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About Clusters
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Development Principles
The underlying concern of the UNIDO Approach is the stimulation of pro-poor growth, defined as a pattern of economic growth that creates opportunities for the poor, and generates the conditions for them to take advantage of those opportunities. In order to improve cluster performance, UNIDO addresses economic and non-economic issues, especially those related to the fostering of human and social capital with a view to enhancing labour force production capacities and increasing economic participation. Such an approach requires measures that are aimed at empowering marginalized groups, improving access to employment opportunities, and supporting the well-being of entrepreneurs and employees as well as the development of their skills to boost productivity and enhance innovation capacity.
 
Facilitate the undertaking of joint actions to realize collective efficiency gains
The UNIDO Approach to cluster development focuses on initiatives that encourage enterprises and institutions in selected clusters to undertake joint actions that could ultimately yield benefits to the cluster as a whole and the communities in which they are embedded. It does so by brokering and facilitating dialogue and by promoting activities oriented at building consensus within the cluster. A distinctive feature of the UNIDO Approach is that – instead of targeting relatively large and successful enterprises and hoping that the benefits will trickle down to smaller enterprises in the cluster - the cluster vision and action plan are devised by a representative group of cluster stakeholders and thus comprise activities that tackle issues of relevance to a majority of cluster stakeholders.

Provide targeted support to the cluster’s institutional support structure
The UNIDO Approach focuses on incentivizing public and private sector bodies to more effectively promote cluster development and on strengthening their capacity to do so. Support is given to relevant local, regional, and national institutions, including chambers of commerce, local governments, NGOs, producer associations, universities and training institutes and regional as well as local economic development agencies to gradually assume a strong supporting role in the development of the cluster. UNIDO also technically assists financial and non-financial service providers (e.g., business development service (BDS) providers, vocational schools and training institutes, large buyers and retailers, and the suppliers of equipment and inputs) to make the services they offer more responsive to demands from within clusters.
 
Involve public and private sector actors based on their respective capacities and competencies
While the role of the public sector in supporting a cluster development initiative normally includes reacting to demands from within the cluster for changes in the business environment as well as with regards to larger scale infrastructure development and the provision of an adequate framework for education and broader skills development and the coordination and support of brokering activities, the private sector can play an active role when it comes to mobilizing human and financial resources to be invested in innovative ventures to increase the growth potential of the cluster; providing business development and financial services on a commercially viable and sustainable basis; and establishing of and/or participating in representative bodies to voice the interests of the business community in dialogues with the public sector. A local public-private forum, e.g. in the context of the Cluster Commission or other suitable dialogue mechanism, can also ensure that cluster development initiatives within a country or region are linked with other public support programmes for private sector development.
 
Monitor and evaluate project results to improve efficiency and effectiveness, enhance accountability and demonstrate impact.
Monitoring and Evaluation (M&E) are an integral part of project management. They provide detailed information about the project’s results assessing any changes – both intended and unintended - an intervention may have produced. Understanding the status quo is a prerequisite to determine the intervention strategy of a project. As project staff and management can only take corrective measures if they are aware of the outcomes produced and the (external) factors that influenced them, monitoring information forms the basis for project-related decision making on a daily basis as well as the coordination of actors and activities. In the UNIDO approach, the careful construction of a cluster development initiative’s causal chain and the determination of key performance indicators are critical steps to be undertaken right from the beginning of a typical project. To facilitate this, UNIDO has developed step-by-step guidelines, based on a generic causal chain and a pool of relevant indicators, to develop a tailor-made monitoring system for each cluster development initiative. A project evaluation, typically carried out at the end of a cluster development initiative (for longer projects, a mid-term evaluation is recommended), assesses several aspects of an intervention, including its relevance, efficiency, effectiveness, impact and sustainability, in order to appraise its overall usefulness.
 
To attain a better understanding of how some of these principles are being implemented in practice, please watch the video on the UNIDO Cluster Development Programme in the Barpali Weavers' Cluster in the state of Orissa, India.
This video is available in English and Spanish.

Barpali Weavers' Cluster in Orissa/India (video, en)
Barpali Weavers' Cluster in Orissa/India (video, es)

For more information on the UNIDO approach to cluster development, please see the publication below.

The UNIDO Approach to Cluster Development (2013)_UNIDO (.pdf, en)