- Title
- Benchmark value chain clusters, agglomeration economies and dynamic externalities : an intergrated approach to regional economic development
- Creator
- Zeelie, Eben Johannes
- Subject
- Industrial clusters
- Subject
- Regional economics
- Subject
- Regional economic disparities
- Subject
- Economic development
- Subject
- Regional planning
- Date Issued
- 2009
- Date
- 2009
- Type
- Thesis
- Type
- Doctoral
- Type
- DBA
- Identifier
- vital:8594
- Identifier
- http://hdl.handle.net/10948/1086
- Identifier
- Industrial clusters
- Identifier
- Regional economics
- Identifier
- Regional economic disparities
- Identifier
- Economic development
- Identifier
- Regional planning
- Description
- From the broad overview of the cluster literature, the proposition emerges that the manipulation of regional economic structural and cluster factor conditions within a geographically proximate region can translate into sustainable regional economic growth outcomes. As a first step in exploring this research, a theoretical framework for the conceptualisation of industry clusters was established and a methodological framework applied to statistically identify major manufacturing value chain clusters in the Eastern Cape Province. This methodology combines a strength-of-linkage measure for all pairs of supply and use sectors (as revealed in the systematic analysis of intermediate purchasing and sales patterns in the South African Final Supply and Use Tables: 2002) with the application of Ward’s hierarchical cluster algorithm to map the national benchmark value chain clusters in the South African national economy. The ensuing national value chain benchmark cluster framework was then transposed to the Eastern Cape Province to reveal cluster concentrations and gaps that exist in the value chain clusters in the province. The methodology applied in this study provides an objective and clear perspective of inter-industry linkages in the South African economy and produces more detailed and evenly distributed clusters than traditional cluster identification methodologies. Secondary linkages were determined for each of the twenty-six core value chain clusters to depict the diversity of sectors linked to the respective core clusters. In transposing the national benchmark value chain cluster framework onto the Eastern Cape Province economy, a number of distinct advantages emerge. Firstly, it reveals gaps in value chain cluster groupings that may be filled through industry recruiting or regional business development strategies. However, not all industries absent from value chain clusters in the region are equally attractive for recruitment. Henceforth, the number of direct and indirect linkages to industries absent from the Eastern Cape Province serves as a measure of their relative attractiveness when considering their recruitment into the region. vi The benchmark value chain cluster framework alone does not explain which agglomeration externalities are generated and exploited within each cluster, but it served as the overarching framework for the remainder of the research. Accordingly, the value chain cluster framework was applied to evidence whether specialisation, competition or diversity (represented by MAR, Porter and Jacobs economies respectively) is the operative mechanism in generating cluster growth in the Eastern Cape Province. Since agglomeration externalities are not directly observable, construct-valid indicators for the various externalities, as well as appropriate mechanisms to empirically assess the statistical relevance of MAR-, Porter and Jacobs economies in stimulating cluster growth, were established. This thesis added to agglomeration literature by disaggregating the standard measure of diversity externalities into two unique diversity indicators, namely supply diversity (SDiv) and use diversity (UDiv). The SDiv- and UDiv coefficients measure the degree to which a value chain cluster’s supplying/user sectoral mix at provincial level differs from that of the cluster grouping at the national level. This distinction between supply-and use diversity developed in this study firstly provides a clearer insight into the relative regional presence of supplying- and using sectors to the various value chain clusters, and secondly, serves as a useful mechanism to regional policymakers in identifying industries that may be targeted for investment into a region. Therefore, by separating the diversity into its two components, a clear distinction can be drawn between the impact of supplying- and using sectors on value chain cluster growth in a particular region. From a narrow perspective, the empirical findings validate both the Marshall Arrow Romer- (small positive impact of regional cluster concentration) and the Jacobs theory (significant positive impact of cluster supply- and use diversity on cluster growth), while it invalidates Porter’s theory (no correlation between competition and cluster performance). The positive effect size recorded between the level of value chain cluster concentration and differential growth indicates that policy makers in the Eastern Cape Province will be well advised to direct growth interventions towards larger concentrated clusters, than towards smaller, incipient value chain clusters. Additionally, vii the effectiveness of targeted inward FDI to the Eastern Cape Province may be raised by evaluating the economic impact against current value chain cluster structure, as well as the effect on the supply- and use diversities of existing value chain clusters in the province. This thesis has also illustrated that value chain clusters that are concentrated in the region, show a positive effect size with the level of supply diversity in the region. Conversely, value chain clusters that reflect high levels of competitiveness record a positive effect size with use diversity. Policy interventions aimed at raising the performance of value chain clusters typified by smaller players in a competitive environment, should therefore consider raising the respective levels of use diversity in the region. This research awakens the proposition that a reliance on a serendipitous approach to generate dynamic externalities is not sufficient, and that certain factor conditions favour the transfer of tacit knowledge between cluster members. Accordingly, this research empirically explored whether statistically significant relationships can be detected between the common cluster elements, or factor conditions, that serve as conduits for the transfer of dynamic externalities and value chain cluster growth in the Eastern Cape Province. The findings indicate that linkages with knowledge generating institutions in the Eastern Cape Province do, albeit to a relatively small extent, have an impact on value chain cluster growth, and validates the assertion that cognitive enhancing institutions contribute to cluster growth. The importance of backward and forward linkages in nurturing regional growth is signified by the moderate effect size recorded by the level of vertical linkages and total value chain cluster growth. Similarly, a moderate effect size was recorded between the level of horizontal linkages and value chain cluster growth, which shows that cooperation amongst competing firms do stimulate cluster and regional growth in the Eastern Cape Province and affirms the proposition that inter-firm linkages on both vertical- and horizontal levels stimulate cluster growth. An expectation was that the institutional framework conditions would have a significant impact on value chain cluster growth in the Eastern Cape Province. However, the empirical findings reflect that the institutional framework conditions have no statistical impact on value chain cluster growth. The study also found a moderate, positive effect size between value chain cluster size (number of employees) and growth, which shows viii that size matters in regional growth. In other words, in contrast to their European counterparts, the larger the number of employees per value chain cluster, the greater the impact on value chain cluster growth in the Eastern Cape Province.
- Format
- ix, 283 pages
- Format
- Publisher
- Nelson Mandela Metropolitan University
- Publisher
- Faculty of Business and Economic Sciences
- Language
- English
- Rights
- Nelson Mandela Metropolitan University
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