In the area of National Competiveness, Porter´s best known work is around Cluster Development. Clusters, he tells us, are “geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region. Clusters arise because they increase the productivity with which companies can compete”. A jargon free explanation would be that its quite a good idea to get lots of people interested in the same thing in the one place particularity that place has natural advantages. A higher priced version of “if your country has lemons, then you
should make lemonade.” A jargon free
explanation would be that its quite a good idea to get lots of people interested in the same thing in the one place particularity that place has natural advantages.
human
The best known example of a Cluster is
undoubtedly
Silicon Valley in Northern California. The precise origins of and reasons for success of are issues under constant debate but there is no doubt that the
financial and capital physically
located there now make it a place that anyone with an ambition to do anything in technology should spend at least some time. Other examples include Hollywood for films, the Square Mile in London for finance, Antwerp in Belgium for diamonds, Paris/ Milan for High Fashion, the British Midlands for Motorsport.
The role of government in the success of each of these examples differs, but in no case did it emerge from the pen of a civil servant. Certainly the defense budget of the Pentagon was important to the initial development of Silicon Valley and the Big Bang to that of the Square Mile but the correlation with superior economic performance is, if anything, more with government staying away or not doing anything stupid than it is with a report written by a Michael Porter (or even a Tony Blair).
So why then is Porter so successful (remember the 28 entrepreneurcountry
billion dollars of consulting) and why do Presidents and Prime Ministers from Vladimir Putin (Skolkovo) to David Cameron (Olympic Park) want to recreate Silicon Valley? Well one of the reasons is redoubtably the legacy factor. Go to the Pantheon in Rome and you will be greeted with the words
M.AGRIPPA.L.F.COS. TERTIUM.FECIT (Marcus Agrippa, son of Lucius, having been consul three times, built it.). The other factor is political. Clusters have attained a feel-good factor status akin to motherhood and apple pie. If you cite the science, you are likely to be accused of being anti-job. If you ignore the science and go with the flow, you are on the news cutting a ribbon with smiles all round.
Here is the science. As Vivek Wadhwa outlined in recent Washington Post article, the formula for creating these clusters is always the same: “Pick a hot industry, build a technology park next to a research university, provide incentives for businesses to relocate, add some venture capital and then watch the magic happen”. Most
of these
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