How to Promote Clusters: Policy Experiences from Latin America

Abstract

In this paper we propose to differentiate between three types of clusters when it comes to formulating cluster-oriented policies in Latin America. Survival clusters of micro- and small-scale enterprises owe their existence more to unfavorable macroeconomic conditions and less to entrepreneurial competence and dynamism. Their competitive potential is limited. Support measures should mainly aim at improving the conditions for survival since these clusters are important in creating employment opportunities. The impetus should be to break through the low skills/low investment vicious circle. More advanced and differentiated mass producers have been flourishing in the import-substitution era but are coming under enormous pressure with the transition to open economies. In these clusters the main challenge is to create an environment that stimulates and supports learning, innovation, and constant upgrading. Clusters of transnational corporations are typically dominated by foreign firms not only at the final assembly stage but also in parts production. These clusters often are showcases of best-practice manufacturing; this can be used to stimulate the upgrading of domestic firms, notably by involving them in the supply-chain of transnationals.