Private Sector Development – Cluster Project in Brief

The Ministry of National Economy along with the Federation of Palestinian Chambers of Commerce, Industry and Agriculture worked on a private sector development initiative where there is an emphasis on improving competitiveness and market access for SME’s. This has been achieved through their project the “Private Sector Development Cluster Project (PSDCP)” aimed at providing a foundation for a sustainable economic development by taking a Cluster Approach. The project is funded by the French Agency for Development (AFD). The development of clusters is new for Palestine and the PSDCP had started with five pilot clusters, four in the West Bank and one in Gaza.

What are Clusters?

Michael Porter Professor at Harvard University  states that “Clusters are geographic concentrations  of interconnected companies, specialized suppliers, service providers, associated institutions in a particular field that are present in a region”

In our PSDCP project this means that our clusters are groups of companies that share local resources, use similar technologies and are forming linkages and alliances and increasing their networks. These linkages can take the form of buyer-supplier relationships, joint marketing, training, or research initiatives, and often involve lobbying government. One of the distinctive features of clusters is that of linkages between firms which in turn affect shared strategies. This is often called «Co-coopetition» – where companies compete in some areas, (such as selling to customers), but cooperate in other areas (such as joint training programs.)

The Private Sector Development Cluster Project had selected the following five pilot clusters to work with after a comprehensive awareness campaign. These are:

  • Furniture cluster in Salfit
  • Tourism and Creative Arts cluster in Jerusalem
  • Stone and Marble cluster in North Hebron and Bethlehem
  • Leather and Shoe making cluster in Hebron
  • Date and Palm cluster in Gaza

The project worked with these clusters to strengthen their competitiveness in order to increase their market share on local market and/or explore new markets for export.