Fall of Cluster in New Zealand - Why Med Abandoned the Cluster Programme?

Why MED abandoned the cluster programme?

First, the programme was too small, too thinly spread and without a clear definition of objectives and outcomes. Hence, it was difficult to measure its effectiveness. Secondly, collaboration to target-specific outcomes resulted in product duplication between CDP and other NZTE programmes (MED, 2005, 2006). Thirdly, the programme was abandoned as it was felt that "regions were in a better position to prioritise and make decisions that suit their needs which may include cluster funding" (Policy Progress, 2010). In addition, many of the clusters in NZ are location-based clusters that can fall under pressure in the event of rising land prices & urbanisation (Akoorie and Scott-Kennel, 2005). Moreover, a lack of transparency in aspects of NZTE's operational decision-making process has also contributed to the failure of CDP. Lastly, if the government was to continue to support the CDP, a clear need should be identified. However, this was not met by the NZTE collaborative-mechanisms (MED, 2005).

Does the broader remit of economic development address this gap?

The idea of broader remit can address the gaps by prioritising its focus on industries: with high levels of productivity and competitive advantage, significant scale, high rates of export growth, and where government action has the best chance of success (e.g. ICT, high-value manufacturing and services industry). The programme also provide greater incentives to firms for innovation, improved access to capital and networks for internationalization, and provide policy advice at the firm level and its link to business performance. Importance is given on establishing business in Auckland to drive for national economic growth and for high value economic activities. In addition, MED also addresses the issues faced by NZ SME's and provides advice to government thus ensuring that the programme is large, wide-spread, focussed, and clear on objectives and expected outcomes. Thus, with MED leading from the front through its broader economic remit, there is a shift from government being seen mainly as a source of operational funding for to becoming an integral partner (MED, 2011).

Provide international example of a country that still uses cluster initiative and briefly describe what is involved

INDIA

With the objective of making Indian SME's globally competitive, India has more than 6,400 clusters and is typified as high-tech clusters (ICT), traditional manufacturing clusters, and low-tech micro-enterprise clusters (MSME, 2006). In India, the cluster-development is promoted by the Ministry of Micro, Small, and Medium Enterprises (MSME, 2010). The main goal is to promote manufacturing, enhance productivity, renew industrial towns and to build new industrial townships,