Clusters of Competitiveness

This primer on “Clusters of Competitiveness” provides a critical overview of competitiveness at many levels. Competitiveness is a broad subject with applications at the level of the firm, industry, region, nation, and global economy. Each one of these aspects has a rich literature drawn on by academics and policy makers over a long period. This book seeks to present a broad overview of the main ideas underlying competitiveness and its applications, highlighting and discussing in greater depth the topics that are of relevance currently. Specifically, the book draws out the experiences of and lessons for developing economies, and examines in detail the role for policy.

Competition, competitiveness and growth are inherently linked and provide a compelling basis for policy analysis and recommendations. The authors begin by looking at competition and competition policy and the effects of these on economic growth, concentrating on product market regulation and finding that more stringent regulation is negatively associated with economic growth. Competition policy has an important role to play in promoting growth. They highlight the reasons why competition policy is critical for developing economies in the current era of globalisation and liberalisation. Moving on, they next provide an overview of competitiveness, highlighting its application to the firm, nation and global economy. The authors differentiate between price and non-price measures of competitiveness, examining the advantages and disadvantages of each and providing a clear guide to the non-price measures that have proliferated in the business literature in recent decades. They examine how the concept of national competitiveness has evolved and classify this according to price and non- price measures. Data from the International Institute for Management Development, the World Economic Forum and the World Bank are discussed, illustrating competitiveness rankings across countries over time. Turning to innovation, the authors emphasise its relationship to economic growth and competitiveness. The modern, knowledge-driven globalised economy is a product of innovation and competitiveness. Drawing on this, they next examine the necessary elements of an effective innovation policy in meeting the economic and social challenges of the modern age.

This primer concludes with a critical overview of clusters and the stimulus for economic development at the local, regional and global level that arises from the connections between firms forming clusters. The authors look at cluster initiatives, which are organised efforts to increase growth and competitiveness within a region and are also a tool for government in pursuing policy reform.