The Brett Chulu Column

WE have laboured under the false belief that national prosperity is inherited. It has spawned a dangerous Father Christmas mentality. Prosperity rests on engineering our own factors of production.

Many are awe-struck by the mantra “Land is the economy; the economy is land.” Unfortunately, this beguiling refrain was and is still a half-truth.

Advanced economies have unintentionally organised economic activity and driven high productivity around clusters, thereby building and sustaining high standards of living for their citizens it is not dreamed up it is proven.

In Zimbabwe, ideas on economic advancement tend to turn on traditional economic insights and prescriptions. Common thinking on bringing down production costs to enhance competitiveness: cutting wages and getting new machinery. There is even an emerging school of economic revival in Zimbabwe called internal devaluation, which is just a code word for slashing wages. Cluster thinking is at variance with the wage-cut approach to achieving productivity. Cluster thinking promotes both high wages and high productivity.

Conventional wisdom has it that high wages father low productivity and blunt competitiveness. Cluster thinking challenges this view you don’t lift and sustain high living standards by giving a nation’s workers peanuts. Clusters are not a game for crybabies it’s only for those who want to play and win in the highest economic leagues. Those who believe government is Father Christmas and should molly-coddle them, granting import protection, preferential tax treatment, incentives, subsidies and pushing for low wages are not ready for the clusters game.

Clusters must be the bellwether of our economic revitalisation thinking. It’s deeper than industrial policy thinking.

There are seven pillars needed to build a cluster.

First, you need several rival firms located close to one another. You cannot form clusters with monopolies and duopolies. You need at least three rival companies located within the same area. Some clusters can have over a hundred rival firms located in the same vicinity.

Italy is well-known for producing the best ceramic tiles in the world. The majority of these tiles come from a single region called Sasuolo. In Sasuolo, there are over 100 equipment manufacturers in the ceramic tiles cluster. Geographic concentration is non-negotiable in cluster formation.

Second, there must be sophisticated and demanding local customers. These are needed to push rival companies to adopt sophisticated ways of competing that produce high quality products. This is what sustains high wages in a