The Characteristics Industrial Clusters need to be Successful

Submitted by Imogen Allan on 08 September 2021

The U.S. Department of Commerce’s Economic Development Administration (EDA) launched a $1 billion grant called the ‘Build Back Better Regional Challenge’ (BBBRC) which aims to transform regional economies through industrial clusters. 

Despite the fact, there are many clusters in the US and the EU, strategic planning, public and private investment and industry engagement are crucial for their success and transformation.  

To achieve this, clusters can learn from insights in Brookings’ report on Rethinking Cluster Initiatives. The report outlines five US case studies that provide valuable lessons for clusters in the EU whilst also sharing how these regions prioritised their clusters, received investment from stakeholders, designed a portfolio, and created a strategy that works. 

The five characteristics cluster initiatives need to be successful are: 

  • A robust ecosystem: initiatives need a robust ecosystem that fosters innovation, talent, and economic opportunities that businesses need to grow. This will also lead to increased employment opportunities 

  • Industry-driven but also government-funded: the strongest clusters are driven by the private sector, however, research institutions and governments must play a role and invest to support private initiatives  

  • A focus on unique opportunities: the most successful cluster initiatives are in regions with a long-term and sustainable mindset  

  • Good leadership: leaders are important because they can recognize a valuable opportunity, create a narrative, and dedicate their time to launching a tailored cluster initiative 

  • Clusters need a physical centre: while companies involved in a cluster can be spread across a region, a physical centre provides a space that facilitates knowledge transfer and interaction 

In addition to these characteristics, there are four new considerations for clusters not addressed in Brookings’ 2018 report, such as: 

  • Inclusivity of clusters and the transition to a fairer economy 

  • Addressing climate change 

  • Improving urban-rural links 

  • Emerging research that could help regions select optimal clusters such as evolutionary economic geography, smart specialization, and complexity theory. These concepts have been applied by the EU’s Smart Specialisation cluster initiative that helps regions understand how their startups can interact with digital technologies. 

Find out more about the transformation of clusters here and read the full report attached at the bottom of this page. 

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