Session 2 - Module 2

Regional Experiences of Eco-Industrial

Clusters as Eco-Friendly Economic Zone

The views expressed in this presentation are the views of the author and do not
necessarily reflect the views or policies of the Asian Development Bank Institute
(ADBI), the Asian Development Bank (ADB), its Board of Directors, or the
governments they represent. ADBI does not guarantee the accuracy of the data
included in this paper and accepts no responsibility for any consequences of
their use. Terminology used may not necessarily be consistent with ADB official
terms.

Venkatachalam Anbumozhi
Asian Development Bank Institute

Outline
Do Industrial Clusters exists in Asia?
How brilliant they are in environmental and
economic terms?
What are the challenges in transforming
them into eco-friendly economic zones?
Scope of the workshop
About the training manual

Module 2

Examples of World-Famous Industrial Clusters

Silicon Valley
London
Zurich
Aichi
Scotland
South Italy
Hollywood

USA
UK
Switzerland
Japan
UK
Italy
USA

Information technology
Financial services
Private banking
Automobile
Biotechnology
Shoes/Leather products
Movies

Kawasaki

Japan

Recycle industries!

Driving forces: Economics of scale, technical knowledge,

financial backing, supply of specialized human resources

Module 2

Defining characteristics of
Industrial Clusters

Close spatial proximity of enterprises across a distance or location.

High density of economic activities, resulting from the relative

concentration of similar/related enterprises.

Presence of firms involved in the same/similar and subsidiary activities

as suppliers or buyers or traders.

The existence of inter-firm linkages between enterprises as a result of

sub-contracting and specific forms of cooperation .

A joint socio-cultural history, infrastructural and dynamic sense of

belonging to the place.

Module 2

Economics of Industrial Clustering

Real GDP per capita in the Yueqing Cluster, Wenzhou City and
PRC, (PRC in 1978 = 100).

Source: Sonobe et al, 2004

Module 2

Industrial Clusters - Types and

Distribution
Eg. Vietnam
Location

North

Central

South

Textile, silk,
leather

139

24

10

Food proc.,
materials

145

42

21

Waste
recycling

64

24

Handicrafts

398

121

87

Constru.
material

19

Others

211

77

42

about 1,450 clusters

About 25% (!) of GDP is from these clusters located in urban/
rural fringe areas

Module 2

Lead Factors of IC

Location
Rural
9%

Eg: India

City
36%

About: 140 industrial clusters of SMEs

Small
Town
45%

Metro
10%

Lead factor
Infrastru
ctureResourc
e
4%
24%

Market
72%

origin
Induced
22%

Natural
78%

Module 2

Enabling Policies of Industrial

Clusters Eg. Thailand
Industrial & Regional
Policies
Promoting investment,
especially in SMEs
Developing and strengthening
entrepreneurship skills
Development of urban fringe areas.
New types of agricultural production
to improve rural income
About 60 clusters in Peri-Urban Areas

Module 2

Industrial Clusters in Japan

Eco-town (26)
Bio-mass town (61)

Industrial cluster (23)

Eco-towns: by local governments

supported by MOE & METI
Biomass towns: by Municipal towns
supported by MAFF.
New Industrial Clusters:
supported by METI & Business
-Support to companies to farm
alliances (39b yen)
-Technical innovations (312b yen)
-Institutions for promotion of
entrepreneurs
-(125 b yen).
Industrial Estates/Parks:
-About 899 in no. covering SMEs

Module 2

Environmental Impact of Industrial

Clustering
Natural & Human
Resources
Energy carriers

Products
Local
Cluster

Emissions
Pollutions
Solid waste

Irony: environmental cost of living and doing business in the clusters

and surrounding areas are the highest in any particular region.
Reality: Little attention has been paid to the environmental Impact of
local Industrial clusters in Asia or elsewhere.
Challenge: Environmental impacts cannot be considered in isolation, as local
clusters have had a large impact on the local socio-economic fabric of the
community.

Module 2

Environmental Cost of Cluster Based

Development
Waste

Quantity

Municipal

27.4 Mt/y

Food and Fruit

Processing

4.5 Mt/y

Pressmud

9 Mt/y

Tannery (2000nos.)

52,500 m3 waste
water/day

(300 mills)

Dairy industry
Distillery (243 nos.)

1,600 m3 waste
water/day

70 Ml/t
8,057 kl/day

18000
16000
14000
PM (t/day)

Paper & pulp industry

Air Pollution

12000
10000
8000
6000
4000
2000

Willow dust

30,000 t/y

0
Copper

Zinc

(Source: CPCB,
India)

Module 2

Distillery
Industry

Pulp & paper

Sulp. Acid

Green Growth through Industrial

Clusters
(Conservation, Cooperation, Competition)

EIC
(Environment, Economy, Equity)
Module 2

Eco-Industrial Cluster (EIC)

A community of business; geographic
concentration of interconnected companies in a
specialized field that cooperate with each other
and with local community to efficiently share
resources (materials, energy, water,
infrastructure, information, finance, etc)-, leading
to improved environmental quality, economic
gains, and equitable enhancement of human
resources for both the business and local
community.
Module 2

Scale and Scope of EICs

Eco-industrial
connections occur
at a larger scale,
in all kinds of small
& medium sized
Businesses and
communities.

Module
Factory

Eco-town

Applies the
principles of
competition theory
and industrial
ecology to support
more efficient use
2of local resources

Eco - Industrial
clusters

Module 2

Urban Rural Fringe Area

Industrial resources

Bio-resources
Agrl. waste

Biomass Refinery
complex

Industrial sector
waste

Forestry waste
Animal waste

Municipal waste

Fishery waste
Eco-service
i
Complex

Energy crops

Bio-degradable
industrial products

Composting
Organic
practices

Recyclable livelihood
Bio-materials
Renewable Energy
Complex

Eco-value added
Rural products
Renewable
energy use

Eco-value added
consumer products
Use of renewable

Industrial Clusters Vs Eco-Industrial Clusters

Module 2

Inter-firm Networks Key to EIC

Maniwa Forestry
Association

Kobayashi Timbers Ltd

Container
box

Waste
Wood
Bark

Bark management
Business

Wood chip making &

transport business

To bio-fuel
company

Automated pellet
injection facility

Flexible
Container

Drying
boiler

Meiken Kogyo Ltd

Bark to Fuel Business

Power Generation
Boiler

Dryer
Waste Wood
Business

Waste wood chips

Makino Wood Industries Ltd

Pellet making
facility

Bark management
Business

To bio-fuel
company

Automated pellet
injection facility
Drying
boiler

To bio-fuel
company

Dryer
Flexible
Container

Torigoe Industries Ltd

Bark management
Business

Container
box

Automated Chip
Carbonization equipments
Drying
boiler

Waste
Pellet

Maniwa Bioenergy Ltd

Dryer
Landes Concrete Co. Ltd

Maniwa Wood Industry Association

Flexible
Container

Chip Size
Separation
Facility

Hot water boiler for

cooling & heating
(pellet only type)

Container
Hopper

Heating & cooling

water system and
air-conditioning

Waste from Timbering

Nishiyama Farms

Warm air boiler system for

small scale green house (mixed
pellet & combustion type)
Nishimura Farms

Hot water boiler system for

large scale green house (mixed
pellet & combustion type)

Steam boiler
(mixed pellet &
combustion type)
Concrete
manufacturing
process

Types of inter connected firms

Wood product firms: 2 (old)
Construction firm: 1 (old)
Timber Firms: 3 (New)
Business Association: 2 (New)
Horticulture firms: 2 (New)

Module 2

Fish Industrial Cluster Net flow in Vietnam

Parent fish

Raw Material
- Fish paste
-Wheat flour
-Corn meal
-Vitamin
- Seafish

Hatchery
Fish farms
-Open Ponds
-Floating cages in
the Mekong River
Fish Feed

Rejects

Fish
processing
industries

Byproduct
processing
Bio-fuel
from Fish
fat

Export
Rejects

Animal feed
processing
industry

Urban
Rural urban fringe areas
Rural

Existing link
Weak link

Pig/Shrimp
farms

Export to China

Module 2

Fish powder
processing

Environmental Gains by Strengthening

Inter-firm Networks Angiang EIC
Reduction of about 118,000 tons of solid
waste
- 62,000 tons of head and bones of fish
-17,000 tons of rice straw
-37,000 tons of sludges
-2,2000 tons of pig faces

32,250 tons of CO2/year

Module 2

Increased Socio-economic benefits are available from fully Functional

Eco-Industrial Cluster
Enterprise

Average annual
production

Labour
requirement

No of
labourers

Fish feeding

1916 ha

13persons/ha

23,870

Fish processing

179,000 tons

28.125 tons/person

6,365

Fish food processing

15,000 tons

120 tons/person

125

Animal food processing 2,200 tons

15 tons/person

147

Bio-diesel

22,000 tons

270 tons/person

82

Compost

19,000 tons

70 tons/person

272

Biogas

2000 pigs

100 pig/person

20

Total

30,881

Context for firm strategy &

Rivalry

Policy initiatives, state

facilitation agency, regulation &
incentives (Patent protection &
innovation)

Factor conditions
High quality human
resources, R&D
Institution, Natural
Resources,
established banking
sector

Demand Conditions

Increase in
sophistication &
market size

Related & Supporting

Industries

supporting
IT, Agriculture,
industries
machine
manufacturers &
packaging industry

Enable formation of
Industrial Clusters

Hospitals

Agri Cluster

Information
Technology Cluster

Primary & secondary

packaging

Water & Electric

Bio-Industrial

Machine
Manufacture

Bio-Agriculture

Pharmaceutical
Companies

Bio-Pharmaceutical

Clinics
Hospitals

Association of
Biotechnology Lead
Enterprises (ABLE)
Biospectrum

Residencies
Pre-clinic
test
Bioinformatics

Vision group on Biotechnology

Bangalore Biointernational fair
Karnataka Biotech Development
Council

Banks

Universities & Research Institutions

Department o
fBiotechnologyBT

Emission
Waste
(2500t/day)

Government Agencies

Conditions Favoring Bio-tech Cluster Formation in Bangalore

Module 2

Leading Actors in EIC initiative

100%
80%
60%

4
12

40
10

5
2
10

29%

8
8

17

14

Local
Govt.

24

12
38

24

40%
24
20%
20

31

33

Vietnam

Thailand

28%
National
Govt.

0%

India
National govt

Local govt

Company

Business Association

Academia/research

NPO/NGO

Intern'l organization

Module 2

25%
Business

A Comparative Evaluation of Key Elements of EIC

Countries and Industrial Clusters
India

Japan

Thailand

Vietnam

Sericulture, Hosur

Wood,
Maniwa

Rice,
Chachoengsao

Fish,
An Giang

Small businesses

120

72

60

175

Nature of Market

Supplyled, mainly
secondary towns

Demandled,
domestic

Demandled,
regional, passive
exports

Demandled, mainly
export, limited
domestic

Producers
&
Development
Assistance Policy

Lead firms
&
Environmental
Policy

Large Firms
&
Social Development
Policy

Foreign Buyers
&
Industrial Policy

Weak bilateral
linkages.

Extensive
multilateral
cooperation
focussed on supply
chain

Effective horizontal
linkages

Extensive
subcontracting.

Product/market
diversification,
Employment

Zero-emission,
Eco-product
development

Waste management,
Income generation

Improved water
quality,
Employment
generation

Limited. Disabling
labour market
pooling

Significant. Positive
intermediate input
effects

Important. Potential
for significant
technology spill over

No local but some

central institutions;
Improved market
access

Social Capital

Policy Conflicts

Enabling Technology

Integrated Policy

Key Factors

Key Players

Evidence of
Inter-firm
Networks

Key
Benefits
Role of
Community &
Support
Institutions
Major
Constraint

In Summary .
Industrial Clusters
Exist

Most of them are in SME in manufacturing

Sector that also in peri-urban areas

Industrial Clusters
Provide Economic Benefits

EIC Development
Has net Benefits

EIC Development can be

Influenced

Industrial clusters are located at the

intersection of environment and economic
development. Well-functioning
EIC in advantageous regions
is a step towards green economy

Experiences suggest strategic policy choices

can bring tangible benefits

Module 2

How to create/transform into EICs

Eco-Innovation

Entrepreneurial
activity

Stimulation
Induction

Regional
Eco-industrial
network
Local
industrial
cluster

Cooperation
between firms,
KI & Policy
community
Cooperation
between firms
and KI
Spatial
Concentration
of firms

Regional Development

Entrepreneurial
attitude

Integrated
national Policy
frame work

EIC Has the Potential to be a new Development Model

Traditional Model

Government drives
economic development
through policy decisions
and incentives
Requires sustained
support by the public
sector
High failure rate
DEEPENS the dependence on
Public sector intervention

EIC based model

Leverage existing assets,

social history and
location.
Builds on coalition of
private and public actors.
Net level of success is
increasing over time.

TRANSFORMS the roles of

private and public sector

Stakeholders & Social Capital in EICs?

EIC community
Government
Objective:
-Econ develt
-Envi. quality
- Tax revenue

Residents
Objective:
-quality of life
-employment

Knowledge Institution
Objective:
-Innovation
-Capacity building

Other Business
Objective:
-Profit

EIC Business
EIC Member
Objective:
-Competitiveness
- Profit
- Social responsibility
EIC Management
Objective
- Cluster competitiveness
- Environmental quality

Module 2

Extra-community
- EIC customers

Does Technological Systems

Matter for EIC?
Technologies deployable
at the micro level
Rural business models with
active community participation

Easily replicable
technologies

Business models with gender equity

and participation of women

Technology
Enhancement

Introduce new
technologies for

Technologies using
local resources
Promote at a
larger scale

Efficient energy
Biomass
to power from
conversion
paddy residues
technologies
Piggery
and poultry

Recovery,
recycling
Bio-fuel production
from
fish fat tech.
& reuse
Use of industry made
fish feed

waste to Biogas

Upgrade existing
systems to

Cost-effective and
affordable technologies

Cascading water
Biomass gasification for
Treatment
and
steam generation
Biogas
production
from
Transport
tech.
sericulture waste

Decentralized power
generation systems

When does an EIC need policy

intervention?
Micro-credit

Objectives of the Workshop

Demonstrate the potentials of transforming industrial

clusters

into eco-friendly economic zones

Identify policy constraints and formulate strategies for boosting
cluster based innovation systems.
Illustrate successful examples of doing businesses within ecoindustrial clusters
Cultivate leadership for inclusive and sustainable development
of urban fringe areas

Module 2

Scope of the Training Workshop

Finance
Ss

Seminars

Technology

EIC as Eco-Friendly Economic

Zones (Module 2)

Social Capital

Business

Cluster based
& Economic Development

Strategies that work Module 3

Field
Visit

Role of Stakeholders - Policy, Businesses, KI

(Module 4)

EIC Initiatives for a New Era

(Module 6)

(Module 5)

Expected Outcome of the Training Course

Enhanced understanding on the environmental and
economic competitiveness of industrial clusters
Have a clear framework on the necessary and sufficient
conditions for transforming clusters into eco-friendly
economic zones
Ability to plan and implement and implement EIC
initiatives for sustainable regional development

Be in a position to make a change

Module 2

5+1 modules
Section 1: Background Information

Section 2: Case Studies and Worksheets

Section 3: References and Reading
Materials