . . 52 Linking objectives across policy streams . . . . . . . . . . . . . . . . . . . . . . . . 60 Changing objectives over time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Chapter 3. How Do Programmes Pick Participants? . . . . . . . . . . . . . . . . . . 71 Introduction and key points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Policy targets: what is the real problem? . . . . . . . . . . . . . . . . . . . . . . . . 75 Identification methods: analytic and strategic choices . . . . . . . . . . . . 78 Selection mechanisms: matching programme goals with targets . . . 81 Chapter 4. What Instruments Do They Use and How? . . . . . . . . . . . . . . . 87 Introduction and key points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Categories of instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Programme duration and funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Linking across programmes, instruments and clusters. . . . . . . . . . . . 104 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007 5 TABLE OF CONTENTS Chapter 5. Who Does What? Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Introduction and key points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Central level governance: co-ordinating at the top. . . . . . . . . . . . . . . . 114 National/regional articulation: managing the relationship. . . . . . . . . 117 Missed opportunities: common examples . . . . . . . . . . . . . . . . . . . . . . . 122 Private sector participation: cultivating long-term engagement . . . . 123 Chapter 6. What Have We Learned? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Introduction and key points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 What are we evaluating?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Lessons learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Future research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Part II Case Studies Chapter 7. Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 Chapter 8. Czech Republic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Chapter 9. Finland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Chapter 10. France. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Chapter 11. Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 Chapter 12. Italy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Chapter 13. Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 Chapter 14. Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Chapter 15. Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 Chapter 16. Norway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 Chapter 17. Spain: The Basque Country. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Chapter 18. Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 Chapter 19. United Kingdom. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 Chapter 20. United States: Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 Chapter 21. United States: Oregon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339 List of boxes 1.1. Related terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 2.1. IDB and UNIDO: cluster and value chain support . . . . . . . . . . . . . 57 6 OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007 TABLE OF CONTENTS 2.2. EU policies supporting clusters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 2.3. Denmark’s cluster policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 3.1. Quantifying clusters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 3.2. Cluster audit in Montreal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 4.1. Denmark’s Network programme: brokers and scouts. . . . . . . . . . 95 5.1. Australia’s Regional Partnership programme . . . . . . . . . . . . . . . . . 120 6.1. Web-based cluster evaluation surveys. . . . . . . . . . . . . . . . . . . . . . . 128 8.1. CzechInvest: combining business development withFDI attraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 13.1. Technology Advanced Metropolitan Area (TAMA): Japan . . . . . . . 227 15.1. Point One: nanoeletronics and embedded systems (Netherlands). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 18.1. BioFuel region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 List of tables 0.1. Programmes of case study countries. . . . . . . . . . . . . . . . . . . . . . . . 18 1.1. Characteristics of science-based and traditional clusters. . . . . . . 28 1.2. Cluster dimensions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 1.3. The economic weight of clusters: selected countries . . . . . . . . . . 30 1.4. Theoretical benefits of clusters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2.1. Policy trends supporting clusters and regional innovation systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.2. Targeted sectors: Sweden, France, Italy and Canada. . . . . . . . . . . 48 2.3. Characteristics of BioRegio winning regions (initial round) . . . . . 49 2.4. Targeted sectors: Spain (Basque Country), US (Oregon) and Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 2.5. Priority clusters identified by UK Regional Development Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 2.6. Selected EU programmes supporting clusters andregionalspecialisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 3.1. Targets and selection mechanisms of case study countries. . . . . 73 3.2. Rationale for different selection mechanisms . . . . . . . . . . . . . . . . 82 4.1. Instruments and budgets of case study countries . . . . . . . . . . . . 89 4.2. Instruments promoting regional specialisation and clusters. . . . 92 4.3. Japanese Industrial Cluster programme typology . . . . . . . . . . . . . 101 4.4. Complementarity of Japanese and Swedish cluster programmes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 5.1. Considerations for level of cluster policy intervention . . . . . . . . . 111 5.2. Governance considerations for case study countries . . . . . . . . . . 112 5.3. Cluster-informed policy options. . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 7.1. Funding for NRC cluster initiatives: Central and Western initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007 7 TABLE OF CONTENTS 7.2. Funding for NRC cluster initiatives: Atlantic initiatives . . . . . . . . 151 8.1. Eight Czech statistical clusters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 9.1. Objectives of the Finnish Centres of Expertise programme . . . . . 174 9.2. National Cluster programme targets: Finland . . . . . . . . . . . . . . . . 175 11.1. Budgets of cluster-based programmes in Germany. . . . . . . . . . . . 205 11.2. Characteristics of winning regions for BioRegio. . . . . . . . . . . . . . . 207 11.3. Instruments of the BioRegio programme . . . . . . . . . . . . . . . . . . . . 209 12.1. Budgets for Italian Technological Districts . . . . . . . . . . . . . . . . . . . 220 12.2. Criteria for Italian industrial districts . . . . . . . . . . . . . . . . . . . . . . . 221 13.1. Industrial Cluster programming stages: Japan. . . . . . . . . . . . . . . . 232 13.2. Region types served by Japan’s Industrial Cluster programme . . 234 13.3. Instruments in Japan’s Industrial Cluster programme . . . . . . . . . 236 14.1. Planning phases for Korea’s Plan forBalancedNational Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 14.2. Targeted areas in Korea’s2010 Industrial Vision . . . . . . . . . . . . . . 246 14.3. Multi-year budget for Korea’s Innovative Cluster Cities . . . . . . . . 248 14.4. Budget breakout2005, Korea’s Innovative Cluster Cities . . . . . . . 248 14.5. Cluster focus by city: Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 14.6. Innovative Cluster City participants. . . . . . . . . . . . . . . . . . . . . . . . . 250 14.A1.1. Projects for Innovative Cluster Cities. . . . . . . . . . . . . . . . . . . . . . . . 253 15.1. Netherlands: funding for region-specific economic policy. . . . . . 261 17.A1.1. Cluster associations in Spain (Basque Country). . . . . . . . . . . . . . . 292 18.1. Spending on business policy and related economic development: Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302 18.2. VINNVÄXT clusters: Sweden. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 19.1. Funding sources of UK Regional Development Agencies . . . . . . . 315 19.2. Budgets for UK Regional Development Agencies. . . . . . . . . . . . . . 318 20.A1.1. Georgia Research Alliance centres . . . . . . . . . . . . . . . . . . . . . . . . . . 337 21.1. Oregon key industries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 List of figures 1.1. Manufacturing employment by key activity: G7countries, 1970-2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 2.1. Finland’s Centres of Expertise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2.2. Intersection of policy streams. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 3.1. Types of policy targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 4.1. Cluster initiative objectives from GCIS . . . . . . . . . . . . . . . . . . . . . . 97 4.2. Complementarity of Norwegian cluster programmes. . . . . . . . . . 106 7.1. Organisational chart: Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 7.2. NRC cluster programme goals by development phase . . . . . . . . . 153 8.1. Organisational chart: Czech Republic . . . . . . . . . . . . . . . . . . . . . . . 158 8.A1.1. Map of Czech clusters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 8 OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007