Methodology: cluster development

In many developing countries the private sector consists mostly of micro, small and medium enterprises that generate a large share of employment and income opportunities. Many of these firms fall short of realizing their potential, however, as they operate in isolation, in uncompetitive production patterns and are unable to approach dynamic business partners that could bring in new expertise. Focusing on the specific challenges faced by developing countries, the United Nations Industrial Development Organization (UNIDO) has formulated a modular approach to guide the development of cluster initiatives.

Clusters are geographic concentrations of interconnected businesses, suppliers, and associated institutions in a particular field. By gathering into clusters, companies increase their productivity and competitiveness in national and international markets. Based on extensive field experience, the UNIDO cluster development approach is based on the following steps:

  • Cluster selection — identifying the clusters to be assisted
  • Diagnostic study — performing an action-oriented analysis of the strengths, weaknesses, opportunities and threats of the clusters
  • Vision building and action planning — formulating a vision and a corresponding development strategy to be shared by the entire cluster
  • Implementation — managing and coordinating the activities outlined in the action plan, including the establishment of horizontal and vertical networks
  • Monitoring and evaluation — namely of the qualitative and quantitative outcomes of the project


To obtain more detailed information on the UNIDO cluster development approach — real-life cases and practical exercises, templates, sample diagnostic studies, movies and case studies — please go here.