Cluster Development.Programs in Latin America and the Caribbean. Lessons from the Experience of the Inter-American Development Bank

National and local governments, international organizations and donors are increasingly using the instrument of cluster development programs (CDP) to promote economic development. This paper builds on the recent experiences of the Inter-American Development Bank (IDB) in financing and executing cluster development programs, explores their conceptual approach and actual practice, and learns some preliminary lessons.

This preliminary review remarks that CDP offer remarkable development potential, provided that they are consistent with the whole system of private sector development policy support. They represent an important opportunity to remedy the coordination failures that constantly hinder the process of economic development.

Some specific lessons may be summarized as follows:

(i) cluster development programs are often very diverse but usually share one common achievement: they have succeeded in creating public and private “institutional spaces” to negotiate, design and implement projects with shared benefits and externalities;

(ii) in all these experiences governments have always taken the leadership to initiate the cluster programs and provide the tools and at least part of the
financing;

(iii) Cluster programs need to enjoy the highest possible Government priority and the coordination with other Government bodies and with other productive sectors is essential;

(iv) Additional essential elements of the programs’ success appear to be the involvement of the community and the private sector with the program since the initial design stages;

(v) Institutional intermediaries between governments and actors have often helped manage and correct “apathy” and information gaps; (vi) As a result of the many CDP implemented in several regions in Latin America and the Caribbean, new capabilities to manage complex projects requiring governance, group decision-making, collective actions, complementarities and coordination have been created. Such experiences have helped put in place new public-public and public-private processes relevant to production and competitiveness.

Cluster Development.Programs in Latin America and the Caribbean. Lessons from the Experience of the Inter-American Development Bank. Carlo Pietrobelli.Claudia Stevenson. November 2011.

The Inter-American Development Bank Discussion Papers and Presentations are documents prepared by both Bank and non-Bank personnel as supporting materials for events and are often produced on an expedited publication schedule without formal editing or review. The information and opinions presented in these publications are entirely those of the author(s), and no endorsement by the Inter-American Development Bank, its Board of Executive Directors, or the countries they represent is expressed or implied. This paper may be freely reproduced.

Cluster Development.Programs in Latin America and the Caribbean. Lessons from the Experience of the Inter-American Development Bank