[Project Name] Post-Mortem

No.1
UNIDO cluster development approach:
A win-win solution for SMEs,
sustainable competitiveness and market access
Gerardo Patacconi
Chief, Clusters and Business Linkages Unit
Business, Investment and Technology Service Branch
UNIDO - Vienna - Austria
No.2
Presentation outline
 UNIDO overview
 UNIDO’s Cluster Development Programme
 Case studies
 The way forward
No.3
UNIDO

Established in 1966 – Specialized UN agency since 1985 with

Only UN organization promoting the creation of wealth and tackling
poverty alleviation through sustainable industrial development

Focus on three inter-related thematic priorities:
Poverty Reduction
through Productive
Activities
Trade CapacityBuilding
Environment
and Energy
No.4
4
UNIDO Thematic priorities and Cluster Development
Long-term
Goal
Thematic
Priorities
Programme
Components
To contribute to the achievement of the Millennium Development Goals (MDGs), in particular to
poverty eradication through sustainable industrial development.
Poverty reduction through
productive activities
Trade
capacity-building
Energy
and environment
Industrial Policy,
Business Environment and
Institutional Support
Enterprise Upgrading for
Trade Enhancement
Renewable Energy
Rural and Women’s
Entrepreneurship Development
Competitiveness Analysis and
Trade-related Policies
SME Cluster Development
Innovation Systems, Technology
Management and Foresight
Agro-processing and
Value Chain Development
Rural Energy for Productive Use
Sustainable Production in
Poor Communities
Modernization of Exportoriented Agro-industries
SME Export Consortia
Technology Diffusion
Corporate Social Responsibility
for Market Integration
Promotion of Domestic
Investment, FDI and Alliances
Standards, Metrology,
Testing and Conformity
Climate Change and
Industrial Energy Efficiency
Cleaner and
Sustainable Production
Water Management
Montreal Protocol
Stockholm Convention
No.5
UNIDO Cluster Development and Business Linkages





Focus on building national human and institutional capacity through
cluster training, development and upgrading and policy advise
 Direct Intervention at the cluster level
 Skill upgrading and development for local associations,
institutions, consultancies and policy makers
 Continuous improvement of CBL methodology
Developed and applied since mid-1990s in emerging markets and LDCs
Adaptation to local contexts (country, sector, size of enterprise etc.)
Continuous Learning process (knowledge management, monitoring
and evaluation, integration with other knowledge centres)
Knowledge Sharing of innovative cluster policy solutions (NorthSouth and South-South)
No.6
UNIDO Cluster Development and Business Linkages

Distinctive features of UNIDO CBL approach:
 Creates and improve “ Social Capital” at the local level
 Establishes a “sustainable governance framework”
within the assisted Clusters and Networks
 Adopts a principle of “ not-substitution” to public and
private sectors functions and roles
 Favours a “ catalytic approach” i.e the capacity to
leverage local funds and resources
 Can be applies to different “ groups of MSMEs” in terms
of size, development and business objective, VC/sectors,
countries
 Integrates different tools, methodologies and skills
No.7
UNIDO Cluster Development and Business Linkages
Medium
Country type
Enterprise
size
Automotive
Emerging
countries
Agri-business
Handicraft
Cultural…
LDC
Micro
Pro-poor
Competitiveness
Development Approach
No.8
UNIDO Cluster Development and Business Linkages
Donors/partners
Multilateral (AFD, IADB, EU)
Upgrading
CSR/sustainability
Supplier Dev’t
VCA
Investment
Promotion
CBL
Energy &
Environment
Technology &
Innovation
Export
consortia
Quality
Standards
compliance
Bilateral (Italy, Japan, Luxemburg,
Switzerland, Slovenia...)
 Self-funded, PPP




Global network
Practitioners
Experts
Research institutions
Universities
No.9
UNIDO Cluster Development and Business Linkages
The Development Dimension
 Inclusive growth through better collective business performance
 Pull-effect on the local economic system (LED)
 Fostering SMEs’ access to local and international markets
 Conducive business environment and spill-over effects on local business
communities…..
 Cost efficiency
 Economies of scale
 Replication benefits
 Leveraging local resources, skills and assets
 Reduction of transaction costs….
No.10
UNIDO Cluster Development and Business Linkages
The causal chain
Causal
chain
Cluster
Initiative
Joint Actions
(B2B, multistakeholders)
Cluster
Performance
Development
impact
Causality
Reduced
coordination/
transaction costs
Reduced
information
asymmetries
Collective
efficiency
Demand for Labour
Profit / Wage raise
UNIDO builds local institutions’ capacity to operate as impartial agents who promote joint actions!
No.11
UNIDO Cluster Development and Business Linkages
Sustainability through cluster policy
Cluster
Policy
 Definition and endorsement of a cluster policy (to
remedy market failures)
 Generation of institutional capacities to design and
implement development initiatives within clusters
(to remedy to coordination failures)
 Establishment of a cluster-friendly policy
environment
Institutional
Capacities
Cluster friendly
policy environment
No.12
UNIDO Cluster Development and Business Linkages
UNIDO delivery mechanisms
 Technical guidance and advice on project design,
implementation and M&E

Capacity building and training activities (training
of trainers and training for final beneficiaries:
entrepreneurs, BDS, policy makers, academia)

Pilot and roll-out

Operational tools (analysis, diagnostic,
management, audit, evaluation, KPIs..)

Building strategic business linkages for market
access

Development of methodologies, manuals, training kits

Joint learning programmes (class-room/distant
learning/on-the-job)

Action-oriented research

Business Linkages and match-making (B2B, C2C, VC)
No.13
UNIDO Cluster Development and Business Linkages
Where?
Serbia
Hungary
Croatia
Russia
China
Iran
Jordan
Morocco
Thailand
Morocco
Tunisia
Pakistan
El Salvador
Egypt
Honduras Senegal
Nicaragua
Nicaragua
IVC
Ethiopia India
Colombia
Nigeria
Bolivia
Colombia
Tanzania
Peru
Ecuador
Ecuador
Uruguay
South Africa Zimbabwe
Mexico
Cluster Development
Cluster Development
Export Consortia Promotion
CSR – Focus
CSR – Focus
Jamaica
Indonesia
Ongoing
Completed
Ongoing
Pipeline
No.14
Case studies
No.15
India: Institutional capacity building
No.16
India: Institutional capacity building
India – now
India – project
(mid 1990s)



Cluster mapping and pilot
interventions (3 clusters)
Budget of US$ 2M
Team of 4 brokers
 Support to 1350 clusters, investing
US$ 179.5 million (90% by the Central
Government)
 18 Indian public institutions actively
engaged in cluster development
 “Empowered Group of Ministers” to
lay down an all-India policy on cluster
development
 Hundreds of brokers trained on
UNIDO methodology
 MSME Cluster Foundation
No.17
India: Cluster policy in India’s Orissa state
Learning from
experience
•Direct assistance to 4
selected clusters
through UNIDO brokers
•Clusters programme
used as training ground
for policy makers and
brokers
•Lessons learned codified
and disseminated
Policy
formulation
• Advisory support
for policy
reform/design
•Harmonization of
sectoral policies to
include CD principles
Institutional
capacity building
•Indirect support to
clusters: training of
CDAs appointed by
local institutions
•Training curricula on
CD for policy makers
and brokers in a leading
business school
Networking of institutional actors
Today
•Govt. of Orissa has adopted an overall MSME policy integrating CD principles
•Assistance was extended to hundreds of clusters in Orissa State
No.18
Morocco: National ownership and public-private partnership
Morocco – now
• 20 export consortia have been established and 13
Morocco – project
beginning
•No support scheme for
export consortia
•Budget of approx.
US$ 880,000 (since 2004)
•Team of 2 promoters
are under development
• Moroccan export consortia federation grouping
20 consortia has been established
• Set-up of an export consortia financial support
scheme by the Ministry of Foreign Trade (publicprivate partnership: fund managed by Moroccan
Exporters Association)
• The Moroccan Centre of Export Promotion and the
Moroccan Export Insurance Company offer export
consortia special treatment.
• Moroccan Garment Association established an
export consortia promotion unit
No.19
Ethiopia: Integrated value chain approach
•
•
A Joint Partnership for Development funded by the MDG-F and implemented by UNIDO
(lead agency) with ILO and FAO
Cluster development as an integrator to enhance the effectiveness of private sector
development assistance
ILO
• Formation and
capacity building of
business associations
• Health and safety
Labour standards
UNIDO
• Cluster development and
business networking
• Partnership with universities
• BDS development
• Technology transfer and
upgrading of existing
processing facilities
FAO
• Improved seed and
fertilizer supply to
farmers and farmercooperatives
• Farmers cooperatives
Quality standards
• Product safety
No.20
Viet Nam
Cluster & enterprise twinning (C2C)
No.21
Viet Nam: Cluster & enterprise twinning (C2C)
UNIDO
Govt. of
Italy DGCS
Promotion of
business
partnerships (B2B
C2C)
•
•
•
Cooperation agreement to
support SME development in
Viet Nam
Cluster
Development and
upgrading
Govt. of Viet
Nam
ASMED/MPI
Technical
assistance and
training
Upgrading and improving competitiveness of Vietnamese SME clusters/enterprise
networks (local and export
Twinning with Italian SME clusters/enterprise networks and industry associations
Business partnerships between Vietnamese and Italian enterprises
No.22
Viet Nam: Cluster & enterprise twinning (C2C)
Cooperation agreement
Viet Nam Cluster:
• LOWER PRODUCTION COSTS
• FREE TRADE ACCESS TO HUGE
ASIAN MARKETS
Dissemination of the
Industrial District
Model in Viet Nam
Promotion and
support to
business
agreements
Italian Cluster:
• DESIGN
• QUALITY
• MARKETING
• KNOW HOW
Transfer of Italian
manufacturing
expertise
No.23
The way forward
 Focus on sustainable/green cluster initiatives
 Development of cross-border cluster assistance frameworks
 Strengthening of North-South and South-South cooperation efforts
 Increased emphasis on backward and forward linkages within the
Value Chains
 Cluster development and retail industry
 Monitoring and Evaluation
No.24
LET’S WORK TOGETHER!
No.25
Thank you!
No.26
For more information, please contact:
Gerardo Patacconi/Adnan Seric
Clusters and Business Linkages Unit
Business, Investment and Technology Services Branch
Email: g.patacconi@unido.org ; a.seric@unido.org
No.27