CLUSTER

DEVELOPMEN
T STRATEGY
URBAN PLANNING 3
What is Cluster Development Strategy?

 Clusters are geographic concentrations of interconnected companies in a

particular field, with upstream links that include suppliers of inputs and
services, downstream entities such as customers and marketing outlets,
and horizontal links among enterprises with similar technology and inputs,
or complementary products.

 Clusters are geographic concentrations of competing and collaborating

firms that tend to produce innovation and higher than average wages.
What is Cluster Development Strategy?
Cluster Development Strategy has the followings:

 Common economic base, complementary resources, high growth and export

potentials and strong economic linkages:
 Same cultural background and has same dialect:
 Geographically contiguous and linked by infrastructure networks:
 Has complementary functional roles within the urban structure:
 Boundaries coincides with the administrative boundaries of the LGUs
 Experiences similar environmental problems and uses common resources
Purpose and Benefit of Cluster Development
Strategy
 Purpose:
 Used consensus building in reaching decisions affecting
the cluster.
 Observance of multi-stakeholder participation
 Actions involvement of the private sector, Dynamic
leadership at the local level
 Support of the international community
 Presence of a champion
Purpose and Benefit of Cluster Development
Strategy
 Benefits:
 The nature of the interconnectedness enables firms
within the cluster to be more productive and
competitive.
 Firms can have access to stable source's of inputs and
market and technical information.
 The linkages facilitate dealings and lower transaction
cost.
Problems and Weaknesses of Cluster Development Strategy

 Like any other enterprise, firms within clusters

experience operational and market constraints and
limitations. Yet in the same way that the multi-firm
nature of clusters enhances its benefits, so does it
magnify problems and weaknesses.
Common Cluster to Clusters
 Weak infrastructure support,
 Unmanageable and costly procedures of doing business.
 For clusters that are in the rural areas there is limited availability of skilled
labor mainly due to migration and low level of technological capability
 For industry clusters comprising of micro-, small-, and medium-sized
enterprises (MSMEs),
 Prevalent problems are access to finance and market information,
 And low productivity and competitiveness due to limited resources
 Oftentimes, MSMEs lack acceptable collateral and credit history to
establish credit worthiness.
Important Factors for Successful Cluster Development Strategy

 A qualified work force is important for the quality and sustainability

of clusters.
 Access to financial institutions
 A link to a center or institute of research development
 Strong link of cooperation among enterprises within the cluster, and
of support from institutions outside the cluster.
 Enterprises must have commitment to devote time and resources,
and willingness and trust to act collectively.
Important Factors for Successful Cluster Development Strategy

 Clusters are also greatly supported and sustained by facilitating

entities or, in general, “institutions for collaboration.” These
consist of trade associations, standard setting agencies, non-
governmental organizations, and technology centers, for example,
that provide connections to market players, and correct for market
and public failures, among others.
Application of the Cluster Development Strategy in Metro Iloilo-
Guimaras
Application of the Cluster Development Strategy in Metro Iloilo-
Guimaras
Renie Romez
Tiara Mercader
Rhara Fuentes
Patricia Ipanag

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