Forest-Based Economic Clusters: Models for Sustainable Economic Development
The concept of “business clustering” has gained increased attention in recent years as public and private sector interests have attempted to identify strategic opportunities for economic development. Cluster development may also be strategically beneficial to emerging bioenergy, biochemicals and related industry development.
In the most general terms, a “cluster” is any instance of closely located (i.e., geographic proximity) and closely aligned operations (i.e., high frequency or number of transactions, or closely related product lines). For a cluster to be maintained, it is also necessary that the parties involved derive mutual benefit. Clusters can be formal (e.g., trade associations, buyer groups, cooperatives) or informal (e.g., friends, family, neighbors) and may or may not include traditional financial interactions (e.g., the cluster may be based upon barter of goods and/or services). One appealing characteristic of clusters is that they often appear to provide benefits of efficiency, enhanced productivity and greater resiliency due to synergies and relationships they support. On the other hand, clusters may also be viewed as creating conditions of co-dependence, which may limit any individual participant’s ability to innovate. Interdependence could also contribute to the quick demise of enterprises due to significant changes in economic, social, or environmental conditions.
In 2008, the U.S. Endowment for Forestry and Communities commissioned a study to examine the status of and opportunities for business clustering within the U.S. forest products sector and other closely aligned sectors.* For the purposes of that study, the focus was on forest industry clusters. The study defined an industry cluster as “a group of firms and institutions located in close proximity whose businesses are interlinked through value and supply chains, labor, and use of similar inputs, technology, and complementary products.”
This report discusses some of the findings from the recent study of U.S. forest sector clusters, highlights the conditions needed to increase the likelihood of success of any business cluster, and provides opportunities for new cluster development.
*Funded by the U.S. Endowment for Forestry and Communities, Inc., the project partners were the Forest and Wildlife Research Center of Mississippi State University, the Department of Forestry at the University of Missouri and Dovetail Partners, Inc. The complete project report and materials are available at the U.S. Endowment website: http://www.usendowment.org
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Comments
Clusters, Bad Name, but very useful
I agree that economic clusters as introduced by Michael Porter (http://www.valuebasedmanagement.net/methods_porter_diamond_model.html) are a very traditional and linear way of looking at economic development and does not represent by itself a new idea. Clusters are the results of "affinities" and what makes someone want to cooperate with others and create "economic clusters" does not necessarily add to a sustainable approach by itself.
Sustainable economic development follows a circular way of thinking and adding value continuously through a process of integrating natural resources, people's needs and regeneration and natural growth of community wealth in a process that could be characterized as "slow money" as some investors are choosing to call this new approach.
My work in economic development has brought me back to what I learned from Michael Porter's "economic clusters", I don't think of this theory as "bad" in itself, it is a good way to get our heads around a process of organizing economic factors, forces and assets (wealth), but for it to be sustainable it must not be linear and it must follow the natural steps of a triple bottom line.
I run the Rural Enterprise Center (www.ruralec.com) a program of Main Street Project in Minneapolis and I find this article to be a description of the process we follow and the characteristics that we seek in order to assemble networks of producers into a symbiotic system of interactions. These process allows us to achieve the maximum value added while maximizing nature's own ability to achieve efficient ways of producing results. We are using the economic clustering as a strategic way to design links between operations of grain growers, grain processing into feeds, free range poultry growing, vegetables that are fertilized by the compost from the poultry operations, poultry processing and distribution and other related "enterprises".
A sustainable development (triple bottom line) approach has allowed us to build into our economic cluster design, the flexibility needed to accommodate market growth and shrinkage without risking the livelihoods of the entrepreneurs. These are the kinds of factors that clusters of traditional industries will miss, as they are not designed for sustainability but for maximum extraction and exploitation of a given resource at hand.
The economic cluster approach is of great value to us, but not as it comes out of Porter's mold, traditional thinking does not add up to sustainable development, this we know.
Rural Oregon perspective on Clusters
First, I would ask the authors, where is the analysis that includes historical context, that being cluster development was a natural outgrowth of western expansion. All Industries have historically spawned clusters of new products and services that grew out of primary resources: timber, agriculture, fishing or metals, etc.
So now the question becomes, why did those clusters go away? What happened to a level playing field? What happened to a social commitment toward local jobs over short term profits?
The answer is a 'no brain er'.
It's because we didn't treat the primary resources in a sustainable manor as evidenced by the Cod Industry of the Eastern seaboard or the Old growth timber Industry of Pacific Northwest.
What we have now are 'externalities and unintended consequences' (invasive species, disease and pests, soil erosion, increased cataclysmic fire and boom then busted rural communities) that have become due and payable as restoration needs without money from the profits that caused the problem to pay for them, becoming a classic economic death spiral, as evidenced by 75% of rural Oregon being classified as economically distressed, and the backlogs of restoration needs through the landscape.
If we don't connect causes with effects we will only compound our problems and never solve them. If our analysis is without learning the lessons of the past, we will remain embedded in ruts and gridlock. If we only hear top down perspectives rarely will we understand the true story. Can we do better than this?????