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Tuesday, February 21, 2017

Can Innovative Clusters Protect the Economy from Recession?

Recessions can be brutal and countries often suffer from the magnitude of global changes and shifts that can impact their economic well-being. While they search for solutions to strengthen their economic position among lower cost emerging nations they should consider the benefits of developing clusters. According to a study entitled Coping with Economic Crisis-The Role of Clusters published in European Planning Studies, clusters offer a ray of hope in fortifying an economy from recession.

When the global economy adjusts there will be winners and losers. Some nations will pick up additional manufacturing while others will lose manufacturing. When times are good more people will be employed, while when times are bad people will be unemployed.  Europe and the U.S. has lost jobs over the past few decades due to the cheaper cost of manufacturing in places like China, Asia and India.

The only true competitive position that Western countries can make is to be more innovative and development oriented than emerging nations. They must lead the market with new products and services in order to ensure their offers gain the most market attention and interest. Clusters offer an opportunity to capitalize on Western ingenuity in a way that keeps manufacturing and jobs at home; even when the global economy shifts.

The study looked at Norwegian clusters and used surveys and data from four cluster organizations to determine how they acted under economic pressure (Skalholt & Thune, 2014). The economic time-frame use for the study was a recession from 2009 to 2010. They looked for innovative strategies, roles and activities of the clusters during the crisis, and the differences in behaviors of mature clusters.

The study found that mature clusters adapted to economic recessions by putting forward new innovative strategies, increasing collaboration with other businesses, and engaging in developing their workforce. A big concern was that lenders slowed down available investment capital and this choked off innovation. The study highlights that when monies were available, clusters were able to overcome challenges by developing new innovative products/services even while the global market was slowing.

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