- Horizontal Linkages (Beyond Extractives)
- Strategies to Increase Linkages to the Broader Economy
- Developing Industrial Policy And Leveraging Clustering
Developing Industrial Policy And Leveraging Clustering
At a Glance
- Industrial policy can help foster clusters of businesses that have synergies with extractive industries, related sectors, and technological institutes.
- Industrial clusters are known to foster innovation, knowledge dissemination, best practices, and increased competitiveness while reducing transaction costs.
- Clusters can also be encouraged through the use of Special Economic Zones (SEZs) section).
- Finland as a Knowledge Economy: Elements of Success and Lessons Learned (Carl J. Dahlman, Jorma Routti, Pekka Yla-Anttila)
- Minerals Cluster Policy Study in Africa: Pilot Studies of South Africa and Mozambique (Economic Commission for Africa)
- Extractive Industries: Optimizing Value Retention in Host Countries (United Nations Conference on Trade and Development)
- Extracting with Purpose: Creating Shared Value in the Oil and Gas and Mining Sectors (Shared Value Solutions)
This report highlights how companies in the oil and gas as well as mining and minerals fields can create shared value by pursuing ...
This paper explores the topic of economic clustering around mineral resources in South Africa and Mozambique. It offers a comprehensive ...
The case of Finland shows that it is possible for a small and peripheral country to transform itself from a natural-resource-based economy ...
Creating horizontal linkages may involve creating a conducive environment for public– private partnerships among economic research organizations, industry federations, and companies to develop initiatives for transferring capabilities from one sector to another.
A more advanced stage of industrial policy involves the intentional formation of industrial clusters. These may, for example, involve synergies among extractive industries, related sectors, and technological institutes. Geographically concentrated areas of industrial development are known to enable innovation, the dissemination of knowledge, the reduction of transaction costs, the acquisition of best practices, and an increase in competitiveness. This is how Trinidad and Tobago, for example, enabled the development of horizontal linkages from its gas sector to the rest of the economy, as described in the Key Resource on this page, Extractive Industries: Optimizing Value Retention in Host Countries.
A useful overview of clusters is provided by the Economic Commission for Africa in its
2004 Minerals Cluster Policy Study in Africa. More information on this report can be found in the Key Resources on this page.
In essence, a “cluster” is a concentration of expertise among closely linked industries and companies in which extensive investment in specialized factors of production catalyzes a growth trajectory. The emphasis is on the linkages that arise because of mutual connections and interaction between individual industries and with associated institutions. Clusters arise through the flow of information or products between companies that are functionally linked together. The agglomeration of producers, customers and competitors, whether based on geographical proximity or linked by complementary expertise, promotes efficiency and increases specialization. Clusters that are well established have the ability to constantly reinvent themselves, which contributes to ensuring the long-term sustainability of a particular industrial sector. Not only do firms improve the competitiveness of the main activity, but they also absorb new functions and activities and generate technological spillovers.
Sometimes these clusters can be encouraged through the use of Special Economic Zones (SEZs) section.