The Impact Of Economic Agglomerations And Productive Networks In Determining Competitive Advantages

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CHAPTER 1. A HISTORICAL AND THEORETICAL REVIEW OF ECONOMIC AGGLOMERATIONS

1.1. A historical perspective of economic agglomerations

1.1.1 Appearance and evolution of the concept

The internationalization of the economy has brought with it a process of construction of new territorial dynamics. Concepts that historically have served to generate all the theoretical and political construction of territories, as a nation, region and locality today are rethought to enable a change of strategies in a commercial world and productively of high competitiveness. Thus, nation states allow the entry of supranational scenarios, such as economic unions or even smaller categories such as free trade agreements or tariff agreements. The importance of the nation state has yielded, in part, in favour of the territorial blocks and the regions and even other minor instances have resurged, from the point of view of the territory’s administration of provinces or municipalities, in order to enable more efficient economic, political and social management, not only for the territory but for the population that inhabits it. These policies include the processes of federalization and centralization that characterize international geopolitics today. In this direction it is essential to think about the concept of region and its relationship with the company, and although it can be an interesting intellectual exercise, especially in academic and discussion spaces on the development of regions and localities, it has a high risk of becoming in a theoretical uselessness when it is verified that in its definition the unique, scientific explanations, do not contribute to the understanding of the concept and it is required of the others, of the whole of the sciences to understand something that is supported in the most complex of the habitat, of human groups’ feel and daily life (Moncayo, 2001). It is necessary then, to begin by asking: How can the concept of a region be defined and what problems or limitations of a theoretical and methodological nature does its definition present? The response should provide the necessary light to address relevant growth and development policies. This will be based on an essential premise: the definitions of the concept of region refer to its flexibility to support any type of possible use. Subsequently, issues such as agglomerations and competitiveness will be addressed, to end with an approach on the importance of local economies in growth and development.

The region: a confused and diffused concept

One could start from a general premise to explain the concept of region: the region is only a category of analysis that by its abstraction is useful to all sciences to discuss the physical and human affairs of societies, in a supposed spatial environment. The sciences have sought, from their specialty, or better from their cognitive compartmentalization, to possess a concept of region that serves their explanatory purposes. According to Palacios (1983: 65), "The term as such, without falling into semantic complications, is but a neutral container capable of being filled with diverse contents that become, in this case, the different connotations of the idea of region that has been reached in different fields of human knowledge". In these circumstances, some more solid or dominant explanations have been positioned that, such as geography and economics, emphasized "strong" guidelines in the concept. For this reason, the region is usually identified as a territory whose limits have been at the center of the discussions and which has been settled out of the most abrupt political-administrative decisions. However, although these conceptions have prevailed, they have not been exempt from evolutionary processes in the definition.

The first dominant position is geographical. For George (1970), this definition, which has contemplated the synthesis elements of geography, has achieved two types of meanings on the concept: the natural region and the historical one. In the natural region, understood as a geographic physical complex, natural elements are considered: geology, geomorphology, climatology and life zones, among others. This conception directs its search towards homogenous territories, conceived from these geographic elements. However, in this conception the obstacle of finding geographical complexes whose natural synthesis is perfect is recognized. It is assumed, therefore, a relative position against the degree of homogeneity that the region would have, as well as the difficulty to establish the limits and even the transitions from one region to another. The conception of historical region is highlighted by the sensitivity that has been built by human groups that inhabit the territory, with the natural elements existing in it; this aspect forces to generate flexibilities with the homogeneity of the territories. In this respect, although the natural elements can still be preserved (or only some of them, in a partial way), they are the historical, social, political, and cultural elements that allow the construction of the region. Two important elements emerge from this theory: the first is the discussion, as mentioned, about administrative limits, which do not necessarily contemplate criteria of a natural or historical order. The second one emphasizes the following dominant position: the so-called historical region contemplates the possible economic region. The economic region is understood from the endowment of productive factors, respectively from the basic elements for accumulation: land, capital and labour. In these circumstances, it is admitted, from the economy, that the region, space or territory is going to become a "figure for production", where advantages differentiate one region from another. The non-self-sufficiency of a region is the element that will promote trade between regions and, therefore, global complementarities. Some elements are added to the definition of economic region in order to highlight its importance: the location and generation of scale economies, as conditions to make the regions global competitiveness spaces.

The German school, headed by Walter Christaller (1933) and August Löst (1940) postulated the theory of the central place or of the organizing centralities, which Perroux (1955) and Boudeville (1966) would later interpret in the theory of the development poles as centres of economic growth. This idea of ​​region, obviously, makes disappear any dimension that does not support the unification of the territory from common economic elements: a macroeconomic policy that integrates and even subordinates the other dimensions of social being, including physical and / or natural ones and at the same time, it consolidates the spatial figure of the territory, resorting to political-administrative criteria. Reductionism and, at the same time, the power of economic thought has led to the discussion of territorial limits being tied to the following approaches:

• War as the possibility of capital accumulation, appropriation of productive and commercial corridors.

• The schemes of the State's economic intervention, as a regulating entity with three basic functions: economic stability, allocation of goods and services and distribution of wealth.

The attempts to trace the lines of flight to the dominant economic theory have been linked to the considerations of the regions as instances of planning, as a substantial element to promote regional development with holistic arrangements. According to Lipietz and Leborgne (1990), these currents have been supported by the regulatory theory that poses, for the regional analysis, three dimensions: the industrial paradigm, the regime of accumulation and the mode of regulation. It is precisely the latter that is going to draw a difference from the other economist positions, since it contemplates the ways in which the economic agents of a territory define and structure their social and productive relations. According to these tendencies, the concept elaborated by Boiseir (1988: 54-55), referring to the regions as socially constructed spaces, has had relevance: socially constructing a region means enhancing its capacity for self-organization, transforming an inanimate, segmented community by sectoral interests, proper perceptive of its territorial identification and ultimately passive, in an organized, cohesive, conscious environment of the society-region identity, capable of mobilizing itself behind collective political projects, becoming, in this respect, the subject of its own development. To understand the idea of ​​a socially constructed region, Boisier integrates geographical, cultural, political elements, among others, but especially of participation, of action, of the transcendence of object regions (dominated ones) towards subject regions (self-defined ones). The associative region starts from a spatial conception of amplitude; these regions have a democratic nature since associativity is given by own will. Finally, virtual regions are contextualized in the scenario of globalization, with respect to the transitory nature of regional construction (regions appear and disappear) with a precise objective in terms of generating better conditions of productivity and competitiveness. All these postulates about economic, productive or planning regions, although they enrich their analysis with historical, organizational and institutional elements, do not manage to transcend economic pragmatism and remain under logics of exclusion of other thoughts.

Other interesting contributions to the concept of region are given by conceptions with some pretensions of integrality; such case is the one of Coraggio (1989), who focuses on the conflict of interest groups, on power structures, and relates spatial forms to social processes. Likewise, according to García-Bellido (1994), it is worth to mention the concept of Coranomía as a trans-disciplinary proposal for the analysis of the territory. These contributions to the definition of the concept of region allow to raise the impossibility of the concept, or perhaps the uselessness of pretending that from the different disciplines it is tried to achieve criteria to establish regions. It can be an interesting intellectual exercise that allows a greater "personality" of the disciplines against others, achieving differentiating element in front of their questions and objects of study. But the deeper the analysis goes, the more it is possible to find categories for understanding. Again, it is necessary to cite the investigations of María Teresa Uribe (2001) as evidence of this region conception, the same concepts being conducted to the micro-spaces, to the cities, to the localities to the human and / or social agglomerations as the relevant spaces for the implementation of public policies.

Agglomeration: the road to the theory of regional development

This journey through the attempts to conceptualize the region as a category of spatial analysis of development and economic growth is nothing more than a mapping procured by the sciences and scientists and that has allowed to maintain an atmosphere of discussion on a theoretical topic that has not had enough importance in the definition of economic and social policies. Thus, the theory of regional development has been concerned to respond, without consensus successes, of course, a question that is simple and enormous complexity: Why a region, a city grows and develops more than others? The answer, from the nineteenth century, developed by the German School from the initial works of Von Thünen (1826), was directed to investigate the issue of agglomeration economies as the reason to explain to understand the issue of regional development. These pioneering works had as a fundamental determinant the land, transport and, in general, the issue of the ordering centralities from which growth and development were radiated. To these were added all the economic theory of the generation of export bases, which not only started from Smith (1776, 1996th edition) but managed to stand out from Keynesianism to enable a vision of the fundamental role of external and internal demand in the promotion of agglomerations. Since then, the theory of regional development (based on geography, economics and other sciences in recent years) has maintained a constant discussion on the determining elements of development and spatial location with the expansion of productive activities and services that characterize the social agglomerations.

The answer then has not been simple either. Neoclassical theory has had, regarding the theory of endogenous growth and convergence, an important component of modelling and formalization that had instruments of analysis and prediction that contemplate technological variables, labour market, knowledge and capital. However, the work of Fujita, Krugman and Venables (2000) emphasizes the basic approaches of space economy (Isard's regional science of 1956, 1971st edition) and manages to generate a basic formalization, in the Anglo-Saxon style, that by joining it with the Economic geography and the theories of international trade allow people to choose a model in which geography integrates the theoretical body of regional development, seen from its economic and mathematical formalization. In any case, no further progress is made on the agglomeration, where they consider it a mere historical accident, in the words of Moncayo (2002: 14) regarding the fact that "a specific location of an agglomeration would be, to a large extent, the result of chance and therefore, not subject to foreseeable determinisms".

On the other hand, according to the currents of thought emerging from the socioeconomic and industrial geography, based on flexible accumulation and different theorists, although they have received deep critics, especially from the work of Fujita and Krugman (2003) one must also say that they have forged an interesting vision on the understanding of the problem of agglomerations and have prevailed an institutional and macroeconomic concept based on a given model of production and industrialization. To the discussion and with a quite obvious but no less suggestive approach, Gallup, Sachs and Mellinger (1999) have also concluded, from empirical works regarding regional convergence and physical geography, that the importance of the proximity to the ports is considered a strategy of competitiveness and agglomeration, while the tropics’ countries are disadvantaged against temperate climates by the management of diseases and agricultural production. These approaches made from formalization that have allowed geography and economics have been joined by others that, without the rigor of modelling and quantification, have led to consider elements such as social participation, satisfaction of basic and axiological needs, environmental quality and the insistence of an adequate institutional and regulatory pattern to enable the formation and maintenance of economies of agglomeration. Anyway, as in the question for the region, regarding the problem of agglomeration does not allow a theoretical consensus that allows the assumption of alternatives for locating a production with a view to the internationalization of the economy.

Paraphrasing Fujita, Krugman and Venables (2000), “both the establishment of a region and its economic success are and have been a fate of destiny”. But in the midst of uncertainty and the low precision of theoretical concepts, the definitions of politics are assuming a rather interesting praxis: the agglomerations, the theme of cities, has had a constant aspect in the different theoretical approaches: there are the company and the production unit which, in the end, competes in international markets, but there are also series of endogenous and exogenous elements created and consolidated in order to generate particularities over other companies or industries. In this respect, these characteristics determine the degree of agglomeration or the capacity of a territory to become a captive of productive resources. Thus, the locality takes on all the possible relevance and becomes the space where the competitive action and the social, political, economic and institutional practice that make the territory the central axis of development and economic growth materialize.

With the current tendency of the economy to globalize, competition tends to be considered not only between companies but between territories. Indeed, the capacity for innovation that at the same time is essential to deploy to compete advantageously, is closely related to the articulation and the local environment of companies, an environment that includes not only infrastructure and adequate public services but also quality of life, human resources and a Cooperation culture. However, the inequalities in terms of development that can be observed when comparing different countries are even more dramatic if this comparison is made between sub-national territories. Macroeconomic balances are not enough, and not even a decentralization such as that through which the countries of the region have been carrying out, so that the so far "losing" territories can advantageously take advantage of the benefits of globalization. On the one hand, it is essential to deepen decentralization in order that all territories can deploy their potential through autonomous public-social-concerted procedures. On the other hand, it is unavoidable to generate active public policies to enhance local development. Third, it is that all this happens in a way that is not only equitable but economically and financially sustainable for the nation as a whole. These are the issues that currently occupy the attention of the Local Directorate and Regional Development.

One of the most outstanding features of the last part of the XXth Century is the emergence of the spatial dimension as a fundamental reference of the economy and the politics both nationally and globally. When, along with "the end of history", the "end of geography" was announced, to signify that globalization was making distances irrelevant, the fact is that, on the contrary, the spatial variables in what they have what to do with the location of production, trade flows and the socio-political aspects of development, are increasingly determining. The valorisation of the local in a dialectical relationship with the "global", has even given rise to a strange neologism : "glocal", to try to express the belonging of the two spatial spheres to the same relational field. This sort of re-spatialization of the socio-economic and political events, manifests itself in multiple ways. From the creation of "technopolis" and other type of intentionally localized areas of innovation, until the emergence of true "states-region" – directly linked to international economic circuits – and the fragmentation of and old national states, going through a growing concern for the design of strategies and policies, the process boost the progress of sub-national regions.

In the previous context, one of the problems that is at the centre of the "New Economic Geography" concerns is that of the deep disparities exhibited by the economic performance of the different regions of the same country. Why do territories such as Silicon Valley and Padania (in northern Italy) have become the most emblematic landmarks of the almost mythical post-century geography and others in turn, which once occupied leadership positions such as the French Northeast or the Canter-South of Mexico, are falling behind ? The issue is even more pressing in Latin America, for example, which, after having always a very concentrated development in a few centres, it seems to be undergoing a repolarisation cycle, now under the impulse of new productive processes and a new logic of relationship with the global economy. The search for an explanation for the fact that productive activities in a country tend to be concentrated in certain agglomerations, is certainly not a last-minute concern since it has been present since the first theorisations of space economy. What happens is that the issue has been progressively loaded with new contents and implications. Indeed, from the first conceptualizations at the beginning of the XIXth century to the present, the basic questions of space economy have been the following:

a) Why do they emerge in a flat, two-dimensional and homogeneous space (the field dedicated to agriculture)? Why do they need urban concentrations of industrial or tertiary activities, instead of the production being distributed in a uniform manner ?

b) What explains the hierarchy of size, range of goods and services produced and therefore wealth, among these agglomerations?

As one has seen above, significant contributions have been made since the last century aimed at answering these questions and this is widely recognized by Krugman, who makes in his works extensive considerations about the contributions of Marshall, Von Thünen and the German School; Harris, Lowry, Pred, and very especially those of Walter Isard. To such an extent is declared in debt to the latter's Regional Science, which states that his last book is "to a significant extent a continuation, perhaps even a validation of Isard's project". He also recognizes his debt to Myrdal and Kaldor. What he completely ignores is the theory of accumulation and the French school of regulation, perhaps because he declares himself monolingual. The fact that the aforementioned contributions did not become part of the economic theory’s "mainstream" Krugman attributes, not to the disinterest of economists, but to the fact that at the time they were produced, they did not have the necessary tools to model the increasing returns and its logical corollary, the markets of imperfect competition, which are, as has already been pointed out, the two central notions of space economy. While regretting that the Anglo-Saxon academy is so demanding with the models, which can act as a sacrifice of valuable contributions, Krugman figure, almost apologetic, one of his main achievements in the development of models that overcome the above-mentioned limitations. From the Dixit-Stiglitz model of monopolistic competition with increasing returns, Krugman incorporates "tricks" (as he himself calls them) to capture the implications of transport costs and monetary flows, in order to arrive at an analysis of general equilibrium that to some extent is of a dynamic nature, in so far as it manages to simulate the effect of centrifugal and centripetal forces that act on the agglomerations, varying their configuration. As this type of models are of multiple equilibrium, the author finds it very useful (almost necessary) to work with the help of the computer.

Krugman's theoretical construction is based on the argument that in trade and specialization, increasing returns, economies of scale and imperfect competition are far more important than diminishing returns, perfect competition and comparative advantage; and that the external economies by size of the market and by technological innovation that underpin these increasing returns are not international or even national, but arise from a process of agglomeration of a regional or local nature. The model developed by Krugman to analyze the relationships between increasing returns and spatial agglomeration represents the interaction between the centripetal forces that promote the geographical concentration of economic activities and the centrifugal forces that operate in the opposite direction.

1.1.2 Economic agglomerations in regional & global context

Territory and economy of knowledge (TE)

The interrelation between urban and economic transformations that have taken place in Spanish metropolitan areas has been analyzed in previous periods (Mendez and Caravaca, 1993, Mendez and Pascual, 2006). In the last decade, the advance of the globalization process and the knowledge economy intensified the changes registered in the urban system and the reorganization of economic activity. Indeed, "large cities gradually abandon the production of material goods for the benefit of a specialization in services, both for the population and for companies. On the contrary, in all the activities related to the production of material goods, their relative importance increases as the size of the nuclei decreases" (Mendez, ed., 2010, 164-165). In relation to metropolitan change and the TE the concept of global-city-region or global metropolitan region (Scott, 2002), based on previous works (Sassen, 1991, Castells, 1991), highlights the territorial and regional dimension of these huge urban agglomerations. The metropolitan region refers to the territorial scope integrated by a main metropolis of international character and the set of cities and smaller urban enclaves that are functionally linked in their surroundings by movements of residence-work, work displacements, daily or weekly trips linked to education, health, leisure and commerce. The international character of the main metropolis is due to the concentration of decision-making and organizational bodies of multinational and national companies, financial headquarters, advanced services, media and transport connections. This concentration of economic functions and representation at international level, closely linked to the TE, generates an intense connectivity with other cities of similar and lower profile, articulating a global network of metropolises that support the current conditions of economic globalization (Taylor, 2011).

At the intra-metropolitan level, the density of flows of goods, information, knowledge and people are no longer only between the centre and the periphery, but the interrelationships between the cities and nuclei between the different metropolitan crowns become more intense. The functional role of the metropolitan peripheries is not only due to the residential, industrial and logistics areas, but above all for the consolidation of the clusters of TE and main headquarters of relevant companies, located in certain sub-centres that articulate the polycentrism of these complex metropolitan regions (Hall & Pain, 2005: 111). Of smaller size than the metropolitan regions and connected to that first urban range are the regional metropolises. Immersed in the process of economic and urban globalization, at the beginning of the twenty-first century the threats and opportunities that it brings have become even more evident: deindustrialization in certain areas of the metropolis and the appearance of activities linked to TE in other areas. The spatial and economic reorganization of the regional metropolis implies a redistribution of activities and tasks, which materializes the response of the metropolis to the processes of globalization and competition between metropolises (Mendez, 2007). At the intra-metropolitan level, the price of land and accessibility are the generic factors that influence the location of the activities of the TE, located in the most accessible and valued areas from the socioeconomic and landscape point of view. At the same time, the progressive pressure to expel industrial activity from the most central areas and the first metropolitan area is stimulated by expectations of changes in land use. The consolidation of local competitive advantages around knowledge is what has supported the regional metropolises (clusters of innovation, quality of infrastructures and human resources, concentration of public investments, agglomeration economies). They participate at the TE in a modest volume with respect to the total of the country and a limited proportion of functions, activities and services, which not only affect the regional scope, but also contribute to certain decisions and fabrications of international character, for continuing to maintain located decision centres, productive establishments and local investors of a certain entity in the region and globally. The participation of regional companies in these global production networks ensures that the interaction between economic globalization and regional change is more dynamic. The strategic fit between the local and the global is key to understanding regional development in the era of globalization (Yeung, 2009).

The strategic fit is defined as a dynamic process through which local agents (companies and political, social and economic institutions) coordinate the interests between local agents and their counterparts in the global economy. This strategic fit is decisive in the role played by the metropolis in relation to technology, knowledge and finance in the international context. An approximation to the place that the metropolis occupy worldwide has been investigated based on the location of the category of establishments (headquarters, regional office at a global level, large office, etc.) of the advanced services companies (banking, insurance and financial intermediation, accounting, advertising, legal advice, consulting and media) (Taylor, 2011: 69). The study of the interrelation between the metropolitan region and the knowledge economy has been debated and propose a theoretical framework in which factors, components and effects in the construction of cities based on knowledge are distinguished. The factors linked to the territory that they emphasize are agglomeration economies, local institutions and agents, accessibility and diffusion processes, knowledge governance. The components that distinguish the metropolitan areas based on knowledge are the accumulation of specific resources for the generation of knowledge, and that is focused on human capital; an economic structure in which sectors and knowledge-intensive companies occupy a preferential position; a regional innovation system, based on networks of local and regional agents that is supported by digital infrastructure to facilitate the exchange of information and knowledge; the tangible results of innovation in the economic and urban areas. A brief comment on each of the differentiating elements of the metropolis of knowledge is noted below.

In relation to human capital, we should highlight the long period of training required by skilled labour and its residential preference for cities that offer a high quality of life. Its strategic role in the generation of innovation and knowledge has been underlined with the terms talent and creative class (Florida, 2005). In the metropolis of knowledge, the number and proportion of university graduates is higher due to the labour demands required in the TE and other productive activities. In a recent report they point out that companies are retaining the most trained workers, which contribute to the improvement of the productivity of companies and also to one of the most technologically developed regions, with a greater capacity to attract human capital (García, 2012: 588).

The regional innovation system connects the links between knowledge generation, learning, innovation processes and economic development. The regions and cities that generate a high rate of production and application of knowledge in the business sector and public management will have a fundamental competitive resource at their disposal. But not only local networks allow us to explain the generation of externalities networks and the assimilation of innovation processes through the creation of communities based on knowledge. The growing importance of global processes in urban dynamics has to be considered. The intensity and balance of the relationships established between the components of the local and foreign innovation system (transfers of capital and knowledge, participation in projects, exchanges of professionals) can provide relevant indicators (Méndez, 2000). The regional innovation system in different countries has been extensively researched (Navarro, 2010; OECD, 2011), agreeing that there is room for improvement in the interconnection between the different agents, in the economic capitalization of investment in R & D & I in the promotion of scientific research in relevant areas of the economic fabric of the region. Regarding the tangible results of innovation in the economic and urban areas, it should be noted that maintaining a city positioned in the EC requires a constant effort in investment of financial resources to root research, technological development and knowledge transfers, both in the private sphere as in the public. The most common indicators are number of patents and utility models registered by companies, number of scientific publications, quality certificates of companies and public bodies, increase of export quotas.

Regarding the achievements of innovation in the urban area, the benchmarks are the participation in networks of cities at national, European and global levels, a better insertion in international urban circuits of merit (titles of the city, awards). Likewise, a transparent and effective public management that implements original solutions to the urban problems of spatial inequalities is an asset to be highlighted. In short, a style of public management introduces creativity as a strategic value to address the challenges of the territory's future (Clark, Huxley and Mountford, 2010). On the other hand, Hutton (2007) highlights a series of intangible components of the city of knowledge such as leadership, differentiation and collaboration, which are interrelated with the tangible ones. Cities that bet on knowledge need a leadership capable of uniting key agents (local institutions, regional government, business organizations, universities) and generating a shared objective environment to overcome the deficiencies detected in the city. The differentiation of the city based on its strengths (original knowledge, productive capacities) helps to strengthen the comparative advantages of the city, achieving a city of knowledge that stands out from others and offers complementary aspects to other nearby cities.

Collaboration with other cities allows us to combine strengths and jointly face challenges of the TE. This collaboration must be supported by realistic and genuine agreements from the recognition of the position of each city in the urban system. In the EU, the aspiration for greater relevance of the EC from the economic and social point of view was approved some time ago (Lisbon Strategy, 2000 European Council) and remains a pending objective to achieve (European Commission, 2010). In this European area, empirical research on CD in European regions has been carried out. Accessibility to knowledge, assimilation and profitability have been identified as key determinants in a regional knowledge-based economy (Wintjes-Hollanders, 2010: 398). These three dimensions of knowledge consist in the interpretation of the regional innovation system previously commented. Accessibility to knowledge implies access to existing knowledge and generation of new knowledge, absorption means learning, innovation processes and economic development are synonymous with the profitability of knowledge. These three dimensions of knowledge imply an evident territorial component due to the inhomogeneous spatial distribution of knowledge. The metropolises and the most prosperous regions enjoy the capacity to generate new knowledge, greater accessibility to the existing one, capacity to assimilate it and translate it into business initiatives. The cities of smaller size and peripheral regions have to face an already limited accessibility. The regional metropolises can have options in the exploitation of specific applications of new knowledge, linking it with the global value chains located in their region (Lagendijk, 2011), as well as in the generation of new knowledge in relation to previous sectorial specializations connected to new activities.

Taking into account these three dimensions of knowledge selected several indicators (knowledge-intensive services, high-tech industry, creative workers, activity rate, R & D in companies, R & D in public centres, productivity) to develop the knowledge map of the regions of the EU. Numerous indicators coincide with those analyzed in the components of the city based on the knowledge proposed by Méndez and Sánchez-Moral (2011) as a consequence of the conceptual consensus on the relevance of the CE in the regions and in the international context. Based on these indicators (Wintjes-Hollanders, 2010) they have distinguished several types of regional TE. The first category would be the metropolitan regions of knowledge-intensive services that usually coincide with the capital of the country. The second category would be the regions absorbing knowledge and that is where different interest countries appear. This model has been applied to 231 NUTS2 regions of the EU for which there was a sufficient set of creative economy indicators in the Eurostat Regio data base. A good number of indicators used in this study also coincide with those selected in the previously cited works. However, due to the metropolitan nature of the TE, it is appropriate to address it at that scale. Although some authors have proposed to understand different countries as a whole knowledge cluster (Arbonies and Moso, 2002), or a polycentric global city (Meijers et al., 2008) due to the growing interactions between a large part of its companies and territories, the contrasts that still remain between the cities that make up its urban system and the functional leadership exercised by its main agglomerations are also evident.

The importance of physical geography

Another approach that has been developed in the American academy in recent years, is that developed, among others, by Jeffrey Sachs, the emulator on the other side of the Charles River in Cambridge, Krugman. In association with J.L. Gallup and A.D. Mellinger, Sachs wonders if physical geography is important for economic development. From an intellectual tradition that goes back to Adam Smith and reaches Jared Diamond and David Landes, through Fernand Braudel and William M. Neil, Sachs and his colleagues intend to examine the complex relationships between physical geography and economic growth, appealing to models formal econometrics. Adding to a simple growth model (the AK, known in its early versions as the Harrod-Domar model), the costs of transport and the assumption that an economy needs to import intermediate goods and capital goods, the authors in question reach one of its first fundamental conclusions: Coastal regions and those linked to the coast by navigable ocean channels tend to have much higher growth rates than the Mediterranean regions (hinterland). This is so, because in the former transport costs are lower and there are economies of agglomeration. Through an increasing complexity of the basic model and incorporating econometric correlations with factual information, Sachs, Gallup and Mellinger establish other empirical regularities, thus:

a) The tropical regions have – in terms of development – a great disadvantage compared to temperate regions, probably due to the incidence of tropical diseases and differences in agricultural productivity.

b) Population density favours growth in coastal regions with good access to domestic, regional and international trade, but it has a negative effect on the "hinterland".

c) The growth of the population in a country is negatively associated with its relative growth potential, that is, the population is increasing faster in less prepared countries to experience an accelerated economic development.

d) The development potential is inversely associated with the distance to the coasts. Some analysts have pointed out that the Gallup, Sachs and Mellinger models overestimate the importance of long-distance maritime transportation and suffer from serious econometric deficiencies.

Although in principle the connection between geography and development evokes the unpleasant resonance of a fatalistic determinism that has sometimes led to ethnocentrism and racism, the fact is that the evidence can not be ignored that there are strong empirical regularities in which the conditions appear of the physical and natural environment, closely connected to the potentialities of development While geography is not "destiny" as the old German geopolitics claimed, neither the development of the territories obeys only the action of self-organized spatial processes of production, based on the effects of agglomeration and on externalities. For example, for Henderson, Shalizi and Venables (2000: 108), there is a relationship governed by a type of gravity law between the center and the periphery: the greater the distance from the centres, the less trade, the (investment), the flows of technology and income. Another study by Venables (1999: 109) that certainly takes up the Von Thünen model mentioned above, concludes that the productive specialization of the countries depends not only on the relative abundance of factors as predicted by the Heckscher-Ohlin model, but also from its distance to the centers. The greater this distance, the less oriented to international trade and therefore the more self-sufficient the country will be.

Some analysts even suggest a type natural resources’ "course" of and of location in the tropics, according to which these two factors are inversely associated with the growth and the distribution of income of the countries (Gavin & Hausmann, 1998: 177). From another perspective, which approaches the approach of flexible accumulation, there are some studies that aim to establish the relevance of geography in the location of innovation activities (Audretsh, 1988) and clusters (Porter 2000). Of course, the two approaches are not incompatible as recognized by both Sachs and Krugman. The latter argues that "understanding why small events caused by chance can have vast effects on economic geography, is crucial to understand why the underlying differences in natural geography can have such large effects". At the same time, Sachs thinks that "a city can emerge because of initial advantages of costs derived from geography, but it can continue to prosper due to agglomeration economies, even when such initial advantages have disappeared". As one may observe, the question obeys to the logic of circular causality so dear to economic geographers: the feedback agglomeration and therefore the economic and industrial policy, can give the initial endowment of natural resources of a region a new impulse for its development future.

1.2. Theoretical concepts of economic agglomerations

1.2.1 Models

From the German school to the theories of endogenous growth

In his pioneering work, Von Thünen (1826: 6) built a very useful model -based on land prices, land quality and transportation costs- to explain farmers' income and the division of urban labor- rural, which still retains its validity thanks to the reworkings of Alonso in the sixties, but leaves unresolved the essential question of why urban agglomerations specialized in manufacturing and tertiary activities arise. In this respect, in Von Thünen's model the localization factors are not explained, but exogenously assumed. Well into the twentieth century, other German geographers such as A. Weber (1929) and especially those of the Jena school – Christaller (1933) and Lösh (1939), developed a theory of location that makes the provision geographic market and, again, the costs of transport, to deduce with a tool taken from the geometry the emergence of hexagonally organized "central sites", in which productive activities are concentrated. Because of its macroeconomic approach, Lösch's work is a precursor of the modern urban regional economy. Just as the German tradition appealed to geometry to build its models, some American geographers resorted to physics to study problems such as the size hierarchy of cities and the interactions between them, finding very interesting empirical regularities. Thus, for example, Zipf (1941) established a "law" that bears his name, to explain the size distribution of cities and also found a mathematical regularity, similar to the law of gravity, which relates the interactions between cities – travel, transportation of goods, etc. – with the size of their populations and the distance between them. In the fifties and sixties, the North American academy developed other theories such as the base-export multiplier (North, 1955 and Friedmann, 1966) and the market potential (Harris, 1954), which have as a common feature their Keynesian emphasis on the role of demand in determining the level of economic activity (and therefore income) of the region. The first prioritizes external demand (exports) and the second, internal demand.

An attempt of great intellectual encouragement to integrate the contributions of the German school with the microeconomics of minimization of costs or maximization of the benefit, was the one made by Walter Isard in his magnum opus "Location and space-economy" (1956). Motivated by his dissatisfaction with a neoclassical economy self-confined to "a wonderland of no spatial dimensions", Isard created the Regional Science (Regional Science) as an interdisciplinary construction that has had considerable practical importance in the field of regional planning. Without ignoring the important contributions made by the German and American geographers outlined above, the fact is that they failed to get to the heart of the spatial issue: what determines the urban agglomeration and the interurban hierarchy? In a certain way, the argument of such theoretical approaches was somewhat tautological: the agglomeration of producers in a location provides advantages and these advantages, precisely, explain the agglomeration. These theories suppose what they are trying to understand: the existence of a central urban market. This explanatory insufficiency has been attributed to the budget of a homogeneous space and to the inadequate capture of the concept of "externalities" -associated with increasing returns to scale and imperfect competition- that was already present in the work of A. Marshall ( 1890), could not be incorporated into spatial models due to limitations in the "state of the art". For the rest, his bias towards economic modelling makes him say to Krugman that this was one of the main reasons for the contributions of economic geography will not become part of the central core of economic thought. For Benko and Lipietz, Marshall to equate the externalities to an "atmosphere", that is, to a dense environment in non-mercantile interactions, information, personal approaches and emulation and trust between agents. For these authors: "some cities are more successful than others because they deserve it, because economic (or cultural) life is more active there … From this it follows that the spatial hierarchy is the result, not the cause: all the cities could be equally prosperous if they did equally well "18. No longer in the field of spatial theories, but from the perspective of the theories of growth and economic development, in the fifties and sixties several conceptualizations were formulated that had a great influence on the thought and practice of regional development. On the one hand, there are the approaches according to which the level of development reached by a region is the result of the place it occupies in a system of a hierarchical nature and of asymmetric relations defined by the deterministic behaviour of flows and forces external to the region itself . In this current the theories of the center-periphery and dependency can be placed in their different versions (Friedmann, 197220, Frank, 196921, Amin, 197322, and CEPAL, 1960-7023). Despite the diversity of positions and the controversies within this line, it could be considered that in general terms it postulates the existence of a world order with "central" countries that allied with the dominant elites of the countries of the "periphery", are progressively enriched at the expense of the latter. In such a way, this vision regarding the development of the advanced economies requires and generates the underdevelopment of the backward ones. They are two interdependent faces of the historical evolution of international capitalism. Transferring this approach to the sub-national sphere, this same type of unequal relations of domination would be reproduced among the different regions or territories that make up the nations, giving rise to a kind of internal colonialism. Related to the previous approaches are the theories of unequal development that investigate the cause of the differences in the rhythm and level of development between the regions. In this sense, the theory of cumulative circular causation formulated initially in qualitative form by Myrdal (1957) and elaborated later in a formal model by Kaldor (1957) and 1962)) was particularly influential. Based on the general notion that the social system does not spontaneously move towards any balance of forces as the neoclassical model posits, but that it is permanently moving away from such a position, Myrdal argues that from an initial agglomeration in a region, the existence of economies of scale and technological externalities, attracts new resources that circularly reinforce the expansion of the market. In contrast, the opposite occurs in lagging regions. The idea that growth is necessarily unbalanced was also shared by Hirshman, (1958), who introduced the concept of linkages (forward and backward linkages), which would be key in later theoretical developments. In this respect, one contributed to the conception of an "unbalanced" development strategy, Rosentein-Rodan (1943) that proposed the need for a big push ("big push") to concentrate scarce local resources on a few large – but diversified – projects well located. The Theory of Growth Poles, associated with the names of François Perroux (1955) and Jacques Boudeville (1968) 31, has a common with the previous models the attention paid to the cumulative processes and location, which can be generated by the interdependencies of the input-output type around a leading and innovative industry. The idea initially presented by Perroux in general terms was transferred to the geographical space by Boudeville, with the argument that dynamic industries and projects cluster in a given area and have spillover effects on the adjacent hinterland and not on the economy as a whole.

Under the influence of this set of theories and models, we came to the conviction that economic processes can be directed and shaped according to a substantive rationality and through the exercise of social engineering techniques. In this way, next to the discipline of Development Planning, at the national level, the Regional Planning applied to the territories arose, both under the active direction of the State, which in the long run resulted in a diversity of experiences almost always unsuccessful. But almost in parallel with the "interventionist" conceptualizations of development, what was to become the standard modern vision of growth began to be elaborated: the neoclassical models constructed by Solow (1956: 38) and Swan (1956: 66), which would lead to economic policies radically opposed to the Keynesian ones. In essence, the central features of these models are two:

a) homogeneity of degree one of the production function, respectively a presence of constant returns to scale for work and capital and

b) decreasing marginal returns of each of the resources productive.

These two assumptions follow two logical implications: first, that in the long term growth will tend to zero, unless there is a technological advance that continually compensates for the negative effects of diminishing returns to capital; and secondly, that the per capita growth rate is inversely related to the initial level of output per capita (the lower the level of product per capita, the higher marginal productivity and therefore the higher growth). From this comes a third implication: in the long term there will be convergence of per capita growth rates and, even, of the levels of per capita income. Consequently, in this optimistic vision of growth, the free play of market forces leads the countries and their interior regions, to a progressive equalization of their levels of development, making unnecessary the interventionist policies advocated by the Keynesian approaches. Notwithstanding the solid theoretical construction of the neoclassical growth model, its successive enlargements and ample empirical evidence that there are indeed periods in which processes of convergence occur both between countries and between subnational regions, the nonconformity that produced the exogenous condition of the technological change and the growing empirical literature on asymmetric and concentrated growth (Kusnets, 1955, Kaldor, 1961, and Madison, 1964, 1982, among others) led in the eighties to the formulation of the Theory of Endogenous Growth. The purpose of this approach was to build models in which technology is endogenous, that is, to respond to the deliberate choices of economic agents; and in those that enter to play as determinants of growth, knowledge, physical capital, human and macro-economic policies44. By assuming the existence of positive externalities associated with the production of knowledge and technology, these models substitute orthodox neoclassical assumptions about constant returns to scale and perfect competition, those of increasing returns and imperfect competition. The concept of "endogenous" that is central to the theory has to do with the assumption that growth is driven by the technological change that comes from intentional investment decisions made by profit-maximizing agents, which implies that the growth of Long term is a function of endogenous factors in a specific historical context. Therefore, the existence of exogenous factors not explained in the model can be ruled out. Although the validity of several of the central assumptions of the Endogenous Growth Models, such as increasing returns, and hence the lack of convergence, has been questioned45, there is no doubt that they shed a new light on the way in which capital human, knowledge and technological change are generated in the economic system and determine its long-term growth. The models of endogenous growth that were initially elaborated by Romer (1986), Lucas (1989) and Rebelo (1991), from the works of Arrow, (1962), Kaldor (1957), Nordhaus (1969) ), Shell (1973), Frankel (1962) and Dixit and Stiglitz (1977), among others, had a very high impact in several fields of economic theory, among which there are two very related to regional development, which they are the one of the space economy and the one of the analysis of the processes of convergence in the long-term economic performance of the economies.

Regional growth and convergence

Another slope that derives from what Krugman calls "the revolution of increasing returns/ imperfect competition" is that of studies on long-term growth and convergence between countries and regions. As seen above, in neoclassical models, the growth rate of an economy is decreasing in the long term. This means that if the only difference between the economies were to the stock of capital per worker, in the real world higher rates of growth should be observed in the poorer economies than in the rich economies. This negative relationship between the initial income and its growth rate is what is known as the convergence hypothesis. It should be noted that neoclassical models only predict convergence, when the only difference between economies lies in their initial levels of capital. In this case, it is about absolute convergence. A contrario sensu, without them also differ in technology or in the rates of savings, depreciation and population growth, the hypothesis of the fastest growth of the poor economies will not be verified and could be presented, rather, a process of divergence . The convergence hypothesis, derived from the assumption of diminishing returns to capital, was then constituted as the main differentiating element between the neoclassical models of exogenous growth and the new theories of endogenous growth. For the latter, the assumption of constant returns of the underlying capital in all its models, entailed the prediction of non-convergence (or divergence). A practical way to resolve which of the two paradigms is better suited to reality was to pass the terrain of empirical studies. However, the neoclassical economists quickly formulated their reply. Sala-i-Martin (1990), Barro and Sala-i-Martin (1991, 1992a, 1992b) and Mankiw, Romer and Weil (1992), were in charge of remembering that the neoclassical model only predicts absolute β convergence, (in the sense that the poorest economies grow more than the rich ones), when all countries have the same savings, technology, depreciation and population growth rates and only differ in their initial capital endowment. As this is a quite unrealistic assumption, it was logical that the empirical evidence found for the 114 countries, demonstrate the lack of absolute β convergence.

This supposed that to make a real test of the neoclassical model, one had to go beyond the absolute β convergence, measuring in some way the distance between the income level of an economy and the level of income corresponding to its steady state. The introduction of the concept of steady state, allowed to recognize additional differences to the capital between the different regions. That is, in the case that economies have different parameters additional to the initial level of capital, then they will approach different stationary states. In this event, what the neoclassical model predicts is that the growth rate of economies is inversely related to the distance that separates it from its own stationary state. An example can help to better understand the argument: if a country is currently poor and is expected to remain poor in the long term, then its growth rate will be low. On the contrary, if the expectation is that the same country will end up being rich, then its current growth rate will be high. This negative partial correlation between growth and level of income – conditional on the steady state – is what the authors mentioned above, called conditional convergence to oppose to the absolute convergence used until then. Empirically there are two ways to apply conditional convergence.

The first is to limit the study to economies with similar technological, institutional and legal parameters, since if these conditions are met, they will all tend to the same stationary state and therefore converge (this case is also known as convergence of clubs). An example of this type of economy is the regions within the same country. A second way of conditioning the data is through the econometric record of using multiple regressions. It will be said that a set of economies presents conditional β convergence, if when performing a regression with cross-section data of the growth on the initial income -maintaining constant a certain number of variables that act as proxi from the steady state- it is found that the coefficient of the Initial income level is negative. Using the first of these modalities to "condition" the analyzes of Barro and Sala-i-Martin verified the hypothesis of convergence in the states of the North American Union, in the prefectures of Japan and in 90 regions of Europe. The verification of the convergence between regions of the same country, which are quite similar, represented evidence in favour of the neoclassical model. Under these circumstances the phenomena of conditional convergence and absolute convergence are equal. Since it is not possible to maintain the assumption of technology, consumer preferences and similar institutions when comparing different countries, it is in this case that the multiple regression econometric technique is used, as previously indicated.

For the above reasons and for the internal logic of endogenous growth models, the theorists of this approach have continued to question the validity of the evolution towards convergence induced only by market forces. On the one hand, the agglomeration economies resulting from increasing returns can reinforce the dynamism of the advanced regions, increasing the gap with respect to the backward ones. On the other hand, the 2% convergence rate could be vitiated by statistical fallacies. For theoreticians such as Quah, in the case of Europe, patterns are emerging that give rise to thinking about a "twin peaks" model, with a polarization between regions of high levels and low income levels and a decrease in the number of regions with intermediate income. This is what Baumol has called "convergence clubs", in the upper and lower parts of the income spectrum. Also Krugman, in his models of international trade, finds that the cumulative effect of externalities and linkages in the more advanced countries, can lead to a scenario where "the backwardness of the South is not something that was developed in isolation, but the consequence necessary from the same process that made industrialization possible in the North ". So far these findings seem to validate the old thesis of dependence, but the same models of Krugman predict that the process of polarization can be reversed due to the declining costs of transport, inherent in the process of globalization. The reason would be that the peripheral regions have a competitive advantage in the form of low wages. At first, this advantage is more than compensated by the North's better access to markets (backward linkages) and inputs (forward linkages), but to the extent that the cost of transport declines, the importance of such chains. In this way, there would be a second turning point in which the industry of the North finds it profitable to move to locations with low wages. In short, the theories of endogenous growth consider that, in one form or another, the rich tend to be richer as a result of increasing returns to scale and that convergence is limited to the club of the territories that have the base of human capital enough to take advantage of modern technology.

Competitive regions: a contribution more to confusion

Competitiveness has become a meaningless word, is the expression to approach what the dominant doctrine in the last fifty years in the economy has wanted to see as the need for commercial triumph in world markets. The theories of advantages, whether they are of the absolute (Smith), comparative (Ricardo) or competitive type, that is, created independently of the initial factor endowment (Porter), have given competitiveness an essential space in economic theory , in business but above all in the growth and development strategies for the nations or, if you prefer, for the territories. For Krugman (1994: 20), the competitiveness of a firm and the approach from the territory must be differentiated, trying to define the competitiveness of a nation is much more problematic than defining that of a corporation. The point of equilibrium of a corporation is literally its balance point: if a corporation is not able to pay its workers, suppliers and bondholders, it will leave the market. Thus, when we say that a corporation is not competitive, we mean that its market position is unsustainable and that, unless it improves its management, it will fail. The countries, on the other hand, do not go bankrupt. These may be happy or unhappy with their economic management but they have no well-defined point of equilibrium. As a result, the concept of national competitiveness is evasive. Thus, overlapping concepts, much less between production and territory, seems not to be entirely orthodox.

Additionally, it is necessary to incorporate in the analysis a set of elements of institutional order that make the human resource more competitive, the companies and the localities, without forgetting, obviously, that these are territorialized, that is, their action is carried out in a geographical space concrete with the interaction of social actors, companies and institutions. The international liberation of trade, the technological revolution and other key elements in the process of globalization have allowed companies worldwide to benefit from an enormous range of possibilities to locate their businesses and access markets that previously seemed impenetrable by conventional techniques. . Consequently, nations need to compete to attract or retain companies. Competitiveness, then, should be understood as the ability to show decision in world markets through exports and direct foreign investment and, at the same time, be attractive for the creation of wealth. On the other hand, it is also clear that the influence of state policy, including economic policy, is capable of encouraging, stagnating or reversing the favourable environment to attract wealth-generating activities. A very important part of the comparative advantage of certain nations depends on their incentive policies to attract investment: subsidies, tax exemptions, among others, and others to generate an atmosphere of trust and certainty. States have a leading role in this competition. The concept of competitiveness is present in the current debate on topics as diverse as economic development, business administration, trade liberalization, free trade agreements, education reforms, etc. This generates very different definitions, as institutions and analysts are dedicated to its study. If one wanted to find a common denominator for different conceptions on the subject, it could be said that competitiveness refers to the ability of countries or territories to generate, in a sustained manner, wealth in the environment of a globalized world. In the usual terminology of the economy, competitiveness is equivalent to achieving "sustained economic growth in an open economy". Even when the literature is abundant, there is a fairly widespread view in the sense of understanding competitiveness as a complex relationship, with multiple variables that determine it, besides, these variables would be at different levels. Among these you can find economic policy in all its variants, cultural factors and political organization, long-term policies such as infrastructure, education, technology, among others, as well as business practices, in terms of resource management human, innovation, cooperation, etc.

Theories of competitiveness have been traversed by the most diverse scientific forms, a position assumed by the dominant theory, which is ultimately the bearer of the standards of competitiveness, as a way to find the absolute and relative advantages of the regions in which the context of the international economy. The instrumental nature of the concept of competitiveness, seen in the dimension of the historical journey or if you prefer the state of art of the theories of regional development, could only be located within the paths proposed by the theory of ordering centralities or more specifically from the idea of ​​growth centres or development poles. These, which are static ideas, insofar as they have referred in their different aspects to limited conceptions of space-territory as a place or axis from which the conditions have to be generated to supply the periphery, they also conceive that from there the limits disappear to take nuances of internationalization and even of globalization, but only in terms of the exchange of goods and services, that is, as market relations that enhance the gains of trade without barriers. In this measure, highly competitive regions, nations or territories are nothing more than transitory scenarios of successful production and marketing of goods and services. That is why competitiveness has been understood as the capacity of the economy to generate productive growth and, therefore, increase the income levels of the population of the regions. On the other hand, almost all the studies on competitiveness are limited to analyzing the participation of national production in external markets; however, a more thorough analysis should also evaluate the participation of production within the domestic market that has to do with the regional. The approaches applied throughout the world on competitiveness approaches have served to stimulate government and business policies and efforts to define and build advantages towards success in global markets. However, this utility has also left in abstraction the field of application of such policies and has gone through the land of the nation, the region or the company without the necessary transcendence for the construction of territories. There remain some questions that transcend the purposes of this article but that need to be raised for future developments: Are innovations, diffusions and access to advantages created a fallacy of the system itself? Will the peripheries be able to integrate or remain immersed in non-development? Are we still immersed in eternal dualities and today we succumb to being or not being competitive? How to understand the space in the era of the virtual, the territorial in globalization and the national in the diffuse jurisdictions of the economic blocks and power?

Before all this – the recognition that has been made from the theory against the obtrigatory of generating growths to tend for greater processes of development -, the idea of ​​the multidimensionality of the systemic arises to try to give movement and life to a purely mechanistic concept, that is to say, they are the lines of flight to a model conceived from the objectivity, it is the attempt to offer subjectivity and, even more, Omni-direction to make it closer to the realities of the regions as spaces to be built for competition. But all this ends up responding only in the space of the local, in the social construction of territories, from complex and systemic dynamics, but given as a starting point, not the instrumentation of dispersed policies, but the conception of the locality as a integrated system for social development, where there is a tacit appropriation of the territory by the agents involved in it, making it a space of innovation, competitive and sustainable.

The alternative of the local aspect

The attempts to define the region, and especially the competitive regions, not only from disciplinary evocations of a unique nature, or even the pretensions to make explanations of a complex nature, structuralist thinking or even the postulates on the complex thought of Morin (1995), not only contribute little but create more and greater confusion in the explanation of the concept. The region ends up being a concept as abstract as that of the nation, which becomes only a category of analysis, a reference for intellectuals, and which does not make transcendent contributions to social development in the territories. In the practical order, that is, in the definition of policies, perhaps the idea of ​​conceptualizing the region should be abandoned in order to focus on concrete social structures that, not for individuals, cease to be complex. Reference is made to the thought of the local, of the micro-territories that, as said, represent the defined nuclei of settlement, of human interaction with social, political, environmental, historical and cultural phenomena, among others, that is, the settlements humans where the daily life of humanity develops. It is in the local where the pretensions of all the sciences of explaining or identifying features of homogeneity materialize, of achieving shades of respect for difference, but above all, identities are achieved that enable the generation of a social conglomerate in relation to others, while the application of the necessary and required policies so that the inhabitants of these communities enjoy autonomies, solidarities, cooperation and visions of joint life and future; it is, in the end, the possibility of development, it is the recognition of the small, of the micro in the era of globalization.

However, from the theories that nurture the studies on development is counted, as in the definition of the region and with the methodologies of competitiveness measurement, with a dominant bias, given from the neoclassical and Keynesian theories that they have prevailed in the international political order. These theories have survived some basic concepts that deny any possibility of permeating orthodox positions with more open, more flexible schemes that have only gained ground through the very action of social and productive processes. In any case, thinking about the local has meant to the countries a divagation of an administrative type. In the Colombian case, as well as in the French and even in the German, the figures of regions and especially of the departments remain as major instances of the municipalities, where their role in the development and growth of the territories continues to be questioned, since they fulfil a function of intermediation between the national and the local that has had great impacts on fiscal results, as increments of bureaucracies and operating expenses, but there are few achievements in terms of investment and welfare. The local, the municipality, breaks in as the concrete space of public action, that is to say, of the public policies that are going to make it possible to unite the sectoral logics with the territorial logics, avoiding that the verticality of the sectorial condition the development of the territories. In the same sense, it is only in the local where the economic and social mediations are going to take place, and with them the networks of public and private action that lead the locality towards higher levels of growth and development.

1.2.2 Advantages & disadvantages

Initial implementation models and the advantages of agglomeration

In the already long experience on regional development policies in European countries, we could highlight at least four differentiated approaches or models under which the clusters have been approximated: the poles of development of the 70s, the Italian-based industrial districts, the Porter's diamond model, and technological valleys inspired by the Silicon Valley phenomenon. All approaches, in terms of economic policy, mentioned above try to generate business agglomeration, but each of them implies totally different conceptions.

In the 1960s, regional policy in several European countries adopted the concept of development pole, based on indicative planning. Interpreted as indicative planning, it was an attempt to apply highly complex economic policies in the allocation of resources. Both Holland and France formulated and applied indicative development plans, and so did Spain, although to a lesser degree. The development pole started from the idea of ​​exploiting the economic links to supposedly generate in a territory the establishment of a large company, almost with public safety, thanks to the direct employment created and the associated direct and induced demand. The expansive mechanism of the development pole had more to do with the Keynesian multiplier than with the external economies of the current cluster models. Time showed that the implementation of a large company, typically in the heavy industry or industrial chemistry sector, in an area with limited prior industrial experience was not enough to attract more private investment and form a cluster. In the 80s and 90s the model to learn from and to emulate were the industrial districts based on the Italian model, concentrations of highly specialized small businesses, belonging to traditional consumer industries, in an institutional environment characterized by historical social relations, values common, mutual knowledge and cooperation, between companies and with local administration.

Interest in industrial districts can be found in Piore and Sabel's writing entitled "The Second Industrial Divide" (1984), which postulated that in the new context of continuous technical progress and diversification of demand, the flexibility of small and medium enterprises, made them more efficient than very large companies to adapt to change. The passage of time has made it possible to verify that small companies, belonging to traditional sectors, in many cases withstood better than large companies the industrial crisis of the early eighties and other industrial crises later. However, it has also been observed that the role, as a regional economic engine, of clusters declines when growth is based on innovation activities linked to new information and communication technologies (ICT). In Spain, the equivalent to the industrial districts are the so-called local production systems. Even with considerable institutional differences with respect to the Italian industrial districts, the local systems studied in Spain share many characteristics with the Italian ones, and in particular, that belong to traditional productive activities or with medium or low innovative intensity, which is not incompatible with the companies in the clusters adopt technological and management practices18. Porter's diamond model contributed since its inception (1990), and has continued to contribute, 19 an analysis methodology of much more general application than the studies on industrial districts, which according to some authors suffers from the limitation of being very subject to specificities of Italian clusters. The cluster model of Michael Porter explains the advantages of cluster companies for external economies of the type spillovers or technology diffusion. Its main emphasis is on the importance of competition, and productive links with suppliers of inputs and services, as elements that contribute to increasing the competitiveness of companies. As has been pointed out, the analysis of the cluster does not have to have a local geographic reference, the geographic reference can be a whole country, but there is always a spatial dimension since the cluster determines the level of competitiveness of its companies, and competitiveness is a relative factor, with respect to other clusters or companies.

With the phenomenon of Silicon Valley and the rapid growth of the ICT sector (computers, software, internet, telecommunications equipment), the cluster model that has generated most attention in recent times is the concentration of high-tech companies where The centripetal force is the external economies, and in particular the spillovers of knowledge. This type of technological valley model, since it originates in innovative activities, does not require the existence of previous historical roots. It may even be the opposite, that is to say, that highly innovative activities tend to move away from areas whose past industrial experience translates into rigidity in management. What determines the attraction of companies to the cluster is the speed with which innovation takes place, the importance of spin-offs segregated by the companies themselves as they mature, and the mobility of qualified technical personnel among the companies in the cluster. In any case, after many initiatives undertaken in several countries (Sophia-Antipolis, Bangalore) it has also been found that Silicon Valley model can not be "replicated" in a volunteer way. Clusters develop over time; they are not a phenomenon that only appears or disappears during the night. Although, as it has been pointed out previously, the exact understanding of the evolution of the clusters is still subject of much investigation.

1.2.3 Role of the Government in determining economic agglomerations

Since the mid-1980s, the decentralization process has taken a renewed momentum in developing countries, due to the deficiencies of central governments in responding to the needs of public services in local areas within developing countries, and the demands of the population for more democratic systems and greater citizen participation. Parallel to this process, specific areas in these countries have tried to advance in the so-called local economic development (LED) process. Unlike the extensive experience of both processes in developed countries, for developing countries both processes are relatively 'new'. The first in full implementation and the second in its initial stages and implemented in specific areas of the countries. The main objective of this document is to provide an initial academic basis for the understanding, analysis and recommendations of economic policy on both processes. To this end, it presents a summary of the various theories / models of local economic development, and a brief account of the basic theoretical aspects of government decentralization in the economic literature.

On the other hand, it presents a summary of the experiences of the decentralization process for a sample of 13 developing countries. From the above, this document proposes a definition of LED for developing countries and distinguishes it from the concept of government decentralization. Thus, the proposed concept of local economic development is broader than the concept of decentralization. The decentralization process, to the extent that it originates an adequate governmental system and is consistent with the LED process, although necessary for it, is not enough to crystallize the objective results of the LED process. To achieve the objectives of economic development at the local level, action and interaction is required not only from the local government but also from the other elements, factors or actors considered in the LED literature. The composition of these actors or factors and the type of actions and interactions for the LED will depend on the economic, social, political, geographic, cultural, environmental conditions, etc., typical of the local areas within the developing countries.

Blakely (2003) describes the LED area as follows: "Local Economic Development is a combination of disciplines and a mix of professional policies and practices … the area has been part of government practice since the early industrial age … unlike the agricultural sector, which depends entirely on the quality of the location for production, in the manufacturing sector the location of production could be more mobile and could be changed and subject to decision … localities (communities) begin to compete [with each other] for the location of the plants on the basis of attributes such as transportation facilities … low cost of land, water and energy as well as low tax rates. In the last two decades [mid 1980 to 2002] a new literature in the area has developed somehow the LED area and its practice is a small growing industry. Leading universities around the world offer courses and [academic] degrees in the area. Almost every city in the industrialized countries has a section or entity that deals exclusively with the LED area. At the national, state or provincial level [in these countries] there are economic units called 'ministries' or economic development department that helps the LED process through various tools [or interventions]. " (Blakely, 2003: 210-211)

The following statement taken from Stiglitz (1988a) and Stiglitz-Hoff (2001) synthesizes the main ideas of this group of literature: "A central question in economic development is how do we explain the differences in the level and growth rates of income by inhabitant between rich and poor countries ?. In the 1950s and 1960s, the standard response was that rich and poor countries are similar, except in the endowment of factors or resources [sources of growth], so the prescription of policy is to increase these resources [through means such as increasing savings or external, levels of education or through foreign aid] … today this response does not seem convincing to the facts that [poor and rich] countries do not converge on per capita income as the neoclassical prediction would suggest … as a consequence the differences between poor and rich countries are due to other important differences … these … can be differences in the economic organization, the interaction of the agents [owners of the growth sources ], and in the institutions that mediate these interactions. It is well known the existence of market failures [or distortions] in rich countries. Even more, these are larger in poor countries, but however the elimination of the distortions generated by governments although desirable do not seem to be necessary or sufficient for sustained growth of an economy; development is not seen only as a process of accumulation or increase of the factors regarding the sources of growth but as a process of organizational change … the [new] areas of development are those related to the information economy, the theory of coordination and the economy of the institutions all resulting from distortions or market failures in poor countries not necessarily generated by the governments of these countries."

Moreover, it is possible for the government to design a set of taxes and subsidies that change the allocation of resources from a balance with inefficient resource allocations to another equilibrium allocation where all individuals improve their welfare. This new allocation of the new equilibrium is called an allocation. In liberal market theories or models and traditional classical and neoclassical theories of development and economic growth, the "initial" situation of low level of real GDP per inhabitant is a "temporary" situation of the development process of the economy and where Changes (or increases) in the foundations of the economy allow it to reach the situation of unique equilibrium, Pareto efficient and sustained growth. In the new theories of economic development, the initial situation of low levels of real GDP per inhabitant of an economy is a situation of Pareto inefficient equilibrium and the changes in the fundamentals will not necessarily change this situation in the presence of distortions in the markets. This balance is called a "balance trap" or a "balance of a less developed economy".

The classics of development took into account the possibility of these equilibrium traps. Thus, the concepts of "take off" (Rostow, 1956); "Big push" (Rosentein-Rodan, 1961), "or the" unlimited supply of labour "(Lewis, 1954) are concepts related to" equilibrium or poverty traps ".

According to Perroux's (1983) hypothesis about development poles, the growth of a region or local area is determined by the leading industries and firms or other dominant economic actors in that region or local area. These industries, firms or actors have some advantages (technological, level of wealth, political influence, etc.) that allow them to develop. The poles of development are linked to other poles and not necessarily to the areas of the periphery around the growing centres or cities. Under the economic theories of location, economic geography (traditional), and space, the factors, models and theories described so far not only to determine the base sectors of the local area but also the development and economic growth of the local area. Thus, under this line of theories or approaches, the development of the regions or local areas is determined by the aspects that affect the location of the industries.

According to Malizia-Feser (1999), local economic development theories based on location aspects also centralize the analysis on whether differences in growth between regions or geographical areas can remain over time or be exacerbated in the absence of intervention by the government. On the other hand, these theories postulate that local areas or regions of lesser development or depressed can benefit from the diffusion of industrial growth of other local areas (or regions) concentrating investments in infrastructure and businesses in certain locations that have a greater potential for increase. The greatest limitation of localization theories, of economic geography and of space, is the incidence that technological development and telecommunications have had in reducing the costs resulting from localization, in particular the impact on transportation costs. On the other hand, other factors not related to location such as quality of community life and economies of scale are having greater importance than traditional location factors such as the size of the market and the existence of natural resources (Blakely-Bradshaw, 2002). The works that are based on the existence and exploitation of economies of scale have been introduced by Krugman (1995) and form the basis of the New Economic Geography.

The problem of the allocation and distribution of the results in a market economy in the neoclassical theory is that in said allocation or distribution the regions or geographical areas are not distinguished. Consequently, the concepts of this theory can be applied indistinctly at the level of countries, regions, and local areas. The differences in regional development or between geographical areas within an economy according to the neoclassical theory are explained by the existing barriers caused by the interventions of the different levels of government and by the market distortions existing in regions. In the absence of these barriers and distortions, interregional flows of mobile and goods and services factors lead to convergence in:

i) factor returns;

ii) the growth rate and the level of GDP of the regions (Bingham-Mier, 1993, Blakely-Bradshaw, 2002). The model of the economic base from the perspective of neoclassical theory has been elaborated by Mcgregor-McVittie-Swales-Ping Yin (2000).

In this regard Bartik (1990) argues: "The regional economic development policy should focus on correcting the failures of private markets to achieve efficiency of these. The main distortions that need to be addressed by regional economic development policies are:

involuntary unemployment and underemployment;

agglomeration economies;

the externalities resulting from the research activities;

imperfections in financial markets, human capital and information. The policy of local economic development focused on the failures or distortions of the markets has two advantages over the traditional approach and the so-called 'new wave' of local economic development policies. On the one hand, the concentration of policies on activities that the private sector can not do allows the government to better use its scarce resources. On the other hand, the policy goals are subject to measurement according to the analysis of benefits and costs. The limitations of LED policies based on market failures are three. The first is that there are information problems for determining some of the benefits of government interventions. Overcoming this limitation requires local governments to pay greater attention to the generation of information and statistics. The second is that politics focuses on problems of efficiency and not distribution. As a consequence, an appropriate cost-benefit analysis requires including the distributive problems of the intervention. The third is that it does not take into account the benefits and costs that may result to other regions. Overcoming this [last] limitation may require interregional analysis". (Bartik, 1990: 361); (Bartik, 1990: 367-368)

Subject to the limitations of the method for evaluating the effectiveness of the State's policies on LED (Reese-Rosenfeld, 2001), among the main proposals that derive from the analysis of the government's policies for LED, the following stand out:

Policies for local economic development (LED Policies) require having: general and specific defined objectives; ways to evaluate or monitor the effectiveness of the instruments; and programs implemented by the various estates of the State. The defined objectives require establishing "goals" of the process variables of the LED process;

Since the beginning of the 20th century, the literature on LED policies has followed three types of fashions or waves of intervention. The first wave had the general objective of attracting investment to the geographical areas determined based on the allocation of the location factors of said areas. The second wave has as a general objective the internal development of the geographical areas based on the internal growth of said areas. The third wave has as its general objective to influence specific sectors under industrial strategies and internal to the geographical areas;

In general, there is no systematic evidence to support that LED policies have been effective in developed and developing countries (Meyer-Stamer, 2003);

Mayer-Stamer (2003) and Bartik (2003) suggest a list of LED policies with the objective of having greater effectiveness of these. Meyer-Stamer (2003) focuses on localization policies. These policies are classified into three types:

a) generic location policies that aim to generate a favorable climate for investment and business in general;

b) strategic location policies that aim to promote certain industrial sectors through clusters; and

c) reflective localization policies that are located between the two previous types of policy and have the objective of generating a climate of reflection of the agents in the determination of their actions within a specific geographical area. Bartik (2003) focuses on specific instruments and programs that are more effective. Among the main instruments / programs highlighted by Bartik (2003) are:

a) prosecutors;

b) employment programs;

c) programs that eliminate market distortions;

d) programs to attract investment and create business;

e) the programs that affect small businesses; e) the programs that develop the technology;

f) those programs that sustain development in a sustainable manner.

1.2.4 Impact of economic agglomerations and competitive advantages to the global economy

Competitiveness is highly marked by innovation as the most important force in recent times for the development of countries, understanding the development process as a set of innovations that transform production processes and sustain the evolution of the product in conditions that favour the interest groups where it is located and the preservation of the environment (Da Costa, 2010, p 12). At the business level, innovation has facilitated the leadership of companies, the research performed by Professor Michel Porter has found that this leadership has occurred mainly in very particular regions, nations or industries, through its companies and the different actors that conform (Sölvell, 2008: 13) giving rise to the concentration, agglomeration or cluster in certain geographical spaces fostering the generation of innovations and significantly impacting their competitiveness.

The agglomerations or clusters have been the subject of much research, since they have been an important mechanism to achieve competitive advantages. For this case, a conceptual analysis of clusters called clusters or industrial districts focusing on the global footwear sector as a framework to deepen the factors of success and not success that have influenced.

Creation of competitive advantages through agglomerations. In the last three decades, the social and economic system has become more and more flexible has been influenced by two new great characteristics: technology and the internationalization or globalization of the activities of companies (Guerrieri & Pietrobelli, 2004: 2). These two major components become paths of access to the future, which facilitate the development of competitive advantages, which have been identified through future studies such as strategic foresight, facilitating the construction of future scenarios that have guided and will continue to guide industry and organizations towards their competitiveness (Pena Castro, 2012: 22).

Other relevant research has based the theory and basic concepts on competitiveness, integrating them into a model that has been used successfully in many countries and regions of the world, and explained where the sources of a country's sustainable prosperity come from within the country. global economy, which come from sectors and segments of specific sectors (Porter, 1990: 33). According to the latter author, the conditions for the sustainability of competitive advantages are identified in the following way:

• The specific source of the advantage: lower order advantages and higher order advantages.

• Number of different sources of advantage available to a company.

• Constant improvement and improvement. Of the above conditions, the third is the most important given that through constant change new advantages are created that competitors will only achieve if they develop extraordinary improvement capacities. Additionally, through the competitiveness model proposed in the Porter Diamond, the determinants of a system to be competitive are established: Context for the strategy and rivalry, Conditions of the Demand, Related and support industries, Conditions of the factors (Porter, 2003, p 217). What can be identified in this model is the importance of the determinants given by the level of impact it has on innovation or improvements that can be generated in the clusters or clusters, and it becomes clear that the importance does not lie in the factors with what counts, if not the mechanisms that have to create new factors that allow the creation of competitive advantages. Cluster agglomerations emerge as one of the most important results of the research carried out by Professor Porter, given that in the ten countries where this research was performed, he found that groupings appear as a characteristic phenomenon in the most advanced national or regional economies. The fundamental thing is to articulate with the global economy and be competitive in different markets, but it requires the participation of the actors involved to establish the virtuous cycle of development, in order to improve competitiveness, productivity, innovation and the generation of new Business. The Institute of Strategy and Competitiveness of Harvard University has been working to give a clearer vision and a route to define competitiveness, given that many definitions have been raised and what has been created is a confusion, for which it proposes three components (Delgado, Kettels, Porter & Scott, 2012: 14):

• Goal orientation.

• Understanding of the most important factors.

• Ability to act.

Globalization and regionalization

From the beginning of the 70s to the present day, the change in the forms of competition in national economies and in the world market, the technological revolution and the expansion of services have as elements of the same process the relationship between Globalization and regionalization. What has determined and made evident the resurgence and importance of regional economies, as well as has highlighted the need to deepen their analysis and understanding. The importance of the regional economy today is evident, due to the reorganization of the world economy and the role played in it by the formation of supranational economic regions with the formation of economic Blocks and sub-national regional and local economic development. The economy of the countries as a whole has been fragmented, giving rise to the fact that only certain sub-national regions are linked to the global economy, narrowing the relations between the global and the local through the regional economies, particularly through local development. In addition, only certain regions and local economies stand out as centres for the generation of technological innovations and technical progress, as well as for flexible adjustments in the face of new competition. On the other hand, the expansion and technological revolution of services, transport and telecommunications and information technology have reinforced the pattern of globalization and economic regionalism, allowing integration between the locality and the region and the world economy. The new world economy is articulated through networks of world cities, which has constituted global networks of urban nodes.

The processes of national economic, political and social transformation have a close relationship with the behaviour of their economies and with their reorganization and regional and local functioning in the context of economic globalization and in the structural adjustment that national governments adopted for their economies national What undoubtedly is clear shows the need for study and understanding of the economic functioning of the supranational and subnational economic regions. Consequently, we consider that the process of globalization and regionalization of economies highlights the current importance of the regional economy, which is characterized by the following processes:

1) reorganization of the world and national economy through the formation of mega supranational and sub-national regions;

2) development and technological innovation in leading sectors of local or regional economic growth,

3) expansion and revolution of services and urban development.

Globalization and competitiveness

The resurgence of regional economies is the result of the globalization of the world economy. A fundamental part of this process has been based on the expansion of international free trade, driven by GATT agreements and the structural adjustment of economies, characterized by the liberalization, opening and privatization of economies.

Economically, the company in the process of economic globalization and international competitiveness is characterized by an intense mobility of capital, information systems and the multinational company.

The policy of structural reform or macroeconomic adjustment increased the exposure of local and national economies and companies to the process of globalization, which also implied its industrial restructuring and regionalization processes in response. This restructuring is characterized by the set of interventions aimed at reorganizing the economic and technological capabilities of the industry, so that it is able to compete internationally considering the social problems that this implies. In addition, the change in the nature of competition requires considering not only industries, but the change of territories as a whole.

Competition and regionalization

The new competition is characterized by the following four aspects:

1) Business unit that is distinguished by the search for continuous improvements in methods, products and processes, in its organization from the top to the base;

2) the importance of the production chain, that is, competitiveness depends on its suppliers;

3) the importance of the institutional sector, inter-firm cooperation facilities;

4) industrial strategy focused on production instead of distribution, aimed at forming markets, stimulating and carrying out complementary investments in support systems and encouraging the celebration of strategic alliances.

The relationship of competitiveness with the regions is established because these have a significant impact on their performance, due to differences in the allocation of regional and local factors and restrictions on their mobility, facilitated by the transport and communications revolution, which they were reflected in a decrease in transport and information costs, facilitating productive integration. So it is not risky to say that competitiveness depends both on technological and administrative factors as well as on regional and urban aspects, given that competition is the result of economies in the use of factors and cost reduction and therefore of its better sectoral administration and regional. Conditions that are met regionally at the sub-national or supranational level in the processes of economic integration.

Of the former, product quality stands out, as are short delivery periods, post-sale services, product differentiation, innovative product design, aggressive marketing, efficient distribution and logistics networks. What has been translated into a high rate of innovation, broad application of new technologies, short cycles of the production process and the life cycle of products, decrease in the proportion of the costs of unskilled and semi-skilled labour – trained. With all this, the quality and speed in the delivery of the merchandise has increased remarkably; considerable savings have been made in the use of inputs, due to increases in energy efficiency, as well as savings in waste material. As a result, the direct cost of production has been reduced as part of the total cost, while the cost of development and transaction increased. This was reinforced with new technologies, favouring changes in the organization and effects on production and competition.

Regionally, its implications are clear if we consider the competitiveness factors of the company, its intra-business relationships and its environment. Business competitiveness is given by product, technology, plant and equipment, production organization, purchasing and research and development: product design, quality control, hiring, training and administration of labour, marketing and distribution, financing, costing and accounting control.

With regard to the competitiveness of intra – firm relations, this depends on the efficiency of the suppliers of inputs and services, associated the production subcontracting networks in a hierarchical way or as a horizontal network of cooperation, through collective action. based on services. Finally, the company's environment is one of the fundamental elements for its contribution to competitiveness, which is essentially integrated in four types:

1) physical infrastructure – transport and communications;

2) human infrastructure – quality and productivity of the labour force;

3) institutional infrastructure: economic, legal, financial, export support institutions and technological development: standards, standards, testing, quality control, research and developmen;

4) the macroeconomic environment.

Spatial and regional implication is significant in each of the levels, being the most obvious the environment of the company, because the companies have little or almost no control over it. However, we believe that the first and second levels are not less important, especially in light of the recent production decisions of large companies and the integration of small and medium-sized enterprises in terms of direct and administrative costs relocation and vertical disintegration of their productive processes, reinforced by the reduction of transport and information costs, changing their location decisions.

One considered that the first level is under the control of the firm, although its preferences take into account the local and regional comparative advantages for decision making. With respect to the second level, companies are characterized by having indirect control that depends on the way in which the relationships between the firms are established to determine the cooperation mechanisms between them, which vary depending on the values, decisions and regional and local policies.

The creation of the world market for labour and production has been made possible by the fragmentation of the manufacturing process into multiple partial operations, resulting both from the supply of cheap labour due to technological changes and the organization of production, as well as from the development of transport and communication networks that have reduced the costs of distances and facilitated the productive integration, favouring that the productive activity is carried out in different geographical locations, based on the comparative advantages that they present. Direct foreign investment and the creation of multinational corporations have culminated this process thanks to the liberalization of the movement of capital.

Despite the dynamism of foreign direct investment, the effects on employment have not been as significant, because they have been offset by their reduction in local manufacturing companies due to imports that are internationally competitive. In addition to the negative effect of imported technology, which is characterized by being labour-saving and capital-intensive. On the other hand, only certain sectors have access to employment because of the training and skills requirements that investments demand for their operation. This penalizes and marginalizes less skilled workers. The effect of globalization is partial and in fact, according to the 1996 and 1998 United Nations reports on the least developed countries, it has been characterized by an increase in inequality in the distribution of income between rich and poor countries.

Economic globalization has been characterized by restructuring the functioning of the world economy and regionalizing it since the 80s, which modified the traditional patterns of economic interdependence among nations, particularly with regard to the patterns of economic international trade and investment. This has increased the competition of the world economy and the uncertainty in its performance, besides recomposing the national economies and their supranational and sub-national economic integration. In the former, the formation of regional economies is highlighted by the constitution of economic and trade blocs as measures for the protection and development of their economies and markets.

The most notable features of this supranational transformation are manifested in the following:

1) The change of exporting countries, through the promotion and development of the new industrial regions of East and Southeast Asia that displaced the traditional exports of the developed countries. The formation of economic blocks or mega world regions such as the European Economic Union, the North American Free Trade Agreement and Japan in the Pacific Basin.

2) the liberalization of the international capital market, integrated with traditional financial centres and characterized by their high volatility and by generating chain effects that threaten international financial stability. It emphasizes in the former socialist countries of Eastern Europe the promotion of the market economy and the opening of its economies to international flows of goods and capital.

3) Changes in international trade and investment patterns and in the technological revolution of services, mainly transport, telecommunications and computers.

In this respect, at the sub-national level, the following aspects are emphasized:

1) Economic and regional supranational reorganization, through the formation of economic blocs by competition in the process of globalization.

2) Adjustments and regional restructuring at the sub-national level, on the one hand, fostering technological innovation and local development, on the other, the economic adjustment of national economies within countries, due to the reconversion of the regional economies and their territorial impacts.

The economic domain of the so-called tertiary and quaternary sectors, mainly composed of financial, commercial, transport, communication services as well as property services.

In this respect, development and resurgence of urban centres as world cities, where the dynamic economic growth and the Mega-cities occur.

1.3. Theoretical concepts of competitive advantages and clusters

1.3.1 Evolution of the concept competitive advantage & economic clusters

Historic context

The world in the 1980s, as described by Servan Schreiber (1980), was in a crisis almost as serious as that of the 1930s, the successive oil shocks and the rise of Japan to economic power that could halt the oil industry. The United States of America and Europe were shaking the great industrial companies of the first world, the appearance of OPEC as a destabilizing element and a captor of the world's financial resources led to the search for competitiveness at all costs. In this respect, Servan Schreibre highlights the impact that microelectronics would have in the future. Michael Porter studies the phenomenon of competitiveness and develops his first theories that have a profound impact on the business world. That decade was the decade lost mainly to Latin America, where the countries were submerged in colossal external debts which increased due to being born oil importers and whose exports were basically commoditized commodities with vile prices. In some Latin American countries some companies took into account Porter's theories and tried to apply them, but as Porter already established, if the sector is not competitive, a company will hardly be able to do so.

Competitive Strategies

Porter (1980) in his book Competitive Strategy, begins by explaining that all companies have competitive strategies, some explicit and others implicit and that these strategies should be focused on the environment in which they dispute the market. The logic of Porter's competitive vision is that the strategic options of a company are limited by the environment, that is, the structure shapes the strategy, which is called a "structuralist" approach. This approach is based on the structure-performance paradigm of the economic aspects of the industrial organization, dominant in the strategic practice since the 1980s. Its analysis is basically outside the company. In his classic books "Competitive Strategy" and "Competitive Advantage" he analyzes the behaviour of the market and its impact on companies to describe what would be the strategies that companies can apply and then the way in which their structures must work in order to execute such strategies to be competitive.

Porter leaves from the base that the goal of the competitive strategy is to find a position within the sector of activity in which the company acts, in order to defend itself against the competitive forces of the market or to influence them in its favour. The first focus of Porter is the well-known five forces that direct competition in a sector,

a) Rivalry between existing companies,

b) Potential income from other companies,

c) Threat of substitute products,

d) Bargaining power of the clients,

e) Bargaining power of suppliers.

These forces were graphically represented in what came to be called Porter's Diamond. Vargas (1999) presents a new vision of the competitive forces of the market. First with a regrouping of Porter's forces and then with the introduction of two more taking into account aspects of the environment previously simplified or ignored by Porter. The proposal was that these forces can be classified into three broad categories: Current Competition, Potential Competence and Agent Negotiating Power – Frontier. The border agents represent the set of economic and social agents that make up the competitive environment of the company and that may have an obvious power or influence on the ability of competition of the company so it is necessary negotiate with them, on which the success or failure of the business strategy depends. It is also worth noting the inclusion among the border agents of the economic power of the owners, a force that can help to confront the other two border agents. Hence, this is its denomination of border agents, given its indirect external influence on business activity, but not least.

Satisfying the demands of the owners, the public power and society can be as arduous as playing in the markets with unexpected strangers. This set of forces constitutes a complex problem to be solved with flexible strategies and not just with the introduction of new products supported with intense marketing activity and a solid financial management. However, confronting the threats represented by these competitive forces again involves constantly observing the client's changing needs and discovering how to satisfy it. From the analysis of these forces in comparison with the strengths and weaknesses of a company can be found the actions tending to generate a strategic position that generates a competitive advantage to it, which is the application of the SWOT matrix – Weaknesses-Threats and Strengths-Opportunities. A second approach of Porter analyzes the six entry barriers of new competitors that the company could develop considering the sector to which it belongs, being these:

a) Scale economies,

b) Product differentiation,

c) Capital need,

d) Costs of change,

e) Access to distribution channels,

f) Disadvantages of the independent cost of the scale.

Turning to the analysis of the strategies that companies can adopt to face both competitive forces and barriers to entry, Porter proposes three generic strategies, which are:

a) Leadership in total cost,

b) Differentiation

c) Approach.

The first two are valid for the scope of the entire industry or the entire sector of economic activity in which the company is inserted, and the third that would be valid only for a particular segment. Returning to another Porter’s book, Competitive Advantage, one may note that already described greater characteristics of the differentiation strategy, explaining that with it the company seeks to show the dimensions or attributes that are perceived by their customers, in this case select one or more attributes, which can be the product itself, the system with which it is delivered, its superior quality, etc. The company that achieves the differentiation is a company superior to the average of its sector and will surely achieve a higher price than the competition, since this differentiation will make the client willing to pay more for the product. However, the price of their products can not be much higher than their competitors, because if the competitors enter with a much lower price they can cancel this difference. The differentiation is the one that must make the product unique in the market or at least be perceived as unique by the clients that procure it. In this other book, Porter also presents the value chain concept, which is basically the disaggregation into large blocks of business activity to try to identify in which activities the value that the company wants to be perceived by the client is generated and that makes him pay more than the cost of it. In short, the value chain seeks to obtain a competitive advantage that can be achieved by developing and integrating the activities of its value chain rationally in cost and differentiated from its rivals.

Different theoretical approaches try to answer the question of why are productive clusters formed and developed? Among them one can find:

1. Theory of location and economic geography

2. The theory of backward and forward chaining

3. The theory of interaction and industrial districts

4. The Michael Porter model

5. Those referring to natural resources

6. Those referred to the common substrate

Theory of location and economic geography

This theory tries to explain why activities tend to concentrate in certain areas and are not distributed randomly. It is known that this approach emphasizes the relative weight of the cost of transport in the final cost, which would explain why some activities are usually located close to natural resources, others are located near the markets that will supply, while that others can be established anywhere. Less well known, but of increasing importance, is that this approach also highlights the interdependencies of the raw material and the processed product and also the by-products, which make it easier to coordinate their movements in a single location. Examples: steelmakers and steelmakers, because their great interdependence induces the vertical integration of these productions. Another example is the processing activities that enjoy significant economies of scale, especially in complex processes such as petrochemicals, will tend to be installed in a country if it has a large national market or if it is close to important regional markets. Critical aspects for the location are the clarity, transparency and tradition of the legislation on property rights, as well as the stability and competitiveness of the tax legislation.

The theory of backward and forward chaining

This theory by Hirschman tries to show how and when the production of a sector is sufficient to satisfy the minimum threshold or minimum scale to make attractive the investment in another sector that it supplies (backwards chaining) or processes (forward). Percent, all activity is linked with others. These chains acquire significance when one investment attracts or makes profitable another in the same region.

The linkages depend both on demand factors (the demand derived from inputs and factors) and on their relationship with technological and productive factors (the optimum plant size). Likewise, the development of forward linkages depends substantially on the technological similarity. Since the learning and mastery of a technology has externalities if the processing technology is not too dissimilar.

The theory of interaction and industrial districts

The theory of interaction aims to explain the most favourable conditions for learning based on interaction, which, according to this approach, one would explain the success of the so-called "industrial districts" in many regions of Italy and Germany and in other regions worldwide. The interaction results in "repetitive games" that increase confidence and reduce, therefore, transaction and coordination costs. Likewise, the interaction accelerates the diffusion of knowledge and innovation, which is a social good internalized by the set of companies in the district. The intense interaction in a locality generates technological spills and external economies and of scale for the group of companies of the district that could not be internalized of being each company interacting with the others at a great distance.

The Michael Porter model

This author maintains in his work "the competitive advantage of nations" [iv] that the diversity and intensity of the functional relationships between companies explain the formation of a productive complex and its degree of maturity. These relationships refer to the four points of the diamond, that is, of support relationships, with producers of complementary inputs and suppliers of inputs and specialized factors.

The "diamond" of competitiveness: Basic conditions for the formation of clusters

The conceptual approach presented here highlights four basic aspects in the business climate that determine the competitive advantages of companies. By operating simultaneously in time and space, these aspects create the conditions for the formation and development of clusters in certain places.

They are the following:

The conditions of the factors;

The structure of the industry to which the companies belong, including the scheme of the rivalries they have with each other;

The conditions of the demand;

The situation of related industries and support.

The way in which these sources of competitiveness manifest themselves and how they interact with each other, allows us to explain how companies do to generate, maintain, or lose their competitive advantages. By focusing on these aspects, it is being recognized that companies do not exist in a kind of social vacuum, but operate in specific geographic, economic, social and cultural environments, and that the analysis of their current or potential competitiveness strategies, must consider certain essential characteristics of those environments, so that it has a true explanatory power.

That is why the analysis categories of individual companies, such as the four ways to increase productivity, are not enough to understand how a certain company developed its competitiveness. Before, it is necessary to analyze the conditions of competitiveness that exist in the business climate of the company, a business climate that is usually structured by complex networks of relationships between companies and public and private organizations. The four aspects that stand out allow us to find and understand the essential determinants of competitiveness, within the multiplicity of relationships, actors and causes that act in the business climate.

The sources of competitiveness

The main features of the four sources that, according to Porter's conceptual model, determine the competitive advantage of industries in specific geographic locations are explained below.

The conditions of the factors

The inputs of factors range from tangible assets, such as physical infrastructure, to information, the legal system and research institutes of universities, to which all competing companies turn. To increase productivity, factor inputs must improve their efficiency, quality and, ultimately, their specialization in particular areas of the cluster. Specialized factors are generally those that make innovation processes possible (eg, a specialized university research institute) not only are they necessary to achieve high levels of productivity, but tend to be less marketable or less easy to find elsewhere .

The schemes of strategy and rivalry

The context for the strategy and rivalry of the companies has to do with the rules, the incentives and the rules that govern the type and intensity of the local rivalry. Economies with low productivity are characterized by having little local rivalry. In these economies, most of the competition, if it is even present, comes from imports. In addition, local rivalry, if it occurs, is based on imitation. Price is the only competitive variable and companies keep wages low to compete in local and foreign markets. In this way, competition implies a minimum investment for these companies.

In order to move to an advanced economy it is necessary to develop a vigorous local rivalry, which must move from low wages to low total cost, which requires improving the efficiency of manufacturing and service provision. Over time, that type of rivalry must also evolve, starting with cost reduction strategies towards product differentiation strategies. Competition must shift from imitation to innovation and from low investment to high investment, not only in physical assets but also in intangibles (eg, skills, technology). As you will see, obviously, clusters play an integral role in these transitions.

The character of rivalry in a location is strongly influenced by many aspects of the business environment (eg, the factors available, the conditions of local demand). However, the investment climate and competition policies set the context. Things such as macroeconomic and political stability, the tax system, labour market policies that affect the incentives for the workforce to develop, and intellectual property rules and their application contribute to companies being willing to invest, to Improve your capital equipment, your skills and your technology. Antitrust policy, government rules on ownership and licensing, and trade and foreign investment policy play a vital role in establishing the intensity of local rivalry.

Conditions of demand

The conditions of the demand in the headquarters of the companies have a lot to do with the fact that the companies can and want to go from imitating products and services and of low quality, to a competition based on differentiation. Low productivity economies focus heavily on foreign markets. To progress, more demanding local markets must be developed. The presence or emergence of sophisticated and demanding national clients pressures companies to improve and discern existing and future needs, which is difficult to do in external markets. Local demand can also reveal segments of the market where companies can differentiate. In a global economy, the quality of local demand matters much more than its size.

Related industries and support

The location within a cluster can provide higher or lower cost access to specialized inputs, such as components, machinery, services to companies and personnel, compared to vertical integration, formal alliances with external entities or the "importation" of inputs from distant places. The cluster can be an inherently more efficient means of gathering inputs, provided that competitive local suppliers are available. If you do not have them, it may be necessary to stock up outside the cluster, even if this is not the ideal result.

Access to inputs supplied by members of the cluster may imply lower transaction costs than if they are obtained from distant sources. Stocking within the cluster minimizes inventory costs and eliminates the cost and delays of importation. It restrains the opportunistic behaviour of suppliers that charge excessive prices or do not comply with commitments, due to the adverse effect of poor performance on the reputation among the other cluster participants.

Providing services within the cluster facilitates communication, reduces the cost of adapting to the measure and facilitates the joint provision of auxiliary or support services, such as installation, debugging, user training, detection and correction of faults and timely repairs. These benefits are especially valuable for those advanced and specialized inputs that involve embedded technology, information or services.

Access to inputs within a cluster is also often more efficient or effective than vertical integration. Specialized external suppliers tend to be more cost-effective and more sensitive than the company's own units, not only in the production of components but also in areas such as training.

In modern economy, the greater depth and specialization of the suppliers that are within the clusters arises, above all, because they recognize market opportunities and reduce their risks, more easily, due to the presence of many local customers. What's more, the developed clusters not only consist of an industry, but of these plus related industries. These industries often resort to common or very similar inputs that expand opportunities for suppliers.

After having explained the four sources of competitiveness that make up the "diamond", we must ask ourselves: where are the clusters, within this scheme? What is expressed allows us to understand that clusters are a manifestation of these four edges of the diamond, or to put it another way, the interaction of these four sources of competitiveness is what creates a set of special conditions that lead to certain spaces being formed those frameworks of companies and organizations that have been called clusters. At the same time, the dynamics of the clusters influence the structure of competition, the supply of factors, the characteristics of demand and related industries and support; in this sense, they should be considered as a fifth facet of the "competitiveness diamond".

Specifically, clusters affect competition in three basic senses:

They increase the productivity of companies and the industries to which they belong;

They improve the innovation capacity of companies and industries, and in that way, they increase their productivity;

They stimulate the formation of new companies that expand and deepen the advantages provided by the cluster.

The reflection that the location has on the competition has been based on a relatively simple conception of how companies compete. Competition has been understood as fundamentally static and based on the minimization of costs within a relatively closed national economy. The competitive advantage in factors of production or in the most recent analysis, economies of scale are decisive. The competition is dynamic and is based on innovation and the search for strategic differences. There are three facts that contribute to reduce the importance of the provision of factors: the supply of factors of production is greater, as the number of countries open to the world economy has increased, the national and international markets of factors are more efficient, and the intensity of competition for factors has decreased. Now, narrowing relationships with buyers, suppliers and other institutions is serving to increase innovation. If extensive vertical integration was perhaps the norm in the past, vertical integration may now prove inefficient, useless and inflexible. In this broader and more dynamic conception of competition, location affects competitive advantage because of its effects on productivity and especially on the growth of productivity. Productivity is the value created by day of work and per unit of capital or material resources used. The generic factors themselves are usually abundant and easily obtainable. Prosperity depends on the productivity with which they are used and the factors are improved in a specific location.

Productivity and prosperity of a place does not depend on the sectors in which the companies located there compete, but on how they compete. All sectors can use high technology, all can be knowledge intensive. The expression high technology, which is usually used to refer to fields such as computers or biotechnology, has a dubious relevance. A more defining expression could be enabling technology, which refers to fields whose instruments improve technology in many sectors. The prosperity of a place depends on the productivity of the activities chosen by the companies based there. This determines the salaries that can be paid and the benefits that can be obtained. National and foreign companies contribute to the prosperity of a place, depending on the productivity of the activities carried out in that place. The presence of advanced foreign companies usually improves the productivity of national companies, and vice versa.

Refinement and productivity

Refinement and productivity with which companies compete in one location are influenced by the quality of the economic environment. Companies can not use technical logistical advances, if there is not a high quality transport infrastructure. Companies can not compete using a strategy based on providing exquisite service if they can not be done with well-trained personnel. Companies can not operate efficiently if they have to deal with a huge amount of bureaucratic procedures and negotiations with Administration officials, or if they are located in a place where the judicial system does not resolve disputes quickly and fairly. All these situations consume resources and time and do not contribute to improve the value offered to the client. The effects of some aspects of the economic environment, such as the road network, tax rates and the judicial system, influence all sectors. These areas that affect the entire economic system may represent the constraints that hinder competitiveness in developing economies. Both in the case of the most advanced economies such as. More and more frequently, in the rest of the world, the most decisive aspects of the economic environment are frequently specific to each cluster. The theory of clusters plays an important role both in the company's strategy and in economic policy.

1.3.2 Cluster models

The agglomeration in a region stimulates economic growth because it reduces the costs of innovation in the region, through the side effects of transaction costs. In turn, growth fosters agglomeration, since when innovative sectors expand, new firms tend to locate near them. Agglomeration implies that innovation and most productive activities take place in a central region. However, as new businesses are continuously created in the centre, some relocate production to the periphery. Among the advantages derived from agglomeration arise when firms form clusters of economic activity, are the particular development strategies in which they flow and through this area of ​​economic activity. This helps to accumulate the flow of information of new and innovative ideas among firms for the achievement of what they call scale of increase. With the establishment of a firm, there is always a fixed or average production cost for the firm based on (sources needed, labour, capital, rent etc.) for the firm's production. When this average production cost decreases as a result of the increasing total output of a product, it indicates a presence of economies of scale; the returns to the scale of increase and economies of scale can be used alternatively.

The agglomeration in a region stimulates economic growth because it reduces the costs of innovation in the region, through the side effects of transaction costs. In turn, growth fosters agglomeration, since when innovative sectors expand; new firms tend to locate near them. Agglomeration implies that innovation and most productive activities take place in a central region. However, as new businesses are continuously created in the centre, some relocate production to the periphery. However, we can find other advantages, as Örjan Sölvell (2008) points out. The advantages of the clusters lie in lower costs, including transaction costs (efficiency advantages), increased workflow and other factors (flexibility advantages) and greater knowledge and cooperation (advantages of innovation) Martin and Ottaviano (2001) they develop a model in which they incorporate an endogenous process of innovation and growth within the line of Romer (1990) and Grossman and Helpman (1991).

The introduction of growth results in a cumulative process that leads to geographic agglomeration. The agglomeration takes place when all the innovation activities and most of the production activities are located in the nucleus, but some productive companies that are in the nucleus move their production to the periphery. This is consistent with the empirical evidence of Audretsch and Feldman (1996) that shows that the geography of innovation and the geography of production tend to reflect one another, but not perfectly, since innovation activities are more concentrated in the space of production. As in the Krugman model, spatial agglomeration generates divergences in income levels. The clusters of world-class firms, instead of individual firms or simple industries, constitute a source of jobs, income and growth of exports. It also shows that the more spatially agglomerated an economy is, the faster it grows at the aggregate level.

Geography is important for growth. This approach is related to some of the current contributions that try to capture the spatial dimension of economic development through the fusion of the New Economic Geography (NGE) and endogenous growth models. Some contributions are those of Englmann and Walz (1995) and Walz (1996), which on the basis of the centripetal forces, of Krugman (1991) and Venables (1996), show that, with preference for the diversity of imperfectly tradable intermediate goods and factor mobility, the interrelationship between producers of intermediate and final goods can create a tendency for production and innovation to be grouped in one region, with an advantage in the number of intermediaries. The production costs of an industry decrease as the relative size of the industry that provides inputs in the same location increases.

There is a relation of the demand, given that the companies of the industry that are in a previous phase of the productive chain benefit from the proximity of the companies that buy them supplies. There is also a gear in the costs because companies that are at a later stage of the production chain benefit from the proximity of the suppliers (vertical linkages). They also show that the geography of economic activity is important for growth, even in the absence of local technological externalities. The mechanism that links growth and geography only takes place through market interactions. Fujita and Thisse (2002) found that growth and congestion go hand in hand, and the paper by Martin and Baldwin (2004) emphasizes the result that, taking into account the secondary effects of agglomeration, spatial agglomeration leads to economic growth. Brülhart and Sbergami (2009) considered the possibility that the effect of spatial concentration on economic growth may be non-linear and subject to other factors. They focus on two important hypotheses.

First, Williamson (1965) suggests that agglomeration is more important in the early stages of development. When transport and communication infrastructure is poor and the scope of capital markets is limited, efficiency can be significantly improved by the geographic concentration of production, but as infrastructure improves and markets expand, the The externalities of congestion could lead to a wider dissemination of economic geography. This context is consistent with the urbanization and growth model of Bertinelli and Black (2004), in which the growth of highly populated areas (cities), as well as the accumulation of human capital, is supposed to occur only there. The benefits of agglomeration dynamics must be weighed against the cost of agglomeration diseconomies (congestion, cost of land, deterioration of infrastructure, shortage of services, longer transfer time, among others). The relative importance of these two effects changes in the different stages of development. Geographical relocation of economic activity is slow and the processes of urbanization reversal tend to take a long time. Therefore, it is conceivable that countries will have a geographically concentrated economy after periods of rapid growth, and that concentration will remain at the optimum level. According to Williamson's hypothesis, agglomeration promotes growth in the early stages of growth, but has no harmful effects on economies that have reached a certain level of income. Second, Krugman and Livas (1992) suggest that the internal geography of countries (and therefore, agglomeration) matters more in closed economies than in open economies. Ades and Glaeser (1995), in a representative sample of 85 countries, find a negative correlation between partial openness and urban concentration, but remain skeptical about the existence of a direct causal relationship. According to the definition of Michael Porter (2000) a cluster is a group of interconnected companies that belong to a particular economic sector, which are close in a geographic space, and which are linked by common and complementary practices. The cluster can have geographic scopes that go from a region, a state or a city. But the concept goes a little further, the clusters are a vehicle for companies, government and local institutions to generate a constructive dialogue about modernization, offering a new mechanism of public-private collaboration. Cluster initiatives provide a new way of organizing economic development efforts, which goes beyond traditional efforts to reduce the costs of doing business and improving the overall business environment.

When concentrated in clusters, companies may be more interested and engaged than they would be when efforts necessarily gravitate around general issues, such as fiscal policies and export promotion. The company-government-university dialogue moves to a more concrete level in which pertinent and timely measures can be taken. Cluster initiatives can not only focus attention on policy issues but can also reveal and help address certain issues in the private sector. Porter considers the following aspects as potential advantages of the clusters: the common understanding of competitiveness and the role of clusters in generating competitive advantages; concentration on the elimination of obstacles and restrictions, for the benefit of the companies that make up the group; a broad participation of the companies that make up the cluster and associated institutions; private sector leadership; special attention to personal relationships and a bias towards action.

Another important aspect in the definition of a cluster is institutionalization. The improvement of the clusters is a long-term process that must ensure the continuity of its effects beyond the effort in a single moment. For the development of the above, it is necessary to institutionalize the concepts, relationships and links between the business advisory groups. In the private sector, new or revitalized business partnerships often assume leadership roles in the continuous improvement of clusters. In government, the improvement of clusters can be institutionalized through an appropriate organization of government agencies, through the collection and dissemination of economic statistics, and by the control of the structure and composition of business advisory groups (Porter, 2000). The most popular definition of cluster is that which is related to the industrial cluster. This is defined as the limited concentration of similar or complementary economic activities that belong to a specific industrial sector and that have active channels for communications and dialogue transactions. In addition, they share a specialized service and labour market infrastructure and face common opportunities and threats (S A. Rosenfeld, 1997).

Under the previous definitions, the cluster seems to include all the other terms, that is, it is a form of agglomeration in a common geographical space that facilitates business interaction and generates economies of agglomeration. However, the cluster is more limited to an economic sector as such and not as diverse sectors as defined for agglomeration per se (location economies). In other words, the location of economic activities in agglomerations constitutes the platform for the emergence of clusters, that is, groups of complementary and interconnected companies that generate specialized productive centres with competitive advantages (Ortiz, working paper). For the present, the definition of a cluster will be the one adopted above, that is, the spatial concentration of companies with the same economic activity in the service or industrial sector and located in the urban area of ​​the city of Bogotá. Under the definition of the Cluster of Professor Michael Porter, it is interesting to ask: Why develop a cluster? Work experience in many countries indicates that companies operating within a cluster enjoy additional competitive advantages in at least 3 areas:

1) A cluster promotes increases in the "productivity" of companies and in a more sustained manner. This happens because:

– Mass attraction of buyers of a certain type of product in a particular city or region

– Training adjusted to the specific needs of the sector

– Creation and availability of specialized labour

– Easy access and variety of high quality raw materials – improvements regarding product quality

– Services specialized in machinery and equipment used by companies

– Financing adapted to the conditions of the sector

– Healthy but intense competition among the cluster companies, which drives the productive improvements.

– Common strategic North and adequate alignment of public incentives

– Mutual trust that makes transactions between local companies belonging to the cluster more efficient and faster

2) A cluster stimulates greater innovation in companies and in support institutions. Companies within a cluster can perceive the new needs of buyers more clearly and quickly. Companies in a cluster can discern buyers' trends faster than isolated competitors can. Participation in the clusters also offers advantages in the perception of new technologies and the possibilities of supplies. Companies can be exposed to richer knowledge about the evolution and availability of technology, components and machinery, services and marketing concepts and the like.

3) A cluster creates a more conducive environment for the creation of more and better companies of all sizes. The incentive to enter the market is often greater in the clusters because there is better information about the opportunities for business. The existence of a cluster is a sign of an opportunity. Individuals working in or near a cluster more easily perceive new gaps to fill in relation to products, services or suppliers. After acquiring this knowledge, individuals can more easily leave established companies to start new ones designed to complement the observed needs. In a cluster the barriers to entry are lower than in other places.

Other types of agglomeration economies

According to the literature, there may be different types of agglomeration economies depending on the way in which the firms are grouped or the geographical scope.

External localization economies: Refers to the common location of a number of independent economic activities that belong to the same industry (or cluster). These types of economies can be attributed to the organization by Clusters.

External economies of urbanization: refers to the common location of economic activities that belong to different sectors and are not related. The sources of urbanization economies include the scope of a range of public services, transportation, communications and infrastructure, the existence of a variety of business services and access to different kinds of labour supply. These economies are best described as a function of the magnitude or diversity of production that may prevail in urban settlement. Productivity in activities increases as a result of the presence of public and private services, and improvements in infrastructure.

External economies of complex activity: They result from the common agglomeration of a particular set of activities that exist in a productive chain3. The above has to do with the backward and forward linkages of an activity with respect to other activities. It is an agglomeration economy if businesses obtain productivity gains because they are located jointly with suppliers and buyers.

Collective actions for the development of innovation capacity at territorial level

The important advances in the new information and telecommunications technologies (ICT) have facilitated the rapid transmission of data and information, inviting in some cases to spread the simplistic idea that territorial differences tend to lose importance in this current phase of development global economic system based on knowledge. However, this idea -basically centered on the possibilities of ICT- does not take into account the social, institutional and organizational dimensions that intervene in the learning processes in the different territories. Therefore, a more detailed view of the current phase of economic development indicates that the advance of globalization and the greater integration of national and regional economies accentuates, rather than minimizes, the importance of the different territories, which are also , much more exposed than in the past to the growing competitive demands, and must address endogenously, respectively from their different socioeconomic and institutional structures, the introduction of substantive innovations in the productive base and business fabric. In the current phase of knowledge-based economic development, competitive success is determined by the quality of the added value of knowledge incorporated into products and production processes, as well as in the networks of companies, agents and territories. In this respect, the classic sectoral division of the economy tends to blur or to lose analytical sense since the important thing is the degree of incorporation of added value of knowledge in the different economic activities.

At the same time, for companies, communities, regions and territories in general, there is a pressing need to invest a greater proportion in education and training of human resources, as well as to ensure in a more effective manner the adequate orientation of the training offer of human resources according to the existing needs in each territory. In this regard, the paradigm of production in the current phase of economic development, by putting the emphasis on knowledge, is highly dependent on the way in which the different territories are able to lay solid foundations to boost collective learning capacity. Learning refers to the construction of new skills and the acquisition of new technical and institutional capacities, and is not limited to obtaining greater access to information. Easier and cheaper access to information tends to reduce the economic value of coded forms of knowledge and information. But this does not guarantee access to tacit, non-codified forms of knowledge. Likewise, it does not ensure the competence to acquire and value both codified and unspoken forms of knowledge, that is, the ability to learn. Thus, it is the ability of individuals, companies and territories to learn and adapt to rapidly changing circumstances, which determines their competitive capacity in the current economic context.

On the other hand, innovation is not a linear process in which new products and processes are generated by R & D institutions working in isolation to the market. On the contrary, innovation is a social process, of a cumulative and interactive nature, in which knowledge users interact with knowledge producers. In this way, both actors (users and producers of knowledge) learn from each other, through learning through interaction. In the same way, innovation does not happen only through breaks or radical leaps, but also progresses, generally, continuously, within the trajectory followed by the production process, where numerous product and process improvements are introduced. Given the social nature of learning and innovation, these processes work best when the actors involved are close to each other, allowing frequent interaction, as well as an easy and effective exchange of information. Likewise, companies grouped territorially frequently share a common territorial culture and identity that facilitates the process of social learning. Much of the knowledge transmitted among these local actors is tacit rather than codified, which confers advantages to the companies that participate in these territorial networks. This language or common communication code, facilitator of the interaction, can also be supported, in addition, by the creation of territorial institutions, which help produce and reinforce the rules and conventions that govern the behaviour of local businesses and the interaction between them . The set of territorial institutions that contribute to the innovation process make up the "territorial system of innovation", which consists of institutions, both public and private, that produce systemic effects that stimulate local companies to adopt standards, expectations, values , attitudes and common practices and, in short, a culture of innovation that is reinforced by the social learning processes mentioned above. Among the institutions involved in territorial innovation systems, we must mention those related to R & D infrastructure (universities, technical schools, laboratories, among others), technology transfer centres and market analysis centres that provide services to companies, the territorial entities of training of human resources, business associations, supplier networks, chambers of commerce, among others. Other institutions and policies that define the incentives that guide the decision making of companies, such as the capital market entities, the labour market, the regulation of working conditions, the incentive, are also part of territorial innovation systems of the participation of workers in business decisions, and other conditions that affect the possibilities of learning within and between companies. An "innovation system" consists of a set of elements and relationships that interact in the production, diffusion and development of a new economically useful knowledge (Lundvall, 1995). An innovation system is, then, an interactive network composed of:

• Companies of different sizes integrated in a "cluster" (sectoral group of companies);

• Relationships between these companies within the "cluster";

• Institutions of higher education and research linked to the productive sector;

• R & D laboratories (public, private or mixed) and technology transfer agencies;

• Chambers and Business Associations;

• Human Resources Training Centers;

• Departments and government agencies.

Territorial learning capacity depends, then, on the construction of an adequate institutional environment to stimulate private and social learning among workers, companies, networks, groups of companies and public bodies in that territorial area.

Territorial or regional capacity to learn ("learning regions") focuses mainly on the contributions made by social capital and the trust in the support of networks of relationships between companies and the interactive learning process. In this way, for the innovations to be successful, the social and cultural context of both the research infrastructure and the network of relationships between companies and territorial actors are crucial. The promotion of a territorial environment favourable to innovation depends, then, on the capacity to promote cooperation relations in the different territories. This approach to innovation systems highlights, therefore, the territorial influence of the same, respectively the relevance of the institutional, social, political and cultural aspects that are present through economic activities.

All this reflection about the scope of the development models of districts or territorial projects and clusters or networks of companies should serve to see how to advance from them towards territorial development strategies in order to achieve with it the best results from the point in view of the competitiveness of productive integration projects. In this sense, the main elements to consider are the following:

• Evolution of the local division of labour through close observation of local labour markets.

• Connection of this local division of labour with the evolution of the main core of local needs, that is, the orientation of the territorial supply of human resources training towards local needs.

• Evolution of the local learning process and integration of contextual knowledge with new codified knowledge.

• Presence of a sufficient number of operators capable of playing the role of versatile intermediaries among the different specialists of the district, and the creation of territorial forums and public-private entities for territorial economic development.

• Formation of a network of local markets.

• Training and circulation of values ​​and knowledge coherent with competitive productive experiences (promotion of the local entrepreneurial culture).

• Development of local, formal and informal institutions, for the promotion of participation and associations of the local population.

• Formation and reproduction of elements of territorial identity or sense of belonging.

As one can observe, in the projects of productive integration (local productive systems of small companies), the capacity to innovate depends on the collaboration of numerous territorial actors that perform different functions and have different levels of competence and knowledge about the productive process and local employment. The operation of the production process, as well as the transfer and acquisition of skills, has to do, therefore, with all those actors (Pezzini, 2006). In these approaches of performance of the local productive systems the action strategy shares, then, as characteristics, a unit of territorial intervention, the public-private cooperation of actors, the active participation and the search for consensus among them, and the given priority to the provision of business development services for small and medium-sized local businesses through the creation of innovative territorial environments or contexts.

The development of ICT and the emergence of knowledge-based models In general, two types of clusters are recognized, which could be determined as the new main base of knowledge activities: Techno clusters These groups are oriented towards high-tech, well adapted to the knowledge economy, and usually have as nucleus renowned universities and research centres. Clusters based on know how emphasize more traditional activities that maintain their advantage in the know-how over the years, and for some of them, over the centuries. They are often industry-specific. Apart from these, there are other types of clusters that have emerged recently due to the incorporation of new technologies, especially as a result of the appearance of the web 2.027, and the recent adaptation needs that arise as a result of the new changes. Some examples of these new clusters are the Virtual Cluster, the Open Cluster and the Knowledge Cluster: Virtual Cluster Due to the need to create value chains with partners that provide skills, it is necessary to be able to select the best partners and, in case of not having them in a region, it is necessary to implement platforms that help companies to look for them outside of it. Therefore, it is important to create a methodology which identifies all those processes or key activities to search, evaluate and select members of the different industrial sectors. The members integrate what is called the "virtual industrial clusters" (CIV). The methodology proposes that the CIV "s integrate different companies that offer specific products, processes or technologies, which are evaluated in order to identify their strengths and weaknesses and in this way know what their key competences are and, at the same time, define projects of improvement that could be implemented for the development of the same company and the cluster as a whole. The information of the members of the cluster is stored in a database which can be explored by the "virtual industrial agents", who act as brokers 28 since their responsibility is to identify a market need and bring together different members of the virtual industrial clusters for the creation of a value chain.

Open clusters. The portion of value is not only in the business of the company, therefore, companies are starting either to share their resources with third parties in order to create value, or to use external resources in their business models. These new business models have been defined by Chesbrough as "Open Business Models": This model bases its success on the fact that currently, companies need to accelerate the value creation process and each time, they are more aware that they do not have all of them the resources necessary to compete successfully in more complex environments and do not have the capacity to develop them on their own. At the same time, they are aware of the difficulties involved in capturing value created by their own resources, many of them underutilized, or even not used commercially.

Knowledge clusters. The knowledge cluster can be defined as a nervous system that promotes the competitiveness of a country. As Wang points out using a metaphor, the skeleton of an economic system are infrastructures, muscles are the companies and the nervous and neuronal system are the relationships that are established. Therefore, the knowledge cluster brings together both companies and institutions that make up the entire basic system for its development. This set of entities, grouped around the concept of knowledge cluster, represents a greater competitiveness for companies and organizations. This system makes it easier for companies to get the necessary management knowledge to make them efficient and productive. In some countries, especially the Asian continent, this system works effectively and the quality of the agents allows for a collective learning spiral. In any case, this type of structures has the following advantages:

Sustainability: Promotes the development of institutions that facilitate dynamism, establishing the foundations of a knowledge society.

Contextualization: Allows knowledge to be applied in a contextualized

Creation of own knowledge: The system also allows • the creation of knowledge in management adapted to realities.

Learning capacity: A learning process is generated that • will allow to better respond to new challenges and opportunities. Quick response: The system guarantees the speed of response, which is almost as important as the quality of it.

Opportunity: At present there are so many changes that working cooperatively is a guarantee to address them.

Cooperation between agents is key to achieving learning capacity and rapid response to problems and opportunities.

Knowledge society: The effective maintenance of a cluster of this nature is a decisive step towards the knowledge economy. For the system to become an engine of change and adaptation, the knowledge cluster, following the principles of knowledge management, works in such a way that it is learned together. The groups are formed at the proposal of the partners and have an open character where the key is the transfer of knowledge and the joint learning of new approaches and methods.

1.3.3 Introduction to Porter’s diamond model

Michael Porter followed an empirical study conducted in ten countries with different characteristics in relation to size, location, culture, government policy, among other factors; he designed a model that explains the process to develop competitiveness. This study defeats the traditional thinking that was had. Porter, (1990) states that the success of a nation (or region) is due to the competitive advantages and not the comparative advantages it holds. Therefore, it is pertinent to reaffirm that the success of a nation is determined by the industries; therefore, the advantages of one nation over another are not based on factor endowments and comparative costs, but on strategic choices and the ability of industries to innovate and improve. Although Krugman, (1994) has criticized Porter's model, because it does not establish the difference between the competitiveness of a company and the competitiveness of a nation, because nations do not compete in the same way that companies compete, including if a company that can not pay suppliers, salaries, etc., is taken to the limit, it will surely disappear, while a nation can not disappear just because it is not competitive.

On the other hand Moon, Rugman and Verbeke (1995), after arguing that Porter's model is incomplete because it does not include the role played by multinational companies. They have developed what is known as generalized double diamond, in order to address some weaknesses of the Porter diamond that, according to the authors, this is not convenient to apply in small economies. The most significant difference has to do with the activity of multinational companies both inside and outside the country, since this has a direct impact on all the determinants of the diamond and therefore on competitiveness. Therefore, the concept of national competitiveness is defined as the ability of companies to maintain the added value in the long term despite international competitiveness. In addition to the above, Cho (1998) makes an important contribution to the model by adding that the mission of human factors should be strengthened, and recognize that the factors vary in importance when they move according to the levels of development achieved.

In this regard, it should be mentioned that the Harvard Institute for Strategy and Competitiveness (ISC), directed by M. Porter, has already identified more than 800 clusters in 50 countries with this template. A complete list of the clusters identified by the ISC can be found on its website. (University of Development, 2005). The diamond of competitiveness as it is also known as the Model developed by Michael Porter, is presented in this section, because precisely this Model in its basic form will be the main methodological element for understanding the analysis and proposal of the Cluster Model for the Cameron industry in Sonora. Porter, (1990) considers that the sectors with capacity to compete depend to a great extent on the environment and conditions that surround it, recognizing that they are not isolated entities. The interrelation of four groups of attributes are determinants that must be considered for the capacity of competitiveness of the companies; These determinants are: the conditions of the factors; the conditions of the demand; suppliers and related industries and support; the strategies, structures and rivalry of the companies. In addition, two more elements must be added: chance and the role of the government.

Conditions of the factors.

It refers to the position of the country (region) regarding the characteristics and availability of human resources and infrastructure necessary to compete in the sector. In order to understand the relationship of these factors in competitiveness, it is clarified that the factors can be grouped into generic categories: Human Resources, from which the quantity, capacity, labour cost, geographical location and culture must be taken into account. In addition these resources can be broken down into categories according to needs. Physical Resources, at this point it is important to consider the abundance, quality, accessibility and cost of the material and natural resources. Equally important are the weather conditions, geographic location and size. Knowledge resources, refers to the capacity and resources to generate scientific, technical and market knowledge that matter for the goods and services of the industry. The sources of these are the universities and trade associations, private or state that generate innovation.

Capital resources, the availability and cost of financing; While it is true that the globalization of markets encourages nations to have similar conditions, there are still notable differences. Infrastructure: Type, quality and price of transport services, courier and parcel service, communications, funds transfer, housing, among others; they are determining services of the competitive advantage. Regarding this point, Porter (1990: 126) states: "The competitive advantage derived from the factors depends on the degree of efficiency and effectiveness with which they are deployed". So it is important to highlight that the mere availability of resources, does not guarantee success to be competitive, but depends on the quality of the factors and the way in which they are used; in fact, more important than the endowment of the factors at a given moment, is the process of creating and perfecting them.

Conditions of domestic demand.

This is the second determinant of competitiveness considered in the "Porter diamond" model. This section explains the influence on the competitiveness of domestic demand. Regarding the composition of domestic demand, it can be seen that a segmented internal market usually has demanding buyers, who also demand innovation for development. In terms of the size and pace of growth of demand, it can lead to competitive advantages, especially in those sectors where economies of scale are applied to boost investments in research and development. However, Porter points out the need to be careful, since a large internal demand is not an advantage unless it occurs for segments that also enjoy demand in other nations or the existence of local or multinational buyers, internationalization. If the buyers of a nation for a given product or service move from one place to another or belong to a multinational, they create an advantage for the nation's businesses because domestic buyers are also foreign buyers.

Related and support sectors.

This third determinant refers to the contribution to competitiveness that is promoted by the availability of suppliers or related sectors with high international quality standards. The presence of competitive industries in a geographic area creates conditions of advantage in the industries that are at the end of the value chain. One of these advantages is the most efficient, fast and preferential access to low-cost inputs. It should be mentioned that simple access to the availability of machinery and supplies is not enough, so special attention must be paid to the efficiency in the use of these inputs (Neme, 2006). In addition to the above, Porter (1990) comments that it is preferable to maintain a competitive supplier industry to have foreign suppliers; because the proximity of the technical and administrative staff, as well as the cultural similarity facilitate the flow of information, which translates into low transaction costs. However, in developing countries, due to the limited presence of competitive suppliers, companies are forced into vertical integration processes, which is good given that innovation is encouraged, an effort must also be made to develop a horizontal integration, to promote economies of scale and scope, as well as scientific and technical exchanges.

Strategy, structure and rivalry of the company.

This is the fourth determinant of competitive advantage that explains the context in which companies are created, organized and managed, as well as the nature of the rivalry between them. Porter (1990) assures that the circumstances in each nation affect the way in which companies are managed and compete. He adds that there are multiple aspects in a nation that influence the way companies are organized and managed, some aspects are the attitudes of workers, the rules of individual or collective behaviour, education, social and religious history among others.

Complementary elements. To complete the theory (Porter, 1990) there are two variables that can significantly influence the national environment, these are chance and the Government. The coincidence that during the study carried out by Porter, it was found that some casual events played a more or less protagonist role. Without a doubt, it must be recognized that some incidents can occur that have an impact on the competitiveness process, and that are also beyond the control and capacity of influence on the part of companies or the Government; Some examples are inventions, technological discontinuities, significant changes in financial markets, unsuspected increases in global or regional demand, wars, natural disasters, among others. However, (Porter, 1990: 178) the fact that a casual event becomes a competitive advantage depends on the national diamond. In other words, a chance event can alter the relationships of the determinants of the Porter model; even, what can be considered a coincidence, can be capitalized as a competitive advantage, by those who have a more favourable "diamond".

Government. The role played by the Government in this model is of great importance, because of the ability to influence the "diamond". The laws, norms and policies of the Government have a positive or negative impact on each and every one of the determinants of competitiveness. It is important to emphasize that the Government has the ability to influence to increase or decrease the chances of achieving competitive advantage, but not to create it. In this regard, Porter (1990:183) says: "Government subsidies that free companies from the pressures that would improve and perfect them are counterproductive", "Government policy will fail if it remains the only source of competitive advantage national".

1.3.4 Role of the Government in creating the competitive advantages & clusters

The degree of government intervention and its policies play a decisive role in the competitiveness of a region. The real role of the government is to serve as a catalyst for innovation and change, to question static positions, to force the system to constantly improve, and to encourage companies to compete to accelerate the innovation process. The government must influence the four determinants of the diamond, creating a fertile environment for the development of internationally competitive industries. The government should focus its efforts on the creation of specialized and advanced factors. It can also influence the conditions of demand, with the issuance of more rigid regulations on products, safety and the environment. Also, the way in which the government plays the role of buyer in the economy can stimulate or numb the national industry. Finally, the government should limit any type of barrier to local competition, promote increasing investment rates, especially in training, innovation and fixed assets, and reject monopolistic or oligopolistic tendencies, as this favors markets in which inefficient companies are located.

The role of government in the Porter Diamond model is to act as a catalyst and challenge, to encourage companies to lift their aspirations and move to higher levels of competitive performance. It should encourage companies to lift their performance, stimulate the primary demand for advanced products, focus on the creation of specialized factors; and stimulate local rivalry by limiting direct cooperation and enforcing anticompetitive regulations. The State performs various functions in an economy. The most fundamental function of the State in the economy is to achieve macroeconomic and political stability. It does so by establishing stable political institutions, a permanent basic economic structure and a sound macroeconomic policy, which include prudent public finances and low inflation. The second function of the State is to improve the overall microeconomic capacity of the country by increasing the efficiency and quality of the general factors that businesses need and which are identified in the diamond as a prepared workforce, accurate and timely economic information and a adequate material infrastructure.

The third function of the State is to establish general microeconomic rules and incentives that govern competition and that promote productivity growth. These rules and incentives, present throughout the diamond, should incorporate a competition policy that promotes rivalry, a tax system and industrial and intellectual property laws that encourage research, a fair and efficient legal system, laws that provide protection to consumers, rules on corporate governance that establish the responsibility of managers for results and regulations that promote innovation instead of preserving the existing situation. To achieve economic progress, these functions are necessary, but they may not be sufficient. From the moment in which the State begins to carry out its fundamental functions, a fourth function that is to facilitate the development and improvement of the clusters becomes important, the public authorities should try to reinforce the development and modernization of all the clusters, and should refrain from choosing between them.

Economic progress is halted in the same way by inaction and ignorance of the steps that must be taken. There are many forces that oppose economic improvement and modernization, from obsolete conceptions of competitiveness to entrenched interests whose prosperity depends on maintaining the status quo. The process must involve all stakeholder groups and must be above government policy. It should cover the general conditions that affect all sectors, as well as the improvement of clusters. Ideally, this process should occur not only on a personal level, but also at the level of regions and cities.

The role of Government in Competitiveness

Neither intervention nor laissez-faire is appropriate for the role of government in economic development. This thinking is simplistic.

Equality of conditions is not enough.

The opening of the market is not enough.

The elimination of negative government roles is not enough.

The government has two functions: setting standards and public investment roles.

Macro progress is insufficient if the micro does not improve. The missing key in government policy is often microeconomic reform and microeconomic capacity building.

Economic and social policy are mutually reinforcing and must be integrated.

The role of Government in competitiveness

The decentralization of economic policy and sub-national units is fundamental for competitiveness in national, medium and large economies

Government functions and responsibilities change as an economy becomes more advanced. Government has an important role in advanced economies but these are different than in a developing country

Government can not create competitiveness on its own. It must create a commitment with companies, universities, institutions for collaboration and with other microeconomic institutions.

No government or leader is capable of transforming an economy, each

ONE must see oneself as a manager of a long-term process.

Political leadership is vital for competitiveness. Due to its construction, it requires a long-term perspective, collaboration with different actors and the possibility of gaining public support for policies that disrupt the state.

The government must achieve acceptance and political legitimacy to succeed in economic development

The pursuit of macro reforms and the opening of the market will create a political reaction

Micro and social reform are crucial to gain acceptance and political support

Determinants of competitiveness

Natural resources create a basis for prosperity but true prosperity is created by productivity in the use of endowments.

Macroeconomic competitiveness establishes the potential for high productivity, but it is not enough.

Productivity depends on improving the microeconomic capacity of the economy and the sophistication of local competition.

Clusters in Developing Economies

Improving the general business environment is essential but, cluster development requires to reach average income levels.

Developing economies should improve traditional clusters (including agriculture), never abandon them.

The TNCs existing in the country should be treated as nodes for economic development

The best way to retain companies is to be part of the cluster.

The attraction of foreign direct investment should focus on existing and emerging clusters, not generalize attractive to be located in the country.

Incentives to attract companies should lean towards training, infrastructure and other areas that improve clusters and generate local assets vs generalized subsidies and tax benefits.

Free trade zones or export processing zones should be organized around the clusters with government regulations designed to foster links with the local economy.

A formal process for cluster development is an important component of economic development.

Private sector guide.

Roles of the government through calls, support and participation.

Financing for the cluster evaluation and the formation of IFC's based on clusters

Impediments of the Government to form a cluster

Developing countries

Tolerance to monopolies, cartels, protectionist regulations and competitive state enterprises.

Rigidity in vocational training and university curricula making the alignment with the cluster complicated.

Incentives or requirements to locate in free trade zones or free zones isolated from the local economy.

Regional development policies that artificially distribute businesses and investment in locations to benefit depressed regions.

A legacy of the planned economy model for development that strongly distorts economic geography.

The global map of clusters in oil-gas sector

The abundance of resources promotes besides the investment activities and research and innovation activities. Regarding the technological trends of the industry, the vast majority of countries are investing in technologies that allow to achieve five strategic objectives:

expand future supplies of conventional hydrocarbons, for which it is necessary to have access to technologically more demanding areas such as deep waters, arctic regions, small deposits in known areas and desert regions;

economically profitable production of non-conventional sources of hydrocarbons, in particular heavy crude, extra-heavy, bituminous, oil sands, oil deposits and nonconventional gas.

improve the percentages of primary and secondary recovery of existing reserves.

reduce the costs of exploration, production and development with the application of new more efficient methodologies, and finally, (v) sharply reduce the environmental damage caused by exploration and production activities, thus improving the image of the oil industry worldwide.

Likewise, the price encourages oil companies to find new deposits, expand their activities and optimize their refineries. This expansionist trend has generated a shortage of skilled labor, machinery and specialized services, increasingly increasing production costs. The attractiveness of business environments that expect to attract investment from the oil industry will depend to a large extent on the ease with which regions provide resources relevant to the industry value chain, and favourable and stable conditions for investment.

Petroleum and gas cluster in Calgary, Canada.

The energy sector of Alberto has a significant importance. The province has significant oil and gas assets and resources. This Cluster consists mainly of the central offices of oil and gas extraction companies, drilling companies and gas pipelines, as well as technical and support services. In 2000, the cluster employed close to 50,500 people, respectively 10% of the total jobs in the region. Major members of the cluster include TransCanada Pipelines Ltd., Petro-Canada, Shell Canada Ltd., PanCanadian Petroleum Ltd., Alberta Energy Company Ltd., Husky Energy Inc., Talisman Energy Inc., Nexen Inc., Suncor Energy Inc., and Canadian Natural Resources Ltd.

This grouping has been a driving force of the regional economy, not only because of the investments and the growth of the industry, but also because it has acted as a catalyst for the development of other clusters in the region, including such strategic groupings as telecommunications and cell phones, information technologies and geometrics. Employees, skills and technologies have shifted from the oil and gas cluster to new or newly initiated businesses in other industries and played a major role in the diversification of the regional economy. Previous employees of the oil and gas cluster established a significant number of ICT and marketing companies, among others. As a result, trends towards Outsourcing in the industry increased; in this direction, geological and technical services currently account for the second most important business concentration of all Calgary's activities.

In recent years, numerous mergers and acquisitions have reduced the number of service sectors and drilling companies. While there is concern on the one hand regarding the negative impact that this trend would have on regional employment and the number of central offices, there are also strong expectations that consolidation could bring new ideas and new people to the region, bringing as a result, bigger and stronger companies, probably better prepared and ready for the global market.

The Calgary Oil and Gas Cluster faces some significant challenges, mainly those related to human resources. Its shortage includes the full range of skill levels, from the specialized technicians of initial level to professionals of highly specialized staff and engineers. In this direction, the government of the province has formed a Sectoral Council to bring together all those involved in the industry, including pipeline businesses and training and training institutions.

The second major challenge is to cover the existing gap in research and development on energy issues. The research programs of the different institutions of Alberta do not have a shared vision regarding their strategic approach. Some industrial leaders see the need for a shared strategy for energy research, with a strong emphasis on innovation, which would make the most of all the province's energy resources. The short-term approach would be to extract more energy and higher value-added products from heavy crude and "bitter gas", while the next step would be to focus on the extraction and conversion of the next generation of "oil sands" and the development of "coal bed methane" or methane from the coal layer. Eventually it could also focus on the transition to clean fuels and the so-called "Hydrogen Economy".
This non-cluster is not currently in the focus of the C-Prosperity Initiative (a plan for the economic development of clusters in the region), since it is considered as already established and consolidated.

Oil and gas cluster of the Northern Sea: United Kingdom-Norway.

The UK-Norway Cooperative Working Group for the North Sea was established to improve trade cooperation between the two countries in all aspects related to the oil and gas industry. The United Kingdom and Norway share most of the natural resources in oil and gas located in the North Sea, but historically their hydrocarbon sectors have evolved to a large extent, as independent systems. Recognizing the growing importance of alliances and partnerships, these countries have come together to establish a working group that represents the interests of all links in the supply chain with representatives of operators, contractors and governments. The Working Group identified that close cooperation and the sharing of best practices would bring greater efficiency and incremental value (over $ 2 billion), through capital savings, reduced operating costs, lower commission costs, and an accelerated development. The benefits would extend to all elements of the supply chain. Among the specific recommendations made in the spirit of developing UK-Norway cooperation are:

Development and Assistance to Mutual Fairs

Sponsorship and training between both countries

The Guide to Compliance with Regulations

Establishment of a single database with respect to suppliers.

Improving competitiveness is one of the main goals of the gas and oil industries in the United Kingdom and Norway, especially since the costs of discovering and producing a barrel in the North Sea have become significantly more expensive than in the North Sea. Gulf of Mexico or Malaysia. The Vision for the Gas and Oil industry set by both countries for 2010 has been defined as: "Industry and Government will work in partnership to deliver faster, smarter and more sustainable energy solutions for the next century"

To achieve this goal, the LOGIC (Leading Oil and Gas Industry Competitiveness) was established, an industrial institution dedicated to the development and promotion of the principles of Supply Chain Management or SCM (Supply Chain Management), as well as cooperation in the interior of the industry. Especially LOGIC would incorporate:

Development of Supply Chain and promotion of best practices in the SCM.

Areas of collaboration between operators and contractors and within operators and contractors.

World Class Benchmarking; for example, a comparison between the practices in the Continental Shelf of the United Kingdom and those of the Gulf of Mexico in aspects related to the design and manufacture of parts for the industry, as well as in the control of operating costs LOGIC used as a working model the successful Formo Industrial one -of the automotive industry. It would be a central resource in the development and dissemination of the SCM in a pre-active manner in the supplier segment for the oil and gas industry, and would also provide invasive consulting services to disseminate the use of such techniques throughout the supply chain. Operator teams and contractor representatives would identify potential benefits of cooperation in non-competitive areas.

Operators, contractors and suppliers could cooperate in different ways:

Timely coordination of drilling in exploration, development of fields and closures or stoppages to minimize the impact on business cycles.

Shared inventories.

Strategic well planning.

Extranet for the Industry, with a view to providing a virtual trading environment for buyers and sellers, and as a means to share information (about inventories, engineering data, waste, etc.).

Shared logistics

Reduction or elimination of commissions in purchases.

Additionally, the teams found other areas for potential cooperation among contractors:

Wells and drilling services (referred to jointly maintaining spare parts for drilling, use of drilling fluids, replacement of shared equipment, etc.)

Establishment of floating reserve of employees A new website was launched in May 2012, containing details for contacts with more than 3,000 companies in the United Kingdom working in the Gas and Oil supply chain. This site, prepared and maintained by the Department of Trade and Industry in Aberdeen, is open to global buyers seeking detailed information and contacts with companies based in the UK's hydrocarbons sector. It is possible to search by company, product or key personnel and contains a large number of hyperlinks to companies. This site is part of the Oil and Gas Portal, under the auspices of governments of different countries.

The Working Group also recognized the importance of having a trained, well-trained and motivated workforce, which is why it recommended the establishment of the National Training Organization (NTO), a group that would serve the oil and gas industry. Its mission would be to provide training and develop first level skills, as well as strategic direction. This would ensure that the oil and gas industry could work under policies and personnel development programs, with a coherent and comprehensive training that covers all the links of the chain (Up- Middle-Downstream). The Working Group also identified a set of technologies available but not disseminated. If applied, an immediate impact would be achieved in improving the recovery of hydrocarbons in existing wells.

Among such technologies are:

Rotary drilling in special.

Multilateral wells.

Drilling under balance.

Smart Wells

Facilities automation techniques.

Other technologies that also needed to be developed later to put back into production the reserves in marginal fields, such as:

Monodiometer wells.

High resolution seismic and reservoir dynamics modelling.

The Working Group also developed a Business Plan for a new Technological Industrial Facilitator, which would manage communications between technology providers and their users.

This was expected to stimulate collaboration and ensure that the risks and benefits of the application of new technologies are shared. A study by the Department of Commerce and Industry, and the Working Group, also identified new business opportunities in the environmental area, emerging from the new regulations in this regard. Companies in the supply chain that provide non-harmful products to the environment or services of this nature for the oil and gas industry had the opportunity to diversify their activities and enter markets located outside the sector.

Trends in the oil and gas industry

It has been noted from the extractive sector in general that "operations often take place in the most disadvantaged areas of the world, confronting some of the most vulnerable children with profound and diverse impacts". Inherently, the potential impacts on human rights of Oil and gas operations are often linked to their proximity to local communities. With regard to children, knowledge of the specific impacts of operational activity has been limited. The feedback suggests that to a certain extent this is due to the remote location, or even to the open sea, of the farms. However, this may be changing due to the increased use of new technologies for land extraction. This trend and other ones in development are discussed briefly below. Re-exploration of solid ground and shallow water using new technologies: Some unconventional technologies are encouraging the increase of exploratory activity on the mainland. These include hydraulic fracturing, also known as "fracking", which is carried out in conjunction with horizontal drilling and which allows capturing more natural gas than other techniques. Public concern about the effects of fracking has been substantial. As described in a Sustain Analytics report published in 2011, "although part of the social concern may be based on exaggerated estimates of possible impacts, the truth is that these impacts have already generated significant risks to the reputation of certain companies, and they will continue to do so." The report identifies several factors that have the potential to affect human health and other rights. Among them are emissions that can affect air quality and climate change; industrial development in rural communities; the consumption of water and possible contamination of surface and groundwater; as well as an increased risk of earthquakes. Increased collaboration agreements between national and international oil companies: The 2017 Review of Resource Economics notes that 90% of the world's oil reserves and 73% of production are controlled by national oil companies (state-owned enterprises).

National oil companies are increasingly becoming associated with international companies for a variety of reasons, including:

• States have other priorities that they must also take into account and may prove impossible justify or finance the exploitation of resources.

• States must respond to their citizens and therefore are less likely to risk public funds in exploration activities that may not prosper. Signing collaboration agreements with international companies allows them to manage risk.

• States may lack the knowledge and technical expertise necessary to extract resources and geopolitical problems may restrict the ability of companies to learn from their peers about the extraction of resources.

Joint ventures, however, can expose international oil companies to potential association with human rights violations committed by a government. For example, the case involving the Union Oil Company of California (Unocal) and an associated Burmese state company, which generated the application of international human rights standards in a US court: "The reasoning that state participation entails a series of expectations regarding human rights supports both the decision regarding the Unocal, as well as the national normative measures. This example of application of international human rights standards by courts as a sample of the practice of the states supporting the private companies responsible for international legislation when there is sufficient state participation."

Exploration in the Arctic: This is expected to increase, with oil and gas companies in the lead , which could have important impacts on the nomadic indigenous communities and their children that live in the Arctic.

Clusters and competitiveness in oil and gas field

The Clusters in oil and gas field reflect an important influence of externalities / links (linkages) between the firms and institutions involved in the competition. In this way, they:

• increase productivity and efficiency

• stimulate and allow technological innovations

• facilitate marketing

Now, within the context of globalization, the competition between regions and localities is changing, of course their relation between them also: more competition, more specialization and regional concentration, and more linkages are required (clusters include links between firms and industries, fundamental for competition and, especially, for the direction and pace of innovation). In this regard it is important to clarify what a cluster is not: a cluster is not a guild or a cooperative.

Clusters of oil and gas s a political economy tool

The clusters are an important economic policy tool in that they allow us to address a new way of thinking about the economy and the organization of efforts in this regard; a better alignment with the reality of the competition and the sources of competitive advantages; reform the role of the private sector, government, trade associations and education and research institutions; gather signatures of all sizes; create a forum for constructive dialogue between business and government; and it is a means to identify common opportunities and not only shared problems.

In this respect, they:

• Create a forum for a constructive dialogue between business and government

• Gather signatures of all sizes

• It is a means to identify common opportunities, not just common problems

• Provides a guide for economic and social policies

• Clusters include links between firms and industries, fundamental for competition and, especially, for the direction and pace of innovation

• Reform of the role of the private sector, government, trade associations and education and research institutions

Innovation: The Levels of Innovation, Research and Development contribute to generate greater productivity and therefore greater prosperity in the region. Innovation, research and development are stimulated through specific investment aimed at strengthening these processes within companies. Firms within a cluster usually have a greater ability to more quickly perceive trends or new market needs. They benefit from the concentration of companies since they generate knowledge that other companies can take advantage of. In addition, these benefits can be used in the investment again. The companies located in a cluster have a better possibility to perceive more easily new technological possibilities, of operations or dispatch. The closeness of the relationships between the companies in the cluster, the ease of making visits and the frequency of face-to-face interaction allow the members of the cluster to have early access to new technological developments, the availability of components and machinery, concepts of service and cutting-edge marketing, etc. In general, the suppliers that are also part of the cluster, are involved in a committed manner in the innovation processes within the cluster, thus ensuring that the companies will obtain the inputs they need.

Entrepreneurship: Clusters provide an incentive to generate entrepreneurial activity by providing better and more information about an opportunity. Entry barriers are lower in the clusters than in other places, since the assets, skills, supplies and labour needed to start a new business are at hand. In the same way, the financing institutions are already familiar with the cluster and can offer lower loan rates due to the lower risk they perceive. The exit barriers can also be low; Given the high specialization of the industry, the companies do not engage in a wide range of activities, but rather concentrate on a few, requiring an investment and a moderate number of assets, which are very specific. Entrepreneurship also benefits from the acceleration of the learning curves of companies due to the ease with which some firms learn from others, the possibility of exploiting them reciprocally.

Visions projected for the oil and gas field in the year 2032:

• By the year 2032, the most competitive departments will have high levels of quality of life and the highest per capita income in the country, thanks to the dynamism of its economy, reaching through productive sectors that respect the environment, innovative in goods and services of high added value, with a business environment that encourages local and foreign investment and promotes the integral and equitable development of the region.

• It will have consolidated a development model based on Clusters, which will be highly competitive and recognized nationally and internationally thanks to the production and commercialization of quality and innovative goods and services.

• It will have a sustainable development based on productive and competitive companies, based on training, entrepreneurship, business strengthening, innovation and technological development, associativity, and access to capital resources.

• Consolidate its identity and territorial image in the world; it will be one of the four main destinations for foreign investment.

• By 2019 it will have a consolidated dynamics of articulation and interaction between the productive sector, the universities of the region and the state organisms to create transfer and adapt knowledge that drives innovation in the region.

At present, the process of globalization has made the competition between regions change. Now it demands more competitiveness, more specialization and regional concentration, more linkages, which include links between firms and industries with innovation guidelines. Under these new demands in search of greater competitiveness supported by innovation that generates local development, employment and improvement of the quality of life, decided to focus efforts on the development of the Oil and Gas Clusters. This implies a reorganization of the guidelines in the productive processes, which is reflected in an increase in productivity and efficiency, which, in turn, stimulates technological innovations. The main objective of the department's authorities in terms of economic development is to make this one of the most competitive "prosperous" worldwide, characterized by high levels of per capita income and quality of life. The clusters include links between firms and industries, fundamental for competition and, especially, for the direction and pace of innovation. Reform the role of the private sector, government, trade associations and education and research institutions With this great initiative the department will have a sustainable development based on productive and competitive companies, based on training, entrepreneurship, business strengthening, innovation and technological development, associativity, and access to capital resources, which will boost worldwide economy with much more efficient and competitive production processes.

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CLUSTERS AS PRODUCTIVE AGGLOMERATIONS IN THE ERA OF GLOBALIZATION

Name

Department

University, city, country

Abstract

The business group is an economic, legal and social phenomenon of great relevance in the contemporary world due to the current economic structures and needs that have required the creation and development of association instruments, companies’ concentration, aspects that allow integration in vertical and horizontal production and marketing scale, as well as formation of groups, multiplication of complex organizations among others, in order to join efforts to more efficiently achieve the initial purposes of each individual who is involved in business. These concentrations, in addition, allow achieving a higher level of competitiveness, a key tool to face the national and international markets.

Based on the foregoing, we are in the presence of superstructures of economic progress that generate a true business evolution that, however, lacks adequate regulation. Among us, the regulation that exists deals, sometimes partially and superficially, with the concept of controlling company and its subordinates or controlled ones, the control or subordination figures and business group, without being able to harmonize globally and comprehensively all that this phenomenon implies and, if that were not enough, it leaves aside all other forms and instruments that the economy, commerce and market have created, which impose themselves as a reality whose importance transcends the normative provisions without giving the formulation of new regulations.

Keywords: collaboration; clusters; expansion; concentration; B2B system; optimization; intermediation; joint venture; partnerships; sustainability area; innovative products; globalization; purchasing power; foreign investment; dynamism.

Economic Groups in the era of globalization

Defining concretely the concept of the Economic Group is a complex task, because there is no known continental legislation that contemplates it. What we do find, both in comparative and national law, is that different terms are presented, such as collaboration groups, transitory unions of companies, economic interest groups, groups of companies, business groups and so on that in our opinion they are much more restricted than what we, in this article, have denominated as Economic Group. (Peattie, 1995) Due to the foregoing, we will now delimit the figure of Economic Group, which, we believe, encompasses all the terms enunciated above. In our conception, the main elements of what we have decided to name the Economic Group regard the following definition "It is a group or meeting of companies, or a set of companies that maintain their independence and autonomy". (Biggadike, 1979: 36)

The notion of a company that is behind the generality of constitutional norms coincides with the definition of organized activity for the production of goods and the rendering of services that we have just mentioned. Along with the company concept, the constituents recognized pluralism in all the forms of satisfaction regarding human needs, without privileging one over another because of their specific structure or of its property form. Thus, the term covers equally the private company (as an organized form of production), the solidarity and the state. It is essential to mention that an entity is established as a common organization or as an economic unit. (Morck, Shleifer, Vishny, 1988: 293-315)

Clusters as productive agglomerations

In this section, the concepts of productive agglomerations must be commonly defined through the specialized literature while their salient characteristics would be presented below. Among them, the most cited form is the "cluster"; but it is not the only one. Therefore, the purpose is to make clear the scope of each of them for this work, beyond the varied terminology used in various sources to reference them. In very broad terms, Chen and Jackson (2015) defines the productive articulation as "a collaboration agreement between economic actors, aiming to generate a competitive benefit" and adds that, therefore, this concept is understood as every modality of positive and voluntary interaction (not imposed, neither casual) between actors of a determined productive community. Independent economic actors establish collaboration agreements to develop actions that point to results that could not be achieved if they acted in isolation" while the internal organization of the productive articulation should be able to make compatible the cooperation, collaboration and competition processes among independent agents. (Delgado, Porter, Stern, 2014: 1785)

Clusters represent concentrated groups of companies or companies dedicated to economically independent branches and activities. (Wessner, 2014: 87) This situation is highlighted when capital is invested in non-ordinary activities for one of the following two reasons: (Lefort, Walker, 200)

(a) because the companies are weak and therefore it is safer to diversify the risk by investing capital in other solid companies dedicated to other branches of business or economic activity

(b) because the companies are strong and large, aspects that simply help the manager to decide to invest the companies’ surpluses in different activities.

It is often said that the origin of this type of formations is due to the principle of risks division. (Lins, Servaes, 1998: 72) But while this is true, one could mention that in general, this has been the case at the levels of non-dominant companies that, unable to have aspirations to develop a considerable vertical or horizontal expansion, considered their own security threatened by competing companies with a great degree of concentration. (Armstrong, 2015: 22) The larger companies, on the other hand, try first to exhaust all their possibilities in the struggle for predominance within their own activity, and then if, in the search to place their surpluses, they decide to diversify towards other horizons. (Porter, 2008: 96-98)

In addition to the forms of integration that one observed earlier, it is important to mention that the Internet revolution has generated a new world of theories and ways of doing business. Thanks to the B2B system, companies can manage business directly with each other, saving administrative and financial costs of distribution and commercialization, creating a new concept with economic, legal and social implications. (Rauyruen, Miller, 2007: 22-24) This new concept of doing business generates certain concerns regarding its implementation and the consequences that this could cause. One considered that B2B basically consists of electronic markets in which companies create online exchanges or sites for the purchase and sale of goods and services between them. On the one hand, B2B is an advantage that allows an optimization of the businesses by producers (Webster, 1995), to the extent that costs are reduced by not resorting to the usual distribution and marketing instruments. In addition, it is a way for local producers to promote themselves in international markets and thus, to sell their products, avoiding the cumbersome methods that made it so complicated to be part of that market. (Keller, Kotler, 2016) On the other hand, there are the intermediaries, respectively the individuals in charge of representing foreign companies, distributing and marketing their products. For these people, the B2B is a disadvantage, to the extent that their work would become obsolete, since they would suddenly be competing directly with distributors and suppliers that present advantages of agility, efficiency and support from manufacturers or producers, situation that would seriously affect the generation of businesses in the local area. (Rhodes‐Kropf, Viswanathan, 2004: 2685-2690)

On the other hand, there are the consumers, whom we could consider the big winners (Alderson, 1965), because the B2B can be a positive benefit mechanism, insofar as they would receive the goods and services in a direct way, without having to endure the abuses of the intermediation. (Wessner, 2014: 22)

Finally, the main difficulty is represented by the control of government manifested on entities, responsible for ensuring compliance with tax, exchange and competition rules.( Howard, 1994: 112) In the latter case, there could be a potential violation of the rules on free competition assuming the existence of agreements or horizontal alliances or among competitors, in response to the beneficial reduction of transaction costs between these traders. Such agreements could violate the general laws of the market (supply and demand) because there is a form of controlled competition. (Goworek, McGoldrick, 2015: 66-68) Thus, it can be said that two individuals are similar if they belong to the same class, group, conglomerate or cluster. If this objective is achieved, it will be necessary that all the individuals, as parts of the same conglomerate, should resemble each other and be deferent from the individuals that belong to another conglomerate. Therefore, the members of a cluster will enjoy common characteristics that differentiate them from the members of other clusters. Therefore, this grouping method consists in identifying groups of heterogeneous segments among themselves and as homogeneous as possible within each group.

The Joint Venture

The joint venture to which we are going to refer, which is the one that is known and used in Europe, is a union or grouping of two or more people, natural or legal, without the purpose of forming a company, to perform a specific operation in search for benefits, assuming the risks in a personal manner. It is a particular form of contractual organization for the realization of a single project. In this system there are partnerships, which cover all existing relationships between two or more people, who contribute efforts in a business or common activity, based on the distribution of the results obtained. Then, one may observe the special partnerships, which are those whose object is reduced to a single activity or commercial operation. The latter are properly a joint venture. The economic function of the joint venture is clear: it allows several companies to perform projects that require immediate execution but that due to their purpose, exceed the capacity of the companies considered in an individual manner. Additionally, it offers a wide range of advantages, especially in developing countries, as it manages to merge national and foreign capital to perform projects, which otherwise would not be possible. (Brennan, 1970: 420) In general, the joint venture is an indispensable means to achieve a large concentration of financial, economic, knowledge and skills for the realization of large-scale construction projects and in general of any project and work that involves great efforts. Taking into account these economic advantages, we conclude that the joint venture generates practical effects against the competition and the consumer. (Yang, Hao, Cai, 2015: 171-176)

Associative benefits of clusters

The analysis focuses on the main benefits of clusters: the collective learning that derives from the interaction, the experiences shared by the members of an agglomeration and the construction of the knowledge executed by them. At the same time, this openness between companies encourages exchange and a mentality aimed at generating new ideas that can be transformed into innovative products brought to market and becoming competitive advantages. In this respect, they are usually presented as the benefits of grouping themselves to the following: Survive during globalization; Generate greater added value; Have greater purchasing power; Exercise bargaining power in the market context; Access to new markets; Greater use of available resources; Increase in the relative power of the associates; Facilitates learning among partners.

Also, groupings can generate the following impacts: Encourage the creation of new productive chains; Access new markets; Increase negotiation capacity; Deepen the division of labour; The level of cooperation of companies around the value chain is increased; Stimulate the formation of new businesses that should contribute to the cluster’s expansion; Increase innovation capacity through the introduction of organizational improvements, new techniques and products; Act as a factor of attraction to foreign investment; Generation of external economies of a technological and economic or pecuniary nature. In addition to the inward benefits of the cluster, the phenomenon of associativism also generates important externalities in the community of which it is a part or in which it is inserted.

CONCLUSIONS

Cluster analysis is a set of statistical methods and techniques that allow the description and recognition of different groupings that underlie a set of data in order to classify or divide into more or less homogeneous groups, a set of individuals which are defined by different variables. The main objective of the analysis of clusters consists, therefore, in obtaining one or more partitions of a set of individuals, based on certain common characteristics. These characteristics will be defined by the scores that each of them has in relation to different variables.

This type of economic agglomerations has the best chance of continuing indefinitely with its expansion, since it is easier for them to obtain capital because they imply a lower risk for those who contribute in a financial way, they have more capacity to adapt because they are able to replace their products more quickly in an obsolete manner, they are able develop research in the most advanced areas, they have the capacity to continue absorbing national and regional companies that interest them and, finally, they have the means to attract the best human resource that serves its purposes.

The dynamism of economy and commercial structures nowadays made us stop to analyze in practice its operation, to then make a classification of what we believe are the species of the mentioned structures. In this respect, the above presentation would serve as a basis for the subsequent analysis of the implications that economic agglomeration may generate against two elements of competition law: consumers and competitors.

BIBLIOGRAPHY

Alderson, Wroe. Dynamic marketing behavior: A functionalist theory of marketing. RD Irwin, 1965.

Armstrong, Gary, et al. Marketing: an introduction. Pearson Education, 2015.

Biggadike, E. Ralph, Corporate Diversification: Entry, Strategy and Performance, Harvard University Press, Cambridge, 1979

Brennan, Michael J. "Taxes, market valuation and corporate financial policy." National tax journal 23.4 (1970)

Chen, Jing, Randall Jackson. Economic Clusters Research: An Annotated Bibliography. No. Resource Document 2015-04. 2015.

Delgado, Mercedes, Michael E. Porter, Scott Stern. "Clusters, convergence, and economic performance." Research policy 43.10 (2014).

Goworek, Helen, Peter McGoldrick. Retail marketing management: Principles and practice. Pearson Higher Ed, 2015.

Howard, John A. Buyer behavior in marketing strategy. Prentice Hall, 1994.

Keller, Kevin Lane, Philip Kotler. Marketing management. Pearson, 2016.

Kotler, Philip, Gary Armstrong. Principles of marketing. Pearson education, 2010.

Lefort, Fernando, Eduardo Walker (2000), “The Effect of Economic and Political Shocks on Corporate Governance Systems in Chile”, ABANTE, Vol 2, No.2, October.

Lins, Karl, Henri Servaes (1998) “Is Corporate Diversification Beneficial in Emerging Markets?” Working Paper, University of North Carolina.

Morck, Randall, Andrei Shleifer, Robert W. Vishny. "Management ownership and market valuation: An empirical analysis." Journal of financial economics 20 (1988).

Peattie, Ken. Environmental marketing management: Meeting the green challenge. Financial Times Management, 1995.

Porter, Michael E. Competitive strategy: Techniques for analyzing industries and competitors. Simon and Schuster, 2008.

Rauyruen, Papassapa, Kenneth E. Miller. "Relationship quality as a predictor of B2B customer loyalty." Journal of business research 60.1 (2007).

Rhodes‐Kropf, Matthew, Steven Viswanathan. "Market valuation and merger waves." The Journal of Finance 59.6 (2004)

Webster, Frederick E. Industrial marketing strategy. University of Texas Press, 1995.

Wessner, Charles W. "Growing innovation clusters for American prosperity." Summary of a Symposium. Washington DC: National Academies Press, 2014.

Yang, Zhenshan, Pu Hao, Jianming Cai. "Economic clusters: A bridge between economic and spatial policies in the case of Beijing." Cities 42 (2015).

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CHAPTER 1. A HISTORICAL AND THEORETICAL REVIEW OF ECONOMIC AGGLOMERATIONS

1.1. A historical perspective of economic agglomerations

1.1.1 Appearance and evolution of the concept

The internationalization of the economy has brought with it a process of construction of new territorial dynamics. Concepts that historically have served to generate all the theoretical and political construction of territories, as a nation, region and locality today are rethought to enable a change of strategies in a commercial world and productively of high competitiveness. Thus, nation states allow the entry of supranational scenarios, such as economic unions or even smaller categories such as free trade agreements or tariff agreements. The importance of the nation state has yielded, in part, in favour of the territorial blocks and the regions and even other minor instances have resurged, from the point of view of the territory’s administration of provinces or municipalities, in order to enable more efficient economic, political and social management, not only for the territory but for the population that inhabits it. These policies include the processes of federalization and centralization that characterize international geopolitics today.

Agglomeration: the road to the theory of regional development

This journey through the attempts to conceptualize the region as a category of spatial analysis of development and economic growth is nothing more than a mapping procured by the sciences and scientists and that has allowed to maintain an atmosphere of discussion on a theoretical topic that has not had enough importance in the definition of economic and social policies. Thus, the theory of regional development has been concerned to respond, without consensus successes, of course, a question that is simple and enormous complexity: Why a region, a city grows and develops more than others? The answer, from the nineteenth century, developed by the German School from the initial works of Von Thünen (1826), was directed to investigate the issue of agglomeration economies as the reason to explain to understand the issue of regional development. These pioneering works had as a fundamental determinant the land, transport and, in general, the issue of the ordering centralities from which growth and development were radiated. To these were added all the economic theory of the generation of export bases, which not only started from Smith (1776, 1996th edition) but managed to stand out from Keynesianism to enable a vision of the fundamental role of external and internal demand in the promotion of agglomerations. Since then, the theory of regional development (based on geography, economics and other sciences in recent years) has maintained a constant discussion on the determining elements of development and spatial location with the expansion of productive activities and services that characterize the social agglomerations.

Paraphrasing Fujita, Krugman and Venables (2000), “both the establishment of a region and its economic success are and have been a fate of destiny”. But in the midst of uncertainty and the low precision of theoretical concepts, the definitions of politics are assuming a rather interesting praxis: the agglomerations, the theme of cities, has had a constant aspect in the different theoretical approaches: there are the company and the production unit which, in the end, competes in international markets, but there are also series of endogenous and exogenous elements created and consolidated in order to generate particularities over other companies or industries. In this respect, these characteristics determine the degree of agglomeration or the capacity of a territory to become a captive of productive resources. Thus, the locality takes on all the possible relevance and becomes the space where the competitive action and the social, political, economic and institutional practice that make the territory the central axis of development and economic growth materialize. With the current tendency of the economy to globalize, competition tends to be considered not only between companies but between territories. Indeed, the capacity for innovation that at the same time is essential to deploy to compete advantageously, is closely related to the articulation and the local environment of companies, an environment that includes not only infrastructure and adequate public services but also quality of life, human resources and a Cooperation culture.

In the previous context, one of the problems that is at the centre of the "New Economic Geography" concerns is that of the deep disparities exhibited by the economic performance of the different regions of the same country. Why do territories such as Silicon Valley and Padania (in northern Italy) have become the most emblematic landmarks of the almost mythical post-century geography and others in turn, which once occupied leadership positions, such as the French Northeast or the Canter-South of Mexico, are falling behind ?

In Silicon Valley, in addition to top-tier universities such as Berkeley and Stanford (which has given rise to such outstanding companies as Oracle, Hewlett Packard, Google and Cisco), there are companies as important as those mentioned above. The symbiosis between the academic world and the business world has been particularly fruitful in this case and has allowed for an environment of innovation and entrepreneurship, especially in the IT area, which can hardly be found anywhere else on the planet. Some of the principles that encourage innovation in this region are the following: learning from failures, the obsession to constantly generate new ideas that generate value for people and companies, the creation of companies that are generated from basic ideas and that are renewed permanently based on the knowledge of the clients, the global vision and the very ambitious goals, the innovation generated by the clients and employees, and the work in group and interdisciplinary.

In Silicon Valley, investors know that a very high percentage of new ventures fail, but this is considered normal and desirable because it is a source of learning. It is easy to demonstrate that mistakes are an important part of our learning process, especially when challenging our abilities with new challenges, doing things for the first time or taking risks. In Silicon Valley mistakes are accepted as a natural part of the innovation process. Or as Gred Linden (2015) says, who worked several years on Amazon: "genius is the fruit of a thousand errors"

The companies in Silicon Valley also have a global vision and very ambitious goals. What new entrepreneurs are looking for is to find financing to start the business and, after a certain time, be bought for a value several times greater than the original. It is the model that we can call, "either it becomes big or it ends" (we could also define it as the "go big or go home" model), and all members of the ecosystem (capital investors, new entrepreneurs, consultants) they conceive it. The above implies that you must have a very ambitious vision and think about global markets. This conception is sometimes lacking in our new entrepreneurs, since they design their business for a very local environment, in which they can hardly have the required vision, and therefore their business plans are not designed to build global businesses.

The issue is even more pressing in Latin America, for example, which, after having always a very concentrated development in a few centres, it seems to be undergoing a repolarisation cycle, now under the impulse of new productive processes and a new logic of relationship with the global economy. The search for an explanation for the fact that productive activities in a country tend to be concentrated in certain agglomerations, is certainly not a last-minute concern since it has been present since the first theorisations of space economy. What happens is that the issue has been progressively loaded with new contents and implications.

Conclusions

In conclusion, neoclassical theory has had, regarding the theory of endogenous growth and convergence, an important component of modelling and formalization that had instruments of analysis and prediction that contemplate technological variables, labour market, knowledge and capital. However, the work of Fujita, Krugman and Venables (2000) emphasizes the basic approaches of space economy (Isard's regional science of 1956, 1971st edition) and manages to generate a basic formalization, in the Anglo-Saxon style, that by joining it with the Economic geography and the theories of international trade allow people to choose a model in which geography integrates the theoretical body of regional development, seen from its economic and mathematical formalization. In any case, no further progress is made on the agglomeration, where they consider it a mere historical accident, in the words of Moncayo (2002: 14) regarding the fact that “a specific location of an agglomeration would be, to a large extent, the result of chance and therefore, not subject to foreseeable determinisms”. Krugman's theoretical construction is based on the argument that in trade and specialization, increasing returns, economies of scale and imperfect competition are far more important than diminishing returns, perfect competition and comparative advantage; and that the external economies by size of the market and by technological innovation that underpin these increasing returns are not international or even national, but arise from a process of agglomeration of a regional or local nature. The model developed above to analyze the relationships between increasing returns and spatial agglomeration represents the interaction between the centripetal forces that promote the geographical concentration of economic activities and the centrifugal forces that operate in the opposite direction.

1.1.2 Economic agglomerations in regional & global context

Territory and economy of knowledge (TE)

The interrelation between urban and economic transformations that have taken place in metropolitan areas has been analyzed in previous periods. In the last decade, the advance of the globalization process and the knowledge economy intensified the changes registered in the urban system and the reorganization of economic activity. Indeed, paraphrasing (Mendez, ed., 2010, 164-165), “large cities gradually abandon the production of material goods for the benefit of a specialization in services, both for the population and for companies. On the contrary, in all the activities related to the production of material goods, their relative importance increases as the size of the nuclei decreases”. In this respect, we can observe that this strategic fit is defined as a dynamic process through which local agents (companies and political, social and economic institutions) coordinate the interests between local agents and their counterparts in the global economy. This strategic fit is decisive in the role played by the metropolis in relation to technology, knowledge and finance in the international context. An approximation to the place that the metropolis occupy worldwide has been investigated based on the location of the category of establishments (headquarters, regional office at a global level, large office, etc.) of the “advanced services companies”, as Taylor (2011:69) considers (banking, insurance and financial intermediation, accounting, advertising, legal advice, consulting and media). The study of the interrelation between the metropolitan region and the knowledge economy has been debated and propose a theoretical framework in which factors, components and effects in the construction of cities based on knowledge are distinguished. The factors linked to the territory that they emphasize are agglomeration economies, local institutions and agents, accessibility and diffusion processes, knowledge governance. The components that distinguish the metropolitan areas based on knowledge are the accumulation of specific resources for the generation of knowledge, and that is focused on human capital; an economic structure in which sectors and knowledge-intensive companies occupy a preferential position; a regional innovation system, based on networks of local and regional agents that is supported by digital infrastructure to facilitate the exchange of information and knowledge; the tangible results of innovation in the economic and urban areas.

In relation to human capital, we should highlight the long period of training required by skilled labour and its residential preference for cities that offer a high quality of life. Its strategic role in the generation of innovation and knowledge has been underlined with the terms “talent and creative class” (Florida, 2005). In the metropolis of knowledge, the number and proportion of university graduates is higher due to the labour demands required in the TE and other productive activities. In a recent report they point out that companies are retaining the most trained workers, which contribute to the improvement of the productivity of companies and also to one of the most technologically developed regions, with “a greater capacity to attract human capital” (García, 2012: 588).

Regarding the achievements of innovation in the urban area, the benchmarks are the participation in networks of cities at national, European and global levels, a better insertion in international urban circuits of merit (titles of the city, awards). Likewise, a transparent and effective public management that implements original solutions to the urban problems of spatial inequalities is an asset to be highlighted. In short, a style of public management introduces creativity as a strategic value to address “the challenges of the territory's future” (Clark, Huxley and Mountford, 2010). On the other hand, Hutton (2007) highlights a series of “intangible components of the city of knowledge” such as leadership, differentiation and collaboration, which are interrelated with the tangible ones. Cities that bet on knowledge need a leadership capable of uniting key agents (local institutions, regional government, business organizations, universities) and generating a shared objective environment to overcome the deficiencies detected in the city. The differentiation of the city based on its strengths (original knowledge, productive capacities) helps to strengthen the comparative advantages of the city, achieving a city of knowledge that stands out from others and offers complementary aspects to other nearby cities.

Collaboration with other cities allows us to combine strengths and jointly face challenges of the TE. This collaboration must be supported by realistic and genuine agreements from the recognition of the position of each city in the urban system. In the EU, the aspiration for greater relevance of the EC from the economic and social point of view was approved some time ago (Lisbon Strategy, 2000 European Council) and remains a pending objective to achieve (European Commission, 2010). In this European area, empirical research on CD in European regions has been carried out. Accessibility to knowledge, assimilation and profitability have been identified as “key determinants in a regional knowledge-based economy” (Wintjes-Hollanders, 2010: 398). These three dimensions of knowledge consist in the interpretation of the regional innovation system previously commented. Accessibility to knowledge implies access to existing knowledge and generation of new knowledge, absorption means learning, innovation processes and economic development are synonymous with the profitability of knowledge. These three dimensions of knowledge imply an evident territorial component due to the inhomogeneous spatial distribution of knowledge. The metropolises and the most prosperous regions enjoy the capacity to generate new knowledge, greater accessibility to the existing one, capacity to assimilate it and translate it into business initiatives. The cities of smaller size and peripheral regions have to face an already limited accessibility. The regional metropolises can have options in the exploitation of specific applications of new knowledge, linking it with the “global value chains located in their region” (Lagendijk, 2011), as well as in the generation of new knowledge in relation to previous sectorial specializations connected to new activities.

The importance of physical geography

Coastal regions and those linked to the coast by navigable ocean channels, for example, tend to have much higher growth rates than the Mediterranean regions (hinterland). This is so, because in the former transport costs are lower and there are economies of agglomeration. Through an increasing complexity of the basic model and incorporating econometric correlations with factual information, one would establish other empirical regularities, thus:

a) The tropical regions have – in terms of development – a great disadvantage compared to temperate regions, probably due to the incidence of tropical diseases and differences in agricultural productivity.

b) Population density favours growth in coastal regions with good access to domestic, regional and international trade, but it has a negative effect on the “hinterland”.

c) The growth of the population in a country is negatively associated with its relative growth potential, that is, the population is increasing faster in less prepared countries to experience an accelerated economic development.

d) The development potential is inversely associated with the distance to the coasts.

Some analysts even suggest a natural type of “resources’ course” of and of location in the tropics, according to which these two factors are inversely associated with the growth and the “distribution of income” of different countries (Gavin & Hausmann, 1998: 177). From another perspective, one would observe the approach of flexible accumulation. There are some studies that aim to establish the relevance of geography in “the location of innovation activities” (Audretsh, 1988) and “clusters” (Porter 2000). Of course, the two approaches are “not incompatible” as recognized by both Sachs and Krugman. The latter argues that “understanding why small events caused by chance can have vast effects on economic geography, is crucial to understand why the underlying differences in natural geography can have such large effects”. Therefore, we can consider that a city can emerge because of initial advantages of costs derived from geography, but it can continue to prosper due to agglomeration economies, even when such initial advantages have disappeared. As one may observe, the question obeys to the logic of circular causality so dear to economic geographers: the feedback agglomeration and therefore the economic and industrial policy, can give the initial endowment of natural resources of a region a new impulse for its development future.

Conclusions

In conclusion, the regional innovation system connects the links between knowledge generation, learning, innovation processes and economic development. The regions and cities that generate a high rate of production and application of knowledge in the business sector and public management will have a fundamental competitive resource at their disposal. But not only local networks allow us to explain the generation of externalities networks and the assimilation of innovation processes through the creation of communities based on knowledge. The growing importance of global processes in urban dynamics has to be considered. The intensity and balance of the relationships established between the components of the local and foreign innovation system (transfers of capital and knowledge, participation in projects, exchanges of professionals) can provide relevant indicators. The regional innovation system in different countries has been extensively researched , agreeing that there is room for improvement in the interconnection between the different agents, in the economic capitalization of investment in R & D & I in the promotion of scientific research in relevant areas of the economic fabric of the region. Regarding the tangible results of innovation in the economic and urban areas, it should be noted that maintaining a city positioned in the EC requires a constant effort in investment of financial resources to root research, technological development and knowledge transfers, both in the private sphere as in the public. The most common indicators are number of patents and utility models registered by companies, number of scientific publications, quality certificates of companies and public bodies, increase of export quotas.

1.2. Theoretical concepts of economic agglomerations

1.2.1 Models

From the German school to the theories of endogenous growth

In his pioneering work, Von Thünen (1826: 6) built a very useful model -based on land “prices, land quality and transportation costs”- to explain farmers' income and the division of urban labour- rural, which still retains its validity thanks to the reworking of Alonso in the sixties, but leaves unresolved the essential question of why urban agglomerations specialized in manufacturing and tertiary activities arise. In this respect, in Von Thünen's model, the localization factors are not explained, but exogenously assumed. Well into the twentieth century, other German geographers such as A. Weber (1929) and especially those of the Jena school – Christaller (1933) and Lösh (1939), developed “a theory of location that makes the provision geographic market” and, again, the costs of transport, to deduce with a tool taken from the geometry the emergence of hexagonally organized “central sites”, in which productive activities are concentrated. Because of its macroeconomic approach, Lösch's work is a precursor of the modern urban regional economy. Just as the German tradition appealed to geometry to build its models, some American geographers resorted to physics to study problems such as the size hierarchy of cities and the interactions between them, finding very interesting empirical regularities. Thus, for example, Zipf (1941) established a “law” that bears his name, to explain the size distribution of cities and also found a mathematical regularity, similar to the law of gravity, which relates the interactions between cities – travel, transportation of goods, etc. – with the size of their populations and the distance between them. In the fifties and sixties, the North American academy developed other theories such as “the base-export multiplier” (North, 1955 and Friedmann, 1966) and the “market potential” (Harris, 1954), which have as a common feature their Keynesian emphasis on the role of demand in determining the level of economic activity (and therefore income) of the region. The first prioritizes external demand (exports) and the second, internal demand.

An attempt of great intellectual encouragement to integrate the contributions of the German school with the microeconomics of minimization of costs or maximization of the benefit, was the one made by Walter Isard in his magnum opus “Location and space-economy” (1956). Motivated by his dissatisfaction with a neoclassical economy self-confined to “a wonderland of no spatial dimensions”, Isard created the Regional Science (Regional Science) as an interdisciplinary construction that has had considerable practical importance in the field of regional planning. Without ignoring the important contributions made by the German and American geographers outlined above, the fact is that they failed to get to the heart of the spatial issue: what determines the urban agglomeration and the interurban hierarchy? In a certain way, the argument of such theoretical approaches was somewhat tautological: the agglomeration of producers in a location provides advantages and these advantages, precisely, explain the agglomeration. These theories suppose what they are trying to understand: the existence of a central urban market. This explanatory insufficiency has been attributed to the budget of a homogeneous space and to the inadequate capture of the concept of "externalities" -associated with increasing returns to scale and imperfect competition- that was already present in the work of A. Marshall ( 1890), could not be incorporated into spatial models due to limitations in the “state of the art”. For the rest, his bias towards economic modelling makes him say to Krugman that this was one of the main reasons for the contributions of economic geography will not become part of the central core of economic thought. No longer in the field of spatial theories, but from the perspective of the theories of growth and economic development, in the fifties and sixties several conceptualizations were formulated that had a great influence on the thought and practice of regional development. On the one hand, there are the approaches according to which the level of development reached by a region is the result of the place it occupies in a system of a hierarchical nature and of asymmetric relations defined by the deterministic behaviour of flows and forces external to the region itself . In this current the theories of “the centre-periphery and dependency can be placed in their different versions” (Friedmann, 197220, Frank, 196921, Amin, 197322, and CEPAL, 1960-7023). Despite the diversity of positions and the controversies within this line, it could be considered that in general terms it postulates the existence of a world order with “central” countries that allied with the dominant elites of the countries of the “periphery”, are progressively enriched at the expense of the latter. In such a way, this vision regarding the development of the advanced economies requires and generates the underdevelopment of the backward ones. They are two interdependent faces of the historical evolution of international capitalism. Transferring this approach to the sub-national sphere, this same type of unequal relations of domination would be reproduced among the different regions or territories that make up the nations, giving rise to a kind of internal colonialism. Related to the previous approaches are the theories of unequal development that investigate the cause of the differences in the rhythm and level of development between the regions. In this sense, the theory of cumulative circular causation formulated initially in qualitative form by Myrdal (1957) and elaborated later in a formal model by Kaldor (1957) and 1962)) was particularly influential. Based on the general notion that the social system does not spontaneously move towards any balance of forces as the neoclassical model posits, but that it is permanently moving away from such a position, we can argue that from an initial agglomeration in a region, the existence of economies of scale and technological externalities, attracts new resources that circularly reinforce the expansion of the market. In contrast, the opposite occurs in lagging regions. The idea that growth is necessarily unbalanced was also shared by Hirshman, (1958), who introduced the concept of linkages (forward and backward linkages), which would be key in later theoretical developments. In this respect, one contributed to the conception of an “unbalanced” development strategy, Rosentein-Rodan (1943) that proposed the need for a big push (“big push”) to concentrate scarce local resources on a few large – but diversified – projects well located. The Theory of Growth Poles, associated with the names of François Perroux (1955) and Jacques Boudeville (1968), has a common with the previous models the attention paid to the cumulative processes and location, which can be generated by the interdependencies of the input-output type around a leading and innovative industry. The idea initially presented by Perroux in general terms was transferred to the geographical space by Boudeville, and we can argue that dynamic industries and projects cluster in a given area and have spillover effects on the adjacent hinterland and not on the economy as a whole.

Under the influence of this set of theories and models, we came to the conviction that economic processes can be directed and shaped according to a substantive rationality and through the exercise of social engineering techniques. In this way, next to the discipline of Development Planning, at the national level, the Regional Planning applied to the territories arose, both under the active direction of the State, which in the long run resulted in a diversity of experiences almost always unsuccessful. But almost in parallel with the "interventionist" conceptualizations of development, what was to become the standard modern vision of growth began to be elaborated: “the neoclassical models” constructed by Solow (1956: 38) and Swan (1956: 66), which would lead to economic policies radically opposed to the Keynesian ones. In essence, the central features of these models are two:

a) homogeneity of degree one of the production function, respectively a presence of constant returns to scale for work and capital and

b) decreasing marginal returns of each of the resources productive.

These two assumptions follow two logical implications: first, that in the long term growth will tend to zero, unless there is a technological advance that continually compensates for the negative effects of diminishing returns to capital; and secondly, that the per capita growth rate is inversely related to the initial level of output per capita (the lower the level of product per capita, the higher marginal productivity and therefore the higher growth). From this comes a third implication: in the long term there will be convergence of per capita growth rates and, even, of the levels of per capita income. Consequently, in this optimistic vision of growth, the free play of market forces leads the countries and their interior regions, to a progressive equalization of their levels of development, making unnecessary the interventionist policies advocated by the Keynesian approaches. Notwithstanding the solid theoretical construction of the neoclassical growth model, its successive enlargements and ample empirical evidence that there are indeed periods in which processes of convergence occur both between countries and between subnational regions, the nonconformity that produced “the exogenous condition of the technological change and the growing empirical literature on asymmetric and concentrated growth” (Kusnets, 1955, Kaldor, 1961, and Madison, 1964, 1982, among others) led in the eighties to the formulation of the Theory of Endogenous Growth. The purpose of this approach was to build models in which technology is endogenous, that is, to respond to the deliberate choices of economic agents; and in those that enter to play as determinants of growth, knowledge, physical capital, human and macro-economic policies. By assuming the existence of positive externalities associated with the production of knowledge and technology, these models substitute orthodox neoclassical assumptions about constant returns to scale and perfect competition, those of increasing returns and imperfect competition. The concept of "endogenous" that is central to the theory has to do with the assumption that growth is driven by the technological change that comes from intentional investment decisions made by profit-maximizing agents, which implies that the growth of Long term is a function of endogenous factors in a specific historical context. Therefore, the existence of exogenous factors not explained in the model can be ruled out. Although the validity of several of the central assumptions of the Endogenous Growth Models, such as increasing returns, and hence the lack of convergence, has been questioned, there is no doubt that they shed a new light on the way in which capital human, knowledge and technological change are generated in the economic system and determine its long-term growth. We can consider that the “models of endogenous growth” that were initially elaborated by Romer (1986), Lucas (1989) and Rebelo (1991), from the works of Arrow, (1962), Kaldor (1957), Nordhaus (1969) ), Shell (1973), Frankel (1962) and Dixit and Stiglitz (1977), among others, had a very high impact in several fields of economic theory, among which there are two very related to regional development, which they are the one of the space economy and the one of the analysis of the processes of convergence in the long-term economic performance of the economies.

Regional growth and convergence

Another slope that derives from what Krugman calls “the revolution of increasing returns/ imperfect competition” is that of studies on long-term growth and convergence between countries and regions. As seen above, in neoclassical models, the growth rate of an economy is decreasing in the long term. This means that if the only difference between the economies were to the stock of capital per worker, in the real world higher rates of growth should be observed in the poorer economies than in the rich economies. This negative relationship between the initial income and its growth rate is what is known as the convergence hypothesis. It should be noted that neoclassical models only predict convergence, when the only difference between economies lies in their initial levels of capital. In this case, it is about absolute convergence. The convergence hypothesis, derived from the assumption of diminishing returns to capital, was then constituted as the main differentiating element between the neoclassical models of exogenous growth and the new theories of endogenous growth. For the latter, the assumption of constant returns of the underlying capital in all its models, entailed the prediction of non-convergence (or divergence). A practical way to resolve which of the two paradigms is better suited to reality was to pass the terrain of empirical studies. However, the neoclassical economists quickly formulated their reply. Sala-i-Martin (1990), Barro and Sala-i-Martin (1991, 1992a, 1992b) and Mankiw, Romer and Weil (1992), were in charge of remembering that the “neoclassical model only predicts absolute β convergence”, (in the sense that the poorest economies grow more than the rich ones), when all countries have the same savings, technology, depreciation and population growth rates and only differ in their initial capital endowment. As this is a quite unrealistic assumption, it was logical that the empirical evidence found for the 114 countries, demonstrate the lack of absolute β convergence.

Competitive regions: a contribution more to confusion

Competitiveness has become a meaningless word, is the expression to approach what the dominant doctrine in the last fifty years in the economy has wanted to see as the need for commercial triumph in world markets. The theories of advantages, whether they are of the “absolute” (Smith), “comparative” (Ricardo) or competitive type, created independently of the “initial factor endowment” (Porter), have given competitiveness an essential space in economic theory , in business but above all in the growth and development strategies for the nations or, if you prefer, for the territories. For Krugman (1994: 20), “the competitiveness of a firm and the approach from the territory must be differentiated”, trying to define the competitiveness of a nation is much more problematic than defining that of a corporation. The point of equilibrium of a corporation is literally its balance point: if a corporation is not able to pay its workers, suppliers and bondholders, it will leave the market. Thus, when we say that a corporation is not competitive, we mean that its market position is unsustainable and that, unless it improves its management, it will fail. The countries, on the other hand, do not go bankrupt. These may be happy or unhappy with their economic management but they have no well-defined point of equilibrium. As a result, the concept of national competitiveness is evasive. Thus, overlapping concepts, much less between production and territory, seems not to be entirely orthodox.

Conclusions:

In conclusion, it is necessary to incorporate in the analysis a set of elements of institutional order that make the human resource more competitive, the companies and the localities, without forgetting, obviously, that these are territorialized, that is, their action is carried out in a geographical space concrete with the interaction of social actors, companies and institutions. The international liberation of trade, the technological revolution and other key elements in the process of globalization have allowed companies worldwide to benefit from an enormous range of possibilities to locate their businesses and access markets that previously seemed impenetrable by conventional techniques. Consequently, nations need to compete to attract or retain companies. Competitiveness, then, should be understood as the ability to show decision in world markets through exports and direct foreign investment and, at the same time, be attractive for the creation of wealth. On the other hand, it is also clear that the influence of state policy, including economic policy, is capable of encouraging, stagnating or reversing the favourable environment to attract wealth-generating activities. A very important part of the comparative advantage of certain nations depends on their incentive policies to attract investment: subsidies, tax exemptions, among others, and others to generate an atmosphere of trust and certainty. States have a leading role in this competition. The concept of competitiveness is present in the current debate on topics as diverse as economic development, business administration, trade liberalization, free trade agreements, education reforms, etc. This generates very different definitions, as institutions and analysts are dedicated to its study. If one wanted to find a common denominator for different conceptions on the subject, it could be said that competitiveness refers to the ability of countries or territories to generate, in a sustained manner, wealth in the environment of a globalized world.

1.2.2 Advantages & disadvantages

Initial implementation models and the advantages of agglomeration

In the already long experience on regional development policies in European countries, we could highlight at least four differentiated approaches or models under which the clusters have been approximated: the poles of development of the 70s, the Italian-based industrial districts, the Porter's diamond model, and technological valleys inspired by the Silicon Valley phenomenon. All approaches, in terms of economic policy, mentioned above try to generate business agglomeration, but each of them implies totally different conceptions.

Interest in industrial districts can be found in Piore and Sabel's writing entitled “The Second Industrial Divide” (1984), which postulated that in the new context of continuous technical progress and diversification of demand, the flexibility of small and medium enterprises, made them more efficient than very large companies to adapt to change. The passage of time has made it possible to verify that small companies, belonging to traditional sectors, in many cases withstood better than large companies the industrial crisis of the early eighties and other industrial crises later. However, it has also been observed that the role, as a regional economic engine, of clusters declines when growth is based on innovation activities linked to new information and communication technologies (ICT). Also, the equivalent to the industrial districts is the so-called “local production system”. Even with considerable institutional differences with respect to the Italian industrial districts, the local systems studied in Spain share many characteristics with the Italian ones, and in particular, that belong to traditional productive activities or with medium or low innovative intensity, which is not incompatible with the companies in the clusters adopt technological and management practices18. Porter's diamond model contributed since its inception (1990), and has continued to contribute, 19 an analysis methodology of much more general application than the studies on industrial districts, which according to some authors suffers from the limitation of being very subject to specificities of Italian clusters. The cluster model of Michael Porter explains the advantages of cluster companies for external economies of the type spillovers or technology diffusion. Its main emphasis is on the importance of competition, and productive links with suppliers of inputs and services, as elements that contribute to increasing the competitiveness of companies. As has been pointed out, the analysis of the cluster does not have to have a local geographic reference, the geographic reference can be a whole country, but there is always a spatial dimension since the cluster determines the level of competitiveness of its companies, and competitiveness is a relative factor, with respect to other clusters or companies.

Conclusions:

With the phenomenon of Silicon Valley and the rapid growth of the ICT sector (computers, software, internet, telecommunications equipment), the cluster model that has generated most attention in recent times is the concentration of high-tech companies where The centripetal force is the external economies, and in particular the spillovers of knowledge. This type of technological valley model, since it originates in innovative activities, does not require the existence of previous historical roots. It may even be the opposite, that is to say, that highly innovative activities tend to move away from areas whose past industrial experience translates into rigidity in management. What determines the attraction of companies to the cluster is the speed with which innovation takes place, the importance of spin-offs segregated by the companies themselves as they mature, and the mobility of qualified technical personnel among the companies in the cluster. In any case, after many initiatives undertaken in several countries (Sophia-Antipolis, Bangalore) it has also been found that Silicon Valley model can not be “replicated” in a volunteer way. Clusters develop over time; they are not a phenomenon that only appears or disappears during the night. Although, as it has been pointed out previously, the exact understanding of the evolution of the clusters is still subject of much investigation.

1.2.3 Role of the Government in determining economic agglomerations

Since the mid-1980s, the decentralization process has taken a renewed momentum in developing countries, due to the deficiencies of central governments in responding to the needs of public services in local areas within developing countries, and the demands of the population for more democratic systems and greater citizen participation. Parallel to this process, specific areas in these countries have tried to advance in the so-called local economic development (LED) process. Unlike the extensive experience of both processes in developed countries, for developing countries both processes are relatively 'new'. The first aspect regards full implementation and the second one emphasises its initial stages and implemented in specific areas of the countries. The main objective of this document is to provide an initial academic basis for the understanding, analysis and recommendations of economic policy on both processes. To this end, it presents a summary of the various theories / models of local economic development and a brief account of the basic theoretical aspects of government decentralization in the economic literature.

The following statement taken from Stiglitz (1988a) and Stiglitz-Hoff (2001) synthesizes the main ideas of this group of literature: “A central question in economic development is how do we explain the differences in the level and growth rates of income by inhabitant between rich and poor countries?” In the 1950s and 1960s, the standard response was that rich and poor countries are similar, except in the endowment of factors or resources [sources of growth], so the prescription of policy is to increase these resources through means such as increasing savings or external, levels of education or through foreign aid. Today this response does not seem convincing to the facts that poor and rich countries do not converge on per capita income as the neoclassical prediction would suggest as a consequence the differences between poor and rich countries are due to other important differences; these can be differences in the economic organization, the interaction of the agents (owners of the growth sources), and in the institutions that mediate these interactions. It is well known the existence of market failures (or distortions) in rich countries. Even more, these are larger in poor countries, but however the elimination of the distortions generated by governments although desirable do not seem to be necessary or sufficient for sustained growth of an economy; development is not seen only as a process of accumulation or increase of the factors regarding the sources of growth but as a process of organizational change the new areas of development are those related to the information economy, the theory of coordination and the economy of the institutions all resulting from distortions or market failures in poor countries not necessarily generated by the governments of these countries.

Moreover, it is possible for the government to design a set of taxes and subsidies that changes the allocation of resources from a balance with inefficient resource allocations to another equilibrium allocation where all individuals improve their welfare. This new allocation of the new equilibrium is called an allocation. In liberal market theories or models and traditional classical and neoclassical theories of development and economic growth, the “initial” situation of low level of real GDP per inhabitant is a “temporary” situation of the development process of the economy and where Changes (or increases) in the foundations of the economy allow it to reach the situation of unique equilibrium, Pareto efficient and sustained growth. In the new theories of economic development, the initial situation of low levels of real GDP per inhabitant of an economy is a situation of Pareto inefficient equilibrium and the changes in the fundamentals will not necessarily change this situation in the presence of distortions in the markets. This balance is called a “balance trap” or a “balance of a less developed economy”.

Conclusions:

In conclusion, the growth of a region or local area is determined by the leading industries and firms or other dominant economic actors in that region or local area. These industries, firms or actors have some advantages (technological, level of wealth, political influence, etc.) that allow them to develop. The poles of development are linked to other poles and not necessarily to the areas of the periphery around the growing centres or cities. Under the economic theories of location, economic geography (traditional), and space, the factors, models and theories described so far not only to determine the base sectors of the local area but also the development and economic growth of the local area. Thus, under this line of theories or approaches, the development of the regions or local areas is determined by the aspects that affect the location of the industries.

In this regard, the regional economic development policy should focus on correcting the failures of private markets to achieve efficiency of these. The main distortions that need to be addressed by regional economic development policies are:

involuntary unemployment and underemployment;

agglomeration economies;

the externalities resulting from the research activities;

imperfections in financial markets, human capital and information.

The policy of local economic development focused on the failures or distortions of the markets has two advantages over the traditional approach and the so-called 'new wave' of local economic development policies. On the one hand, the concentration of policies on activities that the private sector can not do allows the government to better use its scarce resources. On the other hand, the policy goals are subject to measurement according to the analysis of benefits and costs.

1.2.4 Impact of economic agglomerations and competitive advantages to the global economy

Competitiveness is highly marked by innovation as the most important force in recent times for the development of countries, understanding the development process as a set of innovations that transform production processes and sustain the evolution of the product in conditions that favour the interest groups where it is located and “the preservation of the environment” (Da Costa, 2010, p 12). At the business level, innovation has facilitated the leadership of companies, the research performed by Professor Michel Porter has found that this leadership has occurred mainly in very particular regions, nations or industries, through its companies and the different actors that rises to “the concentration, agglomeration or cluster in certain geographical spaces fostering the generation of innovations and significantly impacting their competitiveness.” (Sölvell, 2008: 13)

The agglomerations or clusters have been the subject of much research, since they have been an important mechanism to achieve competitive advantages. For this case, a conceptual analysis of clusters called clusters or industrial districts focusing on the global footwear sector as a framework to deepen the factors of success and not success that have influenced.

Creation of competitive advantages through agglomerations.

In the last three decades, the social and economic system has become more and more flexible has been influenced by two new great characteristics: “technology and the internationalization or globalization of the activities of companies” (Guerrieri & Pietrobelli, 2004: 2). These two major components become paths of access to the future, which facilitate the development of competitive advantages, which have been identified through future studies such as strategic foresight, facilitating the construction of future scenarios that have guided and will continue “to guide industry and organizations towards their competitiveness” (Pena Castro, 2012: 22).

Other relevant research has based the theory and basic concepts on competitiveness, integrating them into a model that has been used successfully in many countries and regions of the world, and explained where the sources of a country's sustainable prosperity come from within the country. In this respect, global economy comes from sectors and “segments of specific sectors” (Porter, 1990: 33). According to the latter author, the conditions for the sustainability of competitive advantages are identified in the following way:

• The specific source of the advantage: lower order advantages and higher order advantages.

• Number of different sources of advantage available to a company.

• Constant improvement and improvement. Of the above conditions, the third is the most important given that through constant change new advantages are created that competitors will only achieve if they develop extraordinary improvement capacities. Additionally, through the competitiveness model proposed in the Porter Diamond, the determinants of a system to be competitive are established: Context for the strategy and rivalry, Conditions of the Demand, Related and support industries, “Conditions of the factors” (Porter, 2003, p 217). What can be identified in this model is the importance of the determinants given by the level of impact it has on innovation or improvements that can be generated in the clusters or clusters, and it becomes clear that the importance does not lie in the factors with what counts, if not the mechanisms that have to create new factors that allow the creation of competitive advantages. Cluster agglomerations emerge as one of the most important results of the research carried out by Professor Porter, given that in the ten countries where this research was performed, he found that groupings appear as a characteristic phenomenon in the most advanced national or regional economies. The fundamental thing is to articulate with the global economy and be competitive in different markets, but it requires the participation of the actors involved to establish the virtuous cycle of development, in order to improve competitiveness, productivity, innovation and the generation of new Business. The Institute of Strategy and Competitiveness of Harvard University has been working to give a clearer vision and a route to define competitiveness, given that many definitions have been raised and what has been created is a confusion, for which it proposes “three components” (Delgado, Kettels, Porter & Scott, 2012: 14):

• Goal orientation.

• Understanding of the most important factors.

• Ability to act.

The processes of national economic, political and social transformation have a close relationship with the behaviour of their economies and with their reorganization and regional and local functioning in the context of economic globalization and in the structural adjustment that national governments adopted for their economies national. What undoubtedly is clear shows the need for study and understanding of the economic functioning of the supranational and subnational economic regions. Consequently, we consider that the process of globalization and regionalization of economies highlights the current importance of the regional economy, which is characterized by the following processes:

1) reorganization of the world and national economy through the formation of mega supranational and sub-national regions;

2) development and technological innovation in leading sectors of local or regional economic growth,

3) expansion and revolution of services and urban development.

The new competition is characterized by the following four aspects:

1) Business unit that is distinguished by the search for continuous improvements in methods, products and processes, in its organization from the top to the base;

2) the importance of the production chain, that is, competitiveness depends on its suppliers;

3) the importance of the institutional sector, inter-firm cooperation facilities;

4) industrial strategy focused on production instead of distribution, aimed at forming markets, stimulating and carrying out complementary investments in support systems and encouraging the celebration of strategic alliances.

The relationship of competitiveness with the regions is established because these have a significant impact on their performance, due to differences in the allocation of regional and local factors and restrictions on their mobility, facilitated by the transport and communications revolution, which they were reflected in a decrease in transport and information costs, facilitating productive integration. So it is not risky to say that competitiveness depends both on technological and administrative factors as well as on regional and urban aspects, given that competition is the result of economies in the use of factors and cost reduction and therefore of its better sectoral administration and regional. Conditions that are met regionally at the sub-national or supranational level in the processes of economic integration.

Conclusions

In conclusion, economic globalization has been characterized by restructuring the functioning of the world economy and regionalizing it since the 80s, which modified the traditional patterns of economic interdependence among nations, particularly with regard to the patterns of economic international trade and investment. This has increased the competition of the world economy and the uncertainty in its performance, besides recomposing the national economies and their supranational and sub-national economic integration. In the former, the formation of regional economies is highlighted by the constitution of economic and trade blocs as measures for the protection and development of their economies and markets. Regionally, economic globalization implications are clear if we consider the competitiveness factors of the company, its intra-business relationships and its environment. Business competitiveness is given by product, technology, plant and equipment, production organization, purchasing and research and development: product design, quality control, hiring, training and administration of labour, marketing and distribution, financing, costing and accounting control.

1.3. Theoretical concepts of competitive advantages and clusters

1.3.1 Evolution of the concept competitive advantage & economic clusters

Historic context

The world in the 1980s, as described by Servan Schreiber (1980), was in a crisis almost as serious as that of the 1930s, “the successive oil shocks and the rise of Japan to economic power that could halt the oil industry”. The United States of America and Europe were shaking the great industrial companies of the first world, the appearance of OPEC as a destabilizing element and a captor of the world's financial resources led to the search for competitiveness at all costs. In this respect, Servan Schreibre highlights the impact that microelectronics would have in the future. Michael Porter studies the phenomenon of competitiveness and develops his first theories that have a profound impact on the business world. That decade was the decade lost mainly to Latin America, where the countries were submerged in colossal external debts which increased due to being born oil importers and whose exports were basically commoditized commodities with vile prices. In some Latin American countries some companies took into account Porter's theories and tried to apply them, but as Porter already established, if the sector is not competitive, a company will hardly be able to do so.

Competitive Strategies

Porter (1980) in his book Competitive Strategy, begins by explaining that all companies have competitive strategies, some explicit and others implicit and that these strategies should be focused on the environment in which they dispute the market. The logic of Porter's competitive vision is that the strategic options of a company are limited by the environment, that is, the structure shapes the strategy, which is called a “structuralist” approach. This approach is based on the structure-performance paradigm of the economic aspects of the industrial organization, dominant in the strategic practice since the 1980s. Its analysis is basically outside the company. In his classic books “Competitive Strategy” and “Competitive Advantage” he analyzes the behaviour of the market and its impact on companies to describe what would be the strategies that companies can apply and then the way in which their structures must work in order to execute such strategies to be competitive.

Porter leaves from the base that the goal of the competitive strategy is to find a position within the sector of activity in which the company acts, in order to defend itself against the competitive forces of the market or to influence them in its favour. The first focus of Porter is the well-known five forces that direct competition in a sector,

a) Rivalry between existing companies,

b) Potential income from other companies,

c) Threat of substitute products,

d) Bargaining power of the clients,

e) Bargaining power of suppliers.

These forces were graphically represented in what came to be called Porter's Diamond. Vargas (1999) presents a new vision of the competitive forces of the market. First with a regrouping of Porter's forces and then with the introduction of two more taking into account aspects of the environment previously simplified or ignored by Porter. The proposal was that these forces can be classified into three broad categories: Current Competition, Potential Competence and Agent Negotiating Power – Frontier. The border agents represent the set of economic and social agents that make up the competitive environment of the company and that may have an obvious power or influence on the ability of competition of the company so it is necessary negotiate with them, on which the success or failure of the business strategy depends. It is also worth noting the inclusion among the border agents of the economic power of the owners, a force that can help to confront the other two border agents. Hence, this is its denomination of border agents, given its indirect external influence on business activity, but not least.

Satisfying the demands of the owners, the public power and society can be as arduous as playing in the markets with unexpected strangers. This set of forces constitutes a complex problem to be solved with flexible strategies and not just with the introduction of new products supported with intense marketing activity and a solid financial management. However, confronting the threats represented by these competitive forces again involves constantly observing the client's changing needs and discovering how to satisfy it. From the analysis of these forces in comparison with the strengths and weaknesses of a company can be found the actions tending to generate a strategic position that generates a competitive advantage to it, which is the application of the SWOT matrix – Weaknesses-Threats and Strengths-Opportunities. A second approach of Porter analyzes the six entry barriers of new competitors that the company could develop considering the sector to which it belongs, being these:

a) Scale economies,

b) Product differentiation,

c) Capital need,

d) Costs of change,

e) Access to distribution channels,

f) Disadvantages of the independent cost of the scale.

Turning to the analysis of the strategies that companies can adopt to face both competitive forces and barriers to entry, Porter proposes three generic strategies, which are:

a) Leadership in total cost,

b) Differentiation

c) Approach.

The first two are valid for the scope of the entire industry or the entire sector of economic activity in which the company is inserted, and the third that would be valid only for a particular segment. Returning to another Porter’s book, Competitive Advantage, one may note that already described greater characteristics of the differentiation strategy, explaining that with it the company seeks to show the dimensions or attributes that are perceived by their customers, in this case select one or more attributes, which can be the product itself, the system with which it is delivered, its superior quality and so on. The company that achieves the differentiation is a company superior to the average of its sector and will surely achieve a higher price than the competition, since this differentiation will make the client willing to pay more for the product. However, the price of their products can not be much higher than their competitors, because if the competitors enter with a much lower price they can cancel this difference. The differentiation is the one that must make the product unique in the market or at least be perceived as unique by the clients that procure it. In this other book, Porter also presents the value chain concept, which is basically the disaggregation into large blocks of business activity to try to identify in which activities the value that the company wants to be perceived by the client is generated and that makes him pay more than the cost of it. In short, the value chain seeks to obtain a competitive advantage that can be achieved by developing and integrating the activities of its value chain rationally in cost and differentiated from its rivals.

Different theoretical approaches try to answer the question of why are productive clusters formed and developed? Among them one can find:

1. Theory of location and economic geography

2. The theory of backward and forward chaining

3. The theory of interaction and industrial districts

4. The Michael Porter model

5. Those referring to natural resources

6. Those referred to the common substrate

Theory of location and economic geography

This theory tries to explain why activities tend to concentrate in certain areas and are not distributed randomly. It is known that this approach emphasizes the relative weight of the cost of transport in the final cost, which would explain why some activities are usually located close to natural resources, others are located near the markets that will supply, while that others can be established anywhere. Less well known, but of increasing importance, is that this approach also highlights the interdependencies of the raw material and the processed product and also the by-products, which make it easier to coordinate their movements in a single location. Examples: steelmakers and steelmakers, because their great interdependence induces the vertical integration of these productions. Another example is the processing activities that enjoy significant economies of scale, especially in complex processes such as petrochemicals, will tend to be installed in a country if it has a large national market or if it is close to important regional markets. Critical aspects for the location are the clarity, transparency and tradition of the legislation on property rights, as well as the stability and competitiveness of the tax legislation.

The theory of backward and forward chaining

This theory by Hirschman tries to show how and when the production of a sector is sufficient to satisfy the minimum threshold or minimum scale to make attractive the investment in another sector that it supplies (backwards chaining) or processes (forward). Percent, all activity is linked with others. These chains acquire significance when one investment attracts or makes profitable another in the same region.

The linkages depend both on demand factors (the demand derived from inputs and factors) and on their relationship with technological and productive factors (the optimum plant size). Likewise, the development of forward linkages depends substantially on the technological similarity. Since the learning and mastery of a technology has externalities if the processing technology is not too dissimilar.

The theory of interaction and industrial districts

The theory of interaction aims to explain the most favourable conditions for learning based on interaction, which, according to this approach, one would explain the success of the so-called “industrial districts” in many regions of Italy and Germany and in other regions worldwide. The interaction results in “repetitive games” that increase confidence and reduce, therefore, transaction and coordination costs. Likewise, the interaction accelerates the diffusion of knowledge and innovation, which is a social good internalized by the set of companies in the district. The intense interaction in a locality generates technological spills and external economies and of scale for the group of companies of the district that could not be internalized of being each company interacting with the others at a great distance.

The Michael Porter model

This author maintains in his work the competitive advantage of nations that the diversity and intensity of the functional relationships between companies explain the formation of a productive complex and its degree of maturity. These relationships refer to the four points of the diamond, that is, of support relationships, with producers of complementary inputs and suppliers of inputs and specialized factors.

The “diamond” of competitiveness: Basic conditions for the formation of clusters

The conceptual approach presented here highlights four basic aspects in the business climate that determine the competitive advantages of companies. By operating simultaneously in time and space, these aspects create the conditions for the formation and development of clusters in certain places.

They are the following:

The conditions of the factors;

The structure of the industry to which the companies belong, including the scheme of the rivalries they have with each other;

The conditions of the demand;

The situation of related industries and support.

The way in which these sources of competitiveness manifest themselves and how they interact with each other, allows us to explain how companies do to generate, maintain, or lose their competitive advantages. By focusing on these aspects, it is being recognized that companies do not exist in a kind of social vacuum, but operate in specific geographic, economic, social and cultural environments, and that the analysis of their current or potential competitiveness strategies, must consider certain essential characteristics of those environments, so that it has a true explanatory power.

That is why the analysis categories of individual companies, such as the four ways to increase productivity, are not enough to understand how a certain company developed its competitiveness. Before, it is necessary to analyze the conditions of competitiveness that exist in the business climate of the company, a business climate that is usually structured by complex networks of relationships between companies and public and private organizations. The four aspects that stand out allow us to find and understand the essential determinants of competitiveness, within the multiplicity of relationships, actors and causes that act in the business climate.

The sources of competitiveness

The main features of the four sources that, according to Porter's conceptual model, determine the competitive advantage of industries in specific geographic locations are explained below.

The conditions of the factors

The inputs of factors range from tangible assets, such as physical infrastructure, to information, the legal system and research institutes of universities, to which all competing companies turn. To increase productivity, factor inputs must improve their efficiency, quality and, ultimately, their specialization in particular areas of the cluster. Specialized factors are generally those that make innovation processes possible (a specialized university research institute) not only are they necessary to achieve high levels of productivity, but tend to be less marketable or less easy to find elsewhere .

The schemes of strategy and rivalry

The context for the strategy and rivalry of the companies has to do with the rules, the incentives and the rules that govern the type and intensity of the local rivalry. Economies with low productivity are characterized by having little local rivalry. In these economies, most of the competition, if it is even present, comes from imports. In addition, local rivalry, if it occurs, is based on imitation. Price is the only competitive variable and companies keep wages low to compete in local and foreign markets. In this way, competition implies a minimum investment for these companies.

In order to move to an advanced economy it is necessary to develop a vigorous local rivalry, which must move from low wages to low total cost, which requires improving the efficiency of manufacturing and service provision. Over time, that type of rivalry must also evolve, starting with cost reduction strategies towards product differentiation strategies. Competition must shift from imitation to innovation and from low investment to high investment, not only in physical assets but also in intangibles (skills, technology). As you will see, obviously, clusters play an integral role in these transitions.

The character of rivalry in a location is strongly influenced by many aspects of the business environment (the factors available, the conditions of local demand). However, the investment climate and competition policies set the context. Things such as macroeconomic and political stability, the tax system, labour market policies that affect the incentives for the workforce to develop, and intellectual property rules and their application contribute to companies being willing to invest, to Improve your capital equipment, your skills and your technology. Antitrust policy, government rules on ownership and licensing, and trade and foreign investment policy play a vital role in establishing the intensity of local rivalry.

After having explained the four sources of competitiveness that make up the “diamond”, we must ask ourselves: where are the clusters, within this scheme? What is expressed allows us to understand that clusters are a manifestation of these four edges of the diamond, or to put it another way, the interaction of these four sources of competitiveness is what creates a set of special conditions that lead to certain spaces being formed those frameworks of companies and organizations that have been called clusters. At the same time, the dynamics of the clusters influence the structure of competition, the supply of factors, the characteristics of demand and related industries and support; in this sense, they should be considered as a fifth facet of the “competitiveness diamond”.

Specifically, clusters affect competition in three basic senses:

They increase the productivity of companies and the industries to which they belong;

They improve the innovation capacity of companies and industries, and in that way, they increase their productivity;

They stimulate the formation of new companies that expand and deepen the advantages provided by the cluster.

The reflection that the location has on the competition has been based on a relatively simple conception of how companies compete. Competition has been understood as fundamentally static and based on the minimization of costs within a relatively closed national economy. The competitive advantage in factors of production or in the most recent analysis, economies of scale are decisive. The competition is dynamic and is based on innovation and the search for strategic differences. There are three facts that contribute to reduce the importance of the provision of factors: the supply of factors of production is greater, as the number of countries open to the world economy has increased, the national and international markets of factors are more efficient, and the intensity of competition for factors has decreased. Now, narrowing relationships with buyers, suppliers and other institutions is serving to increase innovation. If extensive vertical integration was perhaps the norm in the past, vertical integration may now prove inefficient, useless and inflexible. In this broader and more dynamic conception of competition, location affects competitive advantage because of its effects on productivity and especially on the growth of productivity. Productivity is the value created by day of work and per unit of capital or material resources used. The generic factors themselves are usually abundant and easily obtainable. Prosperity depends on the productivity with which they are used and the factors are improved in a specific location.

Productivity and prosperity of a place does not depend on the sectors in which the companies located there compete, but on how they compete. All sectors can use high technology, all can be knowledge intensive. The expression high technology, which is usually used to refer to fields such as computers or biotechnology, has a dubious relevance. A more defining expression could be enabling technology, which refers to fields whose instruments improve technology in many sectors. The prosperity of a place depends on the productivity of the activities chosen by the companies based there. This determines the salaries that can be paid and the benefits that can be obtained. National and foreign companies contribute to the prosperity of a place, depending on the productivity of the activities carried out in that place. The presence of advanced foreign companies usually improves the productivity of national companies, and vice versa.

Conclusions:

In conclusion, the location within a cluster can provide higher or lower cost access to specialized inputs, such as components, machinery, services to companies and personnel, compared to vertical integration, formal alliances with external entities or the “importation” of inputs from distant places. The cluster can be an inherently more efficient means of gathering inputs, provided that competitive local suppliers are available. If you do not have them, it may be necessary to stock up outside the cluster, even if this is not the ideal result. Access to inputs supplied by members of the cluster may imply lower transaction costs than if they are obtained from distant sources. Specialized external suppliers tend to be more cost-effective and more sensitive than the company's own units, not only in the production of components but also in areas such as training. In modern economy, the greater depth and specialization of the suppliers that are within the clusters arises, above all, because they recognize market opportunities and reduce their risks, more easily, due to the presence of many local customers. What's more, the developed clusters not only consist of an industry, but of these plus related industries. These industries often resort to common or very similar inputs that expand opportunities for suppliers.

Companies can not use technical logistical advances, if there is not a high quality transport infrastructure. Companies can not compete using a strategy based on providing exquisite service if they can not be done with well-trained personnel. Companies can not operate efficiently if they have to deal with a huge amount of bureaucratic procedures and negotiations with Administration officials, or if they are located in a place where the judicial system does not resolve disputes quickly and fairly. All these situations consume resources and time and do not contribute to improve the value offered to the client. The effects of some aspects of the economic environment, such as the road network, tax rates and the judicial system, influence all sectors. These areas that affect the entire economic system may represent the constraints that hinder competitiveness in developing economies. Both in the case of the most advanced economies such as. More and more frequently, in the rest of the world, the most decisive aspects of the economic environment are frequently specific to each cluster. The theory of clusters plays an important role both in the company's strategy and in economic policy.

1.3.2 Cluster models

The agglomeration in a region stimulates economic growth because it reduces the costs of innovation in the region, through the side effects of transaction costs. In turn, growth fosters agglomeration, since when innovative sectors expand, new firms tend to locate near them. Agglomeration implies that innovation and most productive activities take place in a central region. However, as new businesses are continuously created in the centre, some relocate production to the periphery. Among the advantages derived from agglomeration arise when firms form clusters of economic activity, are the particular development strategies in which they flow and through this area of ​​economic activity. This helps to accumulate the flow of information of new and innovative ideas among firms for the achievement of what they call scale of increase. With the establishment of a firm, there is always a fixed or average production cost for the firm based on (sources needed, labour, capital, rent etc.) for the firm's production. When this average production cost decreases as a result of the increasing total output of a product, it indicates a presence of economies of scale; the returns to the scale of increase and economies of scale can be used alternatively.

The agglomeration in a region stimulates economic growth because it reduces the costs of innovation in the region, through the side effects of transaction costs. In turn, growth fosters agglomeration, since when innovative sectors expand; new firms tend to locate near them. Agglomeration implies that innovation and most productive activities take place in a central region. However, as new businesses are continuously created in the centre, some relocate production to the periphery. However, we can find “other advantages”, as Örjan Sölvell (2008) points out. The advantages of the clusters lie in lower costs, including transaction costs (efficiency advantages), increased workflow and other factors (flexibility advantages) and greater knowledge and cooperation (advantages of innovation). Martin and Ottaviano (2001) develop a model in which they incorporate an “endogenous process of innovation and growth”.

There is a relation of the demand, given that the companies of the industry that are in a previous phase of the productive chain benefit from the proximity of the companies that buy them supplies. There is also a gear in the costs because companies that are at a later stage of the production chain benefit from the proximity of the suppliers (vertical linkages). They also show that the geography of economic activity is important for growth, even in the absence of local technological externalities. The mechanism that links growth and geography only takes place through market interactions. Paraphrasing Fujita and Thisse (2002), “growth and congestion go hand in hand“, and Martin and Baldwin (2004) emphasizes the result that, taking into account the secondary effects of agglomeration, “spatial agglomeration leads to economic growth”. Brülhart and Sbergami (2009) considered the possibility that the effect of spatial concentration on economic growth may be non-linear and subject to other factors. They focus on two important hypotheses.

First, Williamson (1965) suggests that “agglomeration is more important in the early stages of development”. So, when transport and communication infrastructure is poor and the scope of capital markets is limited, efficiency can be significantly improved by the geographic concentration of production, but as infrastructure improves and markets expand, the externalities of congestion could lead to a wider dissemination of economic geography. This context is consistent with the urbanization and growth model of Bertinelli and Black (2004), in which “the growth of highly populated areas (cities)”, as well as the accumulation of human capital, is supposed to occur only there. The benefits of agglomeration dynamics must be weighed against the cost of agglomeration diseconomies (congestion, cost of land, deterioration of infrastructure, shortage of services, longer transfer time, among others). The relative importance of these two effects changes in the different stages of development. Geographical relocation of economic activity is slow and the processes of urbanization reversal tend to take a long time. Therefore, it is conceivable that countries will have a geographically concentrated economy after periods of rapid growth, and that concentration will remain at the optimum level.

According to Williamson's hypothesis, agglomeration promotes growth in the early stages of growth, but has no harmful effects on economies that have reached a certain level of income. Second, Krugman and Livas (1992) suggest that “the internal geography of countries (and therefore, agglomeration) matters more in closed economies than in open economies”. Ades and Glaeser (1995), in a representative sample of 85 countries, find “a negative correlation between partial openness and urban concentration”, but remain skeptical about the existence of a direct causal relationship. According to the definition of Michael Porter (2000), “a cluster is a group of interconnected companies that belong to a particular economic sector”, which are close in a geographic space, and which are linked by common and complementary practices. The cluster can have geographic scopes that go from a region, a state or a city. But the concept goes a little further, the clusters are a vehicle for companies, government and local institutions to generate a constructive dialogue about modernization, offering a new mechanism of public-private collaboration. Cluster initiatives provide a new way of organizing economic development efforts, which goes beyond traditional efforts to reduce the costs of doing business and improving the overall business environment.

When concentrated in clusters, companies may be more interested and engaged than they would be when efforts necessarily gravitate around general issues, such as fiscal policies and export promotion. The company-government-university dialogue moves to a more concrete level in which pertinent and timely measures can be taken. Cluster initiatives can not only focus attention on policy issues but can also reveal and help address certain issues in the private sector. Porter considers the following aspects as potential advantages of the clusters: the common understanding of competitiveness and the role of clusters in generating competitive advantages; concentration on the elimination of obstacles and restrictions, for the benefit of the companies that make up the group; a broad participation of the companies that make up the cluster and associated institutions; private sector leadership; special attention to personal relationships and a bias towards action.

Another important aspect in the definition of a cluster is institutionalization. The improvement of the clusters is a long-term process that must ensure the continuity of its effects beyond the effort in a single moment. For the development of the above, it is necessary to institutionalize the concepts, relationships and links between the business advisory groups. In the private sector, new or revitalized business partnerships often assume leadership roles in the continuous improvement of clusters. In government, the improvement of clusters can be institutionalized through an appropriate organization of government agencies, through the collection and dissemination of economic statistics, and by the control of the structure and “composition of business advisory groups” (Porter, 2000). The most popular definition of cluster is that which is related to the industrial cluster. This is defined as the limited concentration of similar or complementary economic activities that belong to a specific industrial sector and that have active channels for communications and dialogue transactions. In addition, they share a specialized service and labour market infrastructure and face “common opportunities and threats” (S A. Rosenfeld, 1997).

Nowadays, the definition of a cluster will be the one adopted above, that is, the spatial concentration of companies with the same economic activity in the service or industrial sector and located in the urban area of ​​the cities. Under the definition of the Cluster of Professor Michael Porter, it is interesting to ask: Why develop a cluster? Work experience in many countries indicates that companies operating within a cluster enjoy additional competitive advantages in at least 3 areas:

1) A cluster promotes increases in the "productivity" of companies and in a more sustained manner. This happens because:

– Mass attraction of buyers of a certain type of product in a particular city or region

– Training adjusted to the specific needs of the sector

– Creation and availability of specialized labour

– Easy access and variety of high quality raw materials – improvements regarding product quality

– Services specialized in machinery and equipment used by companies

– Financing adapted to the conditions of the sector

– Healthy but intense competition among the cluster companies, which drives the productive improvements.

– Common strategic North and adequate alignment of public incentives

– Mutual trust that makes transactions between local companies belonging to the cluster more efficient and faster

2) A cluster stimulates greater innovation in companies and in support institutions. Companies within a cluster can perceive the new needs of buyers more clearly and quickly. Companies in a cluster can discern buyers' trends faster than isolated competitors can. Participation in the clusters also offers advantages in the perception of new technologies and the possibilities of supplies. Companies can be exposed to richer knowledge about the evolution and availability of technology, components and machinery, services and marketing concepts and the like.

3) A cluster creates a more conducive environment for the creation of more and better companies of all sizes. The incentive to enter the market is often greater in the clusters because there is better information about the opportunities for business. The existence of a cluster is a sign of an opportunity. Individuals working in or near a cluster more easily perceive new gaps to fill in relation to products, services or suppliers. After acquiring this knowledge, individuals can more easily leave established companies to start new ones designed to complement the observed needs. In a cluster the barriers to entry are lower than in other places.

Other types of agglomeration economies

According to the literature, there may be different types of agglomeration economies depending on the way in which the firms are grouped or the geographical scope.

External localization economies: Refers to the common location of a number of independent economic activities that belong to the same industry (or cluster). These types of economies can be attributed to the organization by Clusters.

External economies of urbanization: refers to the common location of economic activities that belong to different sectors and are not related. The sources of urbanization economies include the scope of a range of public services, transportation, communications and infrastructure, the existence of a variety of business services and access to different kinds of labour supply. These economies are best described as a function of the magnitude or diversity of production that may prevail in urban settlement. Productivity in activities increases as a result of the presence of public and private services, and improvements in infrastructure.

External economies of complex activity: They result from the common agglomeration of a particular set of activities that exist in a productive chain. The above has to do with the backward and forward linkages of an activity with respect to other activities. It is an agglomeration economy if businesses obtain productivity gains because they are located jointly with suppliers and buyers.

Territorial learning capacity depends, then, on the construction of an adequate institutional environment to stimulate private and social learning among workers, companies, networks, groups of companies and public bodies in that territorial area.

Territorial or regional capacity to learn (“learning regions”) focuses mainly on the contributions made by social capital and the trust in the support of networks of relationships between companies and the interactive learning process. In this way, for the innovations to be successful, the social and cultural context of both the research infrastructure and the network of relationships between companies and territorial actors are crucial. The promotion of a territorial environment favourable to innovation depends, then, on the capacity to promote cooperation relations in the different territories. This approach to innovation systems highlights, therefore, the territorial influence of the same, respectively the relevance of the institutional, social, political and cultural aspects that are present through economic activities.

All this reflection about the scope of the development models of districts or territorial projects and clusters or networks of companies should serve to see how to advance from them towards territorial development strategies in order to achieve with it the best results from the point in view of the competitiveness of productive integration projects. In this sense, the main elements to consider are the following:

• Evolution of the local division of labour through close observation of local labour markets.

• Connection of this local division of labour with the evolution of the main core of local needs, that is, the orientation of the territorial supply of human resources training towards local needs.

• Evolution of the local learning process and integration of contextual knowledge with new codified knowledge.

• Presence of a sufficient number of operators capable of playing the role of versatile intermediaries among the different specialists of the district, and the creation of territorial forums and public-private entities for territorial economic development.

• Formation of a network of local markets.

• Training and circulation of values ​​and knowledge coherent with competitive productive experiences (promotion of the local entrepreneurial culture).

• Development of local, formal and informal institutions, for the promotion of participation and associations of the local population.

• Formation and reproduction of elements of territorial identity or sense of belonging.

The development of ICT and the emergence of knowledge-based models In general, two types of clusters are recognized, which could be determined as the new main base of knowledge activities: Techno clusters These groups are oriented towards high-tech, well adapted to the knowledge economy, and usually have as nucleus renowned universities and research centres. Clusters based on know how emphasize more traditional activities that maintain their advantage in the know-how over the years, and for some of them, over the centuries. They are often industry-specific. Apart from these, there are other types of clusters that have emerged recently due to the incorporation of new technologies, especially as a result of the appearance of the web 2.027, and the recent adaptation needs that arise as a result of the new changes. Some examples of these new clusters are the Virtual Cluster, the Open Cluster and the Knowledge Cluster: Virtual Cluster. Due to the need to create value chains with partners that provide skills, it is necessary to be able to select the best partners and, in case of not having them in a region, it is necessary to implement platforms that help companies to look for them outside of it. Therefore, it is important to create a methodology which identifies all those processes or key activities to search, evaluate and select members of the different industrial sectors.

Open clusters. The portion of value is not only in the business of the company, therefore, companies are starting either to share their resources with third parties in order to create value, or to use external resources in their business models. These new business models have been defined by Chesbrough as “Open Business Models”. The definition would be reproduces as a model that bases its success on the fact that currently, while companies need to accelerate the value creation process and each time, they are more aware that they do not have all of them the resources necessary to compete successfully in more complex environments and do not have the capacity to develop them on their own. At the same time, they are aware of the difficulties involved in capturing value created by their own resources, many of them underutilized, or even not used commercially.

Knowledge clusters. The knowledge cluster can be defined as a nervous system that promotes the competitiveness of a country. As Wang points out using a metaphor, “the skeleton of an economic system” consists in infrastructures, the “muscles” are the companies and the “nervous and neuronal system” is represented by the relationships that are established. Therefore, the knowledge cluster brings together both companies and institutions that make up the entire basic system for its development. This set of entities, grouped around the concept of knowledge cluster, represents a greater competitiveness for companies and organizations. This system makes it easier for companies to get the necessary management knowledge to make them efficient and productive. In some countries, especially the Asian continent, this system works effectively and the quality of the agents allows for a collective learning spiral. In any case, this type of structures has the following advantages:

Sustainability: Promotes the development of institutions that facilitate dynamism, establishing the foundations of a knowledge society.

Contextualization: Allows knowledge to be applied in a contextualized

Creation of own knowledge: The system also allows the creation of knowledge in management adapted to realities.

Learning capacity: A learning process is generated that will allow to better respond to new challenges and opportunities.

Quick response: The system guarantees the speed of response, which is almost as important as the quality of it.

Opportunity: At present there are so many changes that working cooperatively is a guarantee to address them.

Cooperation between agents is the key of achieving learning capacity and rapid response to problems and opportunities.

Knowledge society: The effective maintenance of a cluster of this nature is a decisive step towards the knowledge economy. For the system to become an engine of change and adaptation, the knowledge cluster, following the principles of knowledge management, works in such a way that it is learned together. The groups are formed at the proposal of the partners and have an open character where the key is the transfer of knowledge and the joint learning of new approaches and methods.

Conclusions:

In conclusion, the introduction of growth results in a cumulative process that leads to geographic agglomeration. The agglomeration takes place when all the innovation activities and most of the production activities are located in the nucleus, but some productive companies that are in the nucleus move their production to the periphery. This is consistent with the empirical evidence that shows that the geography of innovation and the geography of production tend to reflect one another, but not perfectly, since innovation activities are more concentrated in the space of production. In this respect, spatial agglomeration generates divergences in income levels. The clusters of world-class firms, instead of individual firms or simple industries, constitute a source of jobs, income and growth of exports. It also shows that the more spatially agglomerated an economy is, the faster it grows at the aggregate level. As one can observe, in the projects of productive integration (local productive systems of small companies), the capacity to innovate depends on the collaboration of numerous territorial actors that perform different functions and have different levels of competence and knowledge about the productive process and local employment. The operation of the production process, as well as the transfer and acquisition of skills, has to do, therefore, with all those actors. In these approaches of performance of the local productive systems the action strategy shares, then, as characteristics, a unit of territorial intervention, the public-private cooperation of actors, the active participation and the search for consensus among them, and the given priority to the provision of business development services for small and medium-sized local businesses through the creation of innovative territorial environments or contexts.

1.3.3 Introduction to Porter’s diamond model

Michael Porter followed an empirical study conducted in ten countries with different characteristics in relation to size, location, culture, government policy, among other factors; he designed a model that explains the process to develop competitiveness. This study defeats the traditional thinking that was had. Porter, (1990) states that “the success of a nation (or region) is due to the competitive advantages and not the comparative advantages it holds”. Therefore, it is pertinent to reaffirm that the success of a nation is determined by the industries; therefore, the advantages of one nation over another are not based on factor endowments and comparative costs, but on strategic choices and the ability of industries to innovate and improve. Although Krugman (1994) has criticized Porter's model, because “it does not establish the difference between the competitiveness of a company and the competitiveness of a nation”, because nations do not compete in the same way that companies compete, including if a company that can not pay suppliers, salaries, etc., is taken to the limit, it will surely disappear, while a nation can not disappear just because it is not competitive.

Conditions of the factors.

It refers to the position of the country (region) regarding the characteristics and availability of human resources and infrastructure necessary to compete in the sector. In order to understand the relationship of these factors in competitiveness, it is clarified that the factors can be grouped into generic categories: Human Resources, from which the quantity, capacity, labour cost, geographical location and culture must be taken into account. In addition these resources can be broken down into categories according to needs. Physical Resources, at this point it is important to consider the abundance, quality, accessibility and cost of the material and natural resources. Equally important are the weather conditions, geographic location and size. Knowledge resources, refers to the capacity and resources to generate scientific, technical and market knowledge that matter for the goods and services of the industry. The sources of these are the universities and trade associations, private or state that generate innovation.

Conditions of domestic demand

This is the second determinant of competitiveness considered in the “Porter’s diamond” model. This section explains the influence on the competitiveness of domestic demand. Regarding the composition of domestic demand, it can be seen that a segmented internal market usually has demanding buyers, who also demand innovation for development. In terms of the size and pace of growth of demand, it can lead to competitive advantages, especially in those sectors where economies of scale are applied to boost investments in research and development. However, Porter points out the need to be careful, since a large internal demand is not an advantage unless it occurs for segments that also enjoy demand in other nations or the existence of local or multinational buyers, internationalization. If the buyers of a nation for a given product or service move from one place to another or belong to a multinational, they create an advantage for the nation's businesses because domestic buyers are also foreign buyers.

Related and support sectors.

This third determinant refers to the contribution to competitiveness that is promoted by the availability of suppliers or related sectors with high international quality standards. The presence of competitive industries in a geographic area creates conditions of advantage in the industries that are at the end of the value chain. One of these advantages is the most efficient, fast and preferential access to low-cost inputs. It should be mentioned that simple access to the availability of machinery and supplies is not enough, so special attention must be paid to the “efficiency in the use of these inputs” (Neme, 2006).

Strategy, structure and rivalry of the company

This is the fourth determinant of competitive advantage that explains the context in which companies are created, organized and managed, as well as the nature of the rivalry between them. Porter (1990) assures that “the circumstances in each nation affect the way in which companies are managed and compete”. He wants to say that there are multiple aspects in a nation that influence the way companies are organized and managed, some aspects are the attitudes of workers, the rules of individual or collective behaviour, education, social and religious history among others.

Complementary elements

To complete the theory (Porter, 1990) there are two variables that can significantly influence the national environment, these are chance and the Government. The coincidence that during the study carried out by Porter, it was found that some casual events played a more or less protagonist role. Without a doubt, it must be recognized that some incidents can occur that have an impact on the competitiveness process, and that are also beyond the control and capacity of influence on the part of companies or the Government; Some examples are inventions, technological discontinuities, significant changes in financial markets, unsuspected increases in global or regional demand, wars, natural disasters, among others. However, the fact that a casual event becomes a competitive advantage depends on the national diamond. In other words, a chance event can alter the relationships of the determinants of the Porter model; even, what can be considered a coincidence, can be capitalized as a competitive advantage, by those who have a “more favourable diamond”.(Porter, 1990: 178)

Conclusions:

In conclusion, it should be mentioned that M. Porter has already identified more than 800 clusters in 50 countries with this template. The diamond of competitiveness as it is also known as the Model developed by Michael Porter, is presented in this section, because precisely this Model in its basic form will be the main methodological element for understanding the analysis and proposal of the Cluster Model for the Cameron industry in Sonora. Porter (1990) considers that “the sectors with capacity to compete depend to a great extent on the environment and conditions that surround it, recognizing that they are not isolated entities”. The interrelation of groups of attributes is represented by determinants that must be considered for the capacity of competitiveness of the companies; these determinants are: the conditions of the factors; the conditions of the demand; suppliers and related industries and support; the strategies, structures and rivalry of the companies. In addition, two more elements must be added: chance and the role of the government.

1.3.4 Role of the Government in creating the competitive advantages & clusters

The degree of government intervention and its policies play a decisive role in the competitiveness of a region. The real role of the government is to serve as a catalyst for innovation and change, to question static positions, to force the system to constantly improve, and to encourage companies to compete to accelerate the innovation process. The government must influence the four determinants of the diamond, creating a fertile environment for the development of internationally competitive industries. The government should focus its efforts on the creation of specialized and advanced factors. It can also influence the conditions of demand, with the issuance of more rigid regulations on products, safety and the environment. Also, the way in which the government plays the role of buyer in the economy can stimulate or numb the national industry. Finally, the government should limit any type of barrier to local competition, promote increasing investment rates, especially in training, innovation and fixed assets, and reject monopolistic or oligopolistic tendencies, as this favors markets in which inefficient companies are located.

The role of government in the Porter Diamond model is to act as a catalyst and challenge, to encourage companies to lift their aspirations and move to higher levels of competitive performance. It should encourage companies to lift their performance, stimulate the primary demand for advanced products, focus on the creation of specialized factors; and stimulate local rivalry by limiting direct cooperation and enforcing anticompetitive regulations.

The role of Government in Competitiveness

Neither intervention nor laissez-faire is appropriate for the role of government in economic development. This thinking is simplistic.

Equality of conditions is not enough.

The opening of the market is not enough.

The elimination of negative government roles is not enough.

The government has two functions: setting standards and public investment roles.

Macro progress is insufficient if the micro does not improve. The missing key in government policy is often microeconomic reform and microeconomic capacity building.

Economic and social policy is mutually reinforcing and must be integrated.

The role of Government in competitiveness

The decentralization of economic policy and sub-national units is fundamental for competitiveness in national, medium and large economies

Government functions and responsibilities change as an economy becomes more advanced. Government has an important role in advanced economies but these are different than in a developing country

Government can not create competitiveness on its own. It must create a commitment with companies, universities, institutions for collaboration and with other microeconomic institutions.

No government or leader is capable of transforming an economy, each

ONE must see oneself as a manager of a long-term process.

Political leadership is vital for competitiveness. Due to its construction, it requires a long-term perspective, collaboration with different actors and the possibility of gaining public support for policies that disrupt the state.

The government must achieve acceptance and political legitimacy to succeed in economic development

The pursuit of macro reforms and the opening of the market will create a political reaction

Micro and social reform are crucial to gain acceptance and political support

Determinants of competitiveness

Natural resources create a basis for prosperity but true prosperity is created by productivity in the use of endowments.

Macroeconomic competitiveness establishes the potential for high productivity, but it is not enough.

Productivity depends on improving the microeconomic capacity of the economy and the sophistication of local competition.

Clusters in Developing Economies

Improving the general business environment is essential but, cluster development requires to reach average income levels.

Developing economies should improve traditional clusters (including agriculture), never abandon them.

The TNCs existing in the country should be treated as nodes for economic development

The best way to retain companies is to be part of the cluster.

The attraction of foreign direct investment should focus on existing and emerging clusters, not generalize attractive to be located in the country.

Incentives to attract companies should lean towards training, infrastructure and other areas that improve clusters and generate local assets vs generalized subsidies and tax benefits.

Free trade zones or export processing zones should be organized around the clusters with government regulations designed to foster links with the local economy.

A formal process for cluster development is an important component of economic development.

Private sector guide

Roles of the government through calls, support and participation.

Financing for the cluster evaluation and the formation of IFC's based on clusters

Impediments of the Government to form a cluster

Developing countries

Tolerance to monopolies, cartels, protectionist regulations and competitive state enterprises.

Rigidity in vocational training and university curricula making the alignment with the cluster complicated.

Incentives or requirements to locate in free trade zones or free zones isolated from the local economy.

Regional development policies that artificially distribute businesses and investment in locations to benefit depressed regions.

A legacy of the planned economy model for development that strongly distorts economic geography.

Conclusions:

In conclusion, the economic progress is halted in the same way by inaction and ignorance of the steps that must be taken. There are many forces that oppose economic improvement and modernization, from obsolete conceptions of competitiveness to entrenched interests whose prosperity depends on maintaining the status quo. The process must involve all stakeholder groups and must be above government policy. It should cover the general conditions that affect all sectors, as well as the improvement of clusters. Ideally, this process should occur not only on a personal level, but also at the level of regions and cities.

The role played by the Government in this model is of great importance, because of the ability to influence the diamond. The laws, norms and policies of the Government have a positive or negative impact on each and every one of the determinants of competitiveness. It is important to emphasize that the Government has the ability to influence to increase or decrease the chances of achieving competitive advantage, but not to create it. In this regard, Government subsidies that free companies from the pressures that would improve and perfect them are counterproductive. Also, Government policy will fail if it remains the only source of competitive advantage national.

The global map of clusters in oil-gas sector

The abundance of resources promotes besides the investment activities and research and innovation activities. Regarding the technological trends of the industry, the vast majority of countries are investing in technologies that allow achieving five strategic objectives:

expand future supplies of conventional hydrocarbons, for which it is necessary to have access to technologically more demanding areas such as deep waters, arctic regions, small deposits in known areas and desert regions;

economically profitable production of non-conventional sources of hydrocarbons, in particular heavy crude, extra-heavy, bituminous, oil sands, oil deposits and nonconventional gas.

improve the percentages of primary and secondary recovery of existing reserves.

reduce the costs of exploration, production and development with the application of new more efficient methodologies, and finally, (v) sharply reduce the environmental damage caused by exploration and production activities, thus improving the image of the oil industry worldwide.

Petroleum and gas cluster in Calgary, Canada.

The energy sector of Alberto has a significant importance. The province has significant oil and gas assets and resources. This Cluster consists mainly of the central offices of oil and gas extraction companies, drilling companies and gas pipelines, as well as technical and support services. In 2000, the cluster employed close to 50,500 people, respectively 10% of the total jobs in the region. Major members of the cluster include TransCanada Pipelines Ltd., Petro-Canada, Shell Canada Ltd., PanCanadian Petroleum Ltd., Alberta Energy Company Ltd., Husky Energy Inc., Talisman Energy Inc., Nexen Inc., Suncor Energy Inc., and Canadian Natural Resources Ltd. This grouping has been a driving force of the regional economy, not only because of the investments and the growth of the industry, but also because it has acted as a catalyst for the development of other clusters in the region, including such strategic groupings as telecommunications and cell phones, information technologies and geometrics. Employees, skills and technologies have shifted from the oil and gas cluster to new or newly initiated businesses in other industries and played a major role in the diversification of the regional economy. Previous employees of the oil and gas cluster established a significant number of ICT and marketing companies, among others. As a result, trends towards Outsourcing in the industry increased; in this direction, geological and technical services currently account for the second most important business concentration of all Calgary's activities.

In recent years, numerous mergers and acquisitions have reduced the number of service sectors and drilling companies. While there is concern on the one hand regarding the negative impact that this trend would have on regional employment and the number of central offices, there are also strong expectations that consolidation could bring new ideas and new people to the region, bringing as a result, bigger and stronger companies, probably better prepared and ready for the global market.

The second major challenge is to cover the existing gap in research and development on energy issues. The research programs of the different institutions of Alberta do not have a shared vision regarding their strategic approach. Some industrial leaders see the need for a shared strategy for energy research, with a strong emphasis on innovation, which would make the most of all the province's energy resources. The short-term approach would be to extract more energy and higher value-added products from heavy crude and “bitter gas”, while the next step would be to focus on the extraction and conversion of the next generation of “oil sands” and the development of "coal bed methane" or methane from the coal layer. Eventually it could also focus on the transition to clean fuels and the so-called “Hydrogen Economy”.
This non-cluster is not currently in the focus of the C-Prosperity Initiative (a plan for the economic development of clusters in the region), since it is considered as already established and consolidated.

Oil and gas cluster of the Northern Sea: United Kingdom-Norway.

The UK-Norway Cooperative Working Group for the North Sea was established to improve trade cooperation between the two countries in all aspects related to the oil and gas industry. The United Kingdom and Norway share most of the natural resources in oil and gas located in the North Sea, but historically their hydrocarbon sectors have evolved to a large extent, as independent systems. Recognizing the growing importance of alliances and partnerships, these countries have come together to establish a working group that represents the interests of all links in the supply chain with representatives of operators, contractors and governments. The Working Group identified that close cooperation and the sharing of best practices would bring greater efficiency and incremental value (over $ 2 billion), through capital savings, reduced operating costs, lower commission costs, and an accelerated development. The benefits would extend to all elements of the supply chain. Among the specific recommendations made in the spirit of developing UK-Norway cooperation are:

Development and Assistance to Mutual Fairs

Sponsorship and training between both countries

The Guide to Compliance with Regulations

Establishment of a single database with respect to suppliers.

Improving competitiveness is one of the main goals of the gas and oil industries in the United Kingdom and Norway, especially since the costs of discovering and producing a barrel in the North Sea have become significantly more expensive than in the North Sea. Gulf of Mexico or Malaysia. The Vision for the Gas and Oil industry set by both countries for 2010 has been defined as: “Industry and Government will work in partnership to deliver faster, smarter and more sustainable energy solutions for the next century”

Operators, contractors and suppliers could cooperate in different ways:

Timely coordination of drilling in exploration, development of fields and closures or stoppages to minimize the impact on business cycles.

Shared inventories.

Strategic well planning.

Extranet for the Industry, with a view to providing a virtual trading environment for buyers and sellers, and as a means to share information (about inventories, engineering data, waste, etc.).

Shared logistics

Reduction or elimination of commissions in purchases.

Additionally, the teams found other areas for potential cooperation among contractors:

Wells and drilling services (referred to jointly maintaining spare parts for drilling, use of drilling fluids, replacement of shared equipment, etc.)

Establishment of floating reserve of employees A new website was launched in May 2012, containing details for contacts with more than 3,000 companies in the United Kingdom working in the Gas and Oil supply chain. This site, prepared and maintained by the Department of Trade and Industry in Aberdeen, is open to global buyers seeking detailed information and contacts with companies based in the UK's hydrocarbons sector. It is possible to search by company, product or key personnel and contains a large number of hyperlinks to companies. This site is part of the Oil and Gas Portal, under the auspices of governments of different countries.

The Working Group also recognized the importance of having a trained, well-trained and motivated workforce, which is why it recommended the establishment of the National Training Organization (NTO), a group that would serve the oil and gas industry. Its mission would be to provide training and develop first level skills, as well as strategic direction. This would ensure that the oil and gas industry could work under policies and personnel development programs, with a coherent and comprehensive training that covers all the links of the chain (Up- Middle-Downstream). The Working Group also identified a set of technologies available but not disseminated. If applied, an immediate impact would be achieved in improving the recovery of hydrocarbons in existing wells.

The Working Group also developed a Business Plan for a new Technological Industrial Facilitator, which would manage communications between technology providers and their users. This was expected to stimulate collaboration and ensure that the risks and benefits of the application of new technologies are shared. A study by the Department of Commerce and Industry, and the Working Group, also identified new business opportunities in the environmental area, emerging from the new regulations in this regard. Companies in the supply chain that provide non-harmful products to the environment or services of this nature for the oil and gas industry had the opportunity to diversify their activities and enter markets located outside the sector.

Trends in the oil and gas industry

It has been noted from the extractive sector in general that operations often take place in the most disadvantaged areas of the world, confronting some of the most vulnerable children with profound and diverse impacts. Inherently, the potential impacts on human rights of Oil and gas operations are often linked to their proximity to local communities. With regard to children, knowledge of the specific impacts of operational activity has been limited. The feedback suggests that to a certain extent this is due to the remote location, or even to the open sea, of the farms. However, this may be changing due to the increased use of new technologies for land extraction. This trend and other ones in development are discussed briefly below. Re-exploration of solid ground and shallow water using new technologies: Some unconventional technologies are encouraging the increase of exploratory activity on the mainland. These include hydraulic fracturing, also known as “fracking”, which is performed in conjunction with horizontal drilling and which allows capturing more natural gas than other techniques. Public concern about the effects of fracking has been substantial. Although part of the social concern may be based on exaggerated estimates of possible impacts, the truth is that these impacts have already generated significant risks to the reputation of certain companies, and they will continue to do so. Increased collaboration agreements between national and international oil companies: The 2017 Review of Resource Economics notes that 90% of the world's oil reserves and 73% of production are controlled by national oil companies (state-owned enterprises).

National oil companies are increasingly becoming associated with international companies for a variety of reasons, including:

• States have other priorities that they must also take into account and may prove impossible justify or finance the exploitation of resources.

• States must respond to their citizens and therefore are less likely to risk public funds in exploration activities that may not prosper. Signing collaboration agreements with international companies allows them to manage risk.

• States may lack the knowledge and technical expertise necessary to extract resources and geopolitical problems may restrict the ability of companies to learn from their peers about the extraction of resources.

Exploration in the Arctic: This is expected to increase, with oil and gas companies in the lead , which could have important impacts on the nomadic indigenous communities and their children that live in the Arctic.

Clusters and competitiveness in oil and gas field

The Clusters in oil and gas field reflect an important influence of externalities / links (linkages) between the firms and institutions involved in the competition. In this way, they:

• increase productivity and efficiency

• stimulate and allow technological innovations

• facilitate marketing

Now, within the context of globalization, the competition between regions and localities is changing, of course their relation between them also: more competition, more specialization and regional concentration, and more linkages are required (clusters include links between firms and industries, fundamental for competition and, especially, for the direction and pace of innovation). In this regard it is important to clarify what a cluster is not: a cluster is not a guild or a cooperative.

Clusters of oil and gas as a political economy tool

The clusters are an important economic policy tool in that they allow us to address a new way of thinking about the economy and the organization of efforts in this regard; a better alignment with the reality of the competition and the sources of competitive advantages; reform the role of the private sector, government, trade associations and education and research institutions; gather signatures of all sizes; create a forum for constructive dialogue between business and government; and it is a means to identify common opportunities and not only shared problems.

In this respect, they:

• Create a forum for a constructive dialogue between business and government

• Gather signatures of all sizes

• It is a means to identify common opportunities, not just common problems

• Provides a guide for economic and social policies

• Clusters include links between firms and industries, fundamental for competition and, especially, for the direction and pace of innovation

• Reform of the role of the private sector, government, trade associations and education and research institutions

Innovation: The Levels of Innovation, Research and Development contribute to generate greater productivity and therefore greater prosperity in the region. Innovation, research and development are stimulated through specific investment aimed at strengthening these processes within companies. Firms within a cluster usually have a greater ability to more quickly perceive trends or new market needs. They benefit from the concentration of companies since they generate knowledge that other companies can take advantage of. In addition, these benefits can be used in the investment again.

Entrepreneurship: Clusters provide an incentive to generate entrepreneurial activity by providing better and more information about an opportunity. Entrepreneurship also benefits from the acceleration of the learning curves of companies due to the ease with which some firms learn from others, the possibility of exploiting them reciprocally.

Conclusions:

In conclusion, nowadays, the process of globalization has made the competition between regions change. Now it demands more competitiveness, more specialization and regional concentration, more linkages, which include links between firms and industries with innovation guidelines. Under these new demands in search of greater competitiveness supported by innovation that generates local development, employment and improvement of the quality of life, decided to focus efforts on the development of the Oil and Gas Clusters. This implies a reorganization of the guidelines in the productive processes, which is reflected in an increase in productivity and efficiency, which, in turn, stimulates technological innovations. The main objective of the department's authorities in terms of economic development is to make this one of the most competitive “prosperous” worldwide, characterized by high levels of per capita income and quality of life. The clusters include links between firms and industries, fundamental for competition and, especially, for the direction and pace of innovation. With this great initiative, the Oil and Gas departments will have a sustainable development based on productive and competitive companies, based on training, entrepreneurship, business strengthening, innovation and technological development, associativity and access to capital resources, which will boost worldwide economy with much more efficient and competitive production processes.

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CHAPTER 2. AN OVERVIEW OF ECONOMIC AGGLOMERATIONS OF OIL-GAS AND FOOD INDUSTRY OF TURKMENISTAN

2.1. Role of Government in creating economic agglomerations and productive networks in determining competitive advantages of oil-gas and food industry of Turkmenistan

2.1.1 Challenges that international companies of oil-gas sector face when expand to Turkmenistan

Central Asia's position on the international scene is interesting; in spite of being considered habitually like one of the most important regions of the globe at strategic level and to be known like "the zone of the Great Game" or the Heartland, Central Asia continues being a little known region and something isolated. (Pomfret, 2014: 287)

Therefore, the Asian republics were part of the Soviet Union when it still existed and were created after the fall of it. The ethnic groups were divided and the feeling of national unity was difficult to promote. The attempts to create strong and United Nations have been made based on the idea of ​​moving away from the Soviet model and trying to concentrate power in the majority ethnic group, usually the holder of the name of the country, which has forced the exclusion of minorities. Nowadays, these countries have clearly tended towards authoritarian or semi-authoritarian regimes: Kyrgyzstan, with a single party, Uzbekistan and Kazakhstan with a regime of personality cult of the president or life presidents like in Turkmenistan.

In foreign policy, the republics, separately, have oriented and sought cooperation with regional and world powers. The geopolitics of the region is complicated; Iran could be a good ally, but this damages relations with the West; Russia, on the other hand, is the traditional partner, but these states try to become independent and while, China tries to gain influence in the region, competing with Europe for gas and oil from Central Asia and the Caspian. (Bank, 2010: 147)

The economy of the region is very based on the existence of important oil and gas reserves in the Caspian Sea. Thus, reserves, pipelines and their management move much of the economic interests in the area, also taking advantage of its geopolitical position, its location near other large containers of reserves such as Russia or Iran and consumers such as Europe, China and India. (Javaid, Rashid, 2015: 127).

In Central Asia two major issues can be highlighted, causing conflicts and alliances based on national interests; on the one hand, the construction of pipelines and gas pipelines to send the hydrocarbons produced to the buyers. The ex-Soviet republics have the challenge of building their own infrastructure network without Russian support and coordinating with each other. On the other hand, water management: in Central Asia, the two energy-poor countries, Kyrgyzstan and Tajikistan, control the main rivers that supply water for crops and hydroelectric power plants of the oil and gas-rich republics, Kazakhstan, Uzbekistan and Turkmenistan When all these territories were part of the USSR, water was exchanged for energy and vice versa, but now that they are independent republics, all these nations use their resources to pressure their neighbours and achieve their national interests, generating more tensions in the area.

In the region, approximately 30% of the population does not have access to drinking water and in some areas this percentage increases to 50%. Central Asia has a semi-desert climate, with 60% of the land formed by arid lands. (Rashid, 2001: 27) The two main river systems in the region are the Syr Darya River, born in the Tian Shan Range (Kyrgyzstan), and the Amu Darya River, which originates in the Pamir Mountains (Tajikistan). Both flow into the Aral Sea, in the lands of Kazakhstan and Uzbekistan. The desiccation of the Aral Sea has highlighted the environmental degradation of the area, largely due to poor management of the water resources of the Central Asian republics. The downstream states (Kazakhstan, Turkmenistan and Uzbekistan) need large amounts of water during the summer for their fields and to clear the sandy soil and obtain their fossil resources. In contrast, the States upstream, Kyrgyzstan and Tajikistan, use water to produce electricity and have built dams and hydroelectric power plants that help to meet the energy needs that their thermal power plants do not cover. During the winter months, these countries release the accumulated reserves to operate their hydroelectric plants to the maximum, causing severe flooding in the downstream States. The two most conflictive infrastructures today in this area are the Toktogul dam, which controls Kyrgyzstan over the Syr Darya river and the Rogun dam project, which would increase the control already exercised by Tajikistan, through the Nurek dam, over the Amu Darya river. Both projects would generate situations of water stress in Uzbekistan. Precisely because of this, the most warlike government in Central Asia is currently the Uzbek, which militarily threatens Tajikistan and Kyrgyzstan.

In addition to the fight for rivers, it is also important to highlight the lack of agreements regarding the exploitation of Caspian resources, rich in gas and oil. (Talwani, 1998: 38) The delimitation of the Caspian Sea, already complex in itself because of the five states that share its waters, is even more so if one takes into account that it is an inland sea and that, therefore, the outflow of resources must also be foreseen from this sea to the outside and its future distribution. In the last almost 20 years, the coastal States have not been able to sign an agreement on the status of the Caspian Sea. Currently, Russia, Azerbaijan and Kazakhstan have signed bilateral agreements for the management of the sea, but these are neither recognized by Iran nor accepted by Turkmenistan.

Turkmenistan is the least populated republic of the Central Asian countries and also the most politically closed. The principle on which Turkmen foreign policy pivots is that of "permanent neutrality" and is the first former Soviet republic to join the Movement of Non-Aligned Countries. Turkmenistan has the fifth largest gas reserves in the world. The most important deposits are in the Amu-Darya basin, in the east of the country, although the Dauletabat-Donmez reserves also stand out. The deposit of Yolotan-Osman, in prospecting since 2006, seems to have reserves of between 4 and 14 billion m3, which would make it the fourth or fifth largest deposit in the world. Natural gas accounts for approximately 50% of Turkmenistan's export earnings. Until 2009, 90% of its gas exports went to Russia, although Turkmenistan has diversified its exports to a large extent, sending them today to China, Iran, India and Europe. Relations with Russia have recently cooled down, as Turkmenistan considers that Russia favours the interests of Azerbaijan and Kazakhstan in the Caspian Sea. The state has chosen to strengthen its ties with Iran and Turkey, while relations with the rest of the Central Asian republics are marked by isolationism and the attempt to avoid any "contagion" of social movements such as those that have taken place in Kyrgyzstan or Uzbekistan. (Oliphant, 2013: 247)

Turkmenistan is largely a desert country with intensive agriculture and significant natural gas and oil resources. Exports of hydrocarbons (mainly natural gas) account for 31% of Turkmenistan's GDP, with 60% of gas exports to China and the rest to Russia and Iran. The government has explored two initiatives to bring gas to new markets: a trans-Caspian pipeline that would transport gas to Europe and the Turkmenistan-Afghanistan-Pakistan-India gas pipeline. Both face significant financing and security obstacles and are unlikely to end soon. (Paramonov, Strokov, 2015: 176-185)

Oil & Gas

Despite its large amount of hydrocarbons, Turkmenistan is not a major player in the energy markets due to the lack of infrastructure and limited export capabilities. In recent years, the country has been increasing investments to develop its reserves and export more natural gas to countries such as China. Foreign companies can only participate in Turkmenistan's oil and gas sector when they partner with state-owned Turkmenneft, the country's largest oil producer, or Turkmengaz, the state-owned natural gas company. Foreign associations usually adopt "production-sharing" agreements (PSA) and, in general, refer to extraterritorial resources. The CNPC of China is the only foreign company that has a natural gas PSA with Turkmenistan. The country has two oil refineries, Seidi and Turkmenbashi, with a total crude distillation capacity of almost 237,000 b / d. There is also a small domestic pipeline network linking the oil fields on land with the Turkmenbashi refinery and the Caspian ports. Turkmenistan has virtually no international pipeline infrastructure, except for an oil pipeline between the Seidi refinery in the northeast and the Shymkent refinery in Kazakhstan through Uzbekistan.

The hydrocarbon scenario is marked by economic uncertainty, rising expenses, regulatory complexity, lack of talent and a wave of mergers and acquisitions. According to Deloitte report (2008), companies in the sector must coexist with the depletion of easy oil, the nationalization of resources, the crisis in the area of ​​security, the regulations against harmful emissions and the boom of clean energy.

According to a report prepared by the international consultancy Deloitte, difficulties of various kinds threaten the immediate future of the global hydrocarbons industry. Called 'Oil and gas, a realistic vision', the work lists the top 10 problems that the executives of segment companies will face in the short term.

According to the report, in July 2008, when oil prices touched their ceiling (close to $ 150 per barrel), many thought that at some point they would have to go down. However, they could not predict the speed or intensity of the decline.

By January of last year, the quotation of the resource fell to US $ 40 per barrel. In this context, production companies that had committed to large-scale projects had to deal with unsustainable production costs. And while the approvals of new ventures stagnated, secondary process companies began to experience the negative effects of the global financial crisis.

For Javaid and Rashid (2015), the reduction and containment of costs is a prudent response to weak economic conditions, but this reaction can become a long-term disadvantage for companies in the sector. "The levels of natural reduction in existing fields are equivalent to approximately 7% of the global total, which limits the annual supply capacity by almost 6 million barrels per day. The post-recession resumption in countries with massive growth rates, such as India and China, promises to quickly reverse the recent fall in global demand". (Javaid, Rashid, 2015: 127)

It adds that the costs of regulatory compliance will continue to rise, especially in the United States, due to aggressive plans to reduce greenhouse gas emissions. To complete the picture, these days the rates of retirement in the industry continue to rise, which causes a risk of lack of talent, and there is increasing public support for alternative energies.

Uncertain times

First, the consultant warns that economic uncertainty could generate shortages in demand. "Losing continuity in the development of the new reserves will lead to a lower capacity in the future. And when the consumption recovers the industry will probably be faced with a framework of supply shortages, " Henni (2014) predicts.

Also, one highlights the impact of the increasingly high costs, which could significantly reduce profit margins. "Existing expenditures are due to previous investments, while the levels of activities are based on current production costs. This vicious circle will not be easily altered, and will surely keep the operations quite static in the short term, " Bhat (2017) considered.

Third, one emphasize the negative influence of regulatory complexity on the realization of global projects. By expanding to more and more distant places, companies must submit to diverse regulations. "While focusing their efforts on new regions of exploration and development, companies will have to strengthen their capacity to comply with the changing regulatory frameworks of the industry," observed the same author.

In the fourth instance, Deloitte report is worried about the lack of talent. "More than turning current managers into contractors once they reach their retirement age, companies should take new measures to attract students to the sector," it suggests.

Another problem is the weakness of small and medium producers, which accelerates the realization of mergers and acquisitions. "If it is a possible target of a friendly or hostile offer, it is important to identify the best candidates to merge, prepare for a competitive bidding process and take the necessary measures to protect the value before shareholders," the consultancy recommends (2010).

More restrictions

The sixth major difficulty facing the Oil & Gas industry in Turkmenistan is related to the smaller number of accessible markets due to the increasing nationalization of resources. "Currently state companies control 75% of the hydrocarbon reserves tested worldwide," Paramonov, Vladimir and Alexei Strokov (2015: 188) argued.

A seventh drawback is linked to the progressive difficulties in exploiting oil and natural gas stocks. "A significant portion of the remaining fossil fuels on the planet occur in more complex forms of extraction (such as the Canadian tar sands and the extra-heavy crude oil in

Venezuela), with high levels of contaminants or in locations that are difficult to reach, "observed Effimoff (2000: 157).

On the other hand, Effimoff (2000) argues that safety and health continue to be critical issues. "Fires, leaks, explosions and structural failures continue to cause great human and material losses, in addition to promoting damage to the environment," he emphasizes.

In addition, Economides and Wood (2009: 12) assert that the goals of reducing harmful emissions are acquiring an increasingly marked relevance. "Companies will have to develop new plans to address the fight against climate change both within their organizations and in close collaboration with governments," they emphasized.

Finally, Victor and Yanosek (2011) refer to the boom in clean energy. "The inexorable change towards a future free of fossil fuels requires that all the participants of the segment establish clear long-term strategies," Victor and Yanosek (2011: 119) conclude.

The availability of energy at low prices is closely linked to the quality of life. Indirectly as a productive vector, and directly through the consumption of families. A reduction in consumption beyond reasonable and economically justified measures to increase efficiency is not conceivable. But it is also unthinkable that the attention to energy needs can be freed from the use of fossil fuels, mainly oil and natural gas. There are adequate reserves of these energy sources, which would allow time for the search for alternatives, which are surely much more expensive, in the event that the exploration determines that it is on the way to exhaustion.

• The biggest problem arises from the distribution of current reserves, in a significant proportion in countries that have been shown to be cartelized and / or highly politically unstable. In other words, the main medium-term problem is linked more to the distribution of reserves than to their quantity.

• The biggest problems for the supply are given more in relation to reasonable prices, than to availability or production technology

• The increase in the use of coal, which is abundant in mature economies, is a good solution that requires technological developments, although it would conflict with the objectives of reducing emissions.

• A second dimension is given by the paradigm of global warming and the restrictions it imposes on the use of fossil fuels. If the current directives in terms of emission restrictions are maintained, the countries that joined the Kyoto Protocol will probably face a supply crisis, since in the long term, 15-20 years, in order to meet the growth in demand for electricity, it will be necessary not to only replace the existing generation that uses coal, but practically all the generation based on fossil fuels, which, as mentioned in the report, do not have a plausible substitute in that horizon. The inevitable dilemma will be to accept higher emissions or limit energy consumption. Only the development of CO2 sequestration technologies at reasonable costs8 could avoid this problem.

• The greater penetration of renewable energies does not seem to mitigate the dependence on fossil fuels in the horizon of 20-30 years. The return to nuclear energy that does not produce fears to the population would also require technological developments that effectively eliminate the fears of the population.

• Soft measures: participation of demand, energy efficiency, introduction of competitive global markets for gas, coal, uranium are necessary complements to clarify the energy future Finally, it can be concluded that the energy sector worldwide is not going through a particular crisis, but the supply of growing demand requires continuous efforts, and faces changing and complex situations. And this effort is particularly valuable because of the importance of energy in global welfare. Science as a whole, with a very special role for technology, can respond to current difficulties. Perhaps the greatest difficulties arise from barriers created by political decisions aimed at solving partial or local problems. The purpose of this report is to a large extent a modest attempt to help lift these barriers, helping to disseminate information that is intended to be accurate and objective.

World Bank appreciates conversations about the financing of a fuel pipeline through Afghanistan to India or Pakistan.

World Bank’s President, James Wolfensohn, said recently he had talks on financing a fuel pipeline to channel massive gas reserves from Turkmenistan through Afghanistan to India or Pakistan. Wolfensohn, who was in the Afghan capital to open the offices of the financial institution here and to confirm 100 million dollars of World Bank donations for the interim, said a number of companies had already expressed interest in the project. It has been reported that Turkmenistan has an estimated 159 trillion cubic feet (1.8 trillion cubic meters) of gas reserves, the 11th in the world. However, its status as an enclosed land and 23 years of war in Afghanistan have frustrated previous plans to open up reserves to the outside world. "I have spoken with a number of people about a possible pipeline from Turkmenistan through Afghanistan to Pakistan and out through a port in Pakistan or India," Wolfensohn considered. "We have expressed our interest in that but I think that managers should discuss it more broadly. We have said that we are ready to discuss it when they are ready for it. We are not taking the entrepreneurial role, but if this comes up, we will certainly stop to review it. There are already a number of entrepreneurs in business then we will wait and see." (The World Bank, 2016)

Wolfensohn said that the governments of Turkmenistan, Pakistan and India have expressed an interest, while Ashraf Ghani, special advisor to interim Afghan leader Hamid Karzai, also confirmed the interest of Kabul. Wolfensohn added: "If they do, I will be happy to talk to them and then we will see who is the biggest businessman in practice and what they have designed." The Taliban signed an agreement with the US company Unocal in 1998 to allow a natural gas pipeline two billion dollars and 890 miles (1,424 kilometers). The plan was for the pipeline to go from the Dauletabad gas field in Turkmenistan through Herat in Afghanistan before joining the gas network in Pakistan. But Unocal subsequently left the project, alluding to the civil war and maintaining uncertainty about the costs. (The World Bank, 2016)

Trans-Afghanistan gas pipeline

Pakistan’s President Gen. Pervez Musharraf addressed a meeting attended by interim leader of Afghanistan Hamid Karzai and President of Turkmenistan Saparmurat Niyazov in Islamabad. Pakistan, Afghanistan and Turkmenistan signed an agreement to build and maintain a 1460 km gas pipeline to supply natural gas from Turkmenistan to Pakistan through Afghanistan. Under successful negotiation contracts to explore in Turkmenistan, Bridas obtained exploration contracts for the Keimar block near the Caspian Sea, and the Yashlar block near the Afghan border. By March 1995, Bulgheroni had agreements with Turkmenistan and Pakistan granting Bridas the rights to build a pipeline inside Afghanistan, with pending negotiations with the country plagued by the civil war. The following year, after extensive meetings with landowners throughout Afghanistan, Bridas has a 30-year agreement with the Rabbani regime to build and operate an 875-mile gas pipeline through Afghanistan. But Unocal was not interested in a society. The government of the United States, its affiliated oil and construction transnational companies, and the dominant Western elite have coveted the same oil and gas transit route for years. A trans-Afghan pipeline was not simply a business matter, but a key component of a broader geopolitical agenda: total military and economic control of Eurasia (Middle Eastern and Central Asian Republics). (The World Bank, 2016)

By 1992, 11 Western oil companies controlled more than 50 percent of all oil investments in the Caspian Basin, including Unocal, Amoco, Atlantic Richfield, Chevron, Exxon-Mobil, Pennzoil, Texaco, Phillips and British Petroleum. Business planning groups and policies in Central Asia, such as the Foreign Oil Companies Group operated with full support from the US Department of State, the National Security Council, the CIA and the US Department of Energy and Commerce. (Osmundsen et al., 2006: 49-64)

Among the most active operatives for the American efforts: Brezezinski (Amoco consultant, and architect of the Afghan-Soviet war of the 70s), Henry Kissinger (advisor of Unocal), and Alexander Haig (in charge of lobbying for Turkmenistan), and Dick Cheney (Halliburton, United States Chamber of Commerce – Azerbaijan). Unocal shipments from Central Asia consisted of former US defence and intelligence officials. Robert Oakley, former US ambassador to Pakistan, was a "counter-terrorism" specialist for the Reagan administration who armed and trained the Mujahadeen during the war against the Soviets in the 1980s. He was a conspirator Iran-Contra accused by Lawrence Walsh of Independent Council as a key figure involved in arms shipments to Iran. Richard Armitage, the current Secretary of Defense, was another Iran-Contra actor in the Unocal service. A former Navy SEAL, covert operative in Laos, director with the Carlyle Group, Armitage is allegedly related to terrorist and criminal networks in the Middle East, and the new independent states of the former Soviet Union (Tajikistan, Uzbekistan, and Kyrgyzstan). Armitage was not unaware of the gas pipelines. As a member of the Burma / Myanmar Forum, a group that received much of its funding from Unocal, Armitage was involved in a lawsuit brought by villagers in a Burma village who suffered human rights abuses during the construction of the Unocal pipeline. (Halliburton, under Dick Cheney, did a job under contract on the same Burma project).

Conclusions

The history of oil is very vast and its constant, curiously, has been the presence of dramatic ups and downs. It has gone from the boom and bonanza to difficult crises, which are then overcome by rebounding strongly. This is due to its own nature exposed to fluctuating conditions and to the economic policies that the producing countries have adopted against this industry. The way to commercialize with this resource at international level has also evolved and what is sought is to focus on being more competitive through: better planning in the exploration and exploitation of this branch in less time and more efficiently; and greater investment that allows to take advantage of technological advances. Such objectives require well-studied and strategic plans, but always supported by sound finances in the company.

Regarding the type of property, it should be mentioned that private companies dominate the business in approximately 75%, since these have been dedicated to the optimum exploitation of the deposits and the application of the most innovative technology. Now, how do they work? A clear example is Turkmenistan, which manages its hydrocarbon policy in a way almost entirely foreign to government influence, making it more competitive with each other's energy suppliers. In addition, tax regulations may vary according to the behavior of the market and the revenues of the new wells. But one factor to highlight is that they are developed nations to which such efficient and private organisms belong, in fact, they are of the main world powers.

On the other hand, state enterprises comprise a very different environment. They are characterized by being obliged to satisfy the domestic market, since the level of requirement for the economic utility of oil by the country, as well as the company's tax contribution has a significant impact. A fundamental part of the international economic structure is the fact that the countries that possess hydrocarbon wealth in their subsoils, throughout their presence in this branch of commerce, have grouped themselves in different organizations in order to adapt their respective policies and ensure one for another, trying with this a greater development. Variations in prices, aggressive competition and the economy in general, led to the search for alternatives to promote solidarity, always under the principle of sovereign equality.

2.2. Economic agglomerations and competitive advantages of oil-gas sector: economic aspects: Qatar

Qatar's oil reserves were at the end of 2017, the 13th largest worldwide, maintaining an important position as an oil exporter to world markets. The on-shore field of Dukhan, located along the western coast of the peninsula, is the oldest in oil production in the country, although production was surpassed by the Al-Shaheen offshore field. While the government's energy policy focuses on gas production and export, Qatar is taking steps to extend the life of its oil fields through recovery techniques (EOR).

Organization of the Sector

State-owned Qatar Petroleum (QP) controls all aspects of upstream and downstream in the oil sector. While QP is the owner and operator of the Dukhan onshore field and offshore Maydan Mahzam and Bul Hanine, the remaining fields are operated by international oil companies through production agreements (PSA). In an effort to increase production and reserves and mitigate capital expenditures related to gas, QP offered more favorable conditions for PES in recent years. (Al-Siddiqi, Dawe, 1991: 417-436)

Production

In 2016, Qatar ranked third among OPEC's small producers of crude oil, with production surpassed only by Ecuador and Libya. Qatar produced approximately 1.6 million barrels per day of total liquids of which 850,000 was crude oil. Just over half of the country's crude production comes from the fields of Dukhan and Al-Shaheen, with production of 270,000 bbl / d and 300,000 bbl / d, respectively.

Although Qatar's oil production has grown steadily since the 1990s, Qatar's fields are mature and Dukhan – formerly the largest producing field – is in decline, to compensate for the expected decline, EOR techniques have been used in several fields, including Al-Shaheen, Dukhan, Bul Hanine and Maydan Marjam, according to Rashid, A. (2001). The Danish company Maersk that works in the Al-Shaheen field is an important source for the future growth of production. Although the field average is just under 300,000 bbl / d of production in 2009, Maersk completed an expansion project in 2010, which increased its production capacity to 525,000 bbl / d. Overall, Qatar expects to increase its total production capacity of 1.2 million bbl / d of current capacity of 950,000 bbl / d through the development of existing fields.

Consumption

In 2016, Qatar consumed approximately 183,000 bbl / d of oil. Although still relatively small compared to total production levels, consumption has more than tripled since 2000. Global Energy expects Qatar's petroleum product consumption to grow at an average annual rate of around five percent between 2010 and 2015. The increase in Qatar's oil consumption is due to its rapid economic growth, particularly the growth associated with the demand of the transport sector.

Oil pipelines

National Oil Distribution Company, a subsidiary of QP, operates the pipeline network, which transports from the oil fields to the export terminals and refineries of Qatar. The network brings crude oil from offshore oil fields to Halul Island where crude can be processed for export. On shore, most of the crude is sent to the Mesaieed export terminal for refining or export.

Exports

Qatar has three main export terminals: Mesaieed, Halul Island, and Ras Laffan. Ras Laffan is mainly used for the export of liquefied natural gas. The vast majority of Qatar's oil exports are sent to Asian economies. Japan is the largest importer, although South Korea is also an important export market.

Refinement

According to Oil and Gas Journal, as of January 1, 2018 Qatar has 338,700 bbl / d of refining capacity. There are currently two refineries in Qatar, located in the main port cities of Umm Said and Ras Laffan. The Ras Laffan refinery with a capacity of 138,700 bbl / d of condensate started operations at the end of September 2009. Operated by Qatargas, a subsidiary of QP, the Ras Laffan refinery is controlled by a consortium of investors: QP (51% ), ExxonMobil (10%) and Total (10%), and the Japanese companies Idemitsu (10%), Cosmo (10%), Mitsui (4.5%) and Marubeni (4.5%)

NATURAL GAS

According to Oil & Gas Journal, as of January 1, 2017, Qatar's proven natural gas reserves were approximately 890 cubic feet (Tcf). Qatar holds 13 percent of the world's total natural gas reserves, and is the third largest total in the world, after Russia and Iran. Most of Qatar's natural gas is in the immense North Off-shore Field, which extends over an area roughly equivalent to Qatar itself. The North Field is actually a part of the largest natural gas field in the non-associated world that is found both in Qatar and in the maritime area of ​​Iran, and is the main source of natural gas production. Qatar produces condensate and liquid natural gas (NGL) along with its natural gas production. In 2018, EIA estimates that the condensate and NGL production has exceeded one million bbl / d, surpassing the production of crude oil. (Sandrea and Sandrea, 2007: 44).

Organization of the Sector

To an even greater degree than in the oil sector, Qatar Petroleum (QP) plays a dominant role in Qatar's natural gas sector, leading upstream and downstream projects. Qatar's focus on natural gas development is oriented to large-scale projects linked to the export of liquefied natural gas (LNG) or downstream industries that use natural gas as raw material. Therefore, this situation has favoured the participation of international oil companies with technology and experience in integrated mega-projects, including ExxonMobil, Shell and Total. However, QP maintains a majority stake in its private gas projects through: Qatargas and RasGas. (Thomasen et al., 2005)

Production and consumption

Qatar continues to expand natural gas production in order to continue exporting. In 2017, the EIA estimated that Qatar produced about 5.2 billion cubic feet (mcf) of natural gas, more than three times the amount it produced in 2000. EIA estimated that Qatar's natural gas consumed in 2017 was approximately 690 million cubic feet, leaving the rest for export destined mainly for Asia. Most of this increase goes to the export of liquefied natural gas.

Exports

In 2017, Qatar exported more than 4,200 Bcf of natural gas, of which 80% was LNG, mainly to Asia and Europe. The United States receives 90 Bcf of LNG from Qatar, which represents 26% of the total LNG imported by the USA. The remaining natural gas export is transferred through the Dolphin transportation pipeline to the United Arab Emirates and Oman. Qatar is the world's leading exporter of LNG. In 2017, Qatar exported 3,600 Bcf of LNG. The United Kingdom, Japan, India and South Korea were the main destinations for Qatar's LNG exports. Asia was the main importing hub, accounting for 48% of the LNG in 2017. European markets, such as Belgium, the United Kingdom and Spain were significant buyers of Qatari LNG, accounting for 42%. Although Qatar began its LNG exports in 1997, the strong government emphasis placed on the sector, both in terms of investment generation and attracting foreign investors, has contributed to the rapid development of Qatar's LNG production capacity. . This sector is dominated by Qatargas Operating Company Limited (Qatargas), which operates with four major LNG ventures (Qatargas I-IV), and Ras Laffan Company Limited (RasGas) which operates three major LNG ventures (RasGas I-III). 70% of RasGas belongs to QP and the remaining 30% belongs to ExxonMobil, while the Consortium of companies of Qatargas, includes QP, Total, ExxonMobil, Mitsui, Marubeni, ConocoPhillips, and Shell. Each venture has its own capital participation structure, however QP has at least 65 % in each of the ventures mentioned above. Officials of the Qatari state have pointed out that they do not expect to build more LNG structures in the immediate future and any future increase in capacity will be as a result of the improvement of the structures that already exist in the sector.

Dolphin Project

Paraphrasing Dargin (2008), Qatar is a provider of the Dolphin Project, which connects the natural gas networks of Qatar, UAE, and Oman with the first natural gas pipeline that crosses the border in the Persian Gulf Region. The pipeline currently exports 2 billion cubic feet per day (Bcf / d) from Qatar, despite having a capacity designed for 3.2 Bcf / d. Gas-to-liquids (GTL) technologies are in the refinery process to transform natural gas into liquid fuel. Qatar is one of the three countries, along with South Africa and Malaysia, which has GTL operating plants. The Oryx GTL plant (QP 51%, Sasol-Chevron GTL 49%) started in 2007, but due to initial problems it only operated at 100% in 2009. At its maximum capacity, the Oryx project uses around 330 MMcf / d of natural gas in raw material from the Al Khaleej field to produce 30,000 bbl / d of GTL. The Pearl GTL project (QP 51%, Shell 49%) is expected to use 1.6 Bcf / d of natural gas as raw material to produce 140,000 bbl / d of GTL product as well as 120,000 bbl / d of condensate and LPG. In addition to being the world's largest GTL worldwide, the Pearl project is also GTL's first integrated operation project, which means it will have upstream and integrated gas production with the ground conversion plant. (Dargin, 2008)

Downstream service offer

The downstream sector in Qatar encompasses a wide range of activities ranging from supply, marketing and refining of crude oil to distribution, marketing and sale to the public. Includes derivatives such as gasoline, diesel, heating oil, aircraft fuel, bitumen, lubricants, liquefied propane gas (LPG) and specialized products. More recently, the downstream marketing segment in Qatar has also covered the sale of convenience, biofuels and demand management of the final consumer.

Based on a broad understanding of market dynamics, extensive experience in various segments and differentiated functional skills, strategic consulting teams gives broad support to the downstream oil and gas sector. It also leverages the knowledge brought from other sectors, such as retail, aviation, maritime transport and other segments of transport, mining and financial services (for payment processes and credit card strategies).

Supply of upstream services

Oil and gas upstream exploration and production companies face constant pressures. The private sector needs to guarantee renewal, grow and generate good results. The state oil companies must direct the resource base, concretize the expansion of capacities, promote the greater development of activities and choose the right partners to create wealth.

In this respect, one identified five major issues that impact our clients' agendas in the upstream exploration and production area:

Operational rules and models: a revolution is underway in the form and structure of concession terms and operational licensing models;

Vulnerability: companies face new vulnerabilities related to production, environmental impact, security, approvals and operating licenses;

The margin reduction: increasing costs and tax rates can significantly reduce the return of shareholders;

Players and supply chains: the continuous rise of Russia, India and China in the international E & P landscape is changing the geographic contours of the activity;

Application of technology: the role and timing of new digital oil fields are a great challenge, as well as the application of gas conversion technologies.

Strategy provides total support to the oil and gas sector, both downstream and upstream.

Working in partnership with other companies, one supports the development and execution of strategies, operational readiness and effectiveness, digital design, technology management and personnel planning.

Development and execution of strategies

Sectoral strategies;

Strategies for regions and business units;

Business growth and renewal strategy;

Competitive strategies;

Replacement strategies for the sector.

Disposition and effectiveness of operations

Review of the operational model;

Development of the organization;

Efficiency, efficiency and integrity of operations.

Digital design, development and implementation of oil field

Business need and development / technology selection

Conception and implementation of programs

Change management

Technology management

Technology strategy and portfolio management

Due diligence

Transfer and adoption of technology

Technological profile and competitive position

Personnel planning

Learning and development strategy

Resource allocation, recruitment and retention

Labour planning and training

Discipline and effectiveness of the skill set

Uncertainties and risks in oil production

The International Energy Agency (AIE) indicates that, in order to meet the demand growth contemplated in the New Policies scenario and at the same time compensate for the decline mentioned in the previous section, the oil industry will have to develop here in 2035 a new productive capacity close to 67 million barrels per day (Mbd). A volume that is almost 7 times what exists today in Saudi Arabia. And time is short, since, in eight years from now, in 2020, the new capacity required will be 28 Mbd. The question is, will the oil industry be able to face this challenge? The IEA responds affirmatively to this question. However, it does not escape anyone that the risks to be faced and overcome in this endeavour are many and varied. Some of these risks are essentially technical in nature. Among these are:

• Exploration and production costs are increasing as more and more of the work is performed in more remote regions, in more extreme environments and drilling deeper, which entails a growing technological challenge.

• The oil industry is experiencing an alarming shortage of personnel, especially from highly qualified scientists and technicians.

• The relationship between the energy obtained through the extraction of oil and the energy consumed by this same process (or EROEI) is declining very quickly, which means that each new barrel of added reserves has a lower net energy content.

In addition to the technical risks discussed, we can consider others with a clear geopolitical nuance:

• Oil production in thirty of the fifty-four producing states has already exceeded its zenith, while in ten others there is a tendency to stagnation, which means that in the future the supply of oil will basically depend on fourteen countries, many of them of them integrated into OPEC.

• The production of conventional oil outside OPEC has already passed the zenith and has gone into decline,

• The world will be increasingly dependent on OPEC exports.

Conclusions

This analysis implies the consolidation of an oligopolistic, non-competitive market and a certain danger for the existence of a "free market" for oil. One of the most important risks facing the security of oil supply lies in the uncertainties surrounding the realization of the necessary investments. As mentioned, covering the world oil demand forecast between 2011 and 2035 in the New Policies scenario of the WEO 2011 requires an accumulated investment of close to 10 billion dollars (of 2010). Of this amount, approximately 87% would correspond to exploration and production activities, and the remaining 13% to the refining and transportation sector. Nearly 75% of the accumulated investment in oil exploration and production planned for the aforementioned period would correspond to non-OECD countries and, in most of these countries, the mobilization of investments will require overcoming many legislative and regulatory barriers. and commercial. The main obstacles or risks that could limit or delay the aforementioned investments in the producing countries are essentially geopolitical in nature and include:

• Those associated with the control policies of the rhythm of extraction of resources exercised by governments:

• Derived from "petro-nationalism" that prevents or limits the access of private international companies to the exploitation of resources.

• Those linked to political instability, terrorist threats or military conflicts.

Other types of geopolitical risks that may endanger the security of supply, causing temporary interruptions of this, are those arising from disputes between producing and transit countries, as well as those caused by conflicts or terrorist attacks that block trade routes to markets or damage transportation infrastructure. To prevent such unforeseen events, the OECD countries maintain the so-called strategic reserves. Other large consumers, such as China, are also adopting similar preventive policies.

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