2 Clustering, a way to promote SME and local economic development
Silicon Valley is how Santa Clara, the South Bay portion of the San Francisco Bay area in Northern California, United States, is known. The Silicon Valley pseudonym comes from the association of the semiconductor chip making industry that uses silicon, fine sand, as basic raw material.
Its name is no more associated with the raw material but with the most famous high-tech cluster in the world. This 1,290.10 square miles area is the location for most headquarters of the largest technology corporations e.g.: Google, Intel, Apple Inc., Symantec, Hewlett Packard and Facebook. In order to achieve the productivity benefits and innovation advantages that take place in Silicon Valley, established high-tech companies based in other locations (both foreign and domestic), such as, Dell, Sony, Nokia and Siemens, have established subsidiaries in this cluster.
According to Michael E. Porter (2000), Clusters are geographical concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (e.g. universities, standard agencies, and trade associations) in a particular field that compete but also cooperate. Its geographical concentration goes from one state, a single city or nearby and neighboring countries. As expected, clusters with more sophisticated and higher levels of competitive development are found in industrialized countries. In each of these countries, it is possible to find clusters that reached world leadership in the industries to which they belong; such as, the insulin cluster of Denmark, the flowers in Netherlands, the cork of Portugal and footwear, clothing and high fashion in northern Italy. These mature clusters and more have achieved the benefits of association.
Between 1950 and 1980, the Latin American economy was growing in a stable rate. This growth was mainly through the implementation of development patterns i.e. high protection of domestic markets and strong state intervention, which led its economy to concentrate on the local market, satisfying some of their necessities with low amount of imports. During the 80’s, the accumulation of the external debt in Latin America to the World Bank (WB) forced it to switch its economy model from import substitution industrialization to export oriented industrialization. The countries opened their markets to the world and consequently, the barriers protecting the local industry in front of foreign competitors diminished. These competitors provided specialized quality products for lower prices. The challenge for the industries was to improve their low quality products to compete in the international markets. Companies, mostly SMEs, needed to radically increase their competitive advantages, improving their processes as a basis and through innovation find the key differentiator they needed to deliver competitive products.
The main reason to...