The UNIDO Approach to

Cluster Development
KEY PRINCIPLES AND PROJECT EXPERIENCES

Technical Paper
DEPARTMENT OF DIGITALIZATION, TECHNOLOGY AND INNOVATION

I N C LU S I V E A N D S U S TA I N A B L E I N D U ST R I A L D E V E LO P M E N T
 The UNIDO Approach to
Cluster Development
Key Principles and Project Experiences

TECHNICAL PAPER

Department of
Digitalization, Technology and Innovation

Vienna, Austria
2020
 Acknowledgements

Acknowledgements

This document was prepared by the Department Development and Ms. Clara Mayer Kaibitsch,
of Digitalization, Technology and Innovation International Expert on Cluster Development,
of the United Nations Industrial Development Monitoring and Evaluation. The authors wish to
Organization (UNIDO), under the supervision and acknowledge the valuable comments provided by
technical inputs of Mr. Fabio Russo, UNIDO Senior Ms. Ebe Muschialli, Ms. Nuria Ackermann and Mr.
Industrial Development Officer, and by Ms. Manuela Nima Bahramalian.
Eyvazo, UNIDO Expert on Value Chain and Cluster

[Link]

DISCLAIMER
This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document
do not imply the opinion of the Secretariat of the United Nations Industrial Development Organization (UNIDO) whatsoever concerning: the legal status of any
country, territory, city or area or its authorities; the delimitation of its frontiers or boundaries; its economic system or degree of development. Designations such
as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached
by a particular country or area in the development process. The mention of firm names or commercial products does not constitute an endorsement by UNIDO.
The opinions, figures and estimates set forth are the responsibility of the authors and therefore should not be considered as reflecting the views or carrying the
endorsement of UNIDO.

COMMENTS
Comments and questions on issues raised in this report are welcome and may be addressed to dti@[Link]
Copyright © by the United Nations Industrial Development Organization, 2020

Copyright © 2020 - United Nations Industrial Development Organization

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UNIDO Department of Digitalization, Technology and Innovation 5
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 The UNIDO Approach to Cluster Development Content

Content

1 4
Cluster Development for
Inclusive Economic Growth 8 The UNIDO Approach to Cluster
Development 24

2 5
Cluster Development and the
Sustainable Development 12 UNIDO Project Examples 34
Goals (SDGs)

3
The Rationale for
Cluster Development 16

6 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 7
[Link]
 1 Cluster Development
for Inclusive Economic Growth

8 9
 The UNIDO Approach to Cluster Development Chapter 1 | Cluster Development for Inclusive Economic Growth

Based on lessons learned from theory and practice, stagnation and help unleash their growth potential.
The potential of cluster development resides not just in its capacity to UNIDO cluster initiatives provide technical Support to formulate, implement, monitor and
stimulate high rates of growth, but also in the conducive environment assistance designed to foster the undertaking of evaluate cluster development initiatives is provided
it provides for the promotion of broad-based and inclusive forms of joint actions among firms and support institutions. to local institutions in countries and regions where
clusters have been selected for support.
development. The rationale behind this approach rests in
that joint actions allow cluster stakeholders to The focus lies on initiatives that encourage
The underlying concern of UNIDO’s cluster with the communities living and working within a overcome limitations and reap opportunities that enterprises and institutions in these clusters
development approach is the promotion of private specific area or territory. are beyond their individual reach. to undertake joint actions that could ultimately
sector based inclusive growth, defined as a yield benefits to the cluster as a whole and the
pattern of economic growth that creates equitable Cluster-based entrepreneurs and workers Bottlenecks that constrain the growth of small- communities in which they are embedded.
opportunities and benefits for every section of often share a similar social, cultural and political scale business are thereby removed, triggering

society. background and practice reciprocity and self-help. performance improvements under economic, Getting there requires a strategic approach.
This tends to lend itself to growth patterns that social and environmental aspects. A performing UNIDO has developed a step by step methodology
The potential of cluster development resides not are likely to be more inclusive than in most other private sector will turn into an engine of growth in to assist cluster stakeholders throughout the
just in its capacity to stimulate high rates of growth, economic contexts. the local economy, thus generating benefits and complete cycle of cluster development initiatives
but also in the conducive environment it provides opportunities for participation for a wide range of which is presented in what follows.
for the promotion of broad-based and inclusive Over the past 30 years, UNIDO has been involved economic actors.
forms of development. This is partly because in the implementation of cluster and network For further information on the methodology, please

clusters constitute socio-economic systems where development projects in several countries around UNIDO follows an approach to cluster development refer to [Link]

the population of enterprises often overlaps the globe. aimed at addressing the root causes of cluster

10 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 11
[Link]
 2 Cluster Development and the
Sustainable Development Goals (SDGs)

12 13
 The UNIDO Approach to Cluster Development Chapter 2 | Cluster Development and the Sustainable Development Goals (SDGs)

decision making and governance structure fosters of biodiversity sustainable utilization of resources
regional development not at the expense of for valorization of territorial assets (SDG 15).
UNIDO’s approach to cluster development contributes to achieving the
but by preserving natural and cultural heritage,
Sustainable Development Goals (SDGs) in various ways.
through raising awareness about the importance

UNIDO helps cluster entrepreneurs to overcome impact on improving education in project countries
barriers to growth by increasing their collective (SDG 4).
efficiency and helping them to access new
markets, thereby promoting inclusive and In cluster initiatives, UNIDO often works with

sustainable economic growth (SDG 8). Cluster micro enterprises in peripheral areas and

Development encourages cluster firms to develop marginalized populations, in particular young

new products and improve production processes. people and women. Supporting them will hence

It thus contributes to innovation and ensures have a positive impact on reducing poverty

inclusive and sustainable industrial development (SDG 1) and enhancing gender equality (SDG 5).

(SDG 9). By promoting the development of agro-food,

tourism and creative industries, which are often
In many cluster projects, UNIDO works together concentrated in peripheral regions, the Integrated
with support institutions to develop educational Cluster Approach contributes to reducing regional
programs that directly contribute to improving the inequalities within national borders (SDG 10).
quality and / or marketability of cluster products. Better communication between stakeholders of
Cluster initiatives can thus also have a positive the three sectors together with a collaborative

Introducing a gender perspective within cluster development programmes is a necessary

element to enhance gender equality (SDG 5) and thus contribute to ensuring inclusive and
sustainable industrial development.

14 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 15
[Link]
 3 The Rationale for
Cluster Development

WHY CLUSTERS 18

WHAT ARE CLUSTERS 18

CLUSTERS AS PART OF LOCAL AND GLOBAL 20

VALUE CHAINS

16 17
 The UNIDO Approach to Cluster Development Chapter 3 | The Rationale for Cluster Development

WHY CLUSTERS
cultural identity and social values. Moreover, the number of enterprises necessary to be
Clusters have gained increasing prominence in However, the mere fact of geographical considered as constituting a cluster can vary depending on the size of a country.
debates on economic development in recent agglomeration of enterprises is, in itself, no
▪ As SMEs belonging to a cluster produce similar or related goods or services, they
years. Governments worldwide regard clusters as guarantee of strong economic performance; that
can benefit from economies of scale in their engagement in collective actions for the
potential drivers of enterprise development and is, the advantages associated with clustering do
procurement of supplies and the marketing of their products. They can also benefit from
innovation. Cluster initiatives are also considered not always emerge automatically. Relatively few
information exchange, joint learning and the development and adaptation of innovations.
to be efficient policy instruments in that they clusters in the developing world have been able
The latter is particularly relevant because cluster-based entrepreneurs and workers
allow for a concentration of resources and to achieve high and sustained growth rates. In
often share similar socio-cultural backgrounds and practice reciprocity and self-help.
funding in targeted areas with a high growth and many cases, they are trapped in a cycle of cut-
Vibrant clusters are home to innovative firms that reap the benefits of an integrated
development potential that can spread beyond the throat competition, stagnation and poverty and
support system and dynamic business networks. Cluster development often focuses on
target locations (spill-over and multiplier effects). are unable to spontaneously achieve the transition
supporting SMEs who have weak relative power within the value chain to which they
to innovation and growth.
Examples of internationally renowned clusters, belong and are subject to buyer and supplier dominance. Supporting these entrepreneurs

such as that of the Sassuolo ceramic cluster in Italy, Consequently, appropriate policy support and then comes with an angle of inclusiveness, supporting them for value chain inclusion.

the information technology cluster of Bangalore in assistance are often required. UNIDO has ▪ Finally, all enterprises share the same territory, its infrastructure, services and, in many
India, the automotive cluster of Tangier in Morocco developed an approach to cluster development cases, a common cultural identity. Enterprises within a cluster also often face common
or the Australian and Chilean wine clusters that tackles the underlying causes of cluster obstacles and challenges including, for example, a lack of infrastructure or limited access
demonstrate that clusters are environments where stagnation and helps seize growth opportunities to capital.
enterprises can develop a competitive and global and overcome obstacles to development
2 Besides enterprises, clusters also include support institutions, such as:
edge, while at the same time generating wealth
and local economic development in the process. ▪ Business associations;

▪ Business Development Service (BDS) providers;

WHAT ARE CLUSTERS ▪ Financial service providers, including banks;

▪ Public authorities such as local, regional and national governments and regulatory

In the UNIDO context, clusters are defined as “geographical concentrations agencies;

of inter-connected enterprises and associated institutions that face common ▪ Training agencies such as vocational schools, universities, etc.
challenges and opportunities”. This definition highlights two essential
features of clusters:

Clusters consist of a critical mass of enterprises located in geographical proximity to each

1
other and enterprises within them share many common features:

▪ Cluster as a critical mass of enterprises located in geographical proximity to each other.

There is no universally accepted way of establishing the exact boundaries of a cluster.
What is perceived as close in one location may represent an insurmountable distance in
others; distance can be influenced by the availability of transport facilities, as well as by

18 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 19
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 The UNIDO Approach to Cluster Development Chapter 3 | The Rationale for Cluster Development

CLUSTERS AS PART OF LOCAL AND GLOBAL VALUE CHAINS Lead buyers on top of value chains impose quality supports clusters in their endeavour to compete
criteria and standards that suppliers must comply in a global trading system where increasingly
Cluster dynamics influence the performance of clusters in developing economies show a sluggish with. Investments to achieve compliance are stringent requirements apply with regard to
the value chains to which they belong, that can performance and are resistant to improvement typically left to the suppliers which often times product quality, safety, health and environmental
be only local (e.g. a handicraft cluster, or a cluster and growth. Firms within stagnating clusters face face resource constraints. UNIDO therefore also impacts.
producing a typical food product also known severe bottlenecks. They often operate outdated,
as terroir product) or global (e.g. automotive or often environmentally hazardous technologies.
apparel). This does not, however, mean that they Shortages in infrastructure and basic services
INNOVATION CLUSTERS AND ECOSYSTEMS
play an important role in all value chains; indeed, limit their ability to improve product quality
some value chains may not even consider any and capture emerging market opportunities. Innovation clusters and strong innovation ecosystems are crucial to realize the potential of the Fourth
cluster-based organization of production. In any These bottlenecks, in turn, are major obstacles Industrial Revolution. They are not only a source of quality employment and the backbone of any knowledge-
based economy, but they also enable practice-oriented research, innovative solutions and deep technological
case, where clusters are important in value chains, for meeting international standards in terms of
modernization. It is also imperative to enhance the digital resilience and competitiveness of the business
there are cluster-based development interventions quality and efficiency necessary for successfully sector, particularly of SMEs. UNIDO promotes tailored programmes to assist MSMEs with digital transition;
that contribute to value chain development. Many integrating into global value chains (GVCs). designs e-commerce strategies for digitalization; and strategizes to encourage innovation. Programmes focus
inter alia on increasing the flexibility of production lines, aligning IT systems and support to evolving work
requirements, increasing safety and cybersecurity.

Linking Local Clusters’ Producers to Global Buyers

Global customer

Large scale, multi-outlet retailer

Buyer (including specialized

buyers and TNCs)

Small scale retailer

NATIONAL
BOUNDARY

Buyer and export agent

Local customers
LOCAL
CLUSTER
LOCAL Large scale and/or
multi-plant manufacturer
CLUSTER

Small scale manufacturer

Source: Kaplinsky R. and J. Readman (2000)

20 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 21
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 The UNIDO Approach to Cluster Development Chapter 3 | The Rationale for Cluster Development

Under-performing Clusters Performing Clusters

PUBLIC PRIVATE PARTNERSHIP

SUPPORT SERVICE
INSTITUTION BACKWARD FORWARD
PROVIDER SUPPLIER
FIRM LINKAGES LINKAGES
SUPPLIER FIRM
FIRM
EXPORT Global
SUPPLIER CONSORTIUM
Raw Material buyers
FIRM Suppliers
SUPPLIER
FIRM
FIRM SUPPORT Equipment FIRM SUPPLIER
SERVICE FIRM
PROVIDER
INSTITUTION Suppliers
FIRM
LARGER Final
FIRM FIRM Markets
FIRM
LOCAL FIRM
FIRM GOVERNMENT FIRM
SUPPLIER
PUBLIC & PRIVATE SUPPORT INSTITUTIONS

An underperforming cluster consists of many firms and local (support) A performing cluster is well organized with strong linkages
institutions, but it does not display clear linkages among the different entities. between a multitude of actors.

22 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 23
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 4 The UNIDO Approach to Cluster Development

THE INTERVENTION LOGIC OF UNIDO’S APPROACH i 26

KEY PRINCIPLES 28

PHASES OF CLUSTER DEVELOPMENT 30

ACTORS IN UNIDO’S APPROACH TO CLUSTER DEVELOPMENT 32

IMPLEMENTATION MODALITIES 33

24 25
 The UNIDO Approach to Cluster Development Chapter 4 | The UNIDO Approach to Cluster Development

THE INTERVENTION LOGIC OF UNIDO’S APPROACH UNIDO approach to cluster development thus The intervention logic underlying the approach is
focuses on removing obstacles to joint actions depicted to the below.
with the objective of encouraging collective action.
Clusters are particularly promising environments while at the same time respecting environmental,
for SME development. Due to their small size, social and labour standards.
SMEs individually are often unable to realize
economies of scale and thus find it difficult to take Spatial proximity and shared strategic interests
INTERVENTION LOGIC UNDERLYING UNIDO'S APPROACH
advantage of market opportunities that require the allow enterprises and their support institutions

delivery of large stocks of standardized products to realize shared gains through the organization

or compliance with international standards. of joint actions between cluster enterprises (e.g.
Transaction
joint bulk inputs purchase or joint advertising, Coordination costs
costs
They also tend to have limited bargaining power in collaborative R&D or innovation projects, or shared
inputs purchase, do not command the resources use of equipment), and between enterprises Lack of trust & social
capital and functioning
required to buy specialized support services, and and their support institutions (e.g. provision of institutions to enforce
contracts and laws
have little influence in the definition of support technical assistance by business associations or
policies and services. investments in infrastructure by the public sector).
The advantage accruing to the cluster from
The existence of a cluster per se does not such collective efforts is referred to as collective
ISOLATION OF SMEs
automatically ensure that entrepreneurship will efficiency. as main barrier to growth
flourish or that enterprises will generate sustained

CLUSTER INITIATIVE
returns. Even when located within a cluster, small Evidence suggests that the willingness of Foster linkages Build trust &
social capital
and medium-sized enterprises (SMEs) face barriers entrepreneurs to engage in joint actions is a critical
to growth. Although these barriers are often success factor to unleash their growth potential. Facilitate Strengthen
consensus building governance mechanisms
considered to relate to the size of the enterprises, However, despite the potential benefits deriving
on closer examination they are frequently revealed from joint actions, entrepreneurs often choose a
as having more to do with isolation. go-it alone strategy. Several factors can hinder
cooperation between enterprises including: Joint Actions External Economies
In non-performing clusters, these constraints
▪ transaction costs,
often manifest in unhealthy competition based COLLECTIVE EFFICIENCY

on lowering wages, disregarding the welfare of ▪ coordination costs, and

workers, minimizing investment in technology ▪ adverse business culture.

Improved
and depleting natural resources. This form of cluster
competition results in stagnant clusters, with local Obstacles to cooperation can also arise between performance

stakeholders reaping few benefits. enterprises and support institutions. While spatial
proximity on its own can reduce some of the costs
Evidence from strongly performing clusters, by associated with cooperative activities between Broad-based
contrast, demonstrates that it is possible for SMEs enterprises and institutions, other obstacles inclusive growth

to achieve high levels of growth by achieving need to be consciously addressed for a cluster
steady quality improvements and adding value, to become dynamic and growth-oriented. The

26 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 27
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 The UNIDO Approach to Cluster Development Chapter 4 | The UNIDO Approach to Cluster Development

KEY PRINCIPLES

To promote private sector based inclusive growth, UNIDO has developed an approach to cluster
development based on the following principles:
4 Strengthen cluster governance mechanisms
As has been noted before, cooperation can be strengthened by investing in trust-building activities. In the context of cluster
development, not only the propensity of individual cluster stakeholders to engage in joint actions is important, but also how these

1
interactions are organized and embedded into the local economic system.
Focus on existing clusters
Any formal or informal organization or arrangement that plays a leadership role in initiating and managing joint actions for the
An essential feature of the UNIDO approach is its focus on working with existing clusters, rather than creating new ones. While improvement of cluster competitiveness can be identified a governance mechanism. UNIDO’s approach to cluster development
existing clusters often demonstrate significant unrealised potential, the creation of clusters from scratch is likely to lead to a top- places great importance on strengthening the cluster’s governance mechanisms by changing patterns of interactions among cluster
down process, with private sector having limited incentives to assume a leading role. stakeholders and establishing or reinforcing institutions that can lead and coordinate joint action.
Good governance in a cluster allows for coordinated and effective planning. Through coordinated joint actions the cluster can reach
a higher level of performance. Good performance in turn increases the cluster’s “social capital stock” (embodied e.g. in the trust,
shared values). This raising “social capital stock” tends to reinforce the good governance in the cluster. UNIDO approach to cluster
development attempts to set this virtuous cycle in motion.

2 Promote private sector based inclusive growth GOVERNANCE

(Resilient joint planning
and coordination
The private sector plays a central role in promoting growth in general, as well as pro-poor growth in particular. Growth per se does capacity)

not necessarily lead to a reduction in poverty. To be pro-poor, economic growth must be broad-based, inclusive of all categories of
JOINT ACTIONS
stakeholders, sustainable and gender balanced. SOCIAL CAPITAL (Trust-based
contractual arrangements,
(Trust, shared values,
Cluster initiatives with a pro-poor focus need to focus not only at enhancing (labour force) productivity, innovation and participation networks)
joint purchasing
initiatives,
in economic life, but also address non-economic issues such as limited human and social capital by empowering marginalized establishment of
ECONOMIC associations)
groups, promoting improved access to employment opportunities and improving the health and education of the labour force. PERFORMANCE
(Increasing productivity
and exports, adaptation
to changing market
requirements)

3 Encourage collective efficiency through joint actions

5
The UNIDO Approach to cluster development focuses on initiatives that encourage enterprises and institutions to undertake joint
actions that could ultimately yield benefits to the cluster as a whole and the communities in which they are embedded. Provide targeted support to the cluster’s institutional network
Measures to help cluster stakeholders reduce barriers to cooperation and help them overcome their isolation include: The UNIDO approach focuses on providing incentives for public and private sector bodies to more effectively promote cluster
▪ Foster linkages between cluster stakeholders development and to build their capacity to do so.
▪ Facilitate consensus building Relevant local, regional and national institutions, including chambers of commerce, local governments, NGOs, producer associations,
▪ Build relationships universities, training institutions and regional as well as local economic development agencies are assisted to gradually assume a
▪ Encourage trust building strong supporting role in the development of the cluster.

▪ Strengthen governance mechanism Activities include establishing and/or providing support to business networks, building public-private partnerships and promoting
▪ Support the cluster’s institutional network dialogue among service provides and/or policy makers.
UNIDO also technically assists financial and non-financial service providers (e.g., business development service (BDS) providers,
vocational schools etc.) to make their services more responsive to the demands from within the cluster.

28 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 29
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 The UNIDO Approach to Cluster Development Chapter 4 | The UNIDO Approach to Cluster Development

PHASES OF CLUSTER DEVELOPMENT

Phase I Phase V
CLUSTER SELECTION IMPLEMENTATION

A well-designed and participatory selection process based on clearly defined criteria is a precondition for a successful initiative as it allows the
Implementation refers to the execution of the activities described in the action plan and management thereof. The Cluster Development Agent
identification of those clusters, where the impact of planned interventions can be maximized given the available time and resources.
facilitates this process, but does not engage in direct service provision or resource disbursement to cluster stakeholders. The CDA does not substitute
UNIDO’s role in the selection process is to recommend criteria and variables most appropriate for the achievement of the development objective agreed for functions that can be performed by existing private or public sector organisations but rather builds their capacity for implementation and enhance
upon. their responsiveness to the needs of the cluster.
Upon request, it may also provide technical inputs and can act as a facilitator to encourage the participation of national and regional actors. These are,
together with the donors, the final decision makers in the cluster selection process.
Phase VI
MONITORING AND EVALUATION (M&E)
Phase II
CLUSTER GOVERNANCE, TRUST AND THE ROLE OF THE CLUSTER DEVELOPMENT AGENT (CDA) The Monitoring and Evaluation (M&E) of cluster initiatives is a continuous process, which starts with the drawing up of a clear result chain. A result chain
outlines how specific inputs and project activities are linked to the expected outputs and outcomes and how they contribute to the impact or overall
Once a cluster has been selected for support, a Cluster Development Agent (CDA) or cluster broker, is appointed to facilitate the process of cluster development objective of a cluster project or programme. In line with the information needs of various stakeholders, key performance indicators, data
development in the different target clusters. collection methods, and reporting responsibilities and frequencies are defined and integrated into an overall monitoring framework.
After undertaking a cluster diagnostic study (see phase 3), the CDA will work with the cluster to enable the cluster stakeholders to work together to take At the heart of the UNIDO’s entire cluster development process are institutional capacity building and trust-building activities. These begin with the
the cluster from an underdeveloped one to a performing cluster, and to ultimately establish and operate a cluster governance structure. diagnostic study, continue during the design of the action plan and are reinforced during implementation and monitoring and evaluation.

Phase III
CLUSTER DIAGNOSTIC

Once the cluster is selected, a diagnostic study is undertaken for each selected cluster. The diagnostic helps to
▪ develop an understanding of the socioeconomic and institutional environment of the cluster; Phase

▪ detect potential leverage points for the intervention;

PHASE VI MONITORING & EVALUATION
▪ provide a baseline for monitoring and evaluation; and
▪ build initial trust between the CDA and the cluster stakeholders. PHASE V IMPLEMENTATION

The cluster diagnostic is a participatory exercise, carried out under the supervision and with the participation of the CDA, in which the cluster
stakeholders are the principal informants. It frequently offers the first opportunity for the CDA to establish a relationship with the stakeholders and to PHASE IV VISION BUILDING & ACTION PLANNING
introduce the concept of cluster development.

PHASE III CLUSTER DIAGNOSTIC

Phase IV
VISION BUILDING AND ACTION PLANNING PHASE II CLUSTER GOVERNANCE, TRUST BUILDING

Vision building and action planning are not one-off processes but develop in feedback loops through the life of a cluster initiative. Starting with a PHASE I CLUSTER SELECTION Time
discussion on the results of the diagnostic study, cluster stakeholders formulate a shared vision for their future cluster performance or the overall
cluster development path, which will be periodically reviewed and, if necessary, refined with time to take into account changes in the cluster or related
framework conditions. Action planning then relates to the translation of the vision statement into a realistic and achievable development strategy over
time and can be understood as a roadmap.
Action plans are also revised periodically and by all cluster stakeholders based on a sound monitoring and evaluation framework.

30 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 31
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 The UNIDO Approach to Cluster Development Chapter 4 | The UNIDO Approach to Cluster Development

ACTORS IN UNIDO’S APPROACH TO CLUSTER DEVELOPMENT

MAINSTREAMING GENDER IN CLUSTER DEVELOPMENT
Under the framework of a cluster development The wide participation of cluster stakeholders is
Introducing a gender perspective within cluster development programmes is a necessary element for ensuring inclusive and sustainable
project, UNIDO identifies and trains institutional encouraged by establishing a Cluster Commission
industrial development, where no one is left behind, and interventions do not trigger the exclusion of women as a collateral effect of
counterparts in the beneficiary country and project and inviting representatives of the different the development policy promoted. This implies moving away from the logic of adding a “gender component” to a project, and calls for
staff that will be engaged in project formulation interest groups in the cluster to participate in this gender analysis to be adopted as one of the main analytical tools.
and implementation. Commission. Launching a cluster development
When a gender perspective is adopted, the Cluster Development Agent would be able to anticipate potential gender concerns at all
initiative also requires wide political support stages of project implementation, from the diagnostic study to the final evaluation. This process starts with the design of a diagnostic
At the outset, a project team is established and the building of institutional commitment to methodology that facilitates the assessment of the different positions of men and women in the cluster and how this impacts the
including a Project Coordinator and one or a accessibility of resources, skills and decision-making power.
promote an environment conducive to its success.
team of Cluster Development Agents (CDAs) and This role is performed by a Steering Committee in Vision building and action planning benefit from the adoption of a gender focus. This can be done by explicitly stating gender-related
specialist consultants. These tend to be employed which UNIDO participates along with national and objectives as well as implicitly incorporating them in the cluster activities.
by UNIDO initially, but usually work within or regional institutions. A gender-inclusive action plan builds on the systematic integration of a gender perspective in the allocation of funds and definition
side-by-side with local institutions to promote of activities. Correspondingly, specific empowering practices offer important scope to foster women’s participation in the cluster
the dissemination of the approach and ensure its development initiative while establishing partnerships with complementary institutions in order to facilitate the implementation of
appropriateness to local conditions. the project and ensure the sustainability of outcomes.

All along the initiative, awareness-raising activities on gender disparities and their economic and social impacts are important tools
that facilitate a progressive mind set change in the cluster stakeholders, men and women.
PROJECT COORDINATORS
Overall, the commitment of the CDA and his/her team to promote gender equality at all stages of the initiative is crucial to the
Project coordinators have a deep understanding of the cluster development process and coordinate all cluster development ac-
deployment of an effective gender inclusive cluster development programme. It has been observed that the corresponding skills and
tivities in any given country. Among other tasks, their responsibilities normally include the overall management and monitoring
attributes of the project staff can be reinforced through the provision of appropriate training.
of the initiative, the training, support and monitoring of the performance of the CDAs and building a network of contacts with
strategic counterparts.

CLUSTER DEVELOPMENT AGENTS

Most of the field activities are coordinated and overseen by Cluster Development Agents, the professionals who work on the
ground in the cluster and accompany the process of cluster development from its initiation to phasing out. CDAs perform the role
of impartial brokers or facilitators who provides guidance and support to the cluster in the organisation and coordination of joint IMPLEMENTATION MODALITIES
activities.
The UNIDO approach can be applied in any client consult the [Link]
THE CLUSTER COMMISSION
The Cluster Commission is a network or forum of representatives of the key cluster stakeholders. Its role is to formulate the strategic country across the globe and with respect to any website for more background information, details
objectives for the cluster and to launch and coordinate joint activities among cluster stakeholders. The Cluster Commission does not sector or location. For more information, please on our approach, as well as training and best
get involved with micro-management or administrative issues. visit the UNIDO website featuring additional case practice materials.
THE STEERING COMMITTEE studies and related UNIDO experiences and
The Steering Committee consists of major national stakeholders that have a direct interest in the cluster development initiatives
being undertaken and can provide useful inputs to them. These normally include the Ministry of Industry and Trade, the Ministry
of Education, sector-specific line ministries, industrial promotion organizations, export promotion agencies, research institutes and
universities and development finance institutions and banks. The Steering Committee is normally responsible for promoting and
launching the cluster development project, supporting the process of cluster selection and articulating development priorities.
As in the case of the Cluster Commission, the Steering Committee usually does not get involved in micro-management and
administrative issues.

32 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 33
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 5 UNIDO Project Examples

CLUSTER DEVELOPMENT PROGRAMME FOR PUNJAB (PAKISTAN): 36

INTEGRATING CLUSTERS INTO GLOBAL VALUE CHAINS

CLUSTER INTERVENTION IN GHANA: IMPLEMENTING THE CONCEPT OF 37

UNIDO’S “5 CS FOR COMPETITIVENESS”

CREATING EXPORT CONSORTIA IN COLOMBIA’S AGRI-BUSINESS AND 38

COSMETICS CLUSTERS IN THE VALLE DEL CAUCA

PROMOTING CULTURAL AND CREATIVE INDUSTRIES CLUSTERS 39 The following

IN THE MEDITERRANEAN
experiences based on
UNIDO cluster and network
BOOSTING CLUSTER DEVELOPMENT BY PROMOTING TYPICAL AGRI-FOOD 40
AND TERROIR PRODUCTS (PROJECT PAMPAT) development projects being
implemented across the globe,
SUPPORTING WOMEN'S COOPERATIVES COMPLIANCE TO THE FOOD 42 illustrate how the methodology was
SAFETY STANDARDS IN THE ARGAN OIL CLUSTER OF MOROCCO adapted to the local context and/
or integrated into a project with
CLUSTER-BASED POLICY ADVISORY FOR MONTENEGRO 43
wider or more complex private
sector development
DEVELOPING CLUSTERS OF AUTOMOTIVE COMPONENT SUPPLIERS IN THE 44
SAMARA REGION OF RUSSIA objectives.

34 35
 The UNIDO Approach to Cluster Development Chapter 5 | UNIDO Project Examples

CLUSTER DEVELOPMENT PROGRAMME FOR PUNJAB (PAKISTAN): CLUSTER INTERVENTION IN GHANA: IMPLEMENTING THE
INTEGRATING CLUSTERS INTO GLOBAL VALUE CHAINS CONCEPT OF UNIDO’S “5 CS FOR COMPETITIVENESS”

Implementation period 2016 – 2021 Implementation period 2019 – 2023

Donors Government of Punjab, World Bank Donor European Union

Within the context of this project, UNIDO was asked to ■ Export diversification and market development The project, a component of the West African work towards improving the quality of their products and
provide technical assistance for the Cluster Development in the surgical equipment manufacturers cluster. Competitiveness Programme, was launched in adopting good agricultural/manufacturing practices in
Initiative (CDI), a programme to support the development Sialkot, although holding a significant share of global cooperation with the Ministry of Trade and Industry of order to meet customer demand and – where applicable
of several industrial clusters in the Punjab province of production of surgical equipment, its market share Ghana with the objective to improve the competitiveness - international standards.
Pakistan and advance their further integration into global was limited, as most producers were unbranded and of Ghanaian exports with a focus on three main value
In addition to these general objectives, the cosmetic
value chains. UNIDO’s technical assistance was shaped lacked direct access to export markets. This CRI, built chains encompassing various clusters: cassava, fruits
clusters seek to improve and strengthen collaboration
based on three levels. capacity of enterprises to devise export marketing (mango and pineapple), and cosmetics and personal care
between the industry and academia; create synergies
plans and supported development of markets in products. Access to regional and international markets is
First, training and capacity building of the CDI Cluster within the cosmetic value chain and the packaging
priority countries such as South Africa. improved through enhanced quality and value-addition,
Managers for active engagement with cluster members industry and institutions; and support the Association
compliance to international standards and low carbon
and facilitating cluster development process through: Third, improving cluster and sectoral policies through of Ghana Industries (AGI) and the Ghana Cosmetic
sustainable production.
benchmarking of Punjab industrial clusters with Manufacturing Association in developing an annual
■ Sensitizing firms and institutions on key challenges
comparable clusters around the world and drawing The project was launched based on the concept of cosmetics market survey.
and opportunities facing the cluster to build consensus
lessons for further improvement of their competitiveness UNIDO’s “5 Cs for Competitiveness”, an integrated
and a common vision for the future of the cluster; The cassava clusters seek to collaborate with equipment
by designing new strategic interventions (CRIs), approach that allows SMEs, structured in networks and
■ Fostering dialogue among actors to formulate short fabricators to develop and produce low cost, food grade
as well as providing recommendations on sectoral clusters, to take full advantage of the technical support
to long-term strategies to achieve common goals of equipment to meet standards and the mechanization
policies. Moreover, the project provided a comparative provided by the project.
the cluster; needs of the clusters’ actors, and to strengthen
assessment of Cluster Development Initiatives with
During the first year of implementation, 20 experts from coordination with existing platforms and partnerships to
■ Mobilizing technical and financial support for different cluster support programmes around the world
key support institutions have been trained on the UNIDO organize collective action for joint purchasing, marketing,
formulation and implementation of joint interventions in order to provide actionable policy advice to enhance
cluster methodology and enhanced their capacities in sales and lobbying at both local and national levels.
aimed at addressing key bottlenecks in development cluster policy tools and to establish a sustainability
facilitating cluster support and their development. In
of the cluster. mechanism for the Cluster Development Initiative of the The fruits clusters envision to enhance farmers’ access
a second step, 16 experts from 7 different institutions
Government of Punjab, beyond project completion. to certified planting materials, ensure respect of Good
Second, formulation and implementation of have been trained in their capacity to identify cluster
Agricultural Practices (GAPs) with emphasis on land
Competitiveness Reinforcement Initiatives (CRI), needs and support producers, processors and support
preparation, harvesting techniques and certification
covering strategic joint actions with involvement of institutions to define collective activities. During the
schemes such as GLOBAL G.A.P., Fair Trade, Green
industry and support institutions that aim at addressing training, potential clusters were identified and selected
Label. Furthermore, they seek to support processors
key bottlenecks hampering development of clusters. for in-depth diagnostic studies.
in the implementation of basic HACCP, GMPs, FDA
Successfully implemented CRIs include:
The participatory diagnostic studies highlighted several requirements and GSA standards, and organize training
■ Establishment of a mould design and manufacturing areas of potential cooperation to enhance value chain in marketing, assist producers and processors in market
center for the automotive component manufacturers’ competitiveness. In all clusters, members agreed to research, facilitate participation in trade fairs and
cluster to enhance the capacity of the industry to deepen their collaboration and integration to jointly exhibitions, and encourage collective branding.
produce new components based on the requirements
of OEMs. The center provides specialized engineering
COORDINATE Promote dialogue and synergies within the VCs through Value Chain Strategic Committees
services that support component manufacturers by Compete

design and production of moulds as well as training

COMPETE Develop competitive manufacturing capabilities by upgrading SMEs through clusters
of their workforce;
■ Establishment of a Design and Market Intelligence CONFORM Support Quality Infrastructure and SMEs to comply with market requirements Credit Coordinate Conform

Studio for the Footwear and Readymade Garment

CONNECT Promote efficient connectivity to markets by strengthening marketing capacities
clusters to improve their position within global
value chains, through enhanced design and market Connect
CREDIT Link SMEs to financial Institutions to access appropriate and affordable credit schemes
development capacity;

36 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 37
[Link]
 The UNIDO Approach to Cluster Development Chapter 5 | UNIDO Project Examples

CREATING EXPORT CONSORTIA IN COLOMBIA’S AGRI-BUSINESS PROMOTING CULTURAL AND CREATIVE INDUSTRIES
AND COSMETICS CLUSTERS IN THE VALLE DEL CAUCA CLUSTERS IN THE MEDITERRANEAN

Implementation period 2016 – 2019 Implementation period 2013 – 2017

Donor Korea International Cooperation Agency (KOICA) Donors European Union, Italian Cooperation

The project aimed at enhancing the competitiveness and Thanks to a wide range of support activities including the Recognizing the socio-economic contribution that the enterprises and workshops) with a total workforce of
market access of SMEs with an export potential in the assessments of companies’ compliance capacity, actions Cultural and Creative Industries (CCI) can make in various 280,000 persons.
agribusiness and cosmetics clusters in Valle del Cauca plans to overcome quality gaps and training programs countries of the southern Mediterranean that enjoy
In addition to the technical support in entrepreneurial
through the creation of export consortia. on technical matters, average compliance levels with rich historical heritage, UNIDO started a pilot initiative
cooperation and in product development, great emphasis
relevant international standards increased considerably. embedding the concept of clusters within CCI.
An export consortium is a voluntary alliance of firms was put on networking and international collaboration.
Consequently, consumers (as an indirect beneficiary
with the objective of promoting the export of goods and The project “Creative Mediterranean” covered 7 Creative Hubs - platforms offering services and spaces
group) benefited from safer products available on the
services of its members through joint actions. An export countries, namely Algeria, Egypt, Jordan, Lebanon, to creative industry actors from designers to craftsmen
market.
consortium is a formal organization to promote medium- Morocco, Palestine and Tunisia, where - in an inception and factories – were established to serve as knowledge
to long-term strategic cooperation among firms, and it To enhance the sustainability of the initiative, the project phase – a mapping of clusters and value chains in repositories. These design centres increased national
organizes joint activities to facilitate access to foreign adopted a structured approach to transfer UNIDO’s cultural and creative industries was undertaken and and regional expertise related to CCIs and cluster
markets. methodology to local actors and prepare them to over 140 clusters were identified. Subsequently, a call development, and thereby helped to diffuse design
manage future export consortia initiatives. Following for proposals was launched to allow interested groups knowledge and culture and improved creativity.
The project was structured around the following
the class room trainings, local support institutions were of companies to apply for UNIDO’s assistance and
components: (1) the formation of export consortia; (2) Another focus of the initiative was on market access
supported in developing their own consortia initiatives. submit their proposals. In each target country, a national
technical assistance to consortia member enterprises activities. In particular, marketing and branding strategies
For this purpose, UNIDO local experts followed up and steering committee comprising public and private
to comply with relevant quality standards and market were developed for the new collections created by
mentored their staff in the actual implementation of the actors shortlisted a selected number of clusters. During
requirements; and (3) institutional know-how transfer. participating cluster artisans and participation in local
methodology. implementation, technical support was provided to a
and international trade-fairs was supported. Furthermore,
In the course of the initiative, eight export consortia were total of 14 clusters, including a wide range of industries
cluster members were assisted in developing B2B
assisted directly, of which five became fully operational. such as jewellery, home textiles, furniture, pottery
linkages with local and international buyers.
Through the institutional know-how transfer, additional 9 and copperware. To facilitate the artisans’ access to
consortia were supported indirectly. 33 firms (20 through international markets, “Creative Mediterranean” helped As the initiative was intended as a pilot project that should
direct technical assistance, and 13 through handholding craftsmen modernize their workshops and processes, encourage governments to replicate the approach at
of support institutions) were assisted. All together they increase the quality of their products and improve their the national level, UNIDO helped to develop plans for
comprised 1,857 fixed-term employees (774 women) and marketing and design skills. In total, the project assisted national governments to replicate the project’s activities.
about 68 seasonal workers. roughly 19,300 enterprises (64% of which were micro-

As a result of the UNIDO intervention, 21 companies

managed to target new markets. Jointly as groups, the
PALESTINE
consortia realized exports of a total value of US$ 871,941 Furniture cluster - Nablus
ALGERIA LEBANON
to 10 markets including Spain, United States, France, Jewelry cluster - Batna Copperware
Traditional handicrafts
cluster - Bethlehem Jewelry cluster - Bourj

Hong Kong, Italy, Portugal, Sweden, the Netherlands, MOROCCO

cluster - Constantine
EGYPT
Hammoud
Furniture cluster - Tripoli
TUNISIA
Ecuador and the UK. Thanks to the experience gained Home textile - Casablanca
Interior design cluster - Marrakech Mosaics ceramics -
Home design - Cairo
Leather cluster - Cairo
JORDAN
as members of the consortia, individual companies El Djem
Tableware - Nabeul Fashion design • Amman

managed to realize exports accounting for about US$

Nabeul
4,110,088. Constantine
El Djem
Casablanca Batna
LEBANON
Tripoli

Fixed-term employment in the directly assisted consortia TUNISIA Bourj

MOROCCO PALESTINE JORDAN
Bethlehem
has grown by 14% between 2016 and 2019 while in the
Marrakech Amman
Nablus

three “indirectly assisted consortia”, which were followed- ALGERIA Cairo

up by support institutions under the methodology transfer EGYPT

process, a 28% increase in employment was recorded.

38 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 39
[Link]
 The UNIDO Approach to Cluster Development Chapter 5 | UNIDO Project Examples

BOOSTING CLUSTER DEVELOPMENT BY PROMOTING TYPICAL

AGRI-FOOD AND TERROIR PRODUCTS (PROJECT PAMPAT)

Implementation 2013 – 2019, covering Morocco and Tunisia;

period 2019 – 2024, Tunisia Phase II, including the organization of a National Contest for Local Food Products in Egypt

Donor State Secretariat for Economic Affairs SECO

The “Programme for Market Access of Typical Agri-food and export markets. The programme also helps to supermarket chains, cooking events and trade fair Furthermore, they received trainings and technical
and Terroir Products” (PAMPAT), aim at improving the ensure that products comply with the requirements of participation. As a result of the intervention, prices for the assistance to standardize new processing techniques, to
performance, market access and the socio-economic newly introduced geographical indications and quality fig producers in Djebba have doubled and the PGI fruits create innovative packaging and logistics solutions and
conditions of SMEs in various agri-food clusters and brands, in order to position them in higher niche markets, were sold in different retail chains all over Tunisia, and to incorporate modern marketing and sales techniques.
value chains in Morocco and Tunisia. Project activities and allow the producers to obtain a premium price and were also exported to the Gulf countries and Canada. These new products from Djebba were experiencing a
focus on strengthening the organization of the selected higher revenues. notable success on the local market. Within a couple of
In order to create additional revenues for the
clusters and value chains, improving the productivity, years, prices of dried figs had increased by 50%.
In this programme UNIDO has been applying a holistic inhabitants of Djebba, the programme also supported
quality/standard compliance and product development
approach including the interrelated axes of intervention local producer groups to start offering and marketing The PGI Djebba fig has also played a core role in making
of SMEs, and enhancing their position in both domestic
depicted below. local products such as sun-dried figs, jams, traditional the mountain village increasingly well-known among
pastries and essential oils. A cooperative and two rural Tunisians. Between 2015 and 2019 the number of visitors
COMPETITIVENESS LINKAGES groupings were established and assisted to set-up new had more than doubled ([Link]).
GOVERNANCE
Strengthening the capacity of public Upgrading different links in the value Strengthening alliances production facilities that comply with legal requirements.
and private actors. Establishing a chain (Improving quality, optimizing (e.g. cooperatives, consortia) and
working group of key actors in the resource use, increasing productivity formalizing linkages between the
value chain to develop a shared vision and production capacity). different actors in the value chain (e.g.
supply contracts). The UNIDO Integrated Cluster Approach:
and joint action plan.
Linking Agro-food, Tourism and Creative Industries
QUALITY & ORIGIN MARKETING DIVERSIFICATION
Ensuring compliance with quality, Improving market access and the Diversification and innovation along
Marketing Mix of companies and the value chain (including creation of In a globalizing world, even small differences are becoming increasingly significant in the development of local economies; therefore,
safety and origin labels. Promoting
labels among different actors in the consortia (from branding and product new entrepreneurial initiatives and a place-based territorial approach, which attempts to capitalize on distinct local characteristics, is an appropriate strategy to promote
development to negotiating new product development).
value chain, buyers and consumers.
new sales contracts).
economic growth at the regional level. Linkages and synergies between food, tourism and the creative industries can provide a platform
for local economic development and for turning comparative advantages into competitive advantages. These linkages offer considerable
potential to grow demand and develop new products, experiences and markets.
In Morocco, UNIDO implemented this approach to the enhance market access for products produced by SME To take into consideration the above, UNIDO has been implementing innovative activities and interventions that foster the development
prickle pears and the argan oil clusters/value chains, cooperatives and consortia within the argan oil value of ‘integrated clusters’ built through the combination (and the synergistic linkages) of the primary sector (agriculture) and tertiary service
with a view to ensure the certification of producers and chain. sector (tourism) activities with strong links to the cultural sector (creative industry). This implies the need of shifting from a sectorial
the market promotion of the Protected Geographical orientation towards a territorial approach, in which the key pillar is in the ability of local actors to valorize the whole set of territorial
In Tunisia, the approach was applied to the Harissa and
Indications (PGI). Within this project, the Value Chain Argan goods and services in a complementary way. The ‘integrated cluster’ is not exclusively touristic or exclusively specialized in one production
the prickle pears value chains and to the fig cluster of
Federation (FIFARGANE - Fédération Interprofessionnelle
Djebba. This rural cluster is located in the North-West of covered by the agro-food sector. On the contrary, these features, all present, are interdependent, together with the exploitation of cultural
de la Filière de l'Argane) was assisted to develop a
the country and thanks to the unique quality attributes and creative resources.
traceability software to ensure that producers respect
of the fig, it counts with the first Protected Geographical
the code of practice for the production of the argan oil The production system in an ‘integrated cluster’ is characterized by the presence of an agglomeration of enterprises developed around
Indication granted to a fruit in Tunisia. The programme
under the PGI. Producers, including cooperatives, groups the distinctive resources or ‘cultural and territorial capital’. The process of valorization involves different complementary sectors, and new
supported producers in the Djebba cluster to comply with
of cooperatives and SMEs, were trained to comply with activities contribute to make the economic structure more complete and widen the opportunities for development.
the product specifications of the PGI and also worked
that same code of practice, as well as with the national
with local authorities to set up a local association in For constructing an ‘integrated cluster’ a crucial role is played by public authorities, which should adopt a collaborative governance.
law on food safety and hygiene. As a result, the number
charge by law of the self-control system. In 2019, already This new way of understanding governance brings public and private stakeholders together in collective forums with public agencies
of producers certified based on the PGI increased by
25% of the local production was certified with the PGI. to engage in consensus-oriented decision making. It also ensures that processes are broadly inclusive of all stakeholders, including both
150% between 2013 and 2019.
To convey the quality attributes of the labelled PGI figs powerful and less powerful actors. In this respect there is a strong responsibility put on public agencies to set an appropriate institutional
The programme also covered the promotion of collective to the consumers, a public-private promotion programme design so these processes are broadly inclusive of all stakeholders as well as ensure facilitative leadership for setting and maintaining clear
branding centered on the argan oil PGI in order to was set up, which consisted of tasting events in Tunisian ground rules, building trust, facilitating dialogue and exploring mutual gains.

40 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 41
[Link]
 The UNIDO Approach to Cluster Development Chapter 5 | UNIDO Project Examples

SUPPORTING WOMEN'S COOPERATIVES COMPLIANCE TO THE FOOD CLUSTER-BASED POLICY ADVISORY FOR MONTENEGRO
SAFETY STANDARDS IN THE ARGAN OIL CLUSTER OF MOROCCO
(PROJECT PAMPAT)
Implementation period 2009 – 2016 (various phases)
Donors European Union, Government of Montenegro, One UN Fund

The challenges faced by the Moroccan PAMPAT team, On the strategic front, the in-depth understanding of In 2009, five United Nations agencies developed a joint Clusters by the end of 2016” with a view to increasing
in their daily work with argan oil producers and women’s the legal principles and requirements was indeed a project with a focus on the development of SME clusters. the contribution of selected clusters and networks
cooperatives, with the implementation of the Food Safety challenge for the women’s cooperatives, but it was also UNIDO’s role was to support the Ministry of Economy to employment retention, import substitution, export
Law (28/07) in 2016 were twofold: essential to maintain their role in the value chain. in the development and implementation of a national promotion or new business and job creation.
cluster strategy, containing a concrete set of measures
■ TECHNICAL: What should be done to improve The national expert in charge of the food safety The adopted strategy envisaged contributing to a
for systemically increasing the competitiveness and
cooperatives’ premises and production processes in training undertook participatory diagnostics with the more balanced regional socio-economic development
market access of SME clusters and networks in the
order to comply with the law without impacting on cooperatives’ members in order to familiarize them with by enhancing the competitiveness and employment
country.
the traditional techniques included in the Protected the crucial aspects to be taken into consideration. She capacities of SMEs, and ensuring that the benefits
Geographical Indication Code of Practices for the then worked with some of the cooperatives’ leaders and The process that led up to the development of this deriving from the EU integration process and the further
Argan Oil? familiarized them with the appropriate terms and tools strategy focused on: (a) mapping of existing business opening of markets are spread more equally across the
■ STRATEGIC: How could women become active for the training. Issues such as personal hygiene and clusters a¬¬nd networks in Montenegro; (b) undertaking different economic actors within the country.
players in complying with the food safety standards? changing clothes for work were considered as offensive diagnostic studies of 15 selected sample clusters to
Furthermore, recognizing that linkages between
How to make sure that these women would not be by most of the women involved. However, because of identify the key challenges and problems faced by the
agriculture and the tourism industry can help producers
excluded because of a lack of technical competencies the national expert’s ability to translate the technical local businesses; (c) undertaking a demand assessment
access new markets and generate new income
and knowledge? concepts into everyday local terms and to explain the for key cluster products with a focus on potential buyers
and employment opportunities, UNIDO assisted in
rationale behind those actions, the women became in the food and tourism industries; (d) undertaking a
To tackle these issues, a female agronomist speaking developing the ‘Delicious Montenegro’ brand. The idea
more aware of the procedures to be followed and slowly capacity-building and testing interventions in selected
the local language was hired by UNIDO. The technical was to unite different agri-food producers from various
started to involve their peers from other cooperatives to pilot clusters that have been diagnosed; (e) carrying
aspect was handled by organizing working sessions with clusters under one umbrella brand and to foster linkages
follow the necessary procedures. out a capacity assessment of key support institutions
the national authority in charge of the law enforcement and local networks with gastronomy and the tourism
and municipalities; and (f) drafting and implementing
(ONSSA) in order to present the production methods and As a result of such efforts, 66 diagnostics have been sector ensuring social inclusion and reducing tourism
the “Strategy for Sustainable Economic Growth in
processes used by the argan oil women’s cooperatives undertaken, 36 groups have been coached daily on leakage.
Montenegro through the Introduction of Business
and to provide solutions, taking in to account the reality their production methods, premises, equipment and
(isolation, lack of investment capacities, distance from personnel training, and 25 producers have already been
water sources, low literacy level, etc.). These technical declared compliant to the law by the national authority Within this project context, UNIDO adopted an integrated cluster approach encompassing the following activities:
sessions and some field visits to the cooperatives have (ONSSA).
■ definition of brand elements and communication channels and promotional materials: brochure, roll-ups, posters,
allowed the technical experts to come up with tailor- tags, flyers, website etc.;
made solutions, taking into account their views and
■ tourist trail development (olive oil trails to link to tourism in the regions of Bar and Ulcinj, and help the cluster tap
constrains.
into the significant competitive advantage of Montenegro’s rich olive oil cultural heritage);
■ national and international trade fair participation (the ‘Delicious Montenegro’ concept has been presented at the
Slow Food Network’s ‘Terra Madre Salone Del Gusto’ in Turin - one of the most important events dedicated to
food and gastronomy;
■ targeted technical and vocational trainings in business management and marketing;
■ training on the UNIDO cluster development approach for local government staff and business support
associations;
■ adding value to quality products through certification;
■ engaging producers to co-develop a new brand of Montenegrin ancient olive oil;
■ creation of wine routes to promote Montenegro’s autochthonous wine varieties;
■ establishment of public-private partnership platforms.

42 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 43
[Link]
 The UNIDO Approach to Cluster Development Chapter 5 | UNIDO Project Examples

DEVELOPING CLUSTERS OF AUTOMOTIVE COMPONENT

SUPPLIERS IN THE SAMARA REGION OF RUSSIA

Implementation period 2009 – 2016 (two phases)

Donor Government of Slovenia

This UNIDO project aimed at strengthening automotive ■ Support component manufactures to integrate into
component suppliers, optimizing the local supply chain, global supply chains;
providing the region with an industry-specific and ■ Enhance public-private dialogue through acting as
institutional development concept, and creating access the industry’s communication centre;
to international markets, in particular the European
■ Promote the effective use of scientific, technological
Union.
and innovative capacities of the Samara region
Within the context of the project framework, the capacity through active collaboration.
of support institutions and local organizations were built
Cluster twinning efforts with the Automotive Cluster of
and linkages to other automotive clusters were facilitated
Slovenia resulted in a number of business partnerships
through cluster twinning.
and enhanced the communication between the two
In addition, a number of initiatives were implemented, clusters through establishment of the Russian-Slovenian
such as the formation of the Association of Automotive Business Club with 43 members that successfully
Suppliers in the Samara Region (later referred to as explores business cooperation in automotive, energy
“Automotive Cluster of Samara”), which was originally efficiency and tourism sectors. Furthermore, 3 joint
established with 17 members to: ventures (Russia-Slovenia) have been formed.

UNIDO’s support to Automotive Industry Clusters

UNIDO offers a wide range of services targeted at the automotive supply chain. Due to its long-
standing involvement in the automotive sector – through technical cooperation projects, research
initiatives and global events in the fields of supplier upgrading/development, cleaner production,
technology foresight, private standards, policy advisory matchmaking and investment promotion
related to the automotive industry (and in particular to component manufacturers) – UNIDO has
acquired an in-depth understanding of the sector and has established a relevant network of
technical experts and collaborating institutions, which is essential for information and knowledge
sharing as well as for the transfer of know-how and of technology. This has allowed the
Organization to deliver tailor-made services, at the institutional and enterprise level, in support of
car manufacturer suppliers that are facing increasing higher standards (in terms of cost, quality,
delivery, and engineering know-how). Inter alia, UNIDO directly assists developing countries
and economies in transition through policy advice to develop and implement support schemes
for the automotive industry. UNIDO has impended related programs in Belarus, Colombia, India,
Pakistan, Russia, Nigeria, Serbia and South Africa.

44 Key Principles and Project Experiences UNIDO Department of Digitalization, Technology and Innovation 45
[Link]
 The UNIDO Approach to Cluster Development

Acronyms

BDS Business Development Service

CCI Cultural and Creative Industry
CDA Cluster Development Agent
CDI Cluster Development Initiative
CRI Competitiveness Reinforcement Initiative
EU European Union
GVC Global Value Chain
M&E Monitoring and Evaluation
PAMPAT Programme for Market Access of Typical Agri-food and Terroir Products
R&D Research and Development
RSS Republic of South Sudan
SDG Sustainable Development Goals
SME Small and Medium Enterprise
UNIDO United Nations Industrial Development Organization

Further information
Further information on the UNIDO cluster programme is available at [Link] and
[Link]

This publication may be downloaded free of charge from the website.

UNIDO in brief
UNIDO is the specialized agency of the United Nations that promotes industrial development
for poverty reduction, inclusive globalization and environmental sustainability.

As of 1 April 2019, 170 States are Members of UNIDO. They regularly discuss and decide
UNIDO’s guiding principles and policies in the sessions of the Policymaking Organs.

The mission of the United Nations Industrial Development Organization (UNIDO), as

described in the Lima Declaration adopted at the fifteenth session of the UNIDO General
Conference in 2013, is to promote and accelerate inclusive and sustainable industrial
development (ISID) in Member States.

46 Key Principles and Project Experiences

[Link]

United Nations Industrial Development Organization

Vienna International Centre
P.O. Box 300, 1400 Vienna, Austria
Telephone +43 1 260260
[Link]

DISCLAIMER
This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document do not
imply the opinion of the Secretariat of the United Nations Industrial Development Organization (UNIDO) whatsoever concerning: the legal status of any country, territory,
city or area or its authorities; the delimitation of its frontiers or boundaries; its economic system or degree of development. Designations such as “developed”,
“industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country
or area in the development process. The mention of firm names or commercial products does not constitute an endorsement by UNIDO. The opinions, figures and
estimates set forth are the responsibility of the authors and therefore should not be considered as reflecting the views or carrying the endorsement of UNIDO.

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