27 April, Kyiv The cluster approach used to produce economic development strategies can be successfully applied in Ukraine. The statement was made by the First Deputy Head of the Presidential Administration and the Executive Secretary of the Committee of Economic Reforms Iryna Akimova during opening of the workshop for leaders of Ukrainian regions“Regional Economic Development: Cluster Model” organized by the Foundation for Effective Governance with support of the Committee for Economic Reforms.
Innovative experience of the Foundation for Effective Governance in two pilot economic development projects realized in Donetsk City and Lvov Oblast based on the cluster approach is a very useful instrument for creation of a pragmatic regional economic development program and for development of the action plan”, she noted.

Andrew Swart, a partner at Monitor Group, added that the use of cluster approach by the Ukrainian regions can give to the regional economies what they lack most –creation of fundamental conditions for innovations and improvement of productivity and efficiency as a result.

“The economic competitiveness both of the regions and Ukraine as a whole will improve”, he underlined.

Director of the Foundation for Effective Governance Nataliya Izosimova stated that the work on implementation of the regional development projects carried out by the Foundation in partnership with Monitor Group and local authorities in Lvov Oblast and Donetsk is unique.

“It is unique both because this is the first time the cluster approach has been applied in Ukraine in economic competitiveness of the regions and because of active and constructive interaction between business and government who are working together towards the same goal. Another distinctive feature of the project is creation of viable structures and efficient mechanisms, which will ensure effective implementation of strategies in the regions after the Foundation and Monitor Group complete the work”, she stated.

At present the regional economic development project is at the stage of implementation of the economic competitiveness improvement strategies developed last year. The project specifies the top priorities for the regions in 2010. The emphasis can be given to the following priorities:

The efforts are being taken to found an agricultural college to the best international practice to develop an “agricultural cluster” in Donetsk Oblast. The necessity to establish the college is connected with lack of agricultural specialists as well as staff poor qualifications and low skills because quite often they don’t meet business requirements. Also an electronic catalogue “Business for Business” is being developed to provide a database of agricultural producers, manufacturers and suppliers. In addition, it is planned to introduce occupational guidance programmes in schools. The Fund Raising Committee has already started its work. The goal is to create favorable conditions for investors and determine the priority investor to help him start business in the Oblast.

In the future the Committee is planned to be used as a platform for creation of the Agency for Raising Funds to Donetsk Oblast.

“We definitely understand that we must compete with other countries and regions for investments. Thus, our Agency will be organized using the best world practices. In fact, we consider the Agency as a structure where investors can get a whole range of services, from information services to project administration”, stated the Chairman of Donetsk Regional State AdministrationAnatoliy Bliznyuk.

In Lvov, an Internet resource is prepared for launching within the framework of development of “tourism” and “business services” clusters, which will present investment opportunities of the city. Also the plan is to hold tourist promotion campaigns targeting priority tourist segments and markets. The process of collection of information about outbound tourists will be streamlined in order to adjust the tourism strategy. Association of business service cluster participants aimed at developing the cluster is under formation. Also the program on improvement of the quality of English teaching in the key universities of Lviv is being developed under the auspices of the cluster participants.

Director of the Mayor’s Office Oleg Berezyuk noted at the workshop that the strategy of economic competitiveness developed in Lvov by the Foundation for Effective Governance together with local authorities fundamentally differ from other strategies as it was developed “from the bottom” and has a step-by-step guide of its implementation.

“The strategy takes into account economic factors, cultural and psychological specifics and communication qualities of the environment. Cluster representatives are especially active because of personal participation in the city development. Every month we gather together and analyze implementation of each step and give our recommendations. This will become a good instrument for community development”, he said.

About the project

The Foundation has been implementing the regional economic development project in Donetsk region and Lviv since October 2008 in partnership with international consultancy Monitor Group and in close cooperation with local governments. This is the first time this kind of project has been realized in Ukraine.

The prerequisite for realization of the regional economic development project was the study of Ukraine's competitiveness implemented by the Foundation in tandem with World Economic Forum. It included roundtables in regional centers of Ukraine in June-July 2008. Following regional discussions and meetings with local governments, the Foundation and Monitor Group analyzed 27 Ukrainian regions and selected two – Donetsk region for the regional economic development project and Lviv – for the city economic development project.
Economic development project in Lviv and Donetsk region consists of two stages.

The first stage saw a systemic and deep diagnostics of economy of the region/city, set priorities in fundamental aspects of the economic development, identified competitive clusters to serve as key locomotives of economic growth of Lvov and Donetsk Oblast. In Lvov these are “tourism” and “business services” clusters. In Donetsk Oblast these are “agriculture” and “food industry” clusters. The deliverables of the first stage were used to suggest the strategy for economic development of the region/city that will target to improve its competitiveness.
The second stage started in June 2009 and is still in progress. It is aimed at developing a detailed action plan to realize the strategy of economic development. This is the stage when the Foundation and the advisors of Monitor Group help the regions create own capacities to implement the strategies without any help and assess the achieved results after the Foundation and Monitor Group leave the project.

Profile of FEG

The Foundation for Effective Governance (FEG) www.feg.org.uawas established in 2007 by Ukrainian businessman, Rinat Akhmetov with a mission to develop and implement long-term projects and programs which encourage the long-term economic development of Ukraine. FEG is committed to help reach public and political consensus on the key areas of the economic transformation programs.

To reach its objectives, the Foundation attracts leading Ukrainian and international experts with impeccable reputation. An Advisory Board, which includes famous public and political figures from different countries, ensures the Foundation’s independence. Among the board members are former Canadian Prime Minister Kim Campbell, former U.S. Senator Lincoln Chafee, former president of the National Bank of Hungary György Surányi, and General Director of the Ukrainian office of the International Investment Bank Morgan Stanley Igor Mityukov. The International Advisory Board takes an active part in building the Foundation’s strategy, selecting the priority projects and representing FEG both inside and outside Ukraine.

Monitor Group

International Consulting Company Monitor Group (www.monitor.com) works with the world’s leading corporations, governments and social sector organizations to drive growth on the issues that are most important to them. The firm has extensive expertise in regional economic competitiveness and has worked on over 175 projects in 58 countries the last 20 years to analyze and develop economic development strategies in regions and countries around the world.