CLUSTER APPROACH IN ECONOMICS: THEORETICAL FOUNDATIONS AND PRACTICE OF APPLICATION

Even though the world of sports is captured in the realm of competition, it goes beyond the pursuit of victory.

The "cluster approach" has become the cornerstone of the concept in the field of economic development, aimed at stimulating innovation, increasing competitiveness and stimulating growth at the regional level. Deepening the theoretical foundations and practical application of this approach provides valuable insights into promoting economic prosperity and the development of shared ecosystems in specific geographical regions.

Theoretical foundations:

The cluster approach is based on Michael Porter's seminal work on competitive advantage, which argues that a firm's success is significantly influenced by the broader ecosystem in which it operates. This ecosystem, called a cluster, includes a network of interconnected businesses, suppliers, research institutes, and supporting organizations geographically concentrated in a particular region.

The key theoretical provisions underlying the cluster approach emphasize:

• Specialization and dissemination of knowledge. Firms in a cluster benefit from knowledge sharing and collaboration, resulting in increased innovation and efficiency. This localization of knowledge contributes to the development of specialized skills and experience in the region, which further increases its competitiveness.

•Complementarity. Cluster enterprises often support and complement each other, forming a dynamic network of interconnected industries. This interdependence fosters a dynamic environment that fosters innovation and growth.

• Demand-driven innovation: the close proximity of firms within a cluster allows them to respond quickly to changing market demands and customer needs. This flexibility creates a conducive environment for continuous innovation and adaptation, allowing businesses to stay at the forefront of their industries.

Translation of theory into practice:

The cluster approach goes beyond theoretical concepts and is embodied in effective strategies for regional development. Here are some striking examples of its use:

• Use of existing potential. The first step may be to identify and develop existing clusters. Recognition of regions with

the existing concentration of business in a particular industry allows us to provide targeted support. This support in the form of infrastructure development, skills training, and networking opportunities provided by regional authorities can strengthen existing clusters and push them to further growth.

• Strategic development of new clusters. This approach involves strategically attracting new businesses and institutions in the chosen industry, using existing infrastructure and expertise to create an attractive environment for their creation. This may include providing incentives, such as tax incentives or dedicated research centers, to attract key players to a specific geographic region. Due to the involvement of new subjects, the potential and competitiveness of the cluster are strengthened.

• Promoting connectivity. Promoting networking events, knowledge-sharing platforms and collaborative research initiatives can further strengthen connectivity within the cluster. This enhanced collaboration fosters a dynamic environment in which innovation thrives and regional growth is fostered. By facilitating collaboration, individual cluster actors benefit from the collective knowledge and experience of the wider ecosystem, resulting in faster innovation cycles and increased competitiveness.

Balancing challenges and opportunities:

While the cluster approach holds great promise, it is crucial to be aware of potential problems and to exercise caution:

• The conundrum of overspecialization: Focusing on one industry within a cluster can create vulnerability to external shocks and economic downturns. Diversification within a cluster or the development of linkages with related industries can mitigate this risk. Encouraging

diversification or by strengthening linkages with related industries can reduce the vulnerability of a cluster to external shocks.

• Achieving a balance in development. It is very important to find a balance between top-down and bottom-up approaches. Imposing a predetermined cluster strategy from above can stifle organic development and fail to exploit the unique strengths and opportunities of a particular region. Conversely, relying solely on bottom-up development can lead to uncoordinated efforts that lack strategic direction. Engaging stakeholders and promoting local ownership are critical to developing and implementing a sustainable cluster development strategy that leverages the strengths and opportunities of a particular region.

Specific aspects of the cluster approach:

1. Identify cluster types. Cluster theorists have identified different types of clusters based on various criteria, such as industry focus, geographical coverage, and level of development. Understanding these types is critical for effective adaptation of development strategies. Some notable categories include:

Industry clusters. These clusters focus on a specific industry, such as the automotive cluster in Detroit or the biotechnology cluster in Boston.

Location-oriented clusters. These clusters are geographically concentrated in a specific area, such as the Silicon Valley technology cluster or the Hollywood movie cluster.

Emerging clusters: These are clusters that are in the early stages of development, often requiring targeted support and strategic planning to realize their full potential.

2. Measuring the effectiveness of the cluster. Assessing the success of a cluster requires going beyond traditional economic indicators. Indicators such as employment growth, patent filings, and venture capital investments can provide a more holistic understanding of the cluster's impact. In addition, a qualitative assessment of innovation, collaboration, and talent development within a cluster can provide valuable insights.

3. The role of public-private partnership. Building successful clusters often requires collaboration between the public and private sectors. can play a crucial role in providing infrastructure, funding research initiatives, and creating an enabling regulatory environment that fosters innovation and entrepreneurship within the cluster.

4. Solving the problem of spatial inequality. While clusters can be powerful drivers of economic growth, it is crucial to recognize potential concerns about spatial inequality. Efforts should be made to ensure that the benefits of cluster development are equitably distributed throughout the region and that inequalities between developed and less developed regions are not exacerbated.

5. Globalized context. In today's interconnected world, clusters increasingly operate in a globalized context. Understanding and managing global competition, developing international partnerships, and attracting foreign direct investment can be critical to the long-term success of clusters in today's economic landscape.

Given these nuances and adopting an integrated approach, the cluster approach can be used as a powerful tool to promote sustainable regional development, stimulate innovation and create dynamic economic ecosystems that contribute to a more prosperous and interconnected world.

A cluster approach, based on sound theoretical principles and implemented with careful planning, can be a powerful tool for promoting regional economic growth. By harnessing the collective potential of businesses, institutions, and individuals within a geographically defined area, this approach can spur innovation, increase competitiveness, and create a vibrant ecosystem that fosters sustainable economic prosperity. As we seek to create a more dynamic and interconnected global economy, the cluster approach offers a valuable framework for promoting growth and cooperation at the regional level, ultimately contributing to a more prosperous and interconnected world.