Regional Development and Cluster Management: Lessons from South Africa

Regional and local development cannot be separated from globalisation. For the defining characteristic of this era of globalisation (differentiating it from earlier periods of internationalisation) is the international dispersal of the production of manufactured components, globally coordinated, and oriented towards supplying industrialised country markets (Dicken 1998, Kaplinsky 2005). Most enterprises in developing countries do not engage in spot market, arms length trade with their export customers – i.e. thin, transient, relationships. They are instead locked into various hierarchical outsourcing arrangements – i.e. ‘thick’ relationships where lead firms determine production parameters, specifications, and design over the outsourced enterprises (Gereffi et al 2004; Kaplinsky 2005). Consequently issues of operational performance, competitiveness, learning, upgrading or innovation at a regional level are interlinked with global value chain determinants (Humphrey & Schmitz 2002). Furthermore collective efficiency (i.e. clustering and learning through networking) has played a crucial role in local firms enhancing their productivity, rate of innovation and competitive performance (Bell & Albu 1999; Maskell et al 1998; Bessant et al 2003; Lawson & Lorenz 1999; Morosini 2004, Nadvi & Schmitz 1999, Schmitz 1999a, 1999b, 2004)