Opinion
- Editorial- Commentary
Mary
King: Economic
clusters
Though
it has long been recognised that increasing productivity
of individual firms could improve
or maintain their competitiveness, Michael Porter
in his work, "The Competitive Advantage of
Nations'' demonstrated the importance of industry
clusters in global competition and hence should
be included in the model of our businesses in the
reconstruction of our on- and off-shore sectors.
Pt Lisas may contain a set of energy based industries
but it is not an energy cluster. Classic examples
are of course Silicon Valley, Atlanta, Shannon,
Scotland and Singapore.
Clusters are defined as a geographic concentration
of competitive firms in related industries that
do business with each other, selling primarily
outside the region as well as support firms that
supply raw materials, components and business services.
These groups of companies that compete or interact
with each other are more important to the well
being of a country than any single isolated FDI
firm (or firms) no matter how strong or influential
they are.
But clusters will not form unless some basic economic
foundations exist - physical infrastructure (transportation,
telecommunications), human and financial capital,
education, development and research and training
systems. However, a successful cluster includes
also a concentration of public and private sector
organisations that are stakeholders in the local
economic development. Clusters may be found occurring
already in an economy and subsequently developed.
Hence one approach is for a public-private sector
organisation to set about identifying the nascent
clusters that already exist, attempt to strengthen
the foundations that support them and continue
to develop them where possible.
Structured clusters can be created using the Innovation
Diamond already discussed. For example, one strong
business in a region as happened with Hewlett Packard
can create a whole economy around itself with many
spin-offs. This is why Point Lisas with strong
chemical processing companies is not a cluster
since they have not created a spin-off economy
of interacting and exporting companies. Also, a
research centre can spawn a cluster that uses the
results of the centre. The role that MIT has played
in the Boston area is widely acclaimed.
A previous series of articles talked about the
need to have a government-powered organisation
of stakeholders to drive the experimentally organised
economy, the Innovation Diamond. The task before
this organisation is twofold - to identify any
nascent clusters that can be mainly export-oriented
and to create structured clusters either via industry
development and research centres (centres of excellence)
or world class stand alone companies in the country.
Any
nascent clusters in T&T will include,
tourism and hospitality industry, distribution,
financial services and indigenous culture production.
Though we have recently appointed a committee to
report on making us into a financial centre we
need to create a stakeholder organisation to define
all the relevant measures needed and examine in
depth the issues effecting their growth. For example
it is impossible to have a competitive tourism
industry (possibly regional) without reliable electricity,
transportation, reliable water supply and in these
days reasonably priced and available broadband
telecommunications.
I
received a comment from a reader in Canada that
indeed T&T's tourism industry could be made
extremely competitive since we have an indigenous
product that is difficult to match (natural advantage).
The problem however is our ability to present this
product effectively to the many who would want
to visit. This reader pointed to the need for innovative
marketing and advertising.
Another short term opportunity for cluster formation
is the present energy sector in which a cluster
can be built around the utilisation of natural
gas, not as LNG but taking some of the basic products
into higher added value downstream. The cluster
spin offs have to be owned by us (William Demas)
whereas the Government is focusing on attracting
new FDI in downstream gas. With Peak Oil these
natural resources will be scarce and expensive
hence we need to benefit handsomely from manufacturing/processing
at home and exporting as much added value products
as we can, if only to maintain our financial equilibrium.
Energy is not a final product and as an input
to many of the products we import we can expect
increasingly high import prices. We have already
begun to see this in food prices. UTT's Gas Institute
can be the nucleus of such a cluster if it is properly
managed and directed. The long term clusters, e.g.
Telecoms and ICT, have to be structured and be
the results of the EOE and the Innovation Diamond
that have been the subject of many of these articles.
The basis of these clusters is the provision of
fourth level university graduates. We should be
wary of the present inclination to focus on basic
education to the detriment of producing these creators
and entrepreneurs.
Mary
King is
an article writer in one of the leading newsdaily
in Trinidad & Tobago ( maryking@tstt.net.tt
). Petroleumworld not necessarily share these
views.
Editor's
Note: This article was first publish in Trinidad
Express, Monday, July 16th 2007. Petroleumworld
reprint this article in the interest of our readers.
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Petroleumworld
07/22/07
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