GROUP WORK OF IBD,ACADEMIC YEAR OF 2013/2014

Professor : Alessandro Arrighetti

Students :

Junior Prophete Nemours

Dorcas Makamte

Enterprise clusters in developing

countries

The clusters concept has been defined in multiple ways by researchers and therefore they also tend to come up

with different selection of characteristics according to the premise that you find, what you are looking for. So clustering

of enterprises is commonly held to mean that enterprises are physically

close to each other and that this proximity creates opportunities for

collaboration.

Approximatively we can say that clusters are relatively dense networks of enterprises and organizations, the value chains of which are connected but not necessarily through what we usually understand by economic transactions.

It is necessary to distinguish more systematically between the different cluster type that can be found in the developing country otherwise confusion will prevail. So in our work we will present and explicate a typology of clusters, derived from studies conducted in some country. Particularly we will talk about:

Local market cluster

Local network clusters

Innovative clusters

Industrial districts

Location clusters

Then we will pose the question of how cluster formation can be facilitated and enterprise growth and development within clusters particularly will talk about: Mechanism of regression to lower or

earlier stages Mechanism of development to higher

or later stages Mechanism of growth Retaining the main character of the

cluster

So in our work we will discuss about clusters of small and medium sized enterprises in the south and their performance locating ourselves within the developing discourse.

At the beginning of all initiative we have a Key word to apply “ Trust”, it’s difficult define in a scientific way. In spite of the profusion of material emerging in the subject Trust still remains an elusive notion, it can be described as a positive attitude. Towards somebody else, based on past experience the point that will be made is that Trust is very important in all the Clusters . What is the basis for Trust and how can trust be built? Going back in 1972 to Sahlins theories of exchanges, economic relations may be placed at various points in a context of reciprocities usually not regarded as economic at all but applying to different kinds of relationships as Contracts, informal Cooperation and Competition

LET’S ANALYSE THE TYPE OF CLUSTER

LOCATION CLUSTERS

Observationally indicated by the proximity of Firms in which the mains observable benefit is the easy exchange of information that flows from one to other. In this case we mention the importance of two way of interaction between the milieu and entrepreneurial strategies. Entrepreneurs may well benefit from spills of collective information, Knowledge and Know-how but can also enrich the Local milieu with new experiences.

LOCAL MARKET CLUSTER

The main benefit and the reason to establish oneself in the cluster is easy access by customers,they will arrive because they can find many similar wares on offer be able to compare them and so on .Suppliers will locate themselves nearby because they are assured of outlets. A good example iof is the “ Timber Market Accra in Ghana where a variety of activities are found but similar activities tend to be located close to each other cause malfunction and the missing of competence from part of whether management group or lack of workers training.This is the Dilemma of some many developing countries. In the south,merchants and others large-scale buyers are in particular likely to seek out a cluster rather than scattered individual firms, given the alternative.

LOCAL NETWORK CLUSTER

They are characterized by at least a rudimentary division of labour among entreprises .The main benefits here are those associated with specialization with Firms focusing on one or a few activities within a larger production chain.

INNOVATIVE CLUSTER

They produce locally developed novelties which are based on the application of known techniques able to feed competence and make available materials .Briefly, the innovation cluster can be seen as the first step to industrialization, is commonly linked to evolution of the opportunity structure that could give in long run an increase in dimension and so.

INDUSTRIAL DISTRICTS

In which enterprises with similar products have developed strong relation which facilitate innovation and contribute to higher efficiency. In addition to all the things already mentioned, in industrial districts, cooperation is increasingly formalized, focused on competence and physical infrastructure, joint marketing efforts,quality control schemes and other similar tasks for example,traders and other marketing Agents with inclusion of the effective local Government to give a push towards the goal set

Mechanisms of Clusters development

Recapitulating, five types of Clusters were presented in these previous paragraphs. The first was predicated on informations sharing and proximity, the second was based on the facilitation of transactions and reduction of transaction cost or time expenditure ,the third type embodied the initial stages of specialization ,the fourth introduced local innovation and the fifth type is characterized by the evolution of institutional structure supporting cooperation, innovation and marketing .

Anyway growth and decline are highly dependent on external circumstances .Thus, for example migration can swell the ranks of craftsmen and local traders in a cluster and create a market for their products as well. Import liberalization and competition from producers in others countries can lead to lower growth and even contraction of production volume as well as a movement from production to trade

Difficulties in export production can create opportunities for local producers due to the consequent lack of foreign exchange but it can also create severe problems for producers who are dependent on imported inputs but generally, small enterprise cluster in developing countries adjust quite flexibly to such events .As a result, output in particular clusters fluctuates as well as the numbers of enterprises, the numbers of persons they employ and the incomes of their proprietors. During difficult time a variety of survival strategies are employed and during good time improvement growth can be readily observed.

However, Ceteris Paribus the division of labor among firms is likely to generate more benefits and growth to the extent that it spreads to the entire cluster. Further, the cluster customer base which amounts to the same at a given level of labor productivity, the more room for specialization . Empirically observed small enterprise, clusters tend to vary considerably in this regard. Thus, for example ,Knorringa (1995) observed a large shoe-making cluster in Agra with very developed specialization which had however got stuck in producing for local market

In order to break with a bad previous experience towards a generalized industrial change, innovation and product development ,yet more advanced mechanisms need to be in place ,so number of experiments have been conducted in developing countries in the creations of formalized associations, export promotion units both private and public and other generally accessible for a Cooperative ventures.

Hence, the formalization of information processing capabilities and new way for exchanging product information , diffuse technical specifications and planning to provide education are important characteristics of industrial districts proper . Responsive and negotiable subcontracting arrangements and collective and accessible information processing facilities distinguish fully-fledged industrial districts from other types of clusters. Thus, we believe that lasting advances would be facilitated among cluster experts, entrepreneurs that they study or assist by the realization, that some lessons can wait to be learned.

Conclusion

In this conclusion section we discuss about two topics that have attracted attention and sometimes led to debates among researchers and policymakers in this area. The first is whether cluster development should be preferred to vertical integration. The second is which general policy criteria should be applied to the variety of support measures proposed over the years and intended to facilitate cluster expansion and upgrading.

CLUSTER DEVELOPMENT OR VERTICAL INTEGRATION?

Cluster based development is a possibility rather than an option in many cases because it call for complex co-operation among enterprise whereas , vertical integration strategies can be initiated by a single enterprise. So clusters developing path can coexist with vertical integration paths , and developing clusters can give rise to vertical integration within them just as vertical integrated industries sometimes themselves bypassed by small enterprise clusters

POLICY CRITERIA AND SUPPORT MEASURES

Creating business development services tends to be a supply and donor driven process with limited impact. The development of innovative clusters calls for regular and sophisticated interaction in associations, club, at meetings arranged by different external actors. Thus the appropriate policy criteria would be how the clusters can be advanced from their current stage to the next , if they present viable alternatives to vertically integrated production chains at all.

In this work we analyses the dynamics of clusters enterprise and we focus on different type of clusters. Then we argued about the mechanism of enterprise. In the conclusion we have seen the implication for development research and policy.

THANK YOU FOR YOUR

ATTENTION !