Clusters are essentially groups of businesses working together to solve common problems and to build inclusive growth, through collaboration and scale.
Strong clusters shape a region's economic future.
This is a nuanced approach based on the fact that different regions have different economic challenges and opportunities.
Paul Conway, former Chief Economist at BNZ, explains cluster economics and the potential to transform New Zealand's economy within the framework of the Digital Cluster Initiative.
Fundamental to cluster success is collaboration, trust, information sharing and innovation. It's about good connections, working to strengths, and solving problems together. Successful clusters also display strong social capital and entrepreneurial spirit. Within a cluster, there is productivity-enhancing competition as well as co-operation.
Cluster economics is not a one-size-fits-all approach to development, it's not a policy or a programme, and it's not a way to pick winners.
It's inclusive. It's about community. It has a strong local flavour. And the whole is always greater than the sum of its parts.
Clusters are the foundation of strong, inclusive, prosperous regional economies.
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Clusters are groups of interconnected businesses, suppliers, and associated institutions that collaborate to solve common problems and benefit from scale.
New Zealand's geography and other compounding factors have long been a handbrake on the economy. Incremental policy responses have not yet generated the change needed to propel Aotearoa into becoming a high-performing society.
Relative to many similar small economies, such as Denmark, Norway and Sweden, New Zealand has been a slow starter in appreciating the importance of clusters for business development and for regional growth.
The Digital Cluster Initiative aims to respond to this deficiency, by supporting Kiwi businesses to collaborate, innovate, and grow, with digital transformation at its core.
Within Europe, 3,000 clusters have been identified.
As the European Commission highlights, these clusters matter. They account for one in four jobs, particularly the better-paying jobs.
International evidence on the importance of clusters is extensive. Quite simply, regions that are home to dynamic clusters, and the companies that are rooted in such clusters, do better.
Cluster development initiatives are well placed to respond to pressures and new opportunities, including digitalisation, COVID-19, the circular economy and climate change, technology, and market shifts.
The cluster development approach has been well tested and refined.
Insights supplied in this section by Ifor Ffowcs-Williams, Cluster Navigators Ltd, Nelson.
"New Zealand has been a slow starter in adopting cluster development. Across Europe, this is now a centre-stage strategy to support business growth. Many regions and countries have two decades of experience that we can draw on. Globally, the cluster development agenda is focussed on transition to greener, more socially responsible and more digital societies."
Ifor Ffowcs-Williams, Cluster Navigators Ltd, Nelson
New Zealand already has many naturally occurring clusters, with networks of related companies co-located within a specific geography. Many of these clusters already have a global reach. Auckland has a reputation well beyond New Zealand shores as the City of Sails.
Wellywood's reach is to Hollywood and all corners of the world. The Waikato has a vibrant ag-tech cluster that includes Mystery Creek; a very visible Bay of Plenty specialisation is kiwi fruit and related hort-tech. Marlborough is known globally for sauvignon blanc and Nelson for seafood. Half of the world's radish seeds are grown in South Canterbury. Queenstown has a developing range of tourism-tech competencies.
While each of these New Zealand clusters are a natural occurrence, their development does not need to be left to chance.
Cluster support models, like the Digital Cluster Initiative, provide a coordination and mobilising mechanism that, can lift productivity and upgrade competitiveness.
The Digital Cluster Initiative puts digital transformation at the heart of the cluster approach.
Digital tools and technologies - including ecommerce, digital marketplaces and digital marketing strategy - accelerate their development.
For more information about economic clusters, visit:
https://www.clusternavigators.com/
https://www.tci-network.org/
