Promoting cluster policy in Vietnam: some lessons for institutional building prof. Nicola D. Coniglio University of Bari (Italy) & Norwegian School of Economics New Delhi (India), February 2014

2 Learning from a case study: The project: UNIDO Project “SME Cluster Development” in Vietnam ( ) Aim: building national capacity for (scaling up) cluster policy in Vietnam. Beyond the “pilot” approach: working – together with different Ministries and CIEM - with the Institutional aspects of sustainable cluster development (policy design).

3 Do we really need to ”embedd” cluster policy into the Institutional framework? (pilot) Cluster development initiatives might be successful in the absence of a structured “cluster development framework” …. but…. … the scaling up of cluster development initiatives requires an Institutional arrangement (software: legislation / Master plan / policy guidelines; hardware: public officials – national or subnational agencies or ministries etc. - allocated with the responsabilities over cluster policy initiatives Institutional ‘bottlenecks’ are one of the main sources of failure of cluster development initiatives

The government (national and/or local) is a crucially important actor of cluster development; Cluster policy is a complex industrial policy: i) address multiple market failures; ii) cross-cutting issues (requires a competent and authoritative coordination of multiple ‘policy tools’); iii) Involve several actors and multiple-levels of Government A badly designed Institutional setting will represent the main obstacle (stumbling block) Risks: bureacratic inefficiencies / bureacratic ‘captures’ Institutionalization of cluster policy: pro and cons

There is no ‘one-size-fits-all’ cluster policy setting. The optimal policy setting depends on the specific circumstances  Institutional diagnostics is a fundamental prerequisite (division of labour within the Gov / identifying the ‘capacity’ and ‘structural’ constraints / strenght and capacity of other key actors such as business associations)  Avoid adding Institutional Complexity (not another empty office in a Ministry but an effective and authoritative ‘coordination tool’ of policy actors which tipically conduct their job in isolation) Vietnam case lesson 1. Identifying the policy constraints

A checklist of the main issues  Who is in charge? (there is a strong case for ‘placing’ cluster policy close to SMEs development policy)  The division of responsabilities btw Central and Local governments (definition of the legal framework / funding / coordination / implementation / monitoring / evaluation)  Involvement of other stakeholders 2. Identifying the best (not necessarily the optimal) possible policy architecture

Limited institutional capabilities (transferring or developing ‘best practices’) Heterogeneous ‘visions’ (often very confused vision…) Intra-institutional conflicts (need a neutral and credible broker) 3. Why we might need an ‘impartial broker’ also for the ‘Institutional’ element of cluster policy

8 THANK YOU FOR THE ATTENTION! contact:

Clusters’ club Ministry of Planning and Investments Ministry of Finance Ministry of Education and Training Ministry of Industry and Trade Ministry of Science and Technology Inter-ministerial committee Provincial Governments Cluster A (potential) model of governance of cluster policy in Vietnam

10 Division of roles between central and provincial government