5. Brief Study on Cluster.pptVIP

Pre-Selection of Initial Set of Product Groups/Clusters Drawing on Industrial Survey of 2002 December 2005 Cautionary note Initial set of 4 selected clusters pilot or demonstration clusters only not exclusive base for diversification and competitiveness building Methodology applicable to all clusters We seek clusters with pro-active industry leaders or “drivers” – who share our vision Primary criteria for pre-selection High-potential for technological upgrading – value added/worker At least moderately competitive at present – judged by exports Dynamic – indicated by growth of total output Already significant – which means some business capability exists Supplementary criteria – initial Span a range of industries One strategic high-tech cluster One oil-related cluster An existing non-oil related national (possibly SME) cluster An existing non-oil-related foreign driven cluster New high-tech cluster choice Strong candidates for selection Information and communication technologies (ICT) Biotechnology (in selected application areas) Petrochemicals Candidates for high-tech sector ICT – its importance is well known and widely addressed in the KSA Petrochemicals is already a very strong industry Biotechnology is an emerging, crucially important “general purpose technology” – it is the clear choice Spearman-Kendall ranking Measures aggregate performance by following criteria Value-added per employee Percent of exports in total sales Average annual growth rate in total output over a few years Discussion of pre-selection Ranks 18-30 constitute top 13 Exclude products based strongly on natural resources Exclude very strong sectors Glass and plastics – good potential with weakness in one area Electrical machinery and equipment Some real weakness but has potential Additional comments Potential for technological upgrading high in all of above Information easily available Well-established clusters All have strong local and global links Plastics – based on petrochemical