Report on Competitiveness “Natural-Born Clusters”

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Report on Competitiveness “Natural-Born Clusters” REPORT ON COMPETITIVENESS “NATURAL-BORN CLUSTERS” Pristina, 2014 REPORT ON COMPETITIVENESS “NATURAL-BORN CLUSTERS” Pristina, 2014 ACKNOWLEDGMENTS Financing provided by the Ministry for Foreign Affairs of Finland in the framework of the Aid for Trade project. REPORT PREPARED BY: Cheng G. Ong – Author Supported by: Ilir Salihu and Paul Wittrock SPECIAL CONTRIBUTIONS PROVIDED BY: Ministry of Trade and Industry: The Cabinet of the Minister Department of Industry Department of Trade Kosovo Investment and Enterprise Support Agency UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP) KOSOVO QUALITY ASSURANCE: TEUta PURRINI XHABALI, Project Manager, Aid for Trade ANita SmaiLOVIC, Project Associate, Aid for Trade ARtaNE RIZVANOLLI, External Consultant ERËBLINA ELEZAJ, Research Analyst, Policy, Research, Gender and Communication Team BURBUQE DOBRANJA, Communications Associate, Policy, Research, Gender and Communication Team DANIJELA MITIć, Communication Analyst, Policy, Research, Gender and Communication Team A special gratitude goes to all interviewed businesses and other relevant actors. _________________________________________________________________________________ There is no copyright on this document; therefore its content maybe be partially or fully used without the prior permission of UNDP. Its source, however, must be cited. The analysis and recommendations expressed in this report are those of the authors and do not represent the official position ofU nited Nations Development Programme and the Ministry for Foreign Affairs of Finland. _________________________________________________________________________________ ACRONYMS CAGR Compound Average Growth Rate CEFTA Central European Free Trade Agreement EU European Union EUR Euro FAO Food and Agriculture Organization of the United Nations FDI Foreign Direct Investment GIZ Deutsche Gesellschaftfur Internationale Zusammenarbeit KI Kosovo Institutions MAFRD Ministry of Agriculture, Forestry and Rural Development of Kosovo MAPs Medicinal and aromatic plants MTI Ministry of Trade and Industry of Kosovo OEM Original Equipment Manufacturer OSCE Organization for Security and Co-operation in Europe ROI Return on Investment SME Small and Medium Enterprise SOE State-Owned-Enterprise TOR Terms of Reference UNDP United Nations Development Programme USAID United States Agency for International Development USD United States Dollar TaBLE OF CONTENTS AcrONYMS ��������������������������������������������������������������������������������������������������������������������������������������������5 INTRODUCTION ������������������������������������������������������������������������������������������������������������������������������������8 The “Cluster” Approach in the Context of Public Policy and Economic Development ���������������������� 8 Malaysia’s Second Industrial Master Plan ���������������������������������������������������������������������������������������������������������������������������������9 A Global Halal Hub - from Identification to Global Dominance ��������������������������������������������������������������������������������������9 Economy-Wide Cluster Studies ���������������������������������������������������������������������������������������������������������������������������������������������������9 EXECUTIVE SUMMARY �����������������������������������������������������������������������������������������������������������������������10 1) Convene Cluster Initiatives ��������������������������������������������������������������������������������������������������������������������������������������������������11 2) Organise the implementation of national economic programmes around clusters ....................................12 3) Incentives �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������12 4) Access to Capital ���������������������������������������������������������������������������������������������������������������������������������������������������������������������12 5) Foreign Direct Investment (FDI) ����������������������������������������������������������������������������������������������������������������������������������������12 6) Procurement �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������13 7) Data Collection and Metrics ������������������������������������������������������������������������������������������������������������������������������������������������13 8) Cluster-based Industrial Parks ��������������������������������������������������������������������������������������������������������������������������������������������13 METHODOLOGY ����������������������������������������������������������������������������������������������������������������������������������14 Desk Research ������������������������������������������������������������������������������������������������������������������������������������������������ 14 Trade Performance Review ������������������������������������������������������������������������������������������������������������������������� 14 Representative Cluster Case Studies ��������������������������������������������������������������������������������������������������������� 15 A. Factor (input) Conditions �����������������������������������������������������������������������������������������������������������������������������������������������������16 B. Demand Conditions ���������������������������������������������������������������������������������������������������������������������������������������������������������������16 C. Related and Supporting Industries ����������������������������������������������������������������������������������������������������������������������������������16 D. Context for Firm Strategy, Structure and Rivalry ��������������������������������������������������������������������������������������������������������17 1) A CLUSTER-BASED APPROACH: KEY CONCEPTS .........................................................................17 What are Clusters? ���������������������������������������������������������������������������������������������������������������������������������������� 17 i) Cluster Life Cycles �������������������������������������������������������������������������������������������������������������������������������������������������������������������17 ii) Implications for Government Policies, Action, etc. �����������������������������������������������������������������������������������������������������18 iii) Shifting Responsibilities for Economic Development ����������������������������������������������������������������������������������������������18 iv) Cluster Initiatives as Policy Catalysts for Competitiveness ��������������������������������������������������������������������������������������19 v) Clusters and Value Chains ����������������������������������������������������������������������������������������������������������������������������������������������������19 2) KOSOVO COMPETITIVE ANALYSIS ................................................................................................20 Macroeconomic Conditions ������������������������������������������������������������������������������������������������������������������������ 20 Microeconomic Conditions: The Diamond ����������������������������������������������������������������������������������������������� 20 Factor Conditions ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������21 Demand Conditions ����������������������������������������������������������������������������������������������������������������������������������������������������������������������21 Related and Supporting Industries ������������������������������������������������������������������������������������������������������������������������������������������22 Context for Firm Strategy and Rivalry �������������������������������������������������������������������������������������������������������������������������������������22 3) KOSOVO CLUSTER PERFORMANCE ����������������������������������������������������������������������������������������������25 Kosovo Trade and Exports ��������������������������������������������������������������������������������������������������������������������������� 25 Revitalisation - Clustering in Kosovo ��������������������������������������������������������������������������������������������������������� 26 Representative Cluster Case Studies ���������������������������������������������������������������������������������������������������������������������������������������26 Leather Goods and Footwear Cluster �������������������������������������������������������������������������������������������������������������������������������������27 Agribusiness-Soft Fruits and MAPs Cluster ��������������������������������������������������������������������������������������������������������������������������38 Wine Cluster �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������49 Wine Cluster Map ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������56
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