The potential of cluster development and the role of cluster support policies in Latvia

Abstract

The objective of this paper is to examine the role of institutional and policy support for cluster development, and the competitive advantages of regions based on regional labour force concentration. The tool of cluster identification in regional economies - Location Quotient (LQ) - has been applied to measure the concentration of the labour force in the main economic sectors of Latvia and Finland. This comparative analysis has shown that Finland has much stronger regional labour force concentration in certain sectors of the economy, which is not typical for Latvia and reveals that the regional economy of Latvia has much lower potential for cluster development and competitiveness in global markets. The results of this research confirm that governments should support cluster development to achieve sustainable long-term development based on natural growth poles, exploiting the potential of regional comparative advantages such as specific concentration of skills and knowledge (labour force), concentration of industries, natural resources, etc., but not concentrate on short-term priorities in cluster development

Knowledge and industry clusters as drivers of economic development and competitiveness

“…Due to that theory, the cluster has become a policy tool for obtaining competitiveness and development in various countries. Positive effects of clusters are: exchange knowledge, job creation, skilled labour force, diffusion of technology, innovations, enlargement of the market and business opportunities, (Boronenko & Zeibote, 2011;Delgado et al, 2014;Sosnovskikh, 2017) increase of manufacturing, encouraging the SMEs and entrepreneurship, higher competitiveness and exports and regional development. Clusters have an impact on the EU economic development and competitiveness (Innova & INNO, 2008;Ion & Cristina, 2013;Bordei, 2016).…”

“…Their aim is to provide synergetic potential from all enterprises and institutions in the cluster due to efficiently completed economic/business process or project. Clusters reduce costs of supplies, decrease raw material stocks, exchange knowledge and influence job creation, skilled labour force, diffusion of technology, innovations, enlargement of the market and business opportunities (Boronenko & Zeibote, 2011;Delgado et al, 2014; Sosnovskikh, 2017). The cluster is one of the policy tools for achieving economic development and competitiveness.…”

“…They have influenced the development of trade, regional and economic development. Furthermore, regional or local clusters represent area agglomeration of enterprises and other entities that perform the same or similar economic activities, spreading knowledge and creating various forms of learning (Boronenko & Zeibote, 2011). That should lead to regional development.…”

the impact of national economy structural transformation on regional employment and income: the case of Latvia

“…In contrast, in only one Latvian region -Vidzeme -is the LQ in agriculture greater than 2. At the same time, even in Finland, whose level of economic development is obviously higher than that of Latvia, some regions also specialize in the primary sector (LQ values vary from 1.26 to 1.98), while other industries with relatively high levels of employment concentration include mining, industrial production and energy (LQ values from 1.32 to 1.47); finances, ICT, business services (LQ from 1.25 to 1.56), which are also concentrated near the capital of the country; and transportation, warehousing and communications (LQ from 4.04 to 4.52) (Boronenko and Zeibote 2011). To resume the comparison, Latvia has a lower degree of employment concentration in certain economic activities than Finland.…”

Performance Evaluation of an Industrial Cluster-based Common Facility Centre (CFC) in Pakistan

“…Modern economists and development experts have appreciated the significant role of industrial development and/or competitiveness in a country's economic growth (Boronenko and Zeibote 2011). Micro, small and medium enterprises (MSMEs), which constitute around 90 per cent of most of the developing countries' total enterprises, play a vital role in economic growth through their major contribution in enhanced industrial output and exports (Ittyerah 2009).…”