Sunday, September 25, 2005

Where to clusters come from?

Developing industry clusters makes sense as an economic development strategy. As a cluster develops and grows, it can support larger, more specialized firms, whose productivity increases because they focus narrowly on specific activities firms in the cluster need to be successful. The cluster itself enhances the overall productivity, and thus the global competitiveness, of each firm in it.

Where do clusters come from?

Governor Sanford recently said, "South Carolina must concentrate on its core industries — retirement, tourism and ports — for the state to compete in the global marketplace."

Michael Porter studied South Carolina and found four clusters: automotive, textiles, chemicals, and tourism. The SC Council on Competitiveness, set up at Dr. Porter's recommendation, has a "cluster activation committee."

I was in a meeting this week where someone very active in economic development said that, “We can't do anything to create a cluster, we can only support those created by the market.” I think that's right.

I chaired the economy committee of Greenville Vision 2025, and was uncomfortable stating that we would have this or that cluster, without knowing who the champion was that was going to get each cluster organized.

Peter Drucker has said, "Markets are not created by God, nature, or cosmic forces, but by businessmen." Replace "Markets" with "Clusters," and he's still right.

The key to successfully developing clusters is not having a central planned committee identify and develop them. Central planning as an economic development strategy never works. The key to developing clusters is identifying and supporting the entrepreneurial champions who will work tirelessly to create them.

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