Cluster development means that LED initiatives are concentrated on encouraging and supporting inter-firm collaboration, institutional development and support in targeted industrial sectors. These are quite sophisticated LED strategies and may only be undertaken following in-depth research. The sectors are targeted at those that offer the most local economic development potential. Where the local economy has existing clusters this may provide a more targeted approach to improving economic development activity by leveraging resources in the direction of greatest potential return. These cluster strategies are undertaken within a broader LED strategy that would normally include the standard approaches. Possible projects include:
Developing broker and network agencies
Special attention is paid to encouraging local people engaged in the same cluster to meet together to enable business development opportunities. These could include encouraging local fishermen and fish processors to meet and exchange ideas on improving facilities and adding more value to their products so they would all benefit. Another example could be to start a craft network. The network could jointly market their goods and then start inter-trading with each other, building synergies.
Supporting joint research
Institutions of higher learning can undertake research that benefit all in the cluster. One example of this would be to undertake research into minimizing losses from post-harvest losses of agricultural products.
Developing cluster-focused public procurement and local purchasing agreements
The public sector is often the largest buyer in a city and as such there are opportunities to enable local businesses to access tender processes more easily. It is often difficult for small businesses, in a cluster or not, to bid for large government contracts. A cluster initiative here could include developing a food supplier network to supply government catering needs. A logical cluster development initiative could be to encourage suppliers of basic food products to enter into some form of food processing.Cluster development activities could then move on to transportation, storage and packaging of food products. From there it is likely businesses could start retailing and producing processed foods for the private sector.
Providing cluster specific information
One of the most effective ways of developing a cluster is to gather information about businesses and institutional support systems in the cluster and then produce it so that it can be shared. Thereafter, with a small amount of effort, supplier linkages can be developed. These do not need to be sophisticated.
Developing cluster related marketing efforts
Once a cluster has been identified and it starts developing, there are opportunities to promote it and attract supporting investment as well as promoting business opportunities externally for cluster members.
Developing demand-led skills and education training programs
A significant benefit to developing a cluster initiative is that a key outcome of business networking will be an appreciation of skills needs in the sector. When a number of businesses express a skills need, it is more likely that training or education will be provided. A lone voice is not likely to be taken as seriously.