The analysis of territorial competitiveness is an area where many different concepts, research themes and policy questions meet, and our experience at Orkestra is that it is becoming increasingly important to develop a more sophisticated understanding of the interactions between them. A neat example of this is the recent meeting of two research agendas that we have been working on in parallel for many years with different stakeholders in the Basque Country: industrial clusters and territorial financial ecosystems.

Research on clusters and cluster policy has been a cornerstone of Orkestra’s research agenda over the last two decades, in collaboration with SPRI (the Basque Business Development Agency). Key research questions include how the boundaries between clusters in the Basque Country are changing over time, and how to evaluate the roles that cluster organisations play, both in driving the collaborative dynamics that improve their members’ competitiveness, and in providing an effective bridge with policymakers across a wide range of different government departments (for example, during the COVID pandemic).

Research on the financial and investment ecosystem underpinning regional competitiveness is a newer research area that has been developed in collaboration with IVF (the Basque Institute of Finance). Here we have been working on understanding the importance of sophisticated financing arrangements for the growth and success of local businesses, and especially SMEs (for example, through an analysis of the origins, current situation and challenges of the Basque financial ecosystem).

Over the last year these two research areas have come together in the Basque Country, in the face of two pressing policy questions:

  • How can the competitiveness of firms within the Basque financial and investment ecosystem be strengthened (and the slow decline observed in the strength of this ecosystem over recent decades reversed)?
  • How can the financing needs of firms from across the Basque economy, many of whom are facing important challenges related to digital and green transition, be met in a way that roots them in the territory and reduces the danger of them moving activities elsewhere?

In a region like the Basque Country that has developed a successful cluster policy over several decades and which today supports 16 cluster organisations in key sectors of the economy, a natural response to these questions is to ask whether a new ‘financial services cluster organisation’ could be part of the solution to these inter-related policy questions.

It is in that context that we have been working with SPRI and IVF over the last year, and with almost 100 firms and other organisations working in the financial services space, to explore the possibility of establishing a new cluster initiative. The process has been developed over three phases:

(1) A baseline research phase to understand the contours of the underlying policy problems, to map and assess the relative strength of the financial services and investment activities present in the Basque Country, and to explore the limited range of international experiences and research with clusters and cluster policy related to financial services.

(2) An exploratory phase based on an open call to actors within the Basque financial and investment ecosystem to participate in a series of events and workshops that progressively explored what clusters are and what cluster organisations do and identified the common challenges and opportunities that could form the basis for such a collaborative initiative in the Basque Country.

(3) An action phase, driven forward by a core group of 18 actors who identified themselves as willing to play the role of ‘promoters’ of a new cluster initiative, on behalf of the almost 100 organisations that had participated in the second phase and had expressed the desire to collaborate in addressing the challenges identified.

The most tangible result of this process is the establishment of a new cluster organisation (BasqueFIK), whose underlying mission and basic structure was presented publicly on 15th March 2024, around a year since the process began. While the future of this organisation is a blank book, yet to be written, there are already many learnings that can be taken from the process of action-research that has led us here. Some of these are specific, such as what the structure of a finance and investment cluster looks like in practice and what challenges players with deep knowledge of the cluster see as the most pressing at this moment in time. Others are less tangible, such as how collaborative processes begin and advance across such a diverse range of actors, and across different policy areas within government.

Looking forward, it will be especially important to explore the contribution that this new institution is able to make to the two policy questions that initially provoked the process of its creation: strengthening the competitiveness of its members and responding to the financing and investment needs emerging within the territory. The contribution that it does make will depend also on the interaction between BasqueFIK and the well-established cluster and finance policies surrounding it. From a research perspective, this highlights the need to continue to develop a sophisticated understanding of how different policy areas interact in driving forward territorial competitiveness.

james wilson

James Wilson

James Wilson is Research Director at Orkestra-Basque Institute of Competitiveness and teaching faculty at Deusto Business School.

His research interests are in policy-relevant analysis of territorial competitiveness and socio-economic development processes.

Ibon Gil de San Vicente

Ibon Gil de San Vicente

Ibon Gil de San Vicente, Deputy General Director at Orkestra, holds a Degree in Economics from the University of the Basque Country. Following this he continued his studies with a Master's Degree in Business Administration from the University of Kent (UK) and a Master's Degree in Business Innovation from the University of Deusto.

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