Industrial Clusters Development

The definition of clusters generally applies to groupings of companies to produce a specific good or service with the aim of improving their collective competitiveness. Clustering emerges as part of the new industrial policies and a modern way to boost development. Clusters are a network that links private and public entities consisting of groups of companies, suppliers, and providers of various services, such as transportation, shipping, marketing, advisors, and others, covering backward and forward linkages in a particular commodity and service economic activity. The clustering strategy is based on strengthening links and cooperation between public and private sector stakeholders in order to enhance the collective competitiveness. It is believed that “clustering creates an appropriate environment in the form of access to finance, consulting services, engineering and technology, which is more effective when the companies are cooperating, especially for small and medium-sized companies serving core enterprises.”

Industrial clusters are based on three basic elements: geographical proximity, whether in urban or sometimes rural areas, in addition to value creation, finally, the appropriate business environment which plays a key role in facilitating coordination between companies, government institutions, universities, and research and development centers at the local and national levels. Numerous experiences in developed and developing countries indicate that small and medium-sized companies are able to enhance their competitiveness through cooperation and networking, as their activities become easier and more sustainable within geographical and sectoral clusters that generally face the same opportunities and threats.
From this point of view, industrial clusters seem to be one of the best means to enhance productive investment and expand and diversify the supply capacity and the economy through collectively overcoming market failures that limit the ability of the private sector to take long-term investment decisions towards diversifying existing activities as well as engaging in new economic activities that require price and profits exploration. Given the importance of industrial clusters, API has developed a methodology based on international best practices and empirical literature applicable to Arab countries aiming at accelerating structural transformation, promoting productive investment and the overall competitiveness of the economy. The API provides technical and institutional support to Arab countries according to this methodology through specialized training programs and advanced consultancies.