Cluster approach in industrial policy the example of automotive cluster in Bosnia and Herzegovina

Industrial policy in modern economies requires a co-ordinated effort between the actors in economic policy. Mere state intervention has the tendency to allocate scarce resources inefficiently. Industrial policy includes all government regulations, laws or activities that aim directly or indirectly at changing the structure of the economy or influence this change; the character can be a defensive or reactive. There are completely different judgements on industrial policy: the neo-liberal representatives judge any industrial policy as a negative intervention disturbing the market and generally reject it, advocates stress the positive results of temporary smoothening effects of structural change or promote the creation of emerging industries. The main objective of industrial policy in a modern economy is to improve the competitiveness of the companies. One relatively new instrument of industrial policy is the Cluster approach. Earlier economic literature and economic-policy approaches view competitiveness either from a microeconomic or macroeconomic point of view, neither perspective could explain successes or failures of national economies facing competition. In the cluster approach, competitive advantages result from the system of interrelationships within which a firm is embedded. While the traditional sectoral approach concentrates on horizontal linkages and competitive interdependencies, the cluster approach also includes vertical linkages between different firms and the existence of symbiotic interdependencies. A cluster is an instrument that can also be used to support small and medium-sized enterprises (SMEs). SMEs can work together to utilize the advantages of a large firm without having to finance large-scale infrastructure and idle capacity. A number of criteria must be met for a cluster to be successful. In Bosnia and Herzegovina, cluster promotion is building on the industrial core of the automotive supply industry and incorporates associated economic area that is also interesting for other industrial branches. The first positive results of this approach can be seen