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Dynamic Research Journals (DRJ)

Journal of Economics and Finance (DRJ-JEF)


Volume 1 ~ Issue 1 (October, 2016) pp: 22-32
www.dynamicresearchjournals.org

An Explanatory Analysis on the Impact of Industrial Cluster


Strategy on Industry Growth in Zimbabwe
Kenneth Mahuni & Wellington G. Bonga
Received 27 October, 2016; Accepted 30 October, 2016; Published 07 November, 2016 The
author(s) 2016. Published with open access at www.dynamicresearchjournals.org

Abstract: There has been a growing concern of developing industrial clusters in developed nations and emerging
economies in the past two decades to strengthen economic growth and development. The concept of properly
organised industrial clusters has not yet been heavily implemented in developing nations, and Zimbabwe is not
an exception. Clusters are well known for their ability to reduce costs, enabling research and development,
increased productivity among other advantages. This paper is a policy prescription, to promote the adoption of
industrial clusters in Zimbabwe. There is greater need to improve export value addition and improve
competitiveness of local products against imports, and this can be attained through intensifying well organised
industrial clusters development.
Key Words: Industrial clusters, Exports, Imports, Productivity, Economic Growth, Zimbabwe
JEL Codes: E22, E23, F12, F13, F15, L11, L14, L24, L52, L60, M11, O11.

I. INTRODUCTION
Zimbabwe, just like many developing nations is a net importer and hence unfavourable balance of trade
and balance of payment. Continued reliance on imports of finished goods is unsustainable as it undermines current
efforts to resuscitate domestic industrial production, leading to significant trade and current account deficits (2016
Mid-Term Monetary Policy Statement).
Over the years, there has been greater effort to value add exports as a way to improve competitiveness
of exports. However, exports growth has been unfavourable even after the dollarization era. This calls for stringent
measures to be taken and also new ideologies to be incorporated borrowing from developed nations. Boosting
export sector may be enhanced through adopting the industrial clusters concept.
This paper seeks to introduce the concept of clusters in the development path of the Zimbabwean export
sector, as evidenced from other successful nations, including the neighbour South Africa. Empirical studies on
the concept of clusters has shown a strong link between organised industrial cluster activity and economic growth
and development.
Industrial clusters were firstly embraced by Western European and North American countries (Ketels
and Memedovic, 2008). As time went on emerging economies began to adopt clusters as a model for economic
development. However, for many less developed countries, Zimbabwe in particular, despite vast potential, more
has to be done on clusters. Although the need for having clusters is being realised, the implementation has often
left a lot of gaps, resulting in half-baked clusters which are often not competitive, let alone not visible.
Much literature on clusters has been preoccupied with activities in developed countries and emerging
economies, with little room for activities in less developed countries. This paper seeks to explore the background
which makes implementing the cluster concept difficult in Zimbabwe and the possible way forward and benefits
of formulating properly constituted cluster models. It draws from global success cluster case studies including
footwear in India, clothing in South Africa, textiles in Peru, electronics in South Korea, and manufactures of
surgical instruments in Pakistan etc.
Table 1 below presents a sample of notable successful clusters in the world.
Table 1: Examples of successful global industrial clusters
COUNTRY SECTOR PRODUCTS
South Korea Automobile manufacturing Vehicles, spares etc.
USA Silicon valley Information Technology Computer software
Hollywood Entertainment Film Production
Pakistan Manufacturing Surgical tools
Italy Leather footwear
Slovenia Manufacturing Tools and automobile parts
Scotland Creative Arts Films

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An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

Justification of the Study


Zimbabwes economy over the years has been characterised by;
Company closures
Weak public private collaborations of key stakeholders
Low Productivity
Unfavourable balance of trade and balance of payment
High cost of production (Transport, Distribution costs)

Purpose of the Study


Given the state of the economy, the study through the explanatory analysis of the cluster concept seeks to;
Introduce the industrial clusters concept
Explore the economic benefits of clusters
Explore the theories behind clusters development
Explore successful Case Studies on Clusters development
Explore challenges in the contemporary cluster framework in Zimbabwe

II. A GLIMPSE ON ZIMBABWE INDUSTRY PERFORMANCE


Zimbabwe in 1980, when it became independent from British rule, it inherited a developed and
predominantly white controlled economy (Saungweme, 2013). A number of reforms have been implemented by
the government leading to the shift from socialism to more of capitalism. The government came up with various
policies in an effort to boost industry and economic growth; the efficiency of the policies were not as expected.
Policies include; ESAP, ZIMPREST, MERP, STERP 1 & 2, ZIMASSET and currently 10-point plan.
Zimbabwe has for the past decades remained a net-importing country, just like most developing nations
(Bonga, Shenje and Sithole, 2015). Hence there is a greater need to raise exports applying the cluster concept to
avoid economic contraction. The economy of Zimbabwe was at its best in 1996/1997, after which the country
went through a decade of progressive economic contraction from 2000-2008 (Saungweme, 2015). Exports can
increase intra-industry trade, help the country to integrate in the world economy and reduce the impact of external
shocks on the domestic economy (Bonga et al, 2015).
The concept of clusters is most useful for manufacturing firms and their line of production from inputs
to outputs. A well-developed manufacturing industry will transform to acceptable levels of development in the
economy. The Annual CZI Manufacturing Sector Survey of 2012, indicated that 60% of the manufacturing firms
face competition from both home and away, whilst 26% only face domestic competition, the remainder only faces
foreign competition. The fact can be represented graphically as below;
Figure 1: Source of Manufacturing Firms Competition in Zimbabwe

Source of Manufacturing Firms' Competition


60%

60%
50% 26%
40% 14%
30%
20%
10%
0%
DOMESTIC FOREIGN & DOMESTIC FOREIGN
COMPETITION COMPETITION COMPETITION

Statistics from the above Figure shows a significant overall impact of foreign competition which is not
health for an economy that aims growth. Most foreign competition is coming from South Africa, China, India,
and Brazil among other nations. Promoting and strengthening clusters will reduce outside competition and hence
aid in technological advancement through enabled research and development.
Capacity utilisation for many manufacturing sector firms has been low especially for the past decade
even after the dollarization era. Such justifies, the need to change production model and pattern; the cluster concept
has to be adopted to reap growth benefits.

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Table 2: Average Capacity Utilization of Manufacturing Firms in Zimbabwe


Average Capacity Utilization (%) [as at 2012]
Bakers 40 Chemical 41.6
Battery 76.5 Leather and Allied 27.5
Building (construction and related) 59.5 Paints and Inks 30.5
Car Assemblers 30.3 Pharmaceuticals 58
Electric Appliances Manufacturers 43.8 Plastic, Packaging and Rubber 46.1
Engineering Iron and Steel 36.7 Paper, Printing and publishing 58.3
Food, Dairy and Beverages 58.2 Textiles and Clothing 34.4
Grain Millers 30 Timber Processors 53.8

A lot of factors have been cited, to contribute to the low capacity utilisation. Among the factors include;
working capital constraints, low local demand, antiquated machinery and machine breakdowns, power and water
shortages, competition from imports, drawbacks from the current economic environment, high cost of doing
business and shortage of raw materials.
Exports growth in any country requires a well stable manufacturing sector. Zimbabwean export sector
has been shrinking over the years, posing economic growth challenges. The 2016 Fiscal Policy Mid-Term Review,
has acknowledged that the external sector is characterised by unsustainable trade and current account imbalances,
reflecting declining exports.
As at end of June 2016, exports, which contribute over 60% of the liquidity flows into the country,
totalled US$1.124 billion against an import bill of US$2.5 billion. The 2016 statistics indicated a 9% decline from
2015 statistics of US$1.232 billion. There is greater need for export growth strategies to be adopted in Zimbabwe
especially during this multi-currency era, where there is need to attract foreign currency in the economy to stabilise
the financial sector.
Central Bank of Zimbabwe Governor, in his 2016 Monetary Policy has also acknowledged export
shrinking. The Monetary Policy Review indicated that the economy has continued to be affected by sustained
mismatches between export receipts and imports as evidenced by the disproportionate import absorption relative
to exports especially for the period 2008-2015; a sign of weak economic fundamentals and over liberalisation of
current and capital accounts.
Given this state of the economy now, and its performance in the past, this study seeks to propose a way
that can help resuscitate the economic performance by raising export performance. The development of clusters,
which is seen as a missing link for growth of the manufacturing sectors should be supported through government
policy. The decline in export and import performance is a reflection of the overall slowdown in economic activity,
and this trend is no good for a developing country like Zimbabwe.

III. THEORIES OF INDUSTRIAL CLUSTERS DEVELOPMENT


Industrial clusters are defined as a group of specialized small and medium sized firms which are
geographically concentrated (Rabelotti, 1995). On the other hand, they can be further defined as a group of firms
located in the same geographic area, such as an industrial district, town, small region where there are significant
number of firms specialising in producing inputs for and manufacturing the same type of good.
Further, a cluster can also be defined as a geographically proximate group of interconnected companies
and associated institutions in a particular field linked by communalities and complementarities (Porter 1998:199).
OECD defines clusters as a network of closely related enterprises for production and added value and strategic
alliance among main actors including universities, research organisations, knowledge service providers, brokers
and consumers, (KICOX Cluster handbook, 2015:22).
There is general consensus that the concept of industrial clusters dates back to the works of Alfred Marshall
(Andersen and Opal 2010; Thompson 2005; Ismalina 2010; Boja 2011). According to Andersen and Opsal (2010)
the concept of clusters can be traced to foundations laid by Marshall (1920) and Weber (1929). They contend that
Marshall studied how industrial districts of England evolved overtime. During the time, Marshall observed three
main reasons as to why firms located at one place; specialisation, labour pooling and knowledge spill overs.
The concept of clusters was later advanced by Porter and Krugman in the 1990s (KICOX, 2015).
According to Andersen and Opal (2010) works by Porter brought more understanding and appreciation of the
concept of clusters than the traditional held view. This was captured in his book, The Competitive Advantage of
Nations which features the Diamond theory. In the concept, emphasis is put on the need for cluster networking
of various stakeholders e.g. suppliers, firms, institutions etc. Their synergies create competition and innovation,
which in turn enhances competitiveness of a cluster helping enhancing economic performance. The importance
of networking is also supported by Ketels and Memedovic (2008) they term it collaboration.

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DEVELOPMENT OF CLUSTERS AND CLUSTERS FEATURES


Well organised clusters develop overtime (Ketels and Memedovic, 2008). There is no single cluster
model. Clusters can develop where there are SMEs, from which the rest builds on them. In some cases clusters do
develop where there is a successful institution e.g. a university or a big company, as attraction of other companies
is enabled.1
Todorova and IIieva (2010: 17-18) studied Netherlands flower cluster and covered essential points
necessary for healthy and visible clusters. They should largely exhibit most of the following features shown in
Fig 2;
Figure 2: Features of clusters

Geographical scope: Industrial cluster boundaries should not be fixed. Instead they should be cross
cutting from one region to another, city, or even country. This is reiterated by Porter (2000:16) when he
says that, ...the geographic scope of clusters ranges from a region, a state, or even a single city to span
nearby or neighbouring countries (e.g., Southern Germany and German-speaking Switzerland). The
geographic scope of a cluster relates to the distance over which informational, transactional, incentive,
and other efficiencies occur.
Size, depth and breadth: Size of industrial clusters can be SMEs, big firms, research institutes etc. The
depth spells out the vertical relationships across the value chain in the industry. Conversely the breadth
focuses on the horizontal relationships of firms which can contain few or many firms (Todorova and
IIieva, 2010).
Proximity: Industrial clusters are geographically closer to one another. This allows for coexistence and
concentration of activities. Resultantly, networks and synergies are created. These allow for innovation
and competition. Todorova and IIieva acknowledge a contribution by Spencer e.t al (2010) in this regard.
The proximity makes clusters key drivers of prosperity and regional economic development.
Relationships among stakeholders: Two vital aspects for relationships in clusters are cooperation and
competition. According to Porter (1998) this is critical in aspects such as infrastructure, technology etc.
these allow attraction of other potential members to the cluster. As a result a cluster becomes on the
spotlight.
Life cycle: Todorova and IIieva (2010), note a contribution by Rosenfield (2001) by identifying critical
stages of clusters i.e. the embryo, growth, maturity and decay. Each stage therefore has different policy
implications and interventions. A concluding note which is vital, they state that clusters are not an event,
they are a process which evolves over time.

IV. ECONOMIC BENEFITS OF INDUSTRIAL CLUSTERS


Development of clusters can be linked to some economic benefits. Such economic benefits come in
several dimensions (Porter, 1998a). Clusters enable higher productivity; companies can operate with a higher
efficiency, drawing on more specialised assets and suppliers with shorter reaction times than when working alone.
Research and development is enhanced in industries; companies and research institutions can build
connections to better learn and innovate, as tacit information and knowledge are best developed and exchanged

1
A good example is the Biotech cluster of North Carolina which developed from within a network of universities.

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locally (OECD, 2001; Porter, 2001). Thus proper cluster framework allows for networking, which facilitates cross
pollination of vital information.
Muranda et al (2014) noted the significance of the concept of clusters. They argued that clusters enable
growth of industries which is a prerequisite for economic growth. Industry growth is enabled through
technological and skills transfer effects.
Thompson (2005) gives two crucial points on importance of clusters. The researcher indicated that
clusters help in boosting export performance of a country. Giving a reference to Sialkot, the Pakistan cluster of
surgical instruments produced output amounting to $122 million between 1995-96. On the other hand, the Brazil,
Sinos Valley footwear cluster produced $200 million in exports in 1993.
Clusters benefits sometimes present themselves in terms of positive externalities (Thompson, 2005). The
externalities include numerous advantages such as market access, productivity, specialisation and reduction of
transaction costs.
Clusters are an essential strategy for economic development (Yang 2010). Clusters are an essential tool
for competitiveness of an economy which allows also to foster balanced regional development. This is enabled
by having each region to focus on the economic area it is well positioned on.

V. CHALLENGES WITH THE CONTEMPORARY CLUSTER FRAMEWORK IN ZIMBABWE

Present industrial cluster initiatives lack adequate resources e.g. funds, infrastructure etc.
The role of government becomes particularly important in availing of budgetary support to cluster
initiatives in the economy. According to Ketels et al (2003) its crucial for the clusters to have a physical presence
e.g. in terms of offices so as for the affairs of the clusters to be professionally run. Without offices for instance, it
becomes difficult for marketing, branding etc. of the respective cluster (Ketels et al, 2003). They argue also that
the role of government funding should be diminished with time and instead member subscriptions should sustain
the cluster.
There is a promising SME cluster in Zimbabwe located in Glenview, Harare, dealing on furniture. The
cluster, if well supported may become more efficient and hence contribute significantly to economic growth.
Currently, the area is characterised by poor infrastructure that may be attributed to poor urban planning. The area
was affected by fire in 2015, due too poor security set up, and hence this drove down the eager to grow, as losses
were recorded. There is greater need, to provide better structures to ensure efficient flow of operations by these
SMEs.
A recent development in Zimbabwe in the Information & Communication technology (ICT) sector is
commendable. The launching of the Innovation Fund by the ministry of ICT in the first quarter of 2016 to
encourage software development to rival applications such as WhatsApp, Viber etc. is a step in the right direction.
From the proposed framework in the ICT cluster we can conjecture the following simple model;

Fig 3: ICT cluster model

telecomms
firms

budding
government
innovators

ICT
CLUSTER

Thus the government, budding innovators and the telecommunications will come together resulting in
the ICT cluster. This framework is necessary although it is not sufficient. It lacks depth, an essential component
explored earlier in Fig 1. Rather, the net should be cast wider to include other key stakeholders such universities,
research organisations and other supporting stakeholders. The role of government should be mainly to facilitate
than to be heavily involved since it has an overflowing plate already. The role of government is also emphasised

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by Eliason, Howse and Trebilcock (2013), who argued that the role of government should be on public policies
which help in ensuring that comparative advantage is enhanced.
Furthermore, there is need for massive investment in requisite infrastructure in this sector. For instance,
power, internet connectivity and other ICT supporting infrastructure etc.

Presence of too small, largely SME driven and fragmented cluster activity.
Presently, cluster activity is visible in traditional sectors such as furniture and handcraft. However, these
are not growing much. Rather the SME sector should come in as mini clusters within the broader clusters. SME
sector becomes very important at later stages of growth of an economy. Tourism is a cluster performing reasonably
but is largely sensitive e.g. seasons etc. hence cannot be relied heavily as a cluster to transform the economy.
A survey by FINSCOPE 2012 on the SMEs sector of Zimbabwe reflects a number of problems embedded
in this sector. For instance, the research found out that 71.6 % of the businesses are individually owned and with
no employees. Those into the medium category with 30/40-70 employees were only 0.7 %. Further, the research
identified that only 15 % SMEs were registered/licensed, the rest are informal. The survey showed also that about
39% of SMEs operate at residential premises, due to the lack of access to infrastructure. A further, insight into
that matter also points to poor urban planning in the country, and this should quickly be addressed for smaller
towns that are growing. Thus the SMEs sector, currently cannot be relied entirely to be an engine of cluster
activity.

Weak networking and absence of strong institutions


Current cluster activity exists more as random and sporadic phenomena. They are largely a natural
occurrence. As a result, it is difficult to even analyse quantitatively their impact and hence contributions of these
respective clusters. Despite numerous universities, colleges, trade associations, numerous companies and research
centres, linkages and collaborations of these is currently weak, making it difficult for cluster activity to make any
impact.

Inadequate requisite knowledge on industrial clusters


Industrial clusters, though it might sound as a simple concept, this has subjected them to being
misunderstood. To come up with proper clusters a profound knowledge of the concept is required. This enables
dissemination of correct information about the concept. For instance, training of cluster practitioners becomes
particularly important.

General lack of marketability and attractiveness of present cluster activities


Given the random nature of current cluster activity at present, it generally lacks appeal to be able to
attract serious international investors, funding, resources etc. what Ketals et al (2003) calls the Greta-Garbo
effect. Overally, this makes it difficult to formulate robust cluster models which can neatly dovetail into the global
value chain.

Failure of cluster initiatives to be complimented by other policies areas such as foreign direct investment
Empirical studies have shown that investment policies (FDI), regional SMEs policies and Research and
Development (R &D) policies, are crucial for cluster activities. The Global Cluster Survey of 2003 bears testimony
to this. Thus for instance whenever policies for instance on FDI are formulated, emphasis should also be put on
how they will be integrated in cluster framework. The same could be said to policies for regional development.
The present modus operandi in Zimbabwe on clusters is not very clear in this regard.

Inadequate competition within clusters


Presently, given the nature of the clusters, level of competition is very low and weak. The net effect has
been slow growth of clusters in the whole economy, low efficiency, lack of creativity and new products. For
instance, local furniture products find it difficult to penetrate outside markets. On the other hand, Chinese for
instance given their better products due to competition at home are able to outcompete local suppliers.

Absence of affiliation to global benchmarking organisations such as The Cluster Initiative (TCI) network.
This makes it difficult to bench mark local cluster activity with best practices. Countries which are
actively involved in cluster activity driven by TCI as a networking organisation have successful cluster
programmes. TCI is a platform which allows for interactions and interface of countries seriously into cluster
models.

Dominance of traditional, static and subsistence level cluster activity.

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Present clusters are much more oriented towards traditional cluster activity such as furniture
manufacturing. Subsistence cluster has little emphasis on the growth and export orientation, making it difficult
for the country to fit into the global value chain.
Furthermore, this sector has low innovation. In terms of value, the realised output has small value to
make very meaningful contributions to the economy. The Global Cluster Survey of 2003, identified more than
500 cluster initiatives globally. It noted a number of findings, key among them being that most progressive clusters
were in areas inclined towards high technology sectors e.g. telecommunications, automotive, pharmaceuticals etc.
It was also noted that government national policy towards promotion of science and innovation was also important.
The following table shows the dominant clusters of South Korea;

Table 3: Sample of major industrial clusters in South Korea


NAME OF INDUSTRIAL MAIN PRODUCT LINES
CLUSTER COMPLEX
Seoul digital complex High-tech, knowledge, IT, electricity and electronics
Banwol & Sihwa 1.Machinery, electronics, petrochemicals, textiles and apparel
2.machinery,electricity,electronics,steel and transportation equipment
Namdong Machinery, electricity, electronics, petrochemical, lumber and paper
Gumi Electricity, electronics, machinery, textiles, petrochemicals
Changwon Industrial machinery, electricity, electronics, automobile and auto parts
Ulsan & Mipo Automobile, shipbuilding and petrochemicals
Gwangju High -Tech Optical, electronics and auto parts
Source: KICOX (2015)
From Table 3 above, the clusters of Korea have a high value because they are dominated by science and
technology related sectors. The resulting exports are of high value.

Industrial cluster strategy, a missing link in the economic growth matrix.


The other challenge with the present clusters cannot be separated from the development model the
country adopted. Earlier there was no deliberate focus on how cluster strategy could be carried along so as for it
to fit into the broader economic growth and development framework. In other words, there hasnt been a clear
picture as to what to do with clusters and how to do them.
Later on, the economy is realising the importance of having a clear framework on clusters, as a missing
link. This makes it difficult to actual rope them in the present framework. Its analogous to closing the doors of
the stable when the horses have bolted already.

VI. CASE STUDIES ON INDUSTRIAL CLUSTERS SUCCESSFUL COUNTRIES

1. Seoul Digital Industrial Complex: South Korea


According to KICOX, the cluster was founded in 1964 in the capital city of South Korea. The cluster is one
of the major projects initiated by Korea, as a thrust to promote export-led growth. The cluster falls under the
Information and technology industry, and also includes clustered activity on electronics, textiles and apparels.
A number of factors motivated the growth of the sector. One important factor was the availability of large
piece of state land, which allowed building of factories at affordable costs. The cluster is strategically located in
the capital city of the country, which allowed accessibility to other key support services such as financial services,
consulting services, among others. The cluster was enabled by concise planning. The modernisation plan of 1997
allowed improvement of the cluster. Infrastructure and institutions e.g. roads, convenience facilities, universities
and research centres were put in place. Industry academia collaboration was also enabled. Networking within the
broader cluster model was enabled, leading to success.

2. Waterloo, Canada ICT cluster: Wolfe, D (2009)


The cluster was formed around 1970s.The starting point according David Wolfe for the development of
this cluster was Waterloo University. Initially, the cluster focused on computing and software and later on it has
diversified its ICT products ranging from robotics, biotech, automobiles and financial services. According to
Wolfe, Waterloo University, was instrumental in developing a practical technical knowledge bridging the gap
between theory and actual practice in industry. This was fostered by massive collaboration between the university
and the industrial community in the region which was enabled by the Waterloo Plan put in place. As a result, a
robust cluster model was created and ranks as one of the best in North America.
According to Wolfe a number of factors are attributable to the success of this cluster. The university
served as an innovation hub which constantly churned a supply of professionals with hands on experience.
Industry academia collaboration also fostered creation of a platform for networking. Another factor was the role
played by business associations e.g. Canada Technical Triangle, Waterloo Regional Prosperity Council etc. in

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offering support services. In the fold also were SMEs, they formed synergies with large companies. Lastly another
important factor was the general entrepreneurial culture of the region, this enabled regional cohesion towards the
same goal.

3. Textiles and Apparel cluster: South Africa: Chadda et al (2009)


Much of textile and apparel activity is mainly concentrated in Western Cape, Durban and Gauteng
provinces. The cluster started around the 1930s, specialising in blankets, rugs and sheets. It ventured into industrial
textiles, clothing and later on synthetic fibres. Despite numerous challenges, chief of them being price competition
from low cost Chinese and Taiwanese products, the sector has remained resilient. Western Cape province is
largely the main hub of textiles and apparels. It contributes 35 % of South Africas textiles exports. A number of
factors have been responsible for this clusters resilience. The cluster is located where there is geographic
proximity to retail chains. Both provincial and national government has contributed to the success too. For
instance, at initially stages government maintained tariffs which were high enough to protect the sector, gradually
liberalising.
According to the Cape Clothing and Textiles Cluster 2009, in 2004, collaboration of key stakeholders
was fostered through The Cape Clothing and Textile (CCTC) initiative. It brought together universities, design
firms, retailers, government among other players. This allowed creativity which ensured skills and quality
upgrade. Thus despite price competition faced in the sector, South Africa is able to service the high end European
markets due to high quality textiles and apparels. Gelvenor Textiles is one such success story to come out of
South Africa which commands 50 % global market share for parachute fabrics through specialising in technical
textiles.

VII. POLICY RECOMMENDATIONS


From the preceding expositions and discussions much work has to be put by developing countries if they
are to entertain any chances of formulating competitive industrial clusters. Most problems developing countries
share are similar. The following section explores some possibilities developing countries, Zimbabwe in particular
can work on. Whilst, the list is not exhaustive, the following are essential;

TCI membership
According to TCI Network website TCI is defined as a network of persons and organisations with
the common objective of making their regions and clusters more competitive. The organisation has membership
throughout the world. It was founded in 1998 with its clear vision being to be a leading global network of
professionals and organisations active in cluster based economic development. Its broad mission is to support
the effective use of cluster based economic development approaches as tools to raise the competitiveness and
innovative capacity of firms, regions and countries. In most cases most of these economies with membership are
doing fairly well in with the exception of a few cases though in terms of economic growth. The following table
gives a perfunctory look into part of TCI member countries and their respective membership;

Table 4: Sample TCI country membership


COUNTRY MEMBERSHIP
South Africa 4
Uganda 10
Burkina Faso 1
Egypt 1
Senegal 7
Nigeria 1
South Korea 12
Germany 36
Australia 26

From the table if we add the membership of African countries it falls far short of e.g. Australia and
German membership. The figure for South Korea is 50 % that of Africa. Africa has 54 countries (World Atlas),
with only 6 nations TCI active. Current Africa TCI membership stands at 24. The whole of southern Africa where
Zimbabwe is located, has South Africa as a member. This is too low a figure, thus the issue of well organised
industrial clusters is still treated on a peripheral basis in the continent.

Significance of TCI membership


Helps in expert advice on cluster mapping so as to identify workable networking in the economy

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Study tours
Peer reviews
Hosting of TCI conferences so as to improve visibility of clusters etc.
Mentoring of cluster practitioners
Matchmaking
Staff exchange programmes

Hard and soft Infrastructure


Both hard and soft infrastructure is vital for properly organised cluster activity. Aspects such as roads,
rail systems internet connectivity, electricity, water cost and availability, financial systems and markets are crucial
for cluster programmes. Availability of these affects cost of doing business. Zimbabwe through the ministry of
ICT alluded to earlier is mulling developing the ICT cluster. However, state of infrastructure at the present requires
urgent attention.

Ease of doing business


There is an urgent need for the country to improve general business environment. This can be done if
ease of doing business of the country improves. Ease of doing business covers aspects such as accessing permits,
electricity, and number of days for opening a business, registering a property etc. a country is then given a rank
out of 189 countries by the World Bank. The following table 4 gives a sample of June 2015 rankings. The study
takes a sample across countries.

Table 5: Ease of doing business rankings


Country Ranking
Rwanda 62
South Africa 73
Angola 181
Tanzania 139
Zimbabwe 155
South Korea 4
Singapore 1
Japan 34
Source: Compiled from World Bank

Improving ease of doing business helps to enhance attractiveness of the country as an investment
destination of choice with regards to FDI. South Africa has a good score from the continent as compared to other
countries. It also has active TCI membership, and is doing fairly well in clusters. The same could be said of
countries such as Singapore, Slovenia and Japan. By contrast Zimbabwe has a poor ranking. Equally cluster
activity in Zimbabwe is not competitive either. Thus in the words of Ketels and Memedovic (2008) a a country
will only reach its ambition of economic progress, if it creates an overall business environment that is more
supportive to cluster development.

Moving towards science oriented education


Appropriate education in an economy is crucial in cluster programmes. An empirical study by Andersen
and Opsal (2010) on the Norway offshore industry showed that higher education was particularly important for
cluster programme of Norway as it is innovation oriented. In their research they showed also that what was
important was not the number of higher education institutions (for Norway case). Rather what is important is to
invest on enhancing quality of current institutions.
Another good example is of the ship building industry between Japan and South Korea. Despite having
enjoyed huge monopoly in the industry for over 30 years, failure by Japan to invest in research allowed Korea to
overtake her. Lately Korea is now ahead of Japan, boasting of huge successes in ship building clusters spearheaded
by main companies; Daewoo Ship building &Marine Engineering (DSME), Samsung and Hyundai apart from the
current challenges.
Despite encouraging literacy rates rankings e.g. as at 2013 Zimbabwe was ranked first in Africa, (The
African Economist, 2013), the quality of education remains low. Present education has no much orientation
towards research and innovation, this makes it difficult to come up with practical clusters. One of the findings of
the Global Industrial Cluster Survey of 2003 was that successful clusters were found where promotion of science
and innovation takes centre stage. Recent efforts by the Ministry of Higher Education to promote education in
areas of science through Science, Technology, Engineering and Mathematics (STEM) is a noble initiative in
ensuring uptake of science related subjects. On the contrary, proposals of inclusion of various foreign languages

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An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

on the curriculum by the Ministry of primary and secondary education will not compliment much the STEM
initiative by the Ministry of higher and tertiary education.

Collaboration of key stakeholders


Meaningful cluster activity requires collaboration of various stakeholders. The following representation
shows some of the main players which are crucial for clusters programme.
Fig 4: Key cluster stakeholders

Source: Authors

From the diagram, stakeholders such as the government, universities, vocational centres etc. have to
come together to produce the end, which is the cluster. Thus the cluster concept is a broader concept requiring
bringing in of diverse skills to feed into the overall success of the programme. In particular, more should be done
to encourage industry academia collaborations, Andersen and Opsal (2010). Collaborations allows for depth, a
critical feature of clusters, cross pollinating ideas from numerous stakeholders. The size of all the quadrants are
equal signifying that in the nexus, all the stakeholders despite coming from different angles, they are equally
important to the cause of the industrial cluster.
The following data is an example of Ulsan and Mipo clusters of South Korea. It gives a picture of
importance of collaboration of numerous stakeholders.
Table 5: Stakeholders in Ulsan and Mipo clusters
Products Number of Research Universities Support
business centres organisations
Basic parts 69 2 3 2
Green auto technology 37 1 1 1
Green materials 42 3 2 2
Source: KICOX (2015)

Another example of collaborations of various stakeholders is the Innovation Network of Denmark. This
is spearheaded by the ministry of higher education and science. Its thrust is to foster innovation, collaboration,
growth and internationalisation for the purpose of aiding businesses in Denmark. To date 22 innovation networks
in 9 different professional fields have been created ranging from ICT, energy, transport etc.

Clear Policy framework on FDI


Internationally, much work on clusters has been carried out by Porter and has shown the importance of
clusters from mere spatial concentration of firms to being an essential strategy for economic development (Yang
2010). Porter (1990) asserts that clusters are an important tool for competitiveness of an economy. This research
tries to fill in the missing links right from the planning and execution of industrial clusters in developing countries,
Zimbabwe in particular.

Commitment to the industrial cluster programme


Success of a cluster programmes requires overall commitment of all stakeholders towards realistic
targets. A common risk factor of failure of clusters according to OECD is to have a cluster policy which is vague
with expectations which outweighs resource availability, what it terms wishful thinking cluster framework,
which becomes nothing but a field of dreams.

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An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

VII. CONCLUSION
The study from the numerous case studies highlighted clearly pinpoints the significance of properly
constituted industrial clusters in a 21st century economy. There is a positive correlation between most of the
countries with organised industrial cluster activity and economic growth. If properly executed, clusters go a long
way in improving competitiveness of an economy, acts as a source of sustained economic growth, increased GDP
etc. Robust cluster models go a long way in defining a nation, through creation of powerful and dynamic synergies
in the economy. Global brands such as Kia, Samsung, Apple, Toshiba, Kodak, originate from countries where
organised industrial cluster activity is the hallmark.
For most developing countries, Zimbabwe in particular there is a myriad of challenges which make
chances of properly organised industrial clusters a pie in the sky. Chief among them being the poor state of
infrastructure in the economy and lack of requisite knowledge on modelling proper clusters. Moreover,
commitment on industrial clusters by stakeholders is not very convincing. A lot could be done.
Despite the numerous setbacks existing, there is vast potential for organised clusters in Zimbabwe. There
is a need for engagement of renowned cluster practitioners for expert advice on implementation. They may help
for instance in designing legislative framework on clusters. The engagement also helps in for instance a national
cluster mapping survey. This helps to identify the numerous comparative advantages which the country has, the
existing gaps and a plausible way forward. For instance, Zimbabwe is strategically located in relation to other
member countries in the SADC regional trading block, a transport and logistics cluster is conceivable. Also
Zimbabwe has potential in footwear cluster given comparative advantage in raw materials such as leather.
Conclusively, there is more room for organised industrial clusters in Zimbabwe.

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