Promoting cluster policy in Vietnam: some lessons for

institutional buildingprof. Nicola D. Coniglio

University of Bari (Italy) & Norwegian School of Economics

New Delhi (India), 20-22 February 2014

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Learning from a case study:

The project: UNIDO Project “SME Cluster Development” in Vietnam (2010-2012)

Aim: building national capacity for (scaling up) cluster policy in Vietnam.

Beyond the “pilot” approach: working – together with different Ministries and CIEM - with the Institutional aspects of sustainable cluster development (policy design).

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Do we really need to ”embedd” cluster policy into the Institutional framework?

(pilot) Cluster development initiatives might be successful in the absence of a structured “cluster development framework” …. but….

… the scaling up of cluster development initiatives requires an Institutional arrangement (software: legislation / Master plan / policy guidelines; hardware: public officials – national or subnational agencies or ministries etc. - allocated with the responsabilities over cluster policy initiatives

Institutional ‘bottlenecks’ are one of the main sources of failure of cluster development initiatives

• The government (national and/or local) is a crucially important actor of cluster development;

• Cluster policy is a complex industrial policy: i) address multiple market failures;ii) cross-cutting issues (requires a competent and authoritative coordination of multiple ‘policy tools’);iii) Involve several actors and multiple-levels of Government

• A badly designed Institutional setting will represent the main obstacle (stumbling block)

• Risks: bureacratic inefficiencies / bureacratic

‘captures’

Institutionalization of cluster policy: pro and cons

There is no ‘one-size-fits-all’ cluster policy setting. The optimal policy setting depends on the specific circumstances

Institutional diagnostics is a fundamental prerequisite (division of labour within the Gov / identifying the ‘capacity’ and ‘structural’ constraints / strenght and capacity of other key actors such as business associations) Avoid adding Institutional Complexity (not another empty office in a Ministry but an effective and authoritative ‘coordination tool’ of policy actors which tipically conduct their job in isolation)

Vietnam case lesson 1. Identifying the policy constraints

• A checklist of the main issues Who is in charge? (there is a strong case for ‘placing’ cluster policy close to SMEs development policy) The division of responsabilities btw Central and Local governments (definition of the legal framework / funding / coordination / implementation / monitoring / evaluation) Involvement of other stakeholders

2. Identifying the best (not necessarily the optimal) possible

policy architecture

• Limited institutional capabilities (transferring or developing ‘best practices’)

• Heterogeneous ‘visions’ (often very confused vision…)

• Intra-institutional conflicts (need a neutral and credible broker)

3. Why we might need an ‘impartial broker’ also for the

‘Institutional’ element of cluster policy

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THANK YOU FOR THE ATTENTION!

Email contact: Nicola.Coniglio@nhh.no

Clusters’ club

Ministry of Planning and Investments

Ministry of Finance

Ministry of Education and

Training

Ministry of Industry and

Trade

Ministry of Science and Technology

Inter-ministerial committee

Provincial Governments

Cluster

ClusterCluster

Cluster

A (potential) model of governance of cluster policy in Vietnam

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Division of roles between central and provincial government