This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

The resilience of the Canadian textile industries and clusters to shocks, 2001-2013

By: K. Behrens, B. Boualam, J. Martin. Centre interuniversitaire de recherche en analyse des organisations CIRANO, ISSN 1499-8629, 2016.

Abstract: “Understanding and assessing the role played by geographical clusters in the resilience of industries' and firms' to adverse economic shocks is important to inform policy and to devise regional development strategies. Yet, surprisingly little is known about that topic. This report aims to fill this gap. To this end, we first use recent microgeographic techniques to measure the degree of clustering in the Canadian textile and clothing (T&C) industry, and to detect geographical clusters of plants. We then dissect the changes in that industry (exit of plants, employment changes, productivity, industry switching, and geographical relocation) between 2001 and 2013. The T&C industry is geographically strongly clustered and subject to large industry-specific shocks (the end of the Multi Fibre Arrangement; mfa) during our study period, thus providing an ideal laboratory to examine the role of geographical clusters for resilience. We find a very limited impact of the initial level of clustering on subsequent changes in either industry-level employment, productivity, or revenue. Using detailed geocoded plant-level data, we further find that plants in clusters were more likely to exit than plants that were not part of a cluster and they downsized their employment more than non-clustered plants. These results suggest that clusters need not make industries or plants more resilient to adverse economic shocks. Furthermore, there is a composition effect of clusters. In the T&C industry, clusters contain larger plants that react to shocks by exiting or downsizing. In this respect, clusters were actually less resilient to shocks in the sense of providing local employment stability, which is usually the key concern for local policy makers. Plants in clusters were, however, more likely to switch into different industries following the end of the mfa. This suggests that being part of a cluster may help surviving plants to adapt in the event of a negative shock.“ [ABSTRACT FROM AUTHORS]

Competitiveness of clusters: A comparative analysis between wine industries in Chile and Brazil

By: G. Sarturi, C. A. França Vargas, J. M. Gama Boaventura, S. Aparecido dos Santos. International Journal of Emerging Markets, Vol. 11 Iss: 2, pp.190 – 213, 2016.

Abstract: “The purpose of this paper is to deepen the discussion regarding the competitiveness of clusters based on a theoretical and empirical study that compares the level of competitiveness of the Brazilian wine cluster located in Serra Gaúcha with the competitiveness of the Chilean cluster located in Valle del Maule. A qualitative-descriptive approach was applied to the study, and data collection was conducted through secondary sources. The analysis employed a competitiveness analysis model consisting of 11 competitiveness factors. The Chilean cluster presented a higher level of competitiveness in four competitiveness factors (“scope of viable and relevant business,” “introduction of new technologies,” “balance with no privileged positions” and “oriented strategy”), while the Brazilian cluster presented a higher level of competitiveness in three competitiveness factors (“concentration,” “cooperation” and “replacement”). For four of the competitiveness factors of the model, both clusters presented similar levels of competitiveness. By comparing the two wine clusters, it was possible to identify aspects that can be improved to increase competitiveness, especially in the Brazilian cluster. These aspects include, first, the need for bottle manufacturers in Serra Gaúcha, which would have a positive impact on production costs; second, the expansion of the geographical indication registration for the entire Serra Gaúcha region, resulting in an enhanced image of Brazilian wine abroad; and third, greater incentives for exports, which would result in an increase in market share. The paper proposes an explanation for the superior level of competitiveness of the Chilean cluster regarding the “scope of viable and relevant business,” “balance with no privileged positions,” “introduction of new technologies” and “strategy focussed on cluster development.” In terms of its contribution, the study developed additional metrics for the model adopted, which can be used for the competitive analysis of other agribusiness clusters.” [ABSTRACT FROM AUTHORS]

A new indicator for innovation clusters

By: G. Christopoulos and R. Wintjes. UNU-MERIT Working Papers, ISSN 1871-9872, 2016.

Abstract: “This paper introduces a new approach for the definition of innovation clusters, based on the co-location of concentrated patenting and manufacturing activity in the EU. The incorporation of data on both the production and use of technologies results in an indicator that depicts both formal and informal modes of innovation and conditions which can be expected to be conducive to the generation, diffusion and absorption of innovation, and consequently the enhancement of competitiveness. Our findings indicate that certain types of patenting and manufacturing activity tend to co-locate. The sectoral-technological composition of the three types of concentrations observed points towards a higher level of diversity than one would expect in the case of narrow specialisation. Applying the new indicator in a test of the often hypothesised benefits of innovative clustering, we find that the identified clusters have consistently higher wages in the sectors concerned.“ [ABSTRACT FROM AUTHORS]

State capitalism and clusters: the case of Brazilian shipbuilding

By: F. L. DuBois, M. A. Mendes Primo. International Journal of Emerging Markets, Vol. 11 Iss: 2, pp.214 – 231, 2016.

Abstract: “State capitalism is an economic model that relies on the role of a strong central government to support chosen firms and industries with subsidies, tax benefits and other advantages to which non-favored firms or industries do not have access (Bremmer, 2010). From an economic development perspective state capitalism is often used to redirect economic activity to underdeveloped regions (Wickham, 2009; Chobanyan and Leigh, 2006; Porter, 2008). The purpose of this paper is to examine the case of the Brazilian shipbuilding to illustrate the use of state capitalism to direct economic activity. Using Porter’s diamond factor model the authors analyze the development of an economic cluster focussed on the shipbuilding industry in northeastern Brazil. Using interviews with company executives and archival information, the authors profile the investments and incentives that the government has made in this region with particular attention to the mechanisms and policy directives designed to support local involvement in cluster activity. The authors find that the Brazilian shipbuilding industry offers a unique perspective on the role that governments play in the inducement of economic activity. The authors document the challenges that confront the local enterprise in meeting the requirements of the state controlled buyer and the difficulties associated with developing a local supplier base and finding a qualified workforce. The authors conclude with comments with regard to the applicability of this model to economic development activity in other country contexts. This research adds to the body of literature on the role of governments in the creation of economic clusters. Economic development in emerging markets is often associated with strong government intervention. The authors use the Brazilian shipbuilding industry to illustrate the role of a state owned enterprise in facilitation of economic development. Some countries may suffer from what has been known as the “resource curse,” that is, the misallocation of resource wealth into non-productive activities. In this paper, the authors illustrate and attempt by the Brazilian government to use this wealth to create employment opportunities in an underdeveloped region of the country. Emerging markets are challenged in developing viable enterprises that are competitive in global markets. Most research on the development of industrial clusters is focussed on developed markets. These markets do not have to confront the same challenges found in emerging markets. The research illustrates these challenges and the efforts that may be made to surmount them.” [ABSTRACT FROM AUTHORS]

Tie creation versus tie persistence in cluster knowledge networks

By: S. Juhász, B. Lengyel. Urban & Regional research centre Utrecht, Utrecht University, 2016.

Abstract: “Knowledge networks in industrial clusters are frequently analyzed but we know very little about creation and persistence of ties in these networks. We argue that tie creation primarily depends on opportunities and thus the position of actors in the network and in space; while tie persistence is influenced by the value of the tie. Accordingly, results from a Hungarian printing and paper product cluster suggest that reciprocity, triadic closure, and geographical proximity between firms increase the probability of tie creation. Tie persistence is positively affected by technological proximity between firms and the number of their extra-regional ties.” [ABSTRACT FROM AUTHORS]

Public Transportation and Industrial Location Patterns in California

By: D. Chatman, R. Xu, J. Park, K. Le. Institute of Transportation Studies ITS Berkeley, 2016.

Abstract: “Public transit investments are a large and growing share of all transportation investments in the state of California, and such critical investments should be evaluated partly on their economic benefits. Taking such benefits into account could alter investment, service, and service restructuring decisions taken by transit agencies in the state. The relationship of public transportation to economic productivity, and spatial patterns of industrial location, is understudied. This project investigated how changes in rail transit service in California metropolitan areas (Los Angeles, the San Francisco Bay Area, and San Diego) are associated with firm clustering by industry and with commercial property values. A mixed methods approach was used. One strand of the research involved first, describing location patterns by industry according to transit access, and second, quantitatively modeling the relationship between transit access and (a) employment densification by industry and (b) commercial property values, using instrumental variables techniques with dynamic panel modeling in order to better infer causal relationships. The second strand consisted of interviews and other qualitative research aimed at finding possible explanations for firm location and expansion, and firm productivity. The quantitative research found that rail development generally promotes employment agglomeration and increased land value, but the magnitude of such effects differs across regions. San Francisco County had the highest employment densification and land value associated with rail proximity, while the LA region also had a relatively strong relationship between rail access and both employment density and property value. Rail access in the southern part of the San Francisco Bay Area, where Silicon Valley is situated, had a small relationship with employment densification but a positive effect on land values. On the contrary, rail development in the San Diego region was positively associated with employment density, but negatively associated with land value appreciation. Our interviews were consistent with these quantitative findings, and suggested that the differences between regions are due to differences in historical land development and use patterns as well as urban land regulations. In the San Francisco Bay Area, developers and real estate brokers report that rail transit plays the greatest role in the City of San Francisco, with relatively weak importance in Silicon Valley due to higher parking provisions and employer-provided transportation amenities such as shuttles. In the Los Angeles metropolitan area, rail transit is most highly valued in the dense downtown Los Angeles area, and is perceived to be playing an increasingly important role across the region as in places where traffic congestion is high and increasing.“ [ABSTRACT FROM AUTHORS]

Is collective efficiency in subsistence clusters a growth strategy? The case of the wood industry in Oberá, Argentina

By: G. Sarturi, C. A. França Vargas, J. M. Gama Boaventura, S. Aparecido dos Santos. International Journal of Emerging Markets, Vol. 11 Iss: 2, pp.190 – 213, 2016.

Abstract: “The purpose of this paper is to deepen the discussion regarding the competitiveness of clusters based on a theoretical and empirical study that compares the level of competitiveness of the Brazilian wine cluster located in Serra Gaúcha with the competitiveness of the Chilean cluster located in Valle del Maule. A qualitative-descriptive approach was applied to the study, and data collection was conducted through secondary sources. The analysis employed a competitiveness analysis model consisting of 11 competitiveness factors. The Chilean cluster presented a higher level of competitiveness in four competitiveness factors (“scope of viable and relevant business,” “introduction of new technologies,” “balance with no privileged positions” and “oriented strategy”), while the Brazilian cluster presented a higher level of competitiveness in three competitiveness factors (“concentration,” “cooperation” and “replacement”). For four of the competitiveness factors of the model, both clusters presented similar levels of competitiveness. By comparing the two wine clusters, it was possible to identify aspects that can be improved to increase competitiveness, especially in the Brazilian cluster. These aspects include, first, the need for bottle manufacturers in Serra Gaúcha, which would have a positive impact on production costs; second, the expansion of the geographical indication registration for the entire Serra Gaúcha region, resulting in an enhanced image of Brazilian wine abroad; and third, greater incentives for exports, which would result in an increase in market share. The paper proposes an explanation for the superior level of competitiveness of the Chilean cluster regarding the “scope of viable and relevant business,” “balance with no privileged positions,” “introduction of new technologies” and “strategy focussed on cluster development.” In terms of its contribution, the study developed additional metrics for the model adopted, which can be used for the competitive analysis of other agribusiness clusters.” [ABSTRACT FROM AUTHORS]