CPs to Solve Competitiveness/Economy/stem advanced Manufacturing Networks cp

Industry Clusters CP

1NC — Industry Clusters CP

Text: The United States federal government should establish and fund an industry clusters program that stimulates the collaborative interactions of firms and supporting organizations in regional economies.

The CP solves with cluster programs increasing economic growth through competitiveness and innovation

Extend: “Clusters Solve”

Microeconomic policies like the CP are key to global economic competition – increased productivity, innovation, and new business creation

Paraušić 14 (Vesna Paraušić – Department of Scientific Resaerch, Institute of Agricultural Economics, Belgrade, Serbia; PDF; 11/11/14; Taylor and Francis Online -- Journal Economic Research-Ekonomska Istraživanja, Volume 27, Issue 1; “Correlation between the state of cluster development and national competitiveness in the Global Competitiveness Report of the World Economic Forum 2012–2013”; http://www.tandfonline.com/doi/full/10.1080/1331677X.2014.974917; accessed 7/14/17) {DS]

Many authors emphasise the role of clusters in building national competitiveness. The largest contribution to the promotion of clusters was given by Michael Porter. Specificity of Porter’s interpretation of sources of national competitiveness (Porter, 1990, 1998, 2000, 2008) is reflected in the importance and significance that this author gives to the quality of the business environment and clusters, as an integral part of the business environment, in creating national competitiveness or international competitiveness of companies in specific industries or industry segments. According to this author, globally competitive and export oriented companies do not succeed in isolation, but in the cluster of industries, which is composed of strong horizontal (common customers, technology, channels) and vertical links (customers/suppliers) between companies and institutions. Fairbanks and Lindsay (1997) point out seven patterns of uncompetitive behaviour of the governments and entrepreneurs in developing countries and at the same time they observe them as sources or opportunities for the future success of an economy (so called hidden sources of productivity growth, innovation and competitiveness). One of the patterns of uncompetitive behaviour, but also an opportunity for development of national competitiveness is: ‘lack of cooperation between the companies and institutions in value chain, or non-existence of clusters’. In an interesting analysis of a weak competitive position of Colombian leather bags in the US market, the authors concluded that the main reason for this market position of Colombian leather industry ‘lies’ in the absence of cooperation between companies in a long production chain: from farmers, through slaughterhouses and tanneries, to manufacturers of leather products. Sölvell, Lindqvist, and Ketels (2003) point out that cluster initiatives are central points of industrial, regional and innovation policies in developed countries. Cluster initiatives are being developed in three different areas of policy: (1) regional, industrial and SME policy; (2) the policy of attracting foreign direct investments and (3) scientific research and innovation policies, and all these policies are directed towards the ultimate goal of developing microeconomic and national competitiveness. Krugman and Obstfeld (2009) make a distinction between internal (on the company level) and external economies of scale (sector level) and emphasise that clusters are an important factor of external economies of scale and source of international competitiveness. External economies of scale arise when the cost per unit of product does not necessarily depend on the size of any particular company, but the size of the sector (production capacities and sector capability respond to export demand) and the presence of clusters in the sector (concentration of many small enterprises) Reviewing the literature on clusters (Sölvell, Lindqvist, & Ketels, 2003; Porter, 1990, 1998, 2000, 2008) and analysing the reports on clusters of numerous international institutions (European Commission, 2006, 2008; England’s Regional Development Agencies, 2003; Organisation for Economic Co-operation and Development, 2007; United Nations Conference on Trade and Development, 2002; World Economic Forum, 2008; World Bank, 2009) the following relationship between state of cluster development and national competitiveness and its characteristics can be noticed: Clusters have a key role and they are very important in the development of microeconomic competitiveness. Clusters affect the competition of companies in three ways: by increasing the productivity of companies, by driving the direction and pace of innovation (which underpins future productivity growth) and by stimulating the formation of new businesses. For example, countries with well-developed clusters in many industrial segments have internationally successful and globally competitive companies, and the nature of the company competitive advantage is based on sophisticated and differentiated/unique processes and products (compared with the competition based on low costs and natural resources in companies that do not operate in a cluster environment). Through microeconomic competitiveness, clusters contribute to building the sustainable competitive advantage of a region and nation in the global economy in a particular industry sector. It is important to point out the huge impact of clusters on creating a stimulating and desirable business environment, through which an indirect impact of clusters on national competitiveness is achieved. The impact of clusters on the quality of the business environment is reflected in: (1) encouraging the local competition (many studies show that local rivalry is the key driver of international competitiveness, and clusters encourage exactly the competition among the local companies); (2) the development of entrepreneurship; (3) the presence of numerous and specialised suppliers in the local market; and (4) the established public–private partnership and the like. Many countries, such as Israel, the Netherlands, Finland, Germany, thanks to their high level of productivity and high investments in research and innovations, have built high national competitiveness, which further promotes the development of innovative world-class clusters.

Broad economic policies fail, the CP uses regional clusters to increase competition through trust and collaboration

Ketels 13 (Christian Ketels – member of the Harvard Business School faculty at Professor Michael E. Porter’s Institute for Strategy and Competitiveness. He holds a PhD (Econ) from the London School of Economics and further degrees from the Kiel Institute for World Economics and Cologne University. He is President of TCI, a global network of professionals in the field of competitiveness, clusters, and innovation and Senior Research Fellow at the Stockholm School of Economics; Article; PDF; 4/3/13; Cambridge Journal of Regions, Economy and Society 2013, 6, 269–284 ; “Recent research on competitiveness and clusters: what are the implications for regional policy?”; http://www.hbs.edu/faculty/Pages/item.aspx?num=44859; accessed 7/13/17) [DS]

Relevance of recent competitiveness and cluster research for regional policy Overall, the recent research on competitiveness and its drivers points towards an emerging newrole for regions: Regional policy should focus on microeconomic competitiveness and is in this sense different from the broader scope of economic policies to be set at the national level. The national level has an important influence on pretty much all dimensions of microeconomic competitiveness. These influences have different implications across regions, reflecting the heterogeneity in local circumstances. Regions have an important role in managing these influences and national policies given the specific context in their location. The relevant choices are best made in the context of an economic strategy that defines the strategic positioning of a region in the national and global economy. Public–private dialogue is critical to ensure that such a strategy is consistent with the views of companies and thus able to mobilise their actions. While still only suggestive, the new work on national competitiveness also indicates that there is a qualitative difference in the policy making challenges faced at the national versus the regional level. For many policies set at the national level the challenge is to adopt and sustain policies that have been shown to be prosperity enhancing (for example, low inflation, effective property rights, open markets, etc.) irrespective of locational circumstances. At the level of subnational regions the challenge is much more how to prioritise among many policy actions that are in general prosperity enhancing on their own to create a policy mix that has the strongest positive effect given local circumstances. Current research that abstracts from interactions across different dimensions of competitiveness does not provide the necessary tools to support such choices. The cluster mapping data are a critical diagnostic tool to understand the health and dynamics of any regional economy. It helps regional policy makers to understand what set of activities drives prosperity generation, how their competitive position is changed and whether there are new activities that are emerging. Cluster categories provide a useful level of aggregation to doso, because they capture underlying economic linkages. Broader categories like manufacturing/ services generalise across activities with very different competitive realities while more narrow categories like individual industries fail to capture the economic opportunities of linkages within a cluster. For a given cluster, the particular cluster profile—that is, strengths across industries within the cluster, presence of related clusters, existence of institutions for collaboration that can support joint action, etc.—can then provide critical additional insights to inform policy making. The recent research on clusters as well as the related research on sectorial composition of an economy does suggest that competitiveness upgrading should have a cluster/sectorial dimension: One reading of this data is that location—which generally is meant to mean countries—should actively influence the sectorial composition of its economy (Hausmann et al., 2012; Lin, 2011). This view differs from earlier arguments about industrial targeting in the observation that such changes in composition should follow a sequential path, where economies gradually transition towards related activities that draw on related underlying comparative advantages. This literature tends to be less specific on the policy tools to use, which leaves the door open to distortive interventions. Another reading of the data suggests that competitiveness upgrading needs to consider the specific conditions relevant for the sectors/ clusters in which a location—which generally is meant to mean regions—is specialised in (Porter, 2003). The change in composition is in this literature seen as market-driven response to upgrading the business environment, not as something that economic policy should directly target. Policy tools to consider in this context are all characterised by their positive impact on productivity and innovation. Traditional interventions that distort the market to create private profitability do not pass this test. The data on cluster programmes and cluster initiatives suggest that policy makers need to pay significant attention to the specific tools and programme structures that they deploy. While cluster programmes can be launched by different levels of government, clusters and thus cluster initiatives are always regional in nature. The data suggest that the dynamics go both ways: Strong regional government increases the likelihood that cluster initiatives succeed. Cluster initiatives can increase trust and capacity for regional collaboration.

Cluster development spurs innovation in companies to cause economic competitiveness

Sala et al 16 (Diana Claudia Sala – West University of Timișoara, Faculty of Economy and Business Administration, Romania, Mădălina Dumitrița Maticiuc – West University of Timișoara, Faculty of Economy and Business Administration, Romania, Valentin Partenie Munteanu – West University of Timișoara, Faculty of Economy and Business Administration, Romania; PDF; 9/3/16; “CLUSTERS INFLUENCE ON COMPETITIVENESS. EVIDENCES FROM EUROPEAN UNION COUNTRIES”; http://conferinta.management.ase.ro/archives/2016/PDF/1_2.pdf; accessed 7/14/17) [DS]

4. RESULTS AND DISCUSSION Using data from Global Competitiveness Report 2015-2016 we first analyzed the state of cluster development for all 28 European Union member countries. Remembering, from the first part of the paper, the characteristics of clusters and their impact on companies and nation competitiveness, we identified the score obtained by each country on this indicator inside the report of World Economic Forum. Looking at the score obtained by each country, we can see that cluster development in the western countries of Europe is seen more pregnant then in the east part of the continent. In the same time we can say that state of cluster development in the developed countries is significantly better than in the developing ones. The top positions are occupied by 13 of the 15 European Union states that joined the European Union by 2004. Malta is the state which is intercalated in the rankings, displacing Spain from the 14th place on 15th one, while Greece is occupying the last position of the ranking, 28th place. The top rankings are Germany, Italy and the United Kingdom for EU 15 and for EU 28 are Malta, Cyprus and the Czech Republic. The last positions of the ranking, except Greece we have just mentioned, in ascending order of score are Croatia, Bulgaria and Slovenia. Romania ranks 20th in the ranking and 6th among the 13 countries that recently joined the European Union, since 2004. Analyzing the Global Competitiveness Index, we can see EU15 group retains top positions, once again Germany is occupying the first position in the ranking, but this time from a different perspective, not State of cluster development. Italy, which occupied in previously ranking second position, now reached 18th place. Last place ranking is again occupied by Greece, Romania occupying 21st place in the ranking. It can be concluded when considering the Global Competitiveness Index scores that the Central-East European Countries achieved the lowest scores. As we may note, except Italy and Portugal, the top countries on the State of cluster development are also the in the top of Global Competitiveness Index. The East European Countries are ranked in the middle and bottom half of the index. Looking at Figure 3, we can see the results from the Innobarometer 2004 and 2006 surveys. They offer the evidence that clustered companies are more innovative than non-cluster ones. It is worth mentioning that the data from Innobarometer refers only to EU 25. The companies inside a cluster are much more likely to introduce new or significantly improved products, services and production technology, to conduct market research, to contract out research to other firms or institutes or to apply for patents. There are evidences that show how „regional competitiveness and innovation seem to emerge from innovative complexes of firms and organizations” like clusters (European Commission, Identification of Knowledge-driven Clusters in the EU 2012). Spurring innovation can help the growth of productivity and competitiveness (Atkinson, 2013). Concerning innovation pillar in the Global Competitiveness Report we can see that the top is again occupied by the EU15, with exceptions for Italy, Spain and Greece, but this time, Greece is not in the last position, Croatia and Bulgaria achieving lower scores. In this field, Romania occupies just the 25th place. Interesting is when we analyze the 28 Member States of the European Union by innovation disposing rankings from two sources: European Union Scoreboard 2015 and Global Competitiveness Report 2015-2016 in Table 1. As it can be seen, even if in both ranks, the top is occupied by the states part of the EU 15, we can see some differences regarding the more innovative and less innovative countries. In the Innovation Union Scoreboard 2015, the most innovative country is Sweden, followed by Denmark, Finland and Germany (European Commission, Innovation Union Scoreboard, 2015). In the Global Competitiveness Report, the most innovative country from EU 28 is Finland, a difference of two positions compared with the ranks in Innovation Union Scoreboard. Romania occupies the last position in the Innovation Union Scoreboard, and in the Global Competitiveness Report 25th position. For both reports, the last positions are occupied by the new intrants in the European Union. Even if the methodologies of the two documents used in the analysis do not cover the same trajectory, both are focused on innovation analysis and the results appear to be similar. As stated in the beginning, we based our research on the idea that the competitiveness of a country is affected by the state of cluster development. Throughout our study, we demonstrate that EU 15 countries are more competitive and innovative than the recently joined countries. The competitiveness of a country requires an effort made not only in the private but also in the public sector. In a globally competitive environment most likely to succeed are the competitive companies and often, the competitiveness is given by the company's ability to innovate. Romania needs to create a sustained programme for cluster development to create a perfect environment for innovation. It is necessary a more rigorous understanding of clusters because the past efforts have been imperfect.

Russia proves – cluster growth links key economic parts and causes innovation competition

Popkova et al 17 (Elena G. Popkova – International Economics and Economic Theory, Volgograd State Technical University, Yulia G. Tyurina – Orenburg State University, Orenburg, Russia, Valentina E. Sukhova Aleksey F. Rogachev, Olga A. Boris Valentina N. Parakhina; PDF; 3/8/17; SpringerLink, Contributions to Economics Journal, pg 47 - Role of Clusters in Promotion of Region’s Economic Competitiveness; “Integration and Clustering for Sustainable Economic Growth”; https://link.springer.com/book/10.1007%2F978-3-319-45462-7; accessed 7/13/17) [DS]

Abstract: The article shows the background of the implementation of cluster policy, the problem of creating cluster structures, and their role in improving the competitiveness and efficiency of the regional economy. The basic characteristics in a meaningful definition of a cluster are determined. The mechanisms of forming industrial clusters in the Voronezh region are discussed. The analysis of the main results of implementation of cluster policy in the region demonstrates the competitiveness of the regional economy and its innovative orientation. Modern economic literature provides various definitions of a cluster. Researchers of the French classical theory considered clusters on the basis of the concept of “filiere”, the purpose of their formation is the creation of technological linkages between industries and different sectors of economy in order to realize the main advantages. In our opinion, the most appropriate and effective theory of cluster approach is the method of M. Porter. He suggested a theory of national, state, and local competitiveness in the global economy. “Clusters are geographically concentrated groups of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated organizations (e.g., universities, standards agencies, trade associations) in particular fields that compete but lead collaboration”. Clusters cause a new view on the economy and its development, new roles of business, government and institutions, and new ways of structuring the relationship of the type “business—government or business—institutions” (Porter 2005). The processes of globalization, global financial crisis, increased competition, the use of IT, modern knowledge, processes, and products (services) led to the emergence of clusters as an institutional framework of innovative development of regions and a country as a whole. As a consequence, the theory of clustering can be considered as a new approach to assessing conditions for the development of the regional economy, representing the system as a single interrelated complex that provides the possibility of making management decisions. In the promotion of innovation development, a cluster becomes the most acceptable form of activity in the form of a network of independent production companies, including suppliers, creators of technologies (educational and research institutions), market institutions (consultants) and consumers interacting with each other within a network. D. Lyakhovsky (2016) gives the following definition: “A cluster is a network of independent manufacturers or service firms, including their suppliers, creators of the technology and know-how (universities, research institutes, engineering companies, etc.), market institutions (brokers, consultants), and consumers interacting with each other within the same network and having geographical proximity”. This definition gives a broad idea of possible members of a cluster, their role, and functions, reflecting a modern point of view. The main role in the definition is given to consumers. We see a contemporary viewpoint on the role of a final buyer in the mechanism of transformation of resources and obtaining results of practical activity, i.e., all members of the cluster form a sort of network through interaction and relationships inside a cluster. The interaction based on geographical proximity determines the effectiveness of the cluster itself. One may state that the most successful clusters will be formed if there are innovations in engineering and production technology, followed by entry into new market niche, as one of the features of a cluster is its innovative orientation. To date, the cluster is considered as a network of geographically interrelated and complementary enterprises, including specialized suppliers, producers and buyers, which are in a close relationship with research and educational centers, local institutions, and authorities with the aim of improving the competitiveness of enterprises, regions and national economies. Regional cluster is a set of business entities located on the same property and forming the basis of the local environment through the production of the final product, based on the use of knowledge and technology. Such clusters usually unite not only large enterprises but also small and medium ones. Clusters are a driving force for improving competitiveness at all levels of the economic system, the engines of economic growth and social progress. At the core of the cluster, as a rule, there is a large enterprise which interacts with other organizations involved in the cluster, based on vertical links (chains of purchases and sales) and horizontal ones (more services, use of modern technology). There are auxiliary organizations that provide necessary technology, information, capital (financial resources), and infrastructure—they are typically created around large groups and become their suppliers. Large companies encourage them to the production of intermediate products and related services, which exerts a powerful influence on the development of small and medium businesses. Therefore, the competitiveness of the whole cluster depends on interactions within the clusters, the ability of their participants to use effectively internal resources and to mobilize external ones. Thus, it should be noted that while forming a cluster, one must combine the resources of all kinds, such as: technology, capital, knowledge, services, human resources, etc., so that they could give unconditional and exceptionally high emergent effect. It is necessary to find the type of association, communication and interaction, which will give a constant generation of innovative ideas and relatively continuous process of turning them into goods (services).

They Say: “Links to Politics”

CP avoids the politics DA – cluster programs are bipartisan and supported in Congress

Gurau 10 (Michael Gurau – MBA University Of Virginia - Darden Graduate School Of Business Administration, BS Finance Babson College; Article; Biz Journals; 12/21/2010; “Clusters represent a bipartisan opportunity”; https://www.bizjournals.com/boston/blog/mass-high-tech/2010/12/clusters-represent-a-bipartisan-opportunity.html; accessed 7/13/17) [DS]

One of the earliest U.S. voices advocating cluster development as a framework for regional competitive strategy is the Council on Competitiveness, a policy organization formed in the Reagan years, with the goal of increasing American competitiveness in the global marketplace. The council is one of a small group of respected cluster research organizations — its Regional Initiatives reports serve as a valuable resource that describes and prescribe cluster development process and strategies. Porter — unquestionably the leading researcher and spokesman for clusters — served then and now on the council’s executive committee. Porter’s support for a Republican viewpoint is not limited to the council. He was tapped to chair Mitt Romney’s Global Competitiveness Policy Advisory Group. Notwithstanding his political bent, Porter has proven himself accessible to all political parties through his Institute for Strategy and Competitiveness at Harvard, and has provided counsel to SBA’s Mills of her work. The ISC received $1 million this fall from the U.S. Department of Commerce (EDA) to support its long-standing cluster mapping initiative. Another historical point: The America COMPETES Act was signed by President Bush and became law in August 2007. This was an act, “to invest in innovation through research and development, and to improve the competitiveness of the United States.” COMPETES was re-authorized in May in the House by 262-150 — so it included more than a few Republicans. In a tight fiscal environment, it turns out that clusters are not that expensive. As argued by Mills and others, cluster development is private sector led and provides good “bang for the buck.” Activating, growing and sustaining clusters involves gatherings of regional sector market actors and sustaining these connections over time, activities that can largely be carried forward by technology and trade organizations (and/or cluster development organizations such as the Mass Technology Leadership Council) with sponsorship support from professional services firms, utilities and other such players. While the government can play a catalytic role, the private sector can and should carry the ball to drive toward the benefits that accrue to well functioning clusters: productivity, innovation, higher wage jobs, and economic growth. Given that cluster policy has its formative roots with Republican advocates, is inexpensive to implement and is private sector driven, there seems a unique opportunity for this issue to gain bi-partisan support. Republicans in Congress can be happy (and justified) to claim it as their own, while Democrats can speak to making clusters part of the federal government’s DNA. Cluster development is a long term game so there will be plenty of opportunity for future administrations — whether D or R — to continue to carry this ball forward. For now, it’s got sufficiently compelling optics — focused on regional innovation, led by private sector, inexpensive — to give each party something to crow about.

Arizona and Ohio prove the CP is popular

Muro and Katz 10 (Mark Muro – senior fellow and the director of policy at the Metropolitan Policy Program at Brookings, leads the program’s advanced and inclusive economy activities, bachelor’s degree from Harvard College and a master’s degree in American studies from the University of California, Berkeley, Bruce Katz – inaugural Centennial Scholar at the Brookings Institution, where he focuses on the challenges and opportunities of global urbanization, graduate of Brown University and Yale Law School, and is a visiting professor at the London School of Economics; Article; 9/24/10; New Republic; “The Cluster Moment: Getting Real About the Economy”; https://newrepublic.com/article/77922/the-cluster-moment-getting-real-about-the-economy; accessed 7/13/17) [DS]

Yet beyond that, it also turns out that 10 years after the wide state adoption of cluster strategies a new group of governors and gubernatorial candidates of both parties are maintaining or stepping up their interest, often with strong public support. In Arizona and Ohio, for example, both the Science Foundation Arizona effort and Ohio‘s Third Frontier initiative were initiated by governors of one party (Democratic in the former; Republican in the latter) as vehicles for cluster-based, innovation-oriented economic development yet have each recently received strong affirmations and even expansions under subsequent governorships by the other party. Meanwhile, the bi-partisan consensus is being extended by leading candidates in the 2010 gubernatorial cycle. In Colorado, Michigan, New York and Tennessee, for example, John Hickenlooper, Rick Snyder, Andrew Cuomo and Bill Haslam all suggest tailoring state economic and workforce development strategies to the distinct business clusters of different regions. Hickenlooper and Cuomo are Democrats; Snyder and Haslam are Republicans. Haslam, the current mayor of Knoxville, has even called for regional jobs “base camps” to coordinate disparate investments in the service of unified strategies. In sum, the year 2010 is turning out to be an important juncture for the cluster paradigm. Which raises the question of why—and why now? What explains clusters’ renewed popularity? We’ll have some more reflections in the coming days, and our private sector, regional, and federal guests yesterday had their own views. But for now let us just note that some of the concept's new and bipartisan relevance owes to its Republican lineage and sound non-partisan concern with the mechanics of value-creation in local economies, whether metropolitan or rural, high-tech or manufacturing, suburban or inner-city. And we might observe that it’s also true that as a matter of policy action clusters—ranging from the famous Silicon Valley technology cluster to the Vermont cheesemaking cluster—are all about generating synergies and efficiencies, and don't tend to cost too much. That’s a good thing in bad times. But what is most timely beyond all that may be the possibility that the new prominence of regional innovation clusters reflects something deeper: a positive interest in locating a more grounded, realistic way to think about the economy and development efforts so as to put both on a more productive footing. Clusters, after all, represent the antithesis of the bubble economy of financial engineering, real estate games, and consumption that has now blown up and bitten us. Comprised of regional assemblages of firms, suppliers, trade associations, educational institutions, and related coordinating organizations working in the same field, clusters and cluster frameworks redirect attention, analysis, and policymaking to the more grounded, day-to-day interactions by which real companies in real places complete transactions, share technologies, develop innovations, start new businesses—and yes, create jobs. To that extent, clusters—whether of airplane manufacturing in Wichita or cleantech in Colorado or biomedical innovation in Cleveland—represent an antidote to the nation's recent economic zeitgeist of bubbles and consumption and a framework for recognizing and bolstering the real-world variety and dynamism of America’s “real” economy. Hot spots of productivity and collaboration as well as competition, clusters are the locations most likely to deliver a new economy that is export-oriented, lower carbon, innovation-driven and so opportunity rich. In short, cluster frameworks and strategies are all about getting real after a time of delusion.

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