Presentation made by Susana Franco, on the 21st of November at the new Orkestra's discussing point Sharegune.

1. Public Policies and Cluster Life Cycles:
Insights from the Basque Country Experience
Susana Franco(1), Jesus M. Valdaliso(2), Aitziber Elola(1) and Santiago M. López(3)
(1) Orkestra–Basque Institute of Competitiveness
(2) University of the Basque Country
(3) University of Salamanca
SHAREGUNE, Donostia, 21st November 2012

2. CONTENTS
1. Introduction
2. Context about the clusters considered
3. Theoretical background
4. Discussion of results
5. Conclusions
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3. 1. INTRODUCTION
• Project to analyse the historical trajectory of Basque industrial clusters
Completed In progress Planned
Paper-making Machine-tools Automotive industry
Electronics & ICT Energy Domestic Appliances
Shipbuilding Audiovisual
Aeronautics Environmental industries
Port of Bilbao
Mobility and Logistics
• Policy implications in cluster life cycles scarcely addressed in literature
• Relevance of the Basque Country case:
- Old industrialized European region => successful productive structure
- One of the first European regions to apply a cluster-based policy
- Significant autonomy in the field of industrial policy
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4. 2. CONTEXT
• Diversity in size, export orientation and R&D investment
R&D Exports/ R&D/
Firms Employment Turnover Exports expenses Turnover Turnover
Aeronautics and space 55 9,168 1,235 886 104 71.1% 10.5%
Electronics and ICT 330 14,600 4,136 820 137 19.8% 3.3%
Maritime industries 405 9,100 1,500 950 n.a. 63.3% n.a.
Paper making 15 2,134 839 310 n.a. 34.4% n.a.
Energy* 83 25,000 10,000 2,200 n.a. 22.0% n.a.
Machine tools 74 4.500 800 523 48 65.4% 6.0%
Source: SPRI, Observatorio de Coyuntura Industrial. Figures correspond to 2008.
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5. 3. THEORETICAL BACKGROUND
• Government policies affecting the trajectory of clusters should be adapted to the
different stages of such cycles (Maskell and Kebir, 2006; Elola et al., 2012). Van Klink
and De Langen (2001) and Shin and Hassink (2011) in the shipbuilding industry .
• Effects of the various policy measures in the different phases of the cluster life
cycle according to the theoretical model (Brenner and Schlump, 2011)
Impact in:
Mature phase for:
Policy measures Initial Expansion Avoiding Triggering
phase phase Decline emergence
Education No Yes No Partly
Public research Yes Yes Yes Yes
Supporting research and Yes No Yes Partly
development
Supporting start-ups Yes Yes No Partly
Supporting networks Yes No Yes Partly
Other local conditions No Yes No Partly 5/12

6. 4. DISCUSSION
• Phases of the clusters’ life cycles
1800-1850 1850-1875 1875-1900 1900-1910 1910-1920 1920-1930 1930-1940 1940-1950 1950-1960 1960-1970 1970-1980 1980-1990 1990-2000 2000-2009
Paper-making
Maritime
industries
Machine
tools
Electronics
and ICTs
Aeronautics
Energy
Formation /
Emergence
Development
Maturity
Decline
Renewal
Source: Authors’ elaboration, following Belussi and Sedita (2009)
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7. 4. DISCUSSION
Paper-making Origins Development Maturity Decline
Policy type (c. 1779-1870s) (1870s-1930s) (1940s-1970s) (1980s-
Education Creation of training centres Creation of the Escuela del papel, Escuela del papel becomes a
promoted by firms, but a prívate specialized training government school
supported by public centre that was publicly funded
administration
Public research
Supporting R&D Some collaboration between
firms and technology centres and
access to R&D funds from the
Basque Government
Supporting start- Support to start-ups through
ups Tolosaldea Garatzen, the local
development agency that
promotes business
competitiveness
Supporting Support to cluster association
networks since 1999
Infrastructures Improvements in transport
infrastructures strengthened
location advantages (better
access to markets and to import
raw materials)
Protectionism / Tariffs from 1841 which protect Sector protected from foreign Extreme market regulation and External openness of the national
Openness the domestic market from foreign competition via tariffs until 1936 autarky (1940s and 1950s). Tariff market (from 1986 onwards)
competition and encourage the afterwards, but progressive
import of new technology openness of the domestic market
Demand stimulus
OTHER Excessive taxes on paper Increasing environmental
requirements 7/12

8. 4. DISCUSSION
• Use of policy measures in different phases of the cluster life cycles
POLICY MEASURES Origins Development Maturity
Education 33% 100% 67%
Public research 17% 33% 33%
Supporting R&D 50% 67% 33%
Supporting start-ups 0% 50% 33%
Supporting networks 17% 67% 0%
Infrastructures 50% 50% 0%
Protectionism /
83% 50% 67%
Openness
Demand stimulus 50% 50% 67%
Other 33% 17% 100%
Source: Authors’ calculation
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9. 4. DISCUSSION
• Policies that have had an impact on cluster over time
1800-1850 1850-1875 1875-1900 1900-1910 1910-1920 1920-1930 1930-1940 1940-1950 1950-1960 1960-1970 1970-1980 1980-1990 1990-2000 2000-2009
Paper-making ______7__ ______7__ 1____67__ 1____67__ 1____67__ 1____67__ 1____67__ 1_____7_9 1_____7_9 1_____7_9 1_____7_9 1_345_7_9 1_345_7_ 1_345_7_
Maritime _____678_ _____678_ _____678_ 1_____78_ 1_____78_ 1_____78_ 1_____78_ ______789 ______789 123_567_9 123_567_9 123_567_9
industries
Machine
1_____7__ 1_____7__ 1_____7__ 1_____7__ 1_3_5_7_9 1_3_5_7_9 1_3_5_7_9 1234___89 1234___89 12345__89 12345__89
tools
Electronics 1_3___7__ 1_3___7__ 1_3___7__ 1_3___7__ 123456_8_ 123456_8_ 123456_8_
and ICTs
Aeronautics _23_56_89 _23_56_89 1_345____
Energy __3__6789 123456_8_ 123456_8_
Formation /
Emergence
Development
Maturity
Decline
Renewal
Note: 1. Education; 2. Public research; 3. Supporting R&D; 4. Supporting start-ups; 5. Supporting networks;
6. Infrastructures; 7. Protectionism/Openness; 8. Demand stimulus; 9. Other
Source: Authors’ elaboration, following Belussi and Sedita (2009) for the phases 9/12

10. 4. DISCUSSION
• Types of policies applied in the last phase of the three oldest clusters
Paper-making Shipbuilding Machine-tools
Decline Decline and Maturity and
renewal renewal
Education YES YES YES
Public research YES YES
Supporting R&D YES YES YES
Supporting start-ups YES YES
Supporting networks YES YES YES
Infrastructures YES
Protectionism / YES YES
Openness
Demand stimulus
Other YES YES YES
Source: Authors’ elaboration 10/12

11. 5. CONCLUSIONS
• Secondary, indirect role of public policies (except aeronautics).
Path-dependent mechanisms have been more influential.
• History matters
• Phases of cluster life cycles not taken into consideration while
designing policies
• Role of different policies in different phases:
– protectionist measures during the inception phase
– education during the development phase
– public research for renewal
• Further research:
– Links between policies and technological level
– Other clusters in the Basque Country
– Other cases elsewhere
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12. Thank you!
¡Gracias!
Eskerrik asko!
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