Competitiveness poles and public-

private partnerships for innovation

At the request of the OECD, Technopolis Group has conducted a synthesis review of
the objectives, nature, conditions of use and state-of-the-art of knowledge on impacts
of traditional innovation policy instruments used in the context of regional innovation
policies. This report is a contribution to the Joint OECD-European Union (EU) project
“A New Innovation Strategy for Regions”. This paper has been drafted by Lorena
Rivera Léon and Alasdair Reid of Technopolis Group.

1. Rationale, objective, target groups

A broad literature and empirical research on innovation systems has developed over
the last two decades since the seminal articles of Freeman (1982) which provide a
theoretical and conceptual under-pinning for public policies in favour of
competitiveness poles (or clusters)1. Figure 1 summarises four main strands of
research that contribute to the rationale behind competitiveness poles policy.
Figure 1: theoretical underpinning of competitiveness poles

The institutional infrastructure

Regional supporting innovation within the
Innovation production structure of a region.
Systems Asheim and Gertler (2005)

Geographic concentrations of
interconnected businesses, suppliers,
Clusters service providers, intermediaries and
institutions like universities (Porter, 1998)

Competitiveness Industry, universities and public actors

Triple Helix &
clusters (poles)
the entrepreneurial
university
as interrelated nodes in processes
sustaining new firm creation and the
establishment of critical mass
(Etzkowitz and Leydesdorff, 1997)

A sectoral system of innovation is composed

by the set of heterogeneous agents carrying
out market and non-market interactions for the
Sectoral
generation, adoption and use of (new and
Innovation established) technologies and for the
Systems creation, production and use of (new and
established) sectoral products.
(Malerba, 1999)

The traditional market failure justification for government intervention in favour of

R&D and innovation has been increasingly challenged by innovation system (Smith
2000) theory that underlines the importance interactions between agents and of

1 The term ‘competitiveness poles’ is a literal translation from the French programme “poles de
competitivité”, and in English, the term ‘pole’ is normally translated as ‘cluster’.

Rivera León & Reid for OECD 2010 1

policy tackling ‘bottlenecks’, or system failures, in innovation systems rather than
‘isolated innovation events’ through subsidies to single agents (companies, etc.). A
systemic approach emphasises the importance of the microeconomic business
environment and of linking business, universities/research and public actors in what
has been called a “triple helix” of innovation (Etzkowitz & Leydesdorff 1997).

Figure 2: intervention logic for competitiveness poles

Source: authors
Studies of industrial districts in the so-called ‘Third Italy’ (Becattini 1990, Garofoli
1997) preceded Porter’s seminal paper on clusters (Porter 1998), this line of thinking
has influenced much of the current policy trends in favour of ‘cluster management’
and ‘cluster development’. However, both the triple-helix and cluster theories, while
important in underlining the need for interaction amongst different forms of
stakeholders, risk creating ‘islands of innovation’ within a region, unless they are
integrated in a broader policy in favour of regional innovation systems to create what
has been termed as the ‘learning region’ (Morgan 2007).
The literature underpinning the logic of intervention for competitiveness poles (and
associated instruments such as clusters and competence centres) underlines a range of
potential effects ranging from agglomeration forces through improved knowledge
exchange, to technological (‘smart’) specialisation and improved management of value
chains. Equally, the literature has increasingly underlined that policies that focus
exclusively on strengthening regional linkages are not optimal and it is important that
involvement in such initiatives encourage firms to connect ‘regional buzz’ to national
and international networks by encouraging the growth of national and international
pipe lines (McDonald et al 2007). One of the arguments, indeed, for linking up
regional business people with their ‘academic’ counterparts is that the latter often are
active in international research networks and can act as ‘bridges’ to a broader
knowledge base.
Finally, the intervention logic and types of effects of competitiveness poles types
policies differ according to the three main target groups (see Table 1).

Rivera León & Reid for OECD 2010 2

Table 1: target groups of competitiveness ‘poles’
Target Logic of intervention
Universities Removing barriers and
(& public research centres) facilitating university researchers
to interact more with regional
SMEs in joint research and co-
development in specific
technology fields
Developing internal capabilities
of universities to act more as
entrepreneurial universities
Large firms Encouraging larger firms to
‘embed’ their innovation activities
regionally by joint R&D with
SMEs or universities
SMEs Overcoming barriers due to
internal capability limitations or
external constraints (e.g.
financing) to smaller firms
undertaking innovation
Types of effects
Increased revenue from licensing
or equity returns from stakes in
spin-offs/joint ventures
Increased number of doctoral
/post-grad students involved in
industrial research with regional
SMEs
Improved interaction with
regional firms on higher
education curricula
Increased regional business
expenditure on R&D;
Enhanced process of ‘open
innovation’ with resultant
circulation of tacit knowledge
Increased regional BERD;
Upgrading of longer-term
capacities of SME to undertake
innovation

2. Regional dimension
The concept of clusters became a target for local and regional initiatives in the 1990s
following Michael Porter’s The Competitive Advantage of Nations. The main
argument was that firms and supporting organisations that operate with close
proximity are often more competitive than isolated firms. It was argued that proximity
improves industry and firm innovativeness by facilitating the creation and
dissemination of knowledge and skills. This is due to competition and co-operation.
Co-operation can be not only in the form of formal alliances, but also enterprises
benefiting from tacit knowledge being exchanged between firms along the value chain,
or through other form of social interactions.
The regional dimension of competitiveness poles and public-private partnerships for
innovation can be better understood using the concept of “untraded
interdependencies” as described by Storper (1993, 1995, 1997). For Storper, when
clustering occurs because of commonalities related to technological development,
“untraded interdependencies” arise such as common coded language, norms, customs
and practices. These common institutions facilitate trust and co-operation. Implicit is
also the idea that there are ongoing interactions between key players in a spatially
specific area. The above refers to the incremental nature of innovation at regional
level, where each idea builds upon previous ideas, and thus every exchange contributes
to a common knowledge base that can be the source of unique advantages to firms and
other support institutions taking part of a cluster or competitive pole.
The regional dimension of cluster programmes is particularly efficient in providing
leadership in bringing firms together; helping firms in understanding the benefits of
collective action; network efficiently knowledge organisations such as universities and
research centres; and providing ‘on-site’ technical assistance to run initiatives on the
ground (Brookings, 2008).
As it will be explained below, the dimension of the initiatives depends on the nature of
the instruments and models used. While cluster programmes and competence centre
programmes have a strong regional and localised dimension; competitiveness poles
are more global and respond to the characteristics of global industries and global value
chains.

Rivera León & Reid for OECD 2010 3

3. Evolution over time
The cluster concept, and cluster policies and programmes had evolved considerably
over time. Starting with Marshall’s concept of “industrial districts”, where
geographically concentrated clusters can be explained by specialised labour,
specialised intermediate inputs and knowledge spillovers; regional cluster policy has
evolved and defended using concepts such as ‘learning regions’, ‘innovative milieus’
and ‘regional innovation systems’, which stress learning as a key factor or regional
competitiveness (Hospers, et al., 2002). As a consequence policy interventions have
shifted from simply influencing the inputs of business activity to be more focussed on
the relationships between industries, which underpin competitiveness. Thus, more
attention has been given over time to supporting co-operation in favour of business
innovation and the role of factors and structures at the regional level that promote
innovation activities (Taylor et al., 2001).
In Italy, cluster initiatives were launched in the 1970s and 1980s. Denmark was also a
pacemaker with its Industrial Network Co-operation Programme launched in 1989.
The programme served used as a basis for programmes in Australia and the USA
(Technopolis, 2003).
In countries across the world, the number of cluster initiatives and competitiveness
poles initiatives has grown substantially in recent years. Well-known examples in the
EU are the furniture clusters in Northern Italy, shoe making in the Veneto region,
ceramics in Emilia-Romagna, and the automobile sector clusters in the Austrian
regions of Styria and Upper Austria. There has been a big boost since about 2000 to
public-private partnerships for innovation, and an upsurge in cluster initiatives. The
Green book on cluster initiatives (Solvell et al., 2003) identified more than 500 cluster
initiatives around the world, primarily in Europe, North America, New Zealand and
Australia.
This upsurge has not been nevertheless across the board and in some countries after
an initial enthusiasm, interest waned (Greece, the Netherlands, the UK) at least in
terms of a national policy promoting clusters. In the UK, clusters initiatives tend to be
regional and linked to supply chain management (see West Midlands example below).
The Netherlands also shifted its focus from cluster policy to supporting dynamic
innovation systems, and the term ‘cluster policy’ is now rarely used in Dutch
innovation policy. The same is the case for Greece, where cluster policy is almost
inexistent after initial interest in the 1990s (Technopolis, 2003).
A forthcoming study (Stahlecker et al 2010) highlights that, based on the information
contained in the ERAWATCH-INNO-Policy TrendChart database, there are more than
130 specific national measures supporting framework clusters policies across 31
European countries. Almost all EU Member States have developed cluster-specific
measures or cluster programmes at a national and regional level. In the US, a recent
review (Brookings, 2008) of existing cluster programmes shows that most of the
initiatives were created since 2000.
In 2008, the launch of the European Cluster Memorandum marked an important step
towards encouraging cluster development at EU level, and building on the efforts of
individual Member States. Other complementary EU initiatives include the High Level
European Cluster Policy Group, the European Innovation Platforms for Clusters
(Cluster-IP), the European Cluster Alliance, the European Cluster Excellence
Initiative, and the European Cluster Observatory.
The ‘competitiveness poles’ concept has been most strongly developed in France from
the mid-2000s and was quickly ‘replicated’ in countries ranging from Belgium
(Wallonia region), Greece (‘regional innovation poles’), Hungary, etc. Equally, the
competence centres type initiatives have become a popular tool across a number of EU
countries, notably, during the last decade (Compera 2010).

Rivera León & Reid for OECD 2010 4

4. Complementarity and articulation with other policy instruments
Recent studies from the OECD (2007, 2009) show that most national and regional
cluster programmes and competitiveness cluster programmes in OECD countries tend
to focus on the drivers of national and regional growth or on the needs of the private
sector, and most notably SMEs. Generally, other policy streams falling into the
following categories support competitiveness cluster programmes:
• Regional development policy. The target is usually lagging regions; with a
special focus on SMEs, the engagement of regional actors, and with a broad
approach to sector and innovation targets.
• Science and technology policy. The focus is usually on high technology, the
promotion of R&D instruments in support of commercialisation, and the
reinforcement of spatial impacts of R&D investments.
• Industrial and enterprise policy, notably SME policy. The approach is on
supporting the needs of firm groups and technology absorption, particularly in
SMEs; and increasing competitive advantages in order to attract investment
and promote knowledge spillovers.
• Higher education policy. The focus is on high technology following research
budgets; emphasis on the commercialisation of research outputs; support to
spin offs; joint research with the private sector; and the strong role of Higher
Education institutes in supporting regional innovation programmes.

5. Nature of the instrument

As noted above, the competitiveness poles concept tends to overlap with other
instruments aimed at academic-industry linkages, networking and clustering in
national, regional or sectoral innovation systems.
Currently, at least 3 different models can be identified:
• Competitiveness poles in the form of large and broad partnerships of industrial,
public and academic research organisations located in a distinct region
(occasionally inter-regional or cross-border). The best-known examples are the
French competitiveness poles but a number of other countries or regions have also
developed similar approaches including Wallonia (Belgium), Greece and Hungary.
• Cluster programmes are normally more ‘business’ focused with an emphasis on
support for exports, inter-enterprise co-operation, quality, promotion of business
expenditures in R&D, etc. Examples of this type are in Germany (Spitzenclusters),
Belgium (Wallonia Clusters), and Spain (AIE programme and Basque Cluster
policy).
• Competence Centre programmes are organised as RTDI collaborations in
strategic areas between academia and industry, and in some cases including public
bodies. They comprise specialised smaller groupings of enterprises (notably
SMEs) collaborating with one or more research teams at universities. Examples
can be found in Estonia, Sweden and Northern Ireland.
There is a large diversity of implementation forms and instruments within these three
models defined. Table 2 summarises the different ‘families’ for each model.

Rivera León & Reid for OECD 2010 5

Table 2: Implementation forms of competitiveness poles models and PPPs
Models Implementation forms

Competitiveness Industry-driven R&D-driven Collaboration-

poles driven

Large presence of big Strong and dynamic Intensive collaboration

international groups entrepreneurial activity between public and
investing massively in “Low risk environment for private sectors; and
R&D high risk projects” very active role of
Fundamental research Attractiveness of public sector
outsourced to SMEs universities by R&D Strong
Integrated and local centres of international Entrepreneurship
financing system industrial groups supported by
International scope based Potential for the investment funds of
on the capital of large development of large industrial groups
industrial groups technological parks present at the local level
through a model “industry International scope
on campus” based on the collective
International scope based dynamics of the system
on universities’ and R&D of actors
centres’ capital

Examples: BioValley Examples: Cambridge Examples: Medicon

Bassel (Switzerland); Silicon Fen (United Valley (Denmark and
CARS in Stuttgart Kingdom); Tel Aviv Sweden); Silicon
(Germany) (Israel) Saxony (Germany)
Cluster Research Driven Business Development
Programmes
Triple helix relationships between Focus is on growing regional industries to
industry, research and local public exploit attractive markets where the
authorities or government agencies region has potential or existing strengths.
(i.e. regional development agencies; The intervention logic of this type of
science and technology agencies). cluster is generally linked to value chain
A main focus is on encouraging joint management; sectoral lobbying, collective
R&D and technology transfer and training, economic intelligence and export
research commercialisation. promotion activities.
Science parks can be complementary,
as an asset for the development and Cluster Managers are funded to improve
for exchange of knowledge that inter-company networking and to create
sustains the cluster. links with other clusters.

Examples: the EU’s ‘Regions of

Knowledge Programme’, Japan Examples: United Kingdom, Mexico

Competence University driven/owned PPP or business sector driven

centre
Programmes The aim is to develop (academic) Oriented towards valorisation through
knowledge production technology transfer and more applied
Based on arguments on science.
entrepreneurial university-triple-helix. Programmes are led by industry that
Usually integrated in a university. empower researchers and research
institutes in order to develop strategic
R&D for the benefit of industry.
They are normally created as distinct and
independent legal entities.

Examples: Sweden, Austria, Basque Examples: Estonia, Northern Ireland,

country Valencia, Flanders

Notes: Based on DGCIS, 2009; Insogna et al., 2010; COMPERA, 2010.

Rivera León & Reid for OECD 2010 6

5.1 Competitiveness Poles
Competitiveness poles gather firms, research organisations, training institutes,
specialist management services, and other expert support services, around specialised
activities in order to set up powerful regional developments. Enterprises are not
organised only to innovate, but are rather co-ordinated with each other, have strategic
synergies and partnerships by claiming global excellence. Public bodies (national,
regional, and local) are normally associated to the poles, and provide services to its
members. The partnership is organised around a market and a related technology and
aims at building a critical mass to be competitive and have international visibility. The
keywords that best describe competitiveness poles are global networks, attractiveness
and governance.
Competitiveness poles vary in nature, size and budget. They were born to respond to
challenges brought by globalisation, as a systemic approach to industrial policy for
competitiveness. In the last decades, national and regional governments have put in
place policies in support of competitiveness poles in order to stimulate local industries
and increase the attractiveness of regions.
A recent study by the Ministry of Economy, Industry and Employment of France
(DGCIS, 2009) identified three determinants of world-class competitiveness poles:
• Competitiveness poles do not only include the three key actors of the
“knowledge triangle” (enterprises, research centres and training centres); but
also a strong network of investors and consultants; and local and national
public bodies that make more dynamic the collaborations inside the pole.
• They are territorially anchored, a geographic concentration of actors, whose
governance structures are based on the local industrial system that determines
the co-ordination of the pole thanks to permanent human and financial
resources.
• Collaboration between public and private actors facilitates the creation of
enterprises and start-ups that contribute to the diffusion of innovation inside
the pole, and are also the origin of employment growth.
In the European Union (EU), the most common example is the French concept of
“technopole”, born in the 1970s following the Japanese and American examples.
National policies in support of competitiveness poles started in 2005, following two
strategic reports that gave increasing importance to the role of regions in the passage
towards an innovative and competitive economy. The current French national policy
on competitiveness poles, the ‘Competitiveness Clusters Policy 2.0’, is the second
phase of the competitiveness cluster policy that covers the period 2009-2011,
following the highly-known first phase launched in 2005. Since then, regions in
France, following certification processes in 2005 and 2007, have implemented
regional policies in support of their certified competitiveness poles.
The region of Brittany in France is one of the regions that had embedded the French
national policy in support of poles in their regional policy in support of RTDI. The
competitiveness poles policy was complemented by policies supporting research and
higher education, technology transfers, and the valorisation of research through
collaborative projects. The main objective was to increase collaboration between
enterprises, and research and training centres, in order to boost innovation in the
region.

Rivera León & Reid for OECD 2010 7

Regional policies in support of competitiveness poles in Brittany, France
In 2005 and 2007, the Inter-ministerial Committee for territorial development and regional
attractiveness (CIADT, or in French “Comité interministériel d’aménagement et de
développement du territoire et d’attractivité régionale”) certified 71 competitiveness poles in
the French territory. Four of these poles are located in the region of Brittany focusing in the
automobile sector, agro-industries, ICTs, and a mix of themes regarding the sea industry
(including shipping, biotechnology, cosmetology, environment and energy).
In order to provide a policy framework in support of these competitiveness poles, the regional
policy in support of research and innovation embedded its support to poles together with
policies related to reinforcing research and higher education, and the promotion of technology
transfers.
In 2008, the competitiveness poles in Brittany joined more than 1,000 partners and 627
organisations (mostly research centres and SMEs) in 246 certified collaborative projects. 203 of
these projects were co-financed with public funds, representing about €153m of a total of
€465m invested. The policy, managed by the regional Council, represented about 22% (€10.8m)
of all R&D credits through collaborative projects in the region. The growth in membership of the
poles was mainly thanks to SMEs, which represented about 57% of all new members between
2005 and 2008.
An external evaluation of the regional policy in 2008 showed mixed results related to the
integration of regional actors from pole to pole. In all cases, public research laboratories were
central in pushing for collaborative projects. They gained in terms of financing, in reinforcement
of their research capacity, and regional notoriety. The evaluation also showed that SMEs are the
less prepared in participating in research projects, mainly because of administrative burdens
and lack of capacity.
The national government has extended the certification of all four competitiveness poles in
Brittany for the period 2009-2011.
Source: Conseil régional de Bretagne, 2008
The Wallonia region in Belgium has implemented also a competitiveness poles policy
that complements the Clusters approach developed in the region since 2000. It is the
response of the regional government to the business structure in the region,
characterised for having a small number of large enterprises and a large number of
SMEs with limited capacities of R&D. The aim of the regional competitiveness poles
policy is to create greater critical mass in the Walloon innovation system by federating
different efforts in specific industrial sectors. The strategy is oriented towards
connecting all relevant actors, creating new infrastructures, and giving greater value to
R&D projects.

Competitiveness poles and the Walloon STI policy (Wallonia, Belgium)

Since 2005, the competitiveness poles are a major plank of the Walloon STI policy with a budget
from 2006 to 2010 of €280m. The measure is one of the five priorities of the Marshall Plan and
is a major shift in the regional policy both in terms of the financial means mobilised as well as
the process of design and implementation.
Five sectors and corresponding poles were identified and officially recognised by the regional
authorities: life sciences (Biowin); agro-food (Wagralim); mechanical engineering (Mécatech);
transport-logistics (Logistics in Wallonia); aeronautics/space (Skywin). With the recent
Marshall Plan 2.Green adopted in 2009 (2009-2014), a sixth competitiveness pole focusing on
environmental technologies was launched.
Each competitiveness pole has received budgetary funds that should enable it to implement
various actions in line with its strategy. All funding is granted on the basis of calls for projects,
which invited proposals including a mix of concrete research and contextual planning linking
the research to an overall pole strategy. The support from the Walloon Region can take different
forms: investments in infrastructure, buildings and equipments (€50m); R&D funding
(€120m); investment grants (€45m); training support (€55m); attracting foreign investments
(€4,5m); and export promotion (€5,5m). In 2008, an extra €42m were granted for financing

Rivera León & Reid for OECD 2010 8

projects related to sustainable development and energy efficiency. The participants of the poles
retain, in addition, access to all existing forms of support for investment, R&D, employment
measures, training and exports according to normal procedure for proposals presented outside
of the cluster framework. Proposals presented within the framework of the cluster such as
projects included in the business plan or subsequent work-programmes for spin-offs, qualify for
the maximum aid and a specific top-up for some of the measures.
The private sector has a key role in steering the competitiveness clusters in partnership with the
French-speaking universities, which have the right to appoint a deputy chairperson to the board
of each cluster. Regular calls for projects for the members of the five poles are organised by the
Walloon Government. Between 2005 and 2008, the Government approved 55 research projects
following four calls for projects.
An external evaluation of the competitiveness poles done in 2008 by the Walloon Institute for
Evaluation, Prospective and Statistics; showed that SMEs considered having more local
partnerships than before; academic and industrial actors have learned working together; and
the academic world has started adopting a vision more directed towards industrial use of
research results.
Source: Bayenet et al., 2009; BELSPO, 2010
The most common types of financial support provided to competitiveness poles are in
the form of investments in infrastructure (buildings and equipment); R&D funding;
investment grants; R&D credits through collaborative projects (financed partially by
the private sector or through university funds); training support; support for attracting
foreign investments; and export promotion.
Public budgets varied from €280m for a five years period (2006-2010) in Wallonia,
and €153m in Brittany for four years (2005-2008). The origin of funding depends
normally on the regional institutional structures and the strategic approach of the
policies. The source of funding in the Walloon case is the regional authorities. Whereas
in the French case is a mix of public regional funds, and regional community funds.
Other source of funding (i.e. non public) represented about 70% of all investments in
the case of Brittany.

5.2 Cluster Programmes

Regional cluster are more ‘business’ focussed (i.e. promotion of business expenditures
in R&D, co-operation between enterprises, quality and internationalisation). Some of
these programmes are also focused on the commercialisation of research results. They
are characterised by giving emphasis to four premises (Hospers et al. 2002; Ganne et
al., 2009):
• The importance of having a dynamic local context; that favours investment,
upgrading (of processes and products), and a business policy that promotes
competition-cooperation-and knowledge sharing.
• The availability of specialised high-quality inputs; including human
resources, scientific and technological infrastructures, investment
institutions and communication infrastructures.
• The availability of support structures; concretely including providers of
specialised services in other industries, and other sectoral or inter-sectoral
associations. The implementation of cluster programmes requires support
institutions that push for collaboration between regional actors. This can take
the form of PPPs.
• The existence of “demand conditions”; that serve as motors to the system,
and that includes consumers (enterprises and individuals) of the products
and services being produced.
The cluster approach was the key concept that inspired several regional
competitiveness programmes in the 1990s. One example of this is the Basque Country
in Spain. The cluster approach provided a systematic basis for a sector-oriented
structural policy; which suited a double objective of assisting established and mature

Rivera León & Reid for OECD 2010 9

industrial activities while providing incentives to create new activities. Its basis is the
Cluster Associations, which associate all enterprises in a given cluster, together with
other support institutions such as universities and technology centres.

Cluster Programmes and Cluster Associations in the Basque Country (Spain)

The Basque Country holds a historical experience in cluster policy, since in the early 90s the
regional government decided to analyse the competitive advantages of the region and its long-
term competitiveness potential, following a study by Michael Porter’s consultancy firm Monitor
Company.
In 1991, the Basque Government launched its Competitiveness Programme in the framework of
its Industrial Policy 1991-1995. Working groups were created with enterprises and support
institutions for the sectors of priority to the region: home electronics, equipment-machinery,
steel, aeronautics, paper, auto motion components, tourism and foods. As a consequence of the
first dynamic process of inter-relations between enterprises and support institutions, new
measures were implemented. This included the creation of the Risk Capital Fund of the Basque
Government (EZFTEN) as a tool of financing strategic projects; the creation of the Basque
Foundation for Quality Improvement (EUSKALIT); the launch of the Technology Plan for the
Basque Country; the launch of the RETO Programme (Strategic Reorientation and Operative
Techniques) in order to generate strategic capacity in Basque firms; and a Programme in
support of strategic alliances in order to promote the internationalisation of firms. Additionally,
“Cluster Associations” were born, grouping all enterprises comprising a given cluster; and other
support institutions such as universities and technology centres. Their mission is to increase,
through co-operation, the competitiveness of the associated enterprises and sectors they
represent. Each of the associations works on the basis of strategic plans (3 or 4 years) and has
mainly three axes of activities: technology, quality, and internationalisation. Some of them
include training as a priority area.
In 2009, the Basque government gave a new impulse to its cluster policy, arguing that there
were still economic activities that could be integrated and benefit from the Programme. A call
for expressions of interest was launched with the aim of providing financial support to
enterprises considering the creation of a sectoral “pre-cluster”. As a consequence, four new pre-
cluster associations were born: smelting; graphical arts; habitat and interior equipments and
design; and biosciences.
Nowadays, there are 12 cluster associations and 4 pre-cluster associations in the Basque
country. The 12 main associations, dependent of the Department of Industry, Innovation,
Commerce and Tourism represent about 6% of all enterprises and 7% of all industrial
establishments in the Basque Country. Additionally, they hold 28% of employment and produce
32% of the regional industrial value added.
An external evaluation of the clusters policy done in 2010 has concluded that with a relatively
low public investment (around €2m) the policy has been able to generate valuable mechanisms
for dialogue and co-operation in strategic areas between the public and private sectors.
Additionally, the policy has helped in orienting other regional policies in support of enterprises,
and had increased the awareness of enterprises on the existence of these policies.
Source: Aranguren, 2010
In Quebec, the competitiveness clusters policy started in the 1990s. Promoted by the
Ministry of Economy of Quebec, with the support of Michael Porter, the policy was
launched as a way to restructure the economic activity of Quebec in a context
characterised by the deceleration of productivity and the raise of unemployment. The
competitiveness clusters strategy constituted an innovative approach that privileged
synergies between specialised actors in key sectors. Currently, the Montreal
agglomeration has 15 identified competitiveness clusters in key sectors to the regional
economy.

Rivera León & Reid for OECD 2010 10

Aéro Montréal and competitiveness clusters policy in Québec, Canada
The national Canadian policy in support of competitiveness clusters was defined in the
economic plan “Avantage Canada” of the Ministry of Finance in 2006; and it is made a priority
in the Programme of the Ministry of Industry in 2007 in order to increase the Canadian
potential in science and technology. The National Research Council of Canada is responsible of
implementing the policy since 2000, by working with Canadian regions and agglomerations in
order to reinforce the position of Canada in key technology sectors.
Aéro Montréal is the result of an initiative launched by the Communauté Métropolitaine de
Montréal (CMM) in 2003, which commended a study that constituted one of the strategic
documents for the creation of the cluster programmes, and that resulted in the launch of the
competitiveness clusters policy in 2006. Nowadays, the main local and regional actors involved
in the Quebec competitiveness cluster policy are the CMM, which implemented funds for the
support of competitiveness clusters with a budget of CAD18m; the Ministére des Affaires
municipales et des Régions du Gouvernement du Québec (MAMR), which contributes through
its development fund; and the Ministry of Economic Development, Innovation and Exports of
the Quebec Government (MDERR) through its programme in support of partnerships and
industrial agglomerations.
Aéro Montréal is the third largest aerospace cluster in the world after those of Seattle in the
United States and Toulouse in France. With a structure of more than 20 years, the cluster
integrates today 236 enterprises; 4 universities; 2 specialised research institutes; and 10 public
research centres, whose activities represented about €430m spent in R&D by the private sector
in 2007. The management and co-ordination costs of Aéro Montréal were financed 58% by the
public sector and 42% by the private sector for a total budget of CAD1m in 2007. This budget
includes services contributions, which accounted to 25% of the budget in 2007, from which 16%
was private and 9% public.
In May 2008, Aéro Montréal signed a collaboration agreement with the French regions of Midi-
Pyrénées and Aquitaine and the Aerospace Valley, in order to intensify the technological
partnerships through the definition of a list of structured and strategic projects.
Source: DGCIS, 2009
Regional cluster Programmes in Mexico are still in an infant stage, and they are more
concerned with industrial and enterprise policy. Their effort is oriented in providing
favourable framework conditions for Foreign Direct Investment (FDI) by providing
physical infrastructure and low regulatory burdens for the establishment of firms. The
general focus of state’s programmes is on technology upgrades and the mobilisation of
innovation resources to the benefit of traditional sectors. Many of the existent cluster
initiatives are focused on a model where a Multinational Enterprise (MNEs) anchors
firms and suppliers.
A recent study by the OECD (2009) has shown that there is still a lack of critical mass
among many of the clusters that the different Mexican states seek to support. Some of
the proposed cluster development instruments that could alleviate this lack include
SME support (i.e. instruments for supplier development and supply chain linkages,
export networks, quality certifications); and instruments for creating a stronger skilled
labour force (i.e. vocational and university training).

Rivera León & Reid for OECD 2010 11

Regional Cluster and Competitiveness Programmes in Mexico
Mexican states have made “competitiveness” a priority for state action. Specific sectors are a
priority for different states, which has resulted in an emerging interest in the concept of clusters
and the “clusterisation” of Programmes.
Priorities to sectors are often highlighted in the State Development Plans. The automotive sector
is a priority in the states of Chihuahua and Michoacan, which are specialised in design processes
(i.e. software and electronic and electric devices for automobiles) and vehicle testing; whereas
Queretaro has been consolidating the aerospace sector around its “aerospace park” that is
supported mainly by Multinational Enterprises (MNEs). Some other states, like Colima and
Yucatan, profiting from their natural entry and distribution point in Mexico, had centred their
efforts in becoming logistic centres in order to increase their productivity.
The state of Chihuahua has been a leader in supporting cluster programmes through research
centres with the aim of becoming a national leader in the biotechnology sector. Cluster
initiatives, although infant, also exist in the state of Nuevo Leon, which has created civil councils
in strategic sectors (i.e. IT, automotive, medical services), involving Higher Education
Institutions (HEIs) and the private sector. Notably, the local actors in the IT sector had
developed action plans and performed assessments of the sector needs with the aim of
remaining competitive. In Aguascalientes, cluster initiatives have a strong public support and
are co-ordinated by the state’s Institute of Competitiveness. The state has focused in developing
intermediaries that provide technical services needed by firms.
Competitiveness Programmes in Mexican states are characterised for having a cross-sectoral
approach to public sector mobilisation. For example, the state of Mexico has several
competitiveness working groups, and secretariats involving private sector representatives and
members of HEIs involved in dialogue and exchange of ideas. Also, in the state of Guanajuato,
the Science and Technology Council of the state works in tight collaboration with the local
government and notably with firms in relevant sectors to the state’s production networks.
Source: OECD, 2009
Business development clusters programmes are also common in the United Kingdom.
Over the last years, businesses in the West Midlands region had collaborated with each
other in activities such as market exploitation, technology transfers, skills
development, supply chain management, product development, exports and strategy
planning. Cluster opportunity groups (COGs) and cluster managers provide a
mechanism for steering and mobilising initiatives within specific sectors.
Business clusters in the West Midlands, United Kingdom
The regional clustering Programme in the West Midlands was born as a tool for achieving the
first objective in the new West Midlands Economic Strategy (WMES), aiming at developing
markets and sectors with the most wealth and employment potential.
Starting in 2005, the region currently implements the second cluster three-year programme
through Advantage West Midlands, the Regional Development Agency for the West Midlands.
There are currently 12 business clusters in the region: aerospace; automotive; building
technologies; environmental technologies; food and drink; ICTs; interiors and lifestyle; medical
technologies; rail; screen image and sound; specialist business and professional services; and
tourism and leisure.
The current phase of the programme focuses more on specific markets, where the region has
strengths and where the region has sustained market share over the long term. Each cluster has
specific plans for the period 2008-2011 in which specific markets are targeted with the objective
of delivering critical mass and investment through specific actions. These are exploited by
market focus groups, which provide a forum for clusters in order to collaborate in a specific
number of market opportunities. Each cluster launches individual proposals in order to develop
and implement some of the projects outlined in their cluster plans.
An analysis of the impact of the first programme 2005-08 showed a significant increase in
business confidence in the sectors where collaborations occurred as well as the creation of
informal and formal networks; linkages with university departments and other network
organisations that have direct access to sectors and markets.
Source: Advantage West Midlands, 2008

Rivera León & Reid for OECD 2010 12

An example of research-driven programmes with a strong public-push is the
Knowledge Cluster Initiative in Japan. Knowledge clusters are organised by local
initiatives around universities and other public research institutions by establishing
networks of individuals in academia, and in the public and private sectors through
project planning, joint-research, and exchange of ideas. The Programme gives also a
strong focus to the commercialisation of research outputs and patenting.
The Knowledge Cluster Initiative for Japanese regions
The Ministry of Education, Culture, Sports, Science and Technology (MEXT) of Japan has been
implementing the Knowledge Cluster Initiative since 2002 with the objective of revitalising
regional economies. The Second and Third Science and Technology Basic Plans of 2001 and
2006 called for the creation of knowledge clusters and the support of regions that had the
potential to develop world-class knowledge clusters.
The Initiative promotes conducting joint research by industry, academia and government at
university joint research centres in order to produce new technologies in light of corporate
needs. It gives a strong emphasis on the patenting of research results, by fully implementing
projects from R&D to commercialisation of research outputs.
The Knowledge Cluster Initiative is divided in 2 programmes: Innovative Stage and 2nd Stage.
Six Japanese regions are part of the Innovative Stage Programme, and 9 of the 2nd Stage, in
knowledge clusters around green materials, life sciences, health and medicine, marine bio
industries, nanotechnology, environment, and materials. Local universities have a directive role,
and they set the minimum amount of expenditure by local actors.
The 2nd stage Programme includes a sub-programme named “Expansion Programme”, which
encourages collaboration with other regions in Japan and abroad. An example of international
collaboration in the Fukuoka Kitakyushu Iizuka region is the Fukuoka Cluster for Advanced
System LSI Technology development, which built collaboration networks in the “Silicon Sea
Belt”, and the research achievements have been expanded through research collaborations with
universities in Taiwan and Shanghai as well as with business associations in Bangladesh.
The Knowledge Cluster Initiative is complementary to the Industrial Cluster Project promoted
by the Ministry of Economy, Trade and Industry (METI). The achievements of MEXT policies
have been applied and commercialised by METI, which has resulted in feedback of market
needs and has led to new R&D.
Source: Ministry of Education, Culture, Sports, Science and Technology of Japan, 2009.
The most common types of financial support provided to cluster programmes are in
the form of R&D funding through public calls for projects and calls for tenders.
Collaborative projects are most common. Other instruments (i.e. Germany) include
funding of network management and projects in support of product and service
development (single and co-operative projects) through subsidised loans (including
interest allowances).
Since the focus of cluster programmes is more business oriented, their source of
funding is usually a mix of public and private funds. For example, in the case of the
Basque Country, the enterprises that join the cluster associations also finance the
functioning of the association. Relatively to the size of the enterprises, the private
sector finance 40% of internal costs of the association and 50% of external costs. The
rest of costs (60% of internal costs and 50% of external costs) are financed through
public funds by the cluster policy of the Basque government. The cluster associations
receive a maximum amount of €240k of public funds. The associations can also
receive additional regional public funds through other programmes in the areas of
technology, quality and internationalisation.
In Montréal, R&D collaborative projects are financed at least 25% by the private
sector, while the rest is financed by public funds assigned to universities. Management
and co-ordination costs are financed on a basis of 58% by the public sector and 42% by
the private sector. In 2007, the total cost of R&D collaborative projects amounted to
CAD36m (DGCIS, 2009), and the co-ordination costs were equal to CAD1m.
The Japanese follows a “two-stages” funding scheme, with flexible budget allocations
to regions in a first stage according to their R&D field and their degree of progress of

Rivera León & Reid for OECD 2010 13

between Υ300m to Υ600m per year over five years; and in a second stage budgets
remain flexible while making consigning contracts with core organisations such as
science and technology foundations designated by local governments, is highly
promoted.

5.3 Competence Centre Programmes

Competence Centre Programmes are organised as RTDI collaborations in strategic
areas between mainly academia and industry; and they usually bridge the gap between
technological and economic innovation. Their aim is to achieve stronger impact and
concentration of research efforts by creating research environments in which
enterprises can participate actively and benefit from the results. They play thus an
important role in innovation networks and clusters. This type of Programmes is
normally used to strengthen regional innovation systems between university research
and industrial R&D. Competence centre programmes are also characterised as public-
private partnerships (PPP). Their activities include usually the pooling of knowledge,
the creation of new knowledge by performing research, training and the dissemination
of knowledge.
Some programmes (i.e. Northern Ireland) are led by industry, which empower highly
qualified researchers in association with research institutes and universities in order
to develop strategic R&D for the benefit of industry. Competence centre programmes
contribute to activate industrial participation in formulating strategic goals and most
notably implementing academic research. They also contribute in enhancing the
research profile of the involved universities, and strengthening long-term research
collaboration networks.
This type of programme became popular in the early 90s, for example in countries like
Sweden, with its NUTEK (Swedish National Board for Industrial and Technical
Development) Competence Centre Programme; and most recently in the years 2000s
in Estonia with the Estonian Competence Centre Programme. There are two models
of implementation: those that are created as distinct and independent legal entities;
and those that are integrated in a university.

The Competence centre Programme in Estonia

The Competence centre Programme in Estonia was among the measures introduced to improve
the performance of the Estonian innovation system in the run-up to EU membership, and that
was then integrated into a package of measures made possible through the European Regional
Development Fund (ERDF). It funded five Competence Centres (CCs) for three years in a
process that shifted from solely national to ERDF co-funding.
The Programme tackles weaknesses in the Estonian innovation system, notably its low R&D
capability. Its aim is to create technological strength in research and human capital, in order to
position Estonian industry to become technologically more competitive. Through Enterprise
Estonia (EAS), the Estonian government and the ERDF provides subsidies to the competence
centres with a final public contribution of 75%.
A mid-term evaluation in 2008 showed a significant success of the Programme. Three of the five
funded centres managed to increase significantly their industrial income above expectations.
The Programme is highly decentralised and allows the centres great flexibility in the way they
spent their budgets individually. Some centres had chosen to build up a committed core team,
while others had maintained a slim core and a fragmented periphery of researchers.
The Programme has served to focus research attention and effort on specific areas of
technology. It has also served in providing human resources to strengthen university and
industrial systems. By 2008, the centre’s aggregate publication and patent outputs were
growing, however they remain low.
In July 2008, a new call for proposals was launched for a seven-year successor Programme.
Source: Ministry of Economic Affairs and Communications of the Republic of Estonia, 2008
A recent survey study by COMPERA (2010), the ERANET on national and regional
programmes and initiatives dedicated to the creation and support of Competence

Rivera León & Reid for OECD 2010 14

Research Centres, provides a characterisation of competence centres. Centres can be
physical, or a centralised centre where the research is carried out and bundled on one
or more specific locations (i.e. Valencia, Sweden); but also virtual, where research is
carried out at various locations, most often in the research sites of one of the
participating players (i.e. Germany, Flanders).
Financial support is normally given in the form of grants, and subsidies through calls
for projects and calls for proposals addressed to universities, institutes of technology
and research groups within academic institutions. They can also take the form of open
competitions, and in some cases planning grants are also funded for pre-selected
projects.
Regarding the source of funding and budgets, these vary according to the aims and
scope of the programme. They are normally co-financed by the public and private
sectors. In the European Union, the average annual research budgets of competence
centres is €7.9m; from which 76% of total is public; and 24% is private coming from
industry and research institutes (COMPERA, 2010).
In Sweden the competence centres are integrated in a university, and one of the
selection criteria was that a number of industrial partners supported financially the
activities of the centre. The Swedish model followed a stepwise funding and follow-up:
during the first two years of the competence centres, funding came entirely from
public funds; after two years, the programme covered up to SEK 6 million per year of
total expenses of the centre, while the industrial partners contributed at least with the
same amount, including kind contributions.
In the Estonian Competence Centre Programme, the centres were implemented as
independent legal entities, and these are co-financed by the European Regional
Development Fund (although the Programme was initially funded from solely national
funding), with a budget for the period 2007-2013 of 1 billion kroons (€64m), with an
additional contribution from the project partners of between 30-35%.

6. Success conditions and data on implementation and impact

Unlike other innovation policy instruments, competitiveness poles and PPP have been
systematically evaluated and their impact analysed largely. A recent compilation of
macro-economic benefits from success stories on clusters initiatives in the European
Union by the IRE subgroup (2008) shows two types of benefits from cluster
initiatives:
• Those related to knowledge spillovers, including the creation of formal and
informal linkages and networks between firms, research institutions, public
agents and other local organisations; and
• Those related to the increase in the attractiveness of the hosting regions,
including productivity rises, competitiveness enhancement, and in the long-
term, economic growth and employment.
External mid-term and final evaluations of regional programmes have shown as
immediate impacts evolutions of the cluster populations, notably increased
participation of SMEs but also re-orientation of university activities towards
economically more relevant research as well as boosting industrial doctoral studies
(Arnold et al, 2008). Impacts related to knowledge spillovers include increases in co-
operation processes between research institutes and the private sector; increase of
partnerships in the private sector (BELSPO, 2010); and improvement of the linkages
between public and private research institutes and groups. Public research
laboratories had benefited substantially (Conseil régional de Bretagne, 2008) and
became central in pushing for collaborative projects, between the public and private
sectors.

Rivera León & Reid for OECD 2010 15

Regarding processes in support of productivity rises at the regional level; impacts
include the adoption of a more strategic vision by the academic world directed towards
industrial use of research results. The initiatives had also helped in orienting and
informing other regional policies in support of enterprises, and had increased the
awareness of enterprises on the existence of these policies (Aranguren, 2010).

Results of the Evaluation of the French Competitiveness Clusters

In the 2007-08 period, an independent mid-term evaluation was conducted for the “French
Competitiveness Clusters” programme. The evaluation was based on both global policy and each
cluster individually. Dedicated means, consistency with other public policies (R&D and
innovation), cluster selection process, financing support processes, policy management at
national and local levels, synergy between actors, first effects on local actors were evaluated on
the policy level.
In the evaluation of individual clusters, the following points were taken into consideration:
Economic and international strategy; cluster government and animation, evolution of the
cluster population; R&D projects and firm-public research-training synergy; territorial
settlement and network strengthening, including structural projects; SME’s integration and new
enterprises creation; Human resources training; and Green development approach.
The evaluation results showed that 39 clusters had fully reached the objectives of the policy, 19
clusters have partially reached them but should devote more efforts in strategy definition and
governance, and 13 clusters would benefit from an in-depth rearrangement.
Between 2005 and 2008, the number of new entries into competitiveness clusters increased,
and in particular of large firms and SMEs. Actors from public research were less numerous but
acted usually as project leaders. In addition, partnerships between clusters and economic
development operators had increased as well. The evaluation stressed that the competitiveness
cluster policy has triggered or accelerated a cooperation process on innovative projects in all
industrial sectors. It was also concluded that the competitiveness clusters can be an important
boost to improve the links between public and private research and eventually strengthen the
French strategic positions in the fields of research, development and innovation, and
particularly abroad. On the basis of these results, the French government decided to launch a
second phase of the competitiveness cluster policy (Cluster 2.0) for a further 3 year-period
(2009-2011) with a total budget of €1.5 billion.
According to the data published by the Ministry for the Economy, Industry and Employment at
the end of the first round of the programme 71 Competitiveness Clusters were supported divided
into three types: 7 global (Word class) Competitiveness clusters, 10 globally oriented
Competitiveness clusters, and 54 Competitiveness clusters. In the original version of the policy,
only 15 Competitiveness clusters should have been selected. Despite the fear that public funding
would be spread amongst the 71 clusters, data show that funding focuses on the top clusters.
80% of the €36 million grant for the clusters functioning costs have been attributed to world-
class clusters. Clusters cover various thematic areas such as aeronautics, ICTs, life sciences; and
other traditional sectors such as wood, construction and finance.
5,000 companies were cluster members in 2007, of which 80% were SMEs. 738 R&D projects
with budget €3.9 billion and 14,000 researchers, have received €946 million public funding
since 2005. 54% of funding goes to cluster SMEs, within the framework of the French Inter-
ministerial Fund and Oséo (not including support for laboratories). 2,097 R&D projects received
agency support (ANR and Oséo) in 2006, 2007 and 2008.
Source: BCG et al., 2008
Finally, the “natural” birth of a cluster is usually traced to historical circumstances,
such as the availability of raw materials, specific knowledge in R&D organisations,
and/or traditional know-how. The success implementation of competitiveness poles
also depends on pre-existing scientific and/or industrial strengths at the regional level.
In short, initial endowments matter (McDonald et al 2007).

Rivera León & Reid for OECD 2010 16

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