Friday, March 15, 2013

How should we imagine the industry clusters of Europe 30 years later?

How should we imagine the industry clusters of Europe 30 years later? 

by Ferenc Nyakas

The industry of the world is going to change in the next decades – what should we expect for our continent?

The decision makers of Europe have to face up with the challenge of the current crisis, but they also have to care about the further future and competitiveness of the continent. The competitiveness can be raised by more effective activities in the industry and continuous research and development processes. As competitive advantage replaced comparative advantage by the 1990’s (Porter), clusters in the economy are the most effective tools to reach the above mentioned purposes.

The basic idea of clustering goes back to the second half of the 19th century when Alfred Marshall was inquiring of why the firms of the same industry are located geographically close each other? His answer was there is something in the air, what indicates new and new ideas.

Nowadays the advantages of clustering can be summarized in four main points. Firstly, the close location of similar companies can be explained both by first and second nature reasons, like common sources of raw materials or easy access to transportation hubs, like train centres. Secondly, if companies with similar activities and demand for labour force are concentrated geographically, it creates a pool of specialized labour, and it makes easier the search and matching process for both the employers and employees. Thirdly, the bigger demand for special inputs can raise a supplier network for the members of the cluster, thus it can be easier to find and use the most appropriate inputs. Finally, the observation of Marshall is right – in this atmosphere it is more likely to get the latest information of the branch, to get new ideas and develop them. (The Economist)

The leaders of Europe had recognized the benefits of clustering, and since 2006 there is a framework to encourage the creation of world class clusters in the European Union (Communication from the European Commission), therefore the intention of the governing institutions is serious, but it says almost nothing about the industrial area of the future clusters. A public research was carried out in 2010 by a business consultant company, aiming to find the key areas of industry clusters around 2040. (Research of PricewaterhouseCoopers

The industry clusters of the world in 2040
The authors of the Macro Consulting group examined five key areas of industry - like pharmaceuticals, automobile assembly, asset management, filmed entertainment and tertiary education - to find out what kind of shifts going to take place in the future. 

Europe, especially London will be able to maintain its role in the production of pharmaceuticals, asset management and tertiary education, but the continent will lose the one of its most important clusters, namely the automobile assembly in Germany. It is interesting, because the automotive cluster of Stuttgart is among the oldest ones in the world, but as it can be seen, its advantage from tradition is not going to be enough to compete with the new centres of the branch in South-America and Asia. In the field of tertiary education, the present clusters are likely to be able to retain their primacy, therefore Europe is going to play an important role in the next decades, but regarding the intensity of investments in this field in developing countries, it is likely that their universities going to get almost as well qualified as the former ones. Down to linkages to the leading academic institutions of the world, pharmaceutical clusters in London and New York can retain their present role, but the growing population of Asia going to fuel the rising up of a new cluster in Shanghai. Despite the tighter and tighter regulations, asset management clusters of Europe going to play important role, but the importance of Singapore is likely to get much higher in the following years. Finally, filmed entertainment clusters in Europe are week nowadays, and both in the future in comparison with Mumbai, Shanghai or Hollywood. To sum up the main message of the post, the importance of clusters in ensuring the future competitiveness of the EU is quite high and also we have to prepare for the challenges against the traditional areas, like automobile assembly, and we must concentrate on asset management, tertiary education and pharmaceuticals. It is important to emphasize that this article is focusing on industry, but for a deeper insight into the topic of competitiveness, the examination of services and information and communications technologies is also unavoidable.


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