Cluster Based Development

Approach Facilitating Local

Economic Development
Presentation by:
Sanjay Pal
Faculty
Entrepreneurship Development Institute of India
Ahmedabad, India
Globalisation Performance of Local
Economy/ Cluster Under Performing Local
•Competition
Economy/ Cluster
•New Tech. •Enterprising
•Relevance of LED &
•New Market •Access to tech., market CBDA
•Closure of incompetent •Better R&D
firms •Better Infrastructure
Objective and Contents

Objective: Contents:

„ Enumerate the impact „ What is CBDA?

of CBDA on Local
Economic „ Need
Development.
„ Co-opetition
phenomena

„ How CBDA works

„ Impact on LED
 What is CBDA?
™ Working with a group of enterprises located in a particular
geographical area and manufacturing similar products to ensure
their holistic development with competitiveness & sustainability.
It
™ Improves efficiency of enterprises and make them globally
competitive
™ Boosts local economy through development of sustainable
products, markets, technology.
™ Improves skills of the local people through training and orientation.
™ Creates decent employment opportunities and eradication of
poverty at the local level
™ Focuses on job quality & fair practices
™ Establishes networking with the support institutions and other
stakeholders
™ Builds capacity of the cluster actors and ensure social capital
development
™ Develops infrastructure through PPP mode.
 DA
S
CBDA in Practice
ƒ Quality upgradation & productivity improvement
CB RK ƒ Improving firm competitiveness
O or ƒ Employment creation and job facilitation
W f ƒ
ƒ
Technology upgradation, marketing & export facilitation
Networking and capacity building of the local institutions
ƒ Creation of physical & financial infra-structure
ƒ Social capital development

Backward Private & Public BDS Forward

Linkages Linkages

Tier 1
Suppliers & Marketing
Raw Materials Agents
Tier 2

Inputs Tier 3 Wholesaler

/ Retailer
Machinery
Support Institutes Exporters
Results:
Development of Cluster & Local Economy Improved global competitiveness of SMEs

Employment generation, poverty alleviation Creation of hard infra structure

Facilitation of financial infrastructure PPP in development action
CLUSTER BASED DEVELOPMENT APPROACH

Contributes in
Improving overall performance and achieving
collective efficiency of Enterprises

Need based Group focused

Four pillars
Flexible Beneficiary led
and managed
Facilitates LED
 The Need
™ Relative isolation of enterprises
™ Inability to achieve economies of scale
? PURCHASE ECONOMIES
? MARKETING ECONOMIES
? IN TRANSACTING WITH SUPPORT SYSTEM
? INFORMATION ECONOMIES

™ Low road to growth –quality, competitiveness, R&D

not paid due attention
™ Infrastructure issues
™ Limited capacity to meet the challenges ushered by
globalization.
Co-opetition Phenomena

New Paradigm : CO-OPETITION

Cooperate in Order to Compete
Shifting Responsibilities for Local
Economic Development

OLD MODEL NEW MODEL

Government drives Local Economic
Local Economic development
Development is a collaborative
through process involving
Policy decisions and all the
incentives stakeholders
 CO-OPETITION IN CLUSTERS
THEY COOPERATE IN:
„ IN ESTABLISHING COMMON FACILITY CENTRES /
INFRASTRUCTURE
„ BRAND BUILDING
„ COMMON PURCHASE
„ MUTUALLY GUARANTEEING EACHOTHER’s FINANCIAL
OBLIGATIONS
„ INFORMATION ACCESS & DISEMINATION

THEY COMPETE IN:

„ SOME AREAS SUCH AS IN PRODUCTION PROCESSES
„ DOMESTIC MARKETING
„ NON-QUOTA BASED SALE OF PRODUCTS
How CBDA works
¬ Selection of a cluster
¬ Diagnostic study
¾ Analysis of business operation
¾ Industry structure analysis
¾ Value chain analysis
¾ Developing a cluster map
¾ Developing current reality tree
¾ SWOT Analysis
¬ Developing the Cluster Vision
¬ Developing a comprehensive Strategy
¬ Action Plan
¬ Implementation
¬ Review and Monitoring
 Impact on LED
? In the brass parts cluster,
Jamnagar, Gujarat (India)
introduction of
electropolishing, barreling
and brazing technology
have resulted in
improvement in
productivity and quality-
Enhanced competitiveness
of the local industry

? Skill development training

programme in the leather
goods cluster,
Santiniketan, W.B, has
resulted in skill upgradation
of the local unemployed
youths- Employment
opportunities were created
 Impact on LED
? Introduction of better
health & safety practices
in the brass & bell metal
cluster, Khurda, Orissa
has resulted in reduced
industrial hazards,
hygienic working
environment, reduced
sicknesses

? Initiative on the
marketing front in the
footwear cluster, Agra,
UP has ensured
sustainable market tie-
up for the local industry.
 Impact on LED
? Job quality in the brass
metal handicrafts cluster,
Moradabad, U.P, has
improved due to
successful adoption of
CBDA.
? Networking with the
national & international
institutions/BDS in the
auto component industry,
Punjab has led to
manufacturing efficiency,
quality up gradation,
diversification for the
local firms.
 Impact on LED
™ Linkages with the local
stakeholders has led to
adoption of best
practices and
sustainability of local
enterprises.

™ Export development
initiative in the gold
jewelry cluster, Trichur
has opened a plethora
of export opportunities
for the local industry.
 Impact on LED

? Problems of physical
infrastructure and
industrial pollution were
efficiently handled in the
Textile cluster, Tirupur
under the PPP mode.
? Common facilities were
created in various
clusters with the active
support of stakeholders,
local/provincial & central
Government
 Impact on LED
™ Training programme for
the unemployed youth in
the Agra cluster has
opened up new job
opportunities for them.
™ Formation of soft & hard
networks/ consortium
has led to cohesive
action for holistic
development of local
area firms.
™ Brand building pursued
under CBDA has
improved marketing and
export avenue for the
 Impact on LED
? Strategic Intervention in some select clusters has resulted
in increased income and improved standards of living for
the local people.
? Issue of physical & financial infrastructure was properly
handled under CBDA in various clusters- CLCSS, MCGF,
Artisan credit card, IIUS etc.
? Dissemination of business information was facilitated under
the BIC approach adopted in select clusters- Newsletter,
FAQ booklet, BDS data bank, design library.
? Institutional framework was strengthened in various
clusters/local area as a result of networking and capacity
building.
? Development of social capital led to sustainability of the
growth momentum of the local firms in various clusters/
local area.