Conference Board says Canada can’t count on clusters

Canada’s fledgling technology clusters run the risk of turning parts of Canada into the equivalent of modern mining towns, weakening growth and even leading to an economic downturn, a Conference Board report warned on Tuesday.

In Clusters

of Opportunity, Clusters of Risk, the authors warn policymakers not to assume concentrations of inter-related technology firms will lead to the kind of prosperity they sometimes promote. The federal government, for example, has set a target of creating 10 internationally recognized technology clusters by 2010 as part of the Innovation Strategy.

Gilles Rhéaume, the Conference Board of Canada’s vice-president of Policy, Business and Society, said it didn’t make sense to try and use public funds to build up clusters from scratch. Instead, the report recommends reviewing regulatory and taxation policies to remove impediments to cluster formation and to invest in road systems and airports to ease access to markets.

The success of any cluster, Rhéaume said, depends on the knowledge creation and knowledge diffusion within it. It also depends on how the clusters interact globally.

“”As clusters mature, sometimes there’s overconfidence that is built within the firms of that cluster,”” he said. “”They can tend to become more insular, in the sense that they know it all, they have the magic formula, they don’t need to go elsewhere.””

The Canadian Advanced Technology Alliance included the promotion of technology clusters in a TechAction report it put together last year though a series of town hall meetings across Canada. Barry Gander, CATA’s executive vice-president, said the report highlights what the industry association has been hearing.

“”We’re really glad the Conference Board is talking about this,”” he said. “”The key to making a cluster work is coordinating among the people in the cluster and from the cluster outwards. You can’t have an island. Islands don’t work.””

In the fall, CATA will launch a new series of TechAction meetings across Canada with forecasts of economic growth in each community, which may aid in cluster development, Gander added.

IT clusters may be more at risk because they have been around longer, Rhéaume said. In its research, the Conference Board found clusters within younger industries like biotechnology to generally be more focused on international collaboration.

“”Government can’t force them to share knowledge. It can only provide the means of networking,”” he said. “”The other thing is the support of a strong university base that can supply that knowledge to firms within the cluster, at least to maintain that local buzz.””

Among its other recommendations, the Conference Board said government should do more to promote clusters and to encourage them to make use of public sector procurement strategies to purchase goods and services. One of the challenges in looking at clusters, Rhéaume added, was a lack of available data. “”In our survey we found a lot of stuff that wasn’t available from places like Statistics Canada,”” he said.

The study is part of The Canada Project, a series of research initiatives by the Conference Board to determine what the government needs to do to improve the national standard of living.

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