Business cooperation and cluster development in Kaliningrad
Since 1995 the Nordic Council of Ministers and Russia have co-operated with partners in Northwest Russia in areas of joint interest fff including on improving the conditions for trade and business cooperation in the Baltic Sea Region.
In the Nordic countries fff like in many other parts of the world fff cluster development has over the past two decades increasingly attracted attention as a collaborative approach to enhance the competitiveness (and thereby incomes) of regions.
The fundamental rationale for cluster development is that throughout the world there is strong evidence that a concentration of related businesses and supporting institutions tend to spur competitiveness and thereby regional economic growth and job creation by increasing:
The more co-located companies in related industries; the more interconnected they are; the better their access to specialized suppliers and service providers; and the better networked they are with associated and supporting institutions fff the more competitive clusters tend to be. So clusters are about competition and cooperation. Some call this co-opetition.
Cluster stakeholders can contribute in a number of ways to cluster development. Governments can for example provide incentives to broader dialogue, develop demand side policy frameworks, and link local clusters to foreign clusters with a view to encourage collaboration and trade. Academia/ knowledge institutions can promote cluster development through for example business-centered education programmes, business- and market-based research, and technology development. And the business community can promote cluster development through for example networking, business match-making, development of local supply chains, attracting investors and by providing information to improve the business enabling environment.
Clusters can and will occur and develop spontaneously. Cluster development through Cluster initiatives are characterized as organized efforts among a number of key stakeholders within a cluster to undertake joint actions to realize cluster benefits more quickly than if the cluster was to develop spontaneously.
Mobilizing for cluster development and first results
Realizing that the stronger and the more competitive the Kaliningrad regional economy is, the more attractive the region will be for Nordic cooperation and trade partners, the Nordic Council of Ministers Information Office in Kaliningrad decided in 2010 to undertake an initiative to support the then emerging cluster development agenda.
As a first step a cluster mapping was undertaken. The objective of this analysis was to provide a basis for further dialogue on the cluster development approach and its implications for modernizing the Kaliningrad economy. The cluster mapping identified no well-developed clusters but four industries of regional economic importance with significant clustering potential: Tourism, Furniture, Food and IT.
As a second step, efforts were made to share and transfer knowledge of good cluster development practice in the Nordic countries. This happened in part by organizing three study tours exposing potential cluster development proponents in Kaliningrad to more than 15 Nordic cluster initiatives (in particular Nordic tourism, food, furniture and IT clusters) fff and in part by Nordic experts and cluster managers sharing experiences at cluster development seminars and training session in Kaliningrad.
These initial efforts were successful in fertilizing the cluster development agenda in Kaliningrad fff and in particular in mobilizing a number of dedicated individuals ready to undertake a special effort to move forward local cluster initiatives, i.e. organized cluster development efforts (refer box).
As a first result, the Kaliningrad Tourism Cluster Initiative was launched in March 2012 fff and this mainly as a regional/local effort. This cluster initiative is now unfolding successfully through the combined efforts of a number of dedicated individuals, business leaders, the Regional Tourism Agency and the cluster manager hosted at the Tourism Information Centre.
As a second result, the Kaliningrad IT Cluster Initiative, was launched in November 2012 fff again mainly as a regional/local effort. Given the speed of development and leadership by the business community (not least the Kaliningrad IT Association, KALITA) this cluster initiative also looks very promising. Consultations are ongoing with furniture and food industry stakeholders to possibly pursue similar cluster development efforts fff and also with other industries such as the amber industry. Realizing its role fff which is to encourage and not manage cluster development efforts fff the Nordic Council of Ministers Information Office in Kaliningrad will in 2012-13 continue to fertilize local cluster development efforts in Kaliningrad by further experience sharing with Nordic cluster development partners. This happens for example through cluster specific study tours where the Kaliningrad tourism and IT cluster proponents will meet with Nordic fffsister clustersfff. The objective is to share industry specific experience on cluster development fff and importantly, to encourage business-to-business cooperation between clusters in Kaliningrad and clusters in the Nordic countries. Furthermore, emphasis will be on sharing specific experiences on particular important elements of the fffcluster service systemfff, including business support structures such as incubators, other enterprise start-up programmes; and frameworks for foreign investment attraction. Also, emphasis will be on regional opportunities and bottlenecks associated to Russia WTO membership.
Lessons learned fff realizing the bumpy ride ahead
The efforts undertaken so far have been successful in: 1) increasing awareness about the instruments and tools offered by the cluster development approach for enhancing regional competitiveness and economic growth; 2) translating interest and commitment among dedicated leading stakeholders from government departments and agencies; education and research institutions and business communities into on-ground actions in the form of cluster initiatives; and 3) fertilizing business-to-business cooperation across in the Baltic Sea.
These are important results. However, while cluster development is maybe relatively easy to understand and often attractive for stakeholder to engage in, cluster initiatives are very complex creatures fff and their success dependent on the sustained engagement and commitment of a very large set of stakeholders. Therefore, the result so far is no guarantee for further developments. Cluster initiatives produce few quick wins, they address issues of systemic competitiveness and their impacts are felt over the longer term.
In Kaliningrad there continue to be some misconceptions about clusters, cluster initiatives, what they can and should offer, and what are contributions by the different stakeholders supposed to be. The reason for this (which is a common challenge for cluster around the world) is that clusters and cluster initiatives does not fit in neatly into any one particular policy but rather should be expressed through a number of policies. It is not easy fff but critical fff that policy makers and supporting institutions appreciate and respond to this reality, including by making available early stage funding for developing further the cluster initiatives and their activities/services.
Furthermore, the importance of trust is critical fff and a persistent challenge in Kaliningrad. Lack of trust will break cluster initiatives, more likely sooner than later. Trust is earned fff there is no quick fix. Openness and readiness to dialogue are important to build trust and actions demonstrating trust are paramount. A sound understanding of the value chains and a detailed cluster initiative action plan fff which is accepted by all cluster leaders fff are key ingredients in a trust building process. The success of the cluster initiatives unfolding in Kaliningrad will depend on more efforts in these areas.
Finally, successful cluster development depends surely on harder skills such as understanding industrialisation and value chain analysis fff but more important are softer skills such as relationship building, networking, negotiation and conflict resolution. It is important that not only the cluster manager/facilitator develops these skills. As no schools exist where to go to acquire such skills, enhanced cooperation and experience sharing with cluster colleagues from within and beyond Kaliningrad, the Russian Federation, the Baltic Sea Region and the World are very important. A number of regional and international cluster development networks exist which could inspire further development of the cluster initiatives in Kaliningrad. Also, Kaliningrad could consider the opportunity to establish a cluster resource and knowledge center to build cluster excellence skills among cluster managers and other cluster leaders.