Promoting cluster policy in Vietnam: some lessons for

institutional building

prof. Nicola D. Coniglio

University of Bari (Italy) & Norwegian School of Economics

New Delhi (India), 20-22 February 2014

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Learning from a case study:

The project: UNIDO Project “SME Cluster Development” in Vietnam (2010-2012)

Aim: building national capacity for (scaling up) cluster policy in Vietnam.

Beyond the “pilot” approach: working – together with different Ministries and CIEM - with the Institutional aspects of sustainable cluster development (policy design).

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Do we really need to ”embedd” cluster policy into the Institutional framework?

(pilot) Cluster development initiatives might be successful in the absence of a structured “cluster development framework” …. but….

… the scaling up of cluster development initiatives requires an Institutional arrangement (software: legislation / Master plan / policy guidelines; hardware: public officials – national or subnational agencies or ministries etc. - allocated with the responsabilities over cluster policy initiatives

Institutional ‘bottlenecks’ are one of the main sources of failure of cluster development initiatives

• The government (national and/or local) is a crucially important actor of cluster development;

• Cluster policy is a complex industrial policy: i) address multiple market failures;ii) cross-cutting issues (requires a competent and authoritative coordination of multiple ‘policy tools’);iii) Involve several actors and multiple-levels of Government

• A badly designed Institutional setting will represent the main obstacle (stumbling block)

• Risks: bureacratic inefficiencies / bureacratic

‘captures’

Institutionalization of cluster policy: pro and cons

There is no ‘one-size-fits-all’ cluster policy setting. The optimal policy setting depends on the specific circumstances

Institutional diagnostics is a fundamental prerequisite (division of labour within the Gov / identifying the ‘capacity’ and ‘structural’ constraints / strenght and capacity of other key actors such as business associations) Avoid adding Institutional Complexity (not another empty office in a Ministry but an effective and authoritative ‘coordination tool’ of policy actors which tipically conduct their job in isolation)

Vietnam case lesson 1. Identifying the policy constraints

• A checklist of the main issues Who is in charge? (there is a strong case for ‘placing’ cluster policy close to SMEs development policy) The division of responsabilities btw Central and Local governments (definition of the legal framework / funding / coordination / implementation / monitoring / evaluation) Involvement of other stakeholders

2. Identifying the best (not necessarily the optimal) possible

policy architecture

• Limited institutional capabilities (transferring or developing ‘best practices’)

• Heterogeneous ‘visions’ (often very confused vision…)

• Intra-institutional conflicts (need a neutral and credible broker)

3. Why we might need an ‘impartial broker’ also for the

‘Institutional’ element of cluster policy

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THANK YOU FOR THE ATTENTION!

Email contact: Nicola.Coniglio@nhh.no

Clusters’ club

Clusters’ club

Ministry of Planning and Investments

Ministry of Planning and Investments

Ministry of Finance

Ministry of Finance

Ministry of Education and

Training

Ministry of Education and

Training

Ministry of Industry and

Trade

Ministry of Industry and

Trade

Ministry of Science and Technology

Ministry of Science and Technology

Inter-ministerial committee

Inter-ministerial committee

Provincial Governments

Provincial Governments

ClusterCluster

ClusterClusterClusterCluster

ClusterCluster

A (potential) model of governance of cluster policy in Vietnam

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Division of roles between central and provincial government