Cluster-based local economic development in the context of smart specialisation
Last year the Basque Country celebrated the 25th anniversary of the Basque cluster policy. According to Michael Porter, it was the first region in the world in applying massively the cluster concept. Today, the cluster approach is acknowledged as the most fluent one in modern industrial policy worldwide, and the arrival of smart specialisation to the European Union has even emphasized this influence.
Thus, since RIS3 (Research and Innovation Strategies for Smart Specialisation) is largely about sector prioritization, cluster policies are at the very heart of the smart specialisation paradigm. Consequently, both the smart specialisation concept and the RIS3 method have worked as a booster for cluster-based industrial policies, notably in those contexts where the cluster approach was still barely assumed – we mean where cluster is little more than a buzzword and lacks of a sound work approach behind.
Hence, cities (local/metropolitan authorities and their subsidiaries working on innovation and business-led economic developments) should also take advantage of this to enhance their role in cluster development. At this point, it is worth noticing RIS3 is here to overcome fragmentation and provide single alignment within the regions (or/and member states) with regard to sector development. Therefore, getting relevant city-to-region articulation is a must-do, especially in those cities and metropolitan areas with a significant background in cluster development.
For instance, that is the case of Frankfurt, where the cluster approach is so dominant that the own organizational chart of Frankfurt Economic Development GmbH, the local development agency, mirrors the city´s cluster segmentation. Bordeaux, in France, is other city case with a background in cluster development, which nonetheless should be best connected to cluster policy at regional level, especially right now when Nouvelle-Aquitaine is born as a merger of Aquitaine, Limousin and Poitou-Charentes. A region as large as Austria.
In fact, vertical multi-level governance is absolutely a key issue to all implementation frameworks concerning modern industrial policy and business-led economic development. That is why matching between RIS3 priorities at regional level (often mega-clusters and wide-scope knowledge domains) and the cluster dynamics that are running at city/metropolitan level is an exercise that should be done sooner or later. The question is, How to do it? What method to address such a matchmaking exercise?
Emerging clusters with a special link to the urban space.
Nonetheless, due to the fact that agglomeration economies (which are at the basis of clustering, at least at early stages) work particularly at local and metropolitan levels, cluster-based local economic development is mainstream. Today, most of the main innovative cities have adopted a more or less accurate cluster-based segmentation of themselves as urban economies. For instance, in Bordeaux, like in all France, business-led economic development is largely influenced by the cluster approach. Bordeaux is currently working with a range of clusters that are categorized into three groups: world-class clusters or pôles de compétitivité (aerospace and laser & photonics), clusters of national scale (health and financial & advanced services) and other sectors of excellence like wine, chemistry, boating-sailing and tourism.
Cluster-based readings of the urban/metropolitan economy often have a revitalizing effect by themselves. They are a precious opportunity to unveil new emerging activities or simply highlight those activities with a special link to the city. We mean, for instance, activities with a special impact on central urban spaces, from the creative economy to advanced tertiary.
Regarding the latter, according to a European Cluster Observatory´s report, regions and cities with a strong KIBS sector (Knowledge Intensive Business Services) exhibit higher prosperity and it affects positively innovation performance. It is a cluster with a strong “urban character” and some cities perform better than others. The emerging FinTech scene (which in Frankfurt is very active and fuelled by several cluster-type networks) is part of it. KIBS is one of the six priority clusters in Bilbao, and Bordeaux is making a big bet for its advanced tertiary sector (70,000 jobs, 200 head offices and the 4th services and financial marketplace in France with a specialisation in trading and risk) that includes a new central business district as part of Bordeaux Euratlantique, which is the largest urban regeneration project now in France.
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