The rise of Asia's industrial clusters

The creation of industrial clusters in Asia has a mixed record so far.

by Far Eastern Economic Review
Last Updated: 23 Jul 2013

From the diamond cutters in Antwerp to the software entrepreneurs in the Silicon Valley, clusters grow because of the need to have skilled labour, specialised suppliers and buyers and flows of knowledge all in one place. They can be created by market forces such as in India where the clusters in IT are centred in traffic-choked Bangalore, in spite of the government not because of it. Indeed, many firms may leave because of the government of Karnataka's inadequate investment in infrastructure. Other Indian clusters developed in New Delhi, Hyderabad, Chenai and Pune.

In other countries such as Taiwan and China the government has taken a much more commanding role, encouraging the creation of clusters by offering inducements to companies to relocate there. The most famous one in Taiwan, the Hsinchu Science-based Industrial Park (HSIP) was established in the 70s and now has several hundred companies located there. In China the three biggest hi-tech clusters are in Beijing, Shanghai and Shenzhen. In Beijing the biggest is the Zhongguancun Science Park which also contains the country's top universities and academy of science institutes. Lenovo (formerly known as Legend) came from this cluster and is currently the leading company there. Things developed differently in countries such as Japan and South Korea where large global IT companies developed without the need for clusters to support them.

So far, the universities in Asia have not played the same role as their counterparts in the US, which is to be a driving force for clusters to grow through their research. Instead, the importance of universities hhas been confined to the education of a growing number of talented scientists. They lack major research missions as in the US. Having good research universities could help Asian countries develop world-class clusters but they won't necessarily do so. The most important elements for the growth of world-class clusters in Asia are:
1. Encourage entrepreneurship
2. Be open to foreign connections
3. Support research.

Can Asians innovate? The curious life of clusters
By Henry S. Rowen
Far Eastern Economic Review
July/August 2007
Review by Morice Mendoza

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