Growth, Clusters And Networks

The two key themes for economic progress in the UK for the next few years are increasing growth and reducing debt (the latter being much easier than the former). Regarding growth, this also covers developing a better balanced economy.

I was curious to investigate the current Government ideas for stimulating business growth in areas that I have previously worked in.

A structural aspect is to refocus on local development and as part of this the Regional Development Agencies have been replaced with Local Enterprise Partnerships (see picture above). In principle this should be a better approach provided it’s supported by adequate resources and some creativity.

As Local Enterprise Partnerships are based on more meaningful economic areas, they will be better placed to determine the needs of the local economy along with a greater ability to identify barriers to local economic growth.

Another aspect is fostering and developing successful clusters

Clusters are geographic concentrations of inter-connected companies, specialised suppliers, service providers, firms in related industries, and associated institutions.

In other words, thriving business ecosystems. Clusters can provide high barriers to entry as competitors, as well as having to provide an equal or better product, also have to compete with all the players in the integrated and probably highly complex support network.

By examining the existing successful clusters in the UK, some key characteristics appeared. Some factors were deemed essential whilst others desirable (my interpretation: ‘would/should’ = essential, ‘may’ = desirable):

Essential:

  • well-functioning networks and partnerships – informal and/or formal
  • engaged in innovation – no standard profile but inter-company linkages are often key
  • entrepreneurial dynamism – this seems a bit vague!
  • capacity to change and adapt – for internal or external reasons

Desirable:

  • easy access to a skilled workforce
  • strong educational base – high quality training available, universities for advanced topics etc
  • exhibit expansion – businesses joining the cluster, new startups etc
  • internationalisation – increasing exports or inward investment from overseas

It’s interesting how these factors are so variable. This means that spotting and developing near-critical clusters is not easy, at least until well after the fact. So understanding successful (and unsuccessful) cluster formation better could be an incisive step forward.

Taken at face value, it’s revealing how the role of networks, linkages and the ability to change is so crucial – maybe just considering these aspects alone might be extremely illuminating?

I’ll do a bit of research on this and give it a bit more thought…

See also Knowledge Hotspots and Visualising Innovation Clusters.

Picture credit: see second link above.

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