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Abstract: There has been a growing concern of developing industrial clusters in developed nations and emerging
economies in the past two decades to strengthen economic growth and development. The concept of properly
organised industrial clusters has not yet been heavily implemented in developing nations, and Zimbabwe is not
an exception. Clusters are well known for their ability to reduce costs, enabling research and development,
increased productivity among other advantages. This paper is a policy prescription, to promote the adoption of
industrial clusters in Zimbabwe. There is greater need to improve export value addition and improve
competitiveness of local products against imports, and this can be attained through intensifying well organised
industrial clusters development.
Key Words: Industrial clusters, Exports, Imports, Productivity, Economic Growth, Zimbabwe
JEL Codes: E22, E23, F12, F13, F15, L11, L14, L24, L52, L60, M11, O11.
I. INTRODUCTION
Zimbabwe, just like many developing nations is a net importer and hence unfavourable balance of trade
and balance of payment. Continued reliance on imports of finished goods is unsustainable as it undermines current
efforts to resuscitate domestic industrial production, leading to significant trade and current account deficits (2016
Mid-Term Monetary Policy Statement).
Over the years, there has been greater effort to value add exports as a way to improve competitiveness
of exports. However, exports growth has been unfavourable even after the dollarization era. This calls for stringent
measures to be taken and also new ideologies to be incorporated borrowing from developed nations. Boosting
export sector may be enhanced through adopting the industrial clusters concept.
This paper seeks to introduce the concept of clusters in the development path of the Zimbabwean export
sector, as evidenced from other successful nations, including the neighbour South Africa. Empirical studies on
the concept of clusters has shown a strong link between organised industrial cluster activity and economic growth
and development.
Industrial clusters were firstly embraced by Western European and North American countries (Ketels
and Memedovic, 2008). As time went on emerging economies began to adopt clusters as a model for economic
development. However, for many less developed countries, Zimbabwe in particular, despite vast potential, more
has to be done on clusters. Although the need for having clusters is being realised, the implementation has often
left a lot of gaps, resulting in half-baked clusters which are often not competitive, let alone not visible.
Much literature on clusters has been preoccupied with activities in developed countries and emerging
economies, with little room for activities in less developed countries. This paper seeks to explore the background
which makes implementing the cluster concept difficult in Zimbabwe and the possible way forward and benefits
of formulating properly constituted cluster models. It draws from global success cluster case studies including
footwear in India, clothing in South Africa, textiles in Peru, electronics in South Korea, and manufactures of
surgical instruments in Pakistan etc.
Table 1 below presents a sample of notable successful clusters in the world.
Table 1: Examples of successful global industrial clusters
COUNTRY SECTOR PRODUCTS
South Korea Automobile manufacturing Vehicles, spares etc.
USA Silicon valley Information Technology Computer software
Hollywood Entertainment Film Production
Pakistan Manufacturing Surgical tools
Italy Leather footwear
Slovenia Manufacturing Tools and automobile parts
Scotland Creative Arts Films
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An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe
60%
50% 26%
40% 14%
30%
20%
10%
0%
DOMESTIC FOREIGN & DOMESTIC FOREIGN
COMPETITION COMPETITION COMPETITION
Statistics from the above Figure shows a significant overall impact of foreign competition which is not
health for an economy that aims growth. Most foreign competition is coming from South Africa, China, India,
and Brazil among other nations. Promoting and strengthening clusters will reduce outside competition and hence
aid in technological advancement through enabled research and development.
Capacity utilisation for many manufacturing sector firms has been low especially for the past decade
even after the dollarization era. Such justifies, the need to change production model and pattern; the cluster concept
has to be adopted to reap growth benefits.
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A lot of factors have been cited, to contribute to the low capacity utilisation. Among the factors include;
working capital constraints, low local demand, antiquated machinery and machine breakdowns, power and water
shortages, competition from imports, drawbacks from the current economic environment, high cost of doing
business and shortage of raw materials.
Exports growth in any country requires a well stable manufacturing sector. Zimbabwean export sector
has been shrinking over the years, posing economic growth challenges. The 2016 Fiscal Policy Mid-Term Review,
has acknowledged that the external sector is characterised by unsustainable trade and current account imbalances,
reflecting declining exports.
As at end of June 2016, exports, which contribute over 60% of the liquidity flows into the country,
totalled US$1.124 billion against an import bill of US$2.5 billion. The 2016 statistics indicated a 9% decline from
2015 statistics of US$1.232 billion. There is greater need for export growth strategies to be adopted in Zimbabwe
especially during this multi-currency era, where there is need to attract foreign currency in the economy to stabilise
the financial sector.
Central Bank of Zimbabwe Governor, in his 2016 Monetary Policy has also acknowledged export
shrinking. The Monetary Policy Review indicated that the economy has continued to be affected by sustained
mismatches between export receipts and imports as evidenced by the disproportionate import absorption relative
to exports especially for the period 2008-2015; a sign of weak economic fundamentals and over liberalisation of
current and capital accounts.
Given this state of the economy now, and its performance in the past, this study seeks to propose a way
that can help resuscitate the economic performance by raising export performance. The development of clusters,
which is seen as a missing link for growth of the manufacturing sectors should be supported through government
policy. The decline in export and import performance is a reflection of the overall slowdown in economic activity,
and this trend is no good for a developing country like Zimbabwe.
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Geographical scope: Industrial cluster boundaries should not be fixed. Instead they should be cross
cutting from one region to another, city, or even country. This is reiterated by Porter (2000:16) when he
says that, ...the geographic scope of clusters ranges from a region, a state, or even a single city to span
nearby or neighbouring countries (e.g., Southern Germany and German-speaking Switzerland). The
geographic scope of a cluster relates to the distance over which informational, transactional, incentive,
and other efficiencies occur.
Size, depth and breadth: Size of industrial clusters can be SMEs, big firms, research institutes etc. The
depth spells out the vertical relationships across the value chain in the industry. Conversely the breadth
focuses on the horizontal relationships of firms which can contain few or many firms (Todorova and
IIieva, 2010).
Proximity: Industrial clusters are geographically closer to one another. This allows for coexistence and
concentration of activities. Resultantly, networks and synergies are created. These allow for innovation
and competition. Todorova and IIieva acknowledge a contribution by Spencer e.t al (2010) in this regard.
The proximity makes clusters key drivers of prosperity and regional economic development.
Relationships among stakeholders: Two vital aspects for relationships in clusters are cooperation and
competition. According to Porter (1998) this is critical in aspects such as infrastructure, technology etc.
these allow attraction of other potential members to the cluster. As a result a cluster becomes on the
spotlight.
Life cycle: Todorova and IIieva (2010), note a contribution by Rosenfield (2001) by identifying critical
stages of clusters i.e. the embryo, growth, maturity and decay. Each stage therefore has different policy
implications and interventions. A concluding note which is vital, they state that clusters are not an event,
they are a process which evolves over time.
1
A good example is the Biotech cluster of North Carolina which developed from within a network of universities.
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locally (OECD, 2001; Porter, 2001). Thus proper cluster framework allows for networking, which facilitates cross
pollination of vital information.
Muranda et al (2014) noted the significance of the concept of clusters. They argued that clusters enable
growth of industries which is a prerequisite for economic growth. Industry growth is enabled through
technological and skills transfer effects.
Thompson (2005) gives two crucial points on importance of clusters. The researcher indicated that
clusters help in boosting export performance of a country. Giving a reference to Sialkot, the Pakistan cluster of
surgical instruments produced output amounting to $122 million between 1995-96. On the other hand, the Brazil,
Sinos Valley footwear cluster produced $200 million in exports in 1993.
Clusters benefits sometimes present themselves in terms of positive externalities (Thompson, 2005). The
externalities include numerous advantages such as market access, productivity, specialisation and reduction of
transaction costs.
Clusters are an essential strategy for economic development (Yang 2010). Clusters are an essential tool
for competitiveness of an economy which allows also to foster balanced regional development. This is enabled
by having each region to focus on the economic area it is well positioned on.
Present industrial cluster initiatives lack adequate resources e.g. funds, infrastructure etc.
The role of government becomes particularly important in availing of budgetary support to cluster
initiatives in the economy. According to Ketels et al (2003) its crucial for the clusters to have a physical presence
e.g. in terms of offices so as for the affairs of the clusters to be professionally run. Without offices for instance, it
becomes difficult for marketing, branding etc. of the respective cluster (Ketels et al, 2003). They argue also that
the role of government funding should be diminished with time and instead member subscriptions should sustain
the cluster.
There is a promising SME cluster in Zimbabwe located in Glenview, Harare, dealing on furniture. The
cluster, if well supported may become more efficient and hence contribute significantly to economic growth.
Currently, the area is characterised by poor infrastructure that may be attributed to poor urban planning. The area
was affected by fire in 2015, due too poor security set up, and hence this drove down the eager to grow, as losses
were recorded. There is greater need, to provide better structures to ensure efficient flow of operations by these
SMEs.
A recent development in Zimbabwe in the Information & Communication technology (ICT) sector is
commendable. The launching of the Innovation Fund by the ministry of ICT in the first quarter of 2016 to
encourage software development to rival applications such as WhatsApp, Viber etc. is a step in the right direction.
From the proposed framework in the ICT cluster we can conjecture the following simple model;
telecomms
firms
budding
government
innovators
ICT
CLUSTER
Thus the government, budding innovators and the telecommunications will come together resulting in
the ICT cluster. This framework is necessary although it is not sufficient. It lacks depth, an essential component
explored earlier in Fig 1. Rather, the net should be cast wider to include other key stakeholders such universities,
research organisations and other supporting stakeholders. The role of government should be mainly to facilitate
than to be heavily involved since it has an overflowing plate already. The role of government is also emphasised
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by Eliason, Howse and Trebilcock (2013), who argued that the role of government should be on public policies
which help in ensuring that comparative advantage is enhanced.
Furthermore, there is need for massive investment in requisite infrastructure in this sector. For instance,
power, internet connectivity and other ICT supporting infrastructure etc.
Presence of too small, largely SME driven and fragmented cluster activity.
Presently, cluster activity is visible in traditional sectors such as furniture and handcraft. However, these
are not growing much. Rather the SME sector should come in as mini clusters within the broader clusters. SME
sector becomes very important at later stages of growth of an economy. Tourism is a cluster performing reasonably
but is largely sensitive e.g. seasons etc. hence cannot be relied heavily as a cluster to transform the economy.
A survey by FINSCOPE 2012 on the SMEs sector of Zimbabwe reflects a number of problems embedded
in this sector. For instance, the research found out that 71.6 % of the businesses are individually owned and with
no employees. Those into the medium category with 30/40-70 employees were only 0.7 %. Further, the research
identified that only 15 % SMEs were registered/licensed, the rest are informal. The survey showed also that about
39% of SMEs operate at residential premises, due to the lack of access to infrastructure. A further, insight into
that matter also points to poor urban planning in the country, and this should quickly be addressed for smaller
towns that are growing. Thus the SMEs sector, currently cannot be relied entirely to be an engine of cluster
activity.
Failure of cluster initiatives to be complimented by other policies areas such as foreign direct investment
Empirical studies have shown that investment policies (FDI), regional SMEs policies and Research and
Development (R &D) policies, are crucial for cluster activities. The Global Cluster Survey of 2003 bears testimony
to this. Thus for instance whenever policies for instance on FDI are formulated, emphasis should also be put on
how they will be integrated in cluster framework. The same could be said to policies for regional development.
The present modus operandi in Zimbabwe on clusters is not very clear in this regard.
Absence of affiliation to global benchmarking organisations such as The Cluster Initiative (TCI) network.
This makes it difficult to bench mark local cluster activity with best practices. Countries which are
actively involved in cluster activity driven by TCI as a networking organisation have successful cluster
programmes. TCI is a platform which allows for interactions and interface of countries seriously into cluster
models.
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Present clusters are much more oriented towards traditional cluster activity such as furniture
manufacturing. Subsistence cluster has little emphasis on the growth and export orientation, making it difficult
for the country to fit into the global value chain.
Furthermore, this sector has low innovation. In terms of value, the realised output has small value to
make very meaningful contributions to the economy. The Global Cluster Survey of 2003, identified more than
500 cluster initiatives globally. It noted a number of findings, key among them being that most progressive clusters
were in areas inclined towards high technology sectors e.g. telecommunications, automotive, pharmaceuticals etc.
It was also noted that government national policy towards promotion of science and innovation was also important.
The following table shows the dominant clusters of South Korea;
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offering support services. In the fold also were SMEs, they formed synergies with large companies. Lastly another
important factor was the general entrepreneurial culture of the region, this enabled regional cohesion towards the
same goal.
TCI membership
According to TCI Network website TCI is defined as a network of persons and organisations with
the common objective of making their regions and clusters more competitive. The organisation has membership
throughout the world. It was founded in 1998 with its clear vision being to be a leading global network of
professionals and organisations active in cluster based economic development. Its broad mission is to support
the effective use of cluster based economic development approaches as tools to raise the competitiveness and
innovative capacity of firms, regions and countries. In most cases most of these economies with membership are
doing fairly well in with the exception of a few cases though in terms of economic growth. The following table
gives a perfunctory look into part of TCI member countries and their respective membership;
From the table if we add the membership of African countries it falls far short of e.g. Australia and
German membership. The figure for South Korea is 50 % that of Africa. Africa has 54 countries (World Atlas),
with only 6 nations TCI active. Current Africa TCI membership stands at 24. The whole of southern Africa where
Zimbabwe is located, has South Africa as a member. This is too low a figure, thus the issue of well organised
industrial clusters is still treated on a peripheral basis in the continent.
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Study tours
Peer reviews
Hosting of TCI conferences so as to improve visibility of clusters etc.
Mentoring of cluster practitioners
Matchmaking
Staff exchange programmes
Improving ease of doing business helps to enhance attractiveness of the country as an investment
destination of choice with regards to FDI. South Africa has a good score from the continent as compared to other
countries. It also has active TCI membership, and is doing fairly well in clusters. The same could be said of
countries such as Singapore, Slovenia and Japan. By contrast Zimbabwe has a poor ranking. Equally cluster
activity in Zimbabwe is not competitive either. Thus in the words of Ketels and Memedovic (2008) a a country
will only reach its ambition of economic progress, if it creates an overall business environment that is more
supportive to cluster development.
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on the curriculum by the Ministry of primary and secondary education will not compliment much the STEM
initiative by the Ministry of higher and tertiary education.
Source: Authors
From the diagram, stakeholders such as the government, universities, vocational centres etc. have to
come together to produce the end, which is the cluster. Thus the cluster concept is a broader concept requiring
bringing in of diverse skills to feed into the overall success of the programme. In particular, more should be done
to encourage industry academia collaborations, Andersen and Opsal (2010). Collaborations allows for depth, a
critical feature of clusters, cross pollinating ideas from numerous stakeholders. The size of all the quadrants are
equal signifying that in the nexus, all the stakeholders despite coming from different angles, they are equally
important to the cause of the industrial cluster.
The following data is an example of Ulsan and Mipo clusters of South Korea. It gives a picture of
importance of collaboration of numerous stakeholders.
Table 5: Stakeholders in Ulsan and Mipo clusters
Products Number of Research Universities Support
business centres organisations
Basic parts 69 2 3 2
Green auto technology 37 1 1 1
Green materials 42 3 2 2
Source: KICOX (2015)
Another example of collaborations of various stakeholders is the Innovation Network of Denmark. This
is spearheaded by the ministry of higher education and science. Its thrust is to foster innovation, collaboration,
growth and internationalisation for the purpose of aiding businesses in Denmark. To date 22 innovation networks
in 9 different professional fields have been created ranging from ICT, energy, transport etc.
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VII. CONCLUSION
The study from the numerous case studies highlighted clearly pinpoints the significance of properly
constituted industrial clusters in a 21st century economy. There is a positive correlation between most of the
countries with organised industrial cluster activity and economic growth. If properly executed, clusters go a long
way in improving competitiveness of an economy, acts as a source of sustained economic growth, increased GDP
etc. Robust cluster models go a long way in defining a nation, through creation of powerful and dynamic synergies
in the economy. Global brands such as Kia, Samsung, Apple, Toshiba, Kodak, originate from countries where
organised industrial cluster activity is the hallmark.
For most developing countries, Zimbabwe in particular there is a myriad of challenges which make
chances of properly organised industrial clusters a pie in the sky. Chief among them being the poor state of
infrastructure in the economy and lack of requisite knowledge on modelling proper clusters. Moreover,
commitment on industrial clusters by stakeholders is not very convincing. A lot could be done.
Despite the numerous setbacks existing, there is vast potential for organised clusters in Zimbabwe. There
is a need for engagement of renowned cluster practitioners for expert advice on implementation. They may help
for instance in designing legislative framework on clusters. The engagement also helps in for instance a national
cluster mapping survey. This helps to identify the numerous comparative advantages which the country has, the
existing gaps and a plausible way forward. For instance, Zimbabwe is strategically located in relation to other
member countries in the SADC regional trading block, a transport and logistics cluster is conceivable. Also
Zimbabwe has potential in footwear cluster given comparative advantage in raw materials such as leather.
Conclusively, there is more room for organised industrial clusters in Zimbabwe.
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