Clusters and Networks Development Programme

Clusters are agglomerations of interconnected companies and associated institutions. Firms in a cluster produce similar or related goods or services and are supported by a range of dedicated institutions located in spatial proximity, such as business associations or training and technical assistance providers. Vibrant clusters are home of innovation oriented firms that reap the benefits of an integrated support system and dynamic business networks.

Networks are alliances of firms that work together towards an economic goal. They can be established between firms within clusters but also exist outside clusters. Networks can be horizontal and vertical.

• Horizontal networks are built between firms that compete for the same market, such as a group of producers establishing a joint retail shop.
• Vertical networks, particularly supplier development schemes, are alliances between firms belonging to different levels of the same value chain, such as a buyer assisting its suppliers for upgrading.

Building on the experience gathered in the field, UNIDO has designed a methodology for the formulation and implementation of cluster development projects.

The UNIDO methodology is based on the following steps:

• Cluster selection, which entails the identification of the cluster(s) to be assisted;
• Diagnostic study, an action-oriented analysis of strengths, weaknesses, opportunities and threats of the cluster(s);
• Vision building and action planning, which refers to the formulation of a vision and a corresponding development strategy shared by the entire cluster;
• Implementation, i.e. the management and coordination of the activities outlined in the action plan, including the establishment of horizontal and vertical networks.
• Monitoring & evaluation (M&E) of the qualitative and quantitative outcomes of the project.
• Based on this approach, UNIDO offers a range of services to private and public sector institutions engaged in cluster development.