The Power of the Cluster - A Dialogue of Practice and Theory

Author: Yao Xiangjun
Publisher:
Publish Date: 2006-06-01
Features: The concept of "cluster" has not yet formed a unified definition. "Cluster" is also known as "industrial cluster," "firm cluster," "regional cluster," "local production system," "new industrial area," and other terms, all defining the same economic phenomenon from different perspectives. The definition by Michael Porter, a professor at Harvard Business School, is: an industrial cluster is a geographical agglomeration of interconnected firms and institutions in a specific field. The upstream of a cluster includes suppliers of raw materials, components, machinery, equipment, and services, as well as suppliers of specialized infrastructure and related services. It extends downstream to sales channels and customers, and horizontally to manufacturers of complementary products and firms related in technology, skills, or shared inputs. Finally, many clusters also include government and other relevant institutions, such as universities, standard-setting organizations, think tanks, vocational training institutions, and chambers of commerce, which provide specialized training, education, information, research, and technical support. From Porter's definition of clusters, we can derive two key characteristics: industrial interconnectedness and spatial agglomeration. The unity of industrial interconnectedness and spatial agglomeration makes clusters different from internal network organizations within firms—they are externalized network organizations—and also different from general economic regions (such as an ordinary city)—where numerous firms and institutions exhibit close industrial ties. Industrial clusters have long existed and have been expanding in size and number since the Industrial Revolution. However, in the modern development of capitalism, with the concentration and monopoly of capital, the increasing scale and high modernization of production, attention has been drawn to the continuous emergence of large companies, giant companies, and multinational corporations, while the development of small and medium-sized enterprises has long been neglected. In the late 1970s and early 1980s, facing a global economic crisis, some regions showed signs of economic decline: large enterprises collapsed one after another, a large number of workers lost their jobs, and people's quality of life relatively declined. Meanwhile, industrial districts with many small and medium-sized enterprises demonstrated remarkable growth momentum, attracting worldwide attention. Foreign economists have been concerned with the phenomenon of industrial clusters since the 19th century, from the external economy theories of Marshall and Krugman to the agglomeration economy theories of Webb and Hoover, all emphasizing the advantages of industrial ties and specialized division of labor brought by geographical concentration. Porter incorporated industrial clusters into the analytical framework of competitive advantage theory, pioneering the new competitive economy theory and driving the study of industrial clusters to become a trend in contemporary world economic research. By the late 20th century, industrial clusters had become a shared hot topic in disciplines such as economic geography, economics, management, and sociology, and had attracted great interest from decision-making and industrial planning departments. The United Nations Industrial Development Organization (UNIDO) and the Organization for Economic Cooperation and Development (OECD) have vigorously promoted and popularized cluster strategies. The reason industrial clusters have attracted such high global attention lies in their strong vitality and competitiveness. In the United States, there are approximately 380 industrial clusters, employing 57% of the labor force and creating 61% of the national output. Among them, Silicon Valley in California is home to tens of thousands of high-tech firms, accounting for 40% of the nation's sales. In Italy, over 70% of manufacturing, more than 30% of employment, and over 40% of exports are achieved through industrial clusters, with the northeastern and central regions ("Third Italy") being typical. The textile, home goods, jewelry, food, and metal fiber clusters in these areas constitute an important national competitive advantage. India has about 350 industrial clusters, with export products accounting for 60% of the nation's total, among which the IT industry in Bangalore alone accounts for 25% of exports. Other regions with outstanding performance in industrial clusters include Baden-Württemberg in Germany, Oenaksel in France, Jutland in Denmark, Sm?land in Sweden, and Barcelona in Spain. The immense power of industrial clusters has also been fully demonstrated in China. In regions with a favorable economic environment, industrial clusters often thrive, and their regional economies often show strong growth potential. Cluster economy has become one of the most dynamic economic forces in China. P8-9