The Twilight Saga 2: New Moon Chapter 8 ADRENALINE

â€Å"OKAY, WHERE'S YOUR CLUTCH?† I pointed to the lever on my left handlebar. Letting go of the grip was a mistake. The heavy bike wobbled underneath me, threatening to knock me sidewise. I grabbed the handle again, trying to hold it straight. â€Å"Jacob, it won't stay up,† I complained. â€Å"It will when you're moving,† he promised. â€Å"Now where's your brake?† â€Å"Behind my right foot.† â€Å"Wrong.† He grabbed my right hand and curled my fingers around the lever over the throttle. â€Å"But you said† â€Å"This is the brake you want. Don't use the back brake now, that's for later, when you know what you're doing.† â€Å"That doesn't sound right,† I said suspiciously. â€Å"Aren't both brakes kind of important?† â€Å"Forget the back brake, okay? Here† He wrapped his hand around mine and made me squeeze the lever down. â€Å"That is how you brake. Don't forget.† He squeezed my hand another time. â€Å"Fine,† I agreed. â€Å"Throttle?† I twisted the right grip. â€Å"Gearshift?† I nudged it with my left calf. â€Å"Very good. I think you've got all the parts down. Now you just have to get itmoving.† â€Å"Uh-huh,† I muttered, afraid to say more. My stomach was contorting strangely and I thought my voice might crack. I was terrified. I tried to tell myself that the fear was pointless. I'd already lived through the worst thing possible. In comparison with that, why should anything frighten me now? I should be able to look death in the face and laugh. My stomach wasn't buying it. I stared down the long stretch of dirt road, bordered by thick misty green on every side. The road was sandy and damp. Better than mud. â€Å"I want you to hold down the clutch,† Jacob instructed. I wrapped my fingers around the clutch. â€Å"Now this is crucial, Bella,† Jacob stressed. â€Å"Don't let go of that, okay? I want you to pretend that I've handed you a live grenade. The pin is out and you are holding down the spoon.† I squeezed tighter. â€Å"Good. Do you think you can kick-start it?† â€Å"If I move my foot, I will fall over,† I told him through gritted teeth, my fingers tight around my live grenade. â€Å"Okay, I'll do it. Don't let go of the clutch.† He took a step back, and then suddenly slammed his foot down on the pedal. There was a short ripping noise, and the force of his thrust rocked the bike. I started to fall sideways, but Jake caught the bike before it knocked me to the ground. â€Å"Steady there,† he encouraged. â€Å"Do you still have the clutch?† â€Å"Yes,† I gasped. â€Å"Plant your feetI'm going to try again.† But he put his hand on the back of the seat, too, just to be safe. It took four more kicks before the ignition caught. I could feel the bike rumbling beneath me like an angry animal. I gripped the clutch until my fingers ached. â€Å"Try out the throttle,† he suggested. â€Å"Very lightly. And don't let go of the clutch.† Hesitantly, I twisted the right handle. Though the movement was tiny, the bike snarled beneath me. It sounded angry and hungry now. Jacob smiled in deep satisfaction. â€Å"Do you remember how to put it into first gear?† he asked. â€Å"Yes.† â€Å"Well, go ahead and do it.† â€Å"Okay.† He waited for a few seconds. â€Å"Left foot,† he prompted. â€Å"I know,† I said, taking a deep breath. â€Å"Are you sure you want to do this?† Jacob asked. â€Å"You look scared.† â€Å"I'm fine,† I snapped. I kicked the gearshift down one notch. â€Å"Very good,† he praised me. â€Å"Now, very gently, ease up on the clutch.† He took a step away from the bike. â€Å"You want me to let go of the grenade?† I asked in disbelief. No wonder he was moving back. â€Å"That's how you move, Bella. Just do it little by little.† As I began to loosen my grip, I was shocked to be interrupted by a voice that did not belong to the boy standing next to me. â€Å"This is reckless and childish and idiotic, Bella,† the velvet voice fumed. â€Å"Oh!† I gasped, and my hand fell off the clutch. The bike bucked under me, yanking me forward and then collapsing to the ground half on top of me. The growling engine choked to a stop. â€Å"Bella?† Jacob jerked the heavy bike off me with ease. â€Å"Are you hurt?† But I wasn't listening. â€Å"I told you so,† the perfect voice murmured, crystal clear. â€Å"Bella?† Jacob shook my shoulder. â€Å"I'm fine,† I mumbled, dazed. More than fine. The voice in my head was back. It still rang in my earssoft, velvety echoes. My mind ran swiftly through the possibilities. There was no familiarity hereon a road I'd never seen, doing something I'd never done beforeno deja vu So the hallucinations must be triggered by something else I felt the adrenaline coursing through my veins again, and I thought I had the answer. Some combination of adrenaline and danger, or maybe just stupidity. Jacob was pulling me to my feet. â€Å"Did you hit your head?† he asked. â€Å"I don't think so.† I shook it back and forth, checking. â€Å"I didn't hurt the bike, did I?† This thought worried me. I was anxious to try again, right away. Being reckless was paying off better than I'd thought. Forget cheating. Maybe I'd found a way to generate the hallucinationsthat was much more important. â€Å"No. You just stalled the engine,† Jacob said, interrupting my quick speculations. â€Å"You let go of the clutch too fast.† I nodded. â€Å"Let's try again.† â€Å"Are you sure?† Jacob asked. â€Å"Positive.† This time I tried to get the kick-start myself. It was complicated; I had to jump a little to slam down on the pedal with enough force, and every time I did that, the bike tried to knock me over. Jacob's hand hovered over the handlebars, ready to catch me if I needed him. It took several good tries, and even more poor tries, before the engine caught and roared to life under me. Remembering to hold on to the grenade, I revved the throttle experimentally. It snarled at the slightest touch. My smile mirrored Jacob's now. â€Å"Easy on the clutch,† he reminded me. â€Å"Do you want to kill yourself, then? Is that what this is about?† the other voice spoke again, his tone severe. I smiled tightlyit was still workingand ignored the questions. Jacob wasn't going to let anything serious happen to me. â€Å"Go home to Charlie,† the voice ordered. The sheer beauty of it amazed me. I couldn't allow my memory to lose it, no matter the price. â€Å"Ease off slowly,† Jacob encouraged me. â€Å"I will,† I said. It bothered me a bit when I realized I was answering both of them. The voice in my head growled against the roar of the motorcycle. Trying to focus this time, to not let the voice startle me again, I relaxed my hand by tiny degrees. Suddenly, the gear caught and wrenched me forward. And I was flying. There was wind that wasn't there before, blowing my skin against my skull and flinging my hair back behind me with enough force that it felt like someone was tugging on it. I'd left my stomach back at the starting point; the adrenaline coursed through my body, tingling in my veins. The trees raced past me, blurring into a wall of green. But this was only first gear. My foot itched toward the gearshift as I twisted for more gas. â€Å"No, Bella!† the angry, honey-sweet voice ordered in my ear. â€Å"Watch what you're doing!† It distracted me enough from the speed to realize that the road was starting a slow curve to the left, and I was still going straight. Jacob hadn't told me how to turn. â€Å"Brakes, brakes,† I muttered to myself, and I instinctively slammed down with my right foot, like I would in my truck. The bike was suddenly unstable underneath me, shivering first to one side and then the other. It was dragging me toward the green wall, and I was going too fast. I tried to turn the handlebar the other direction, and the sudden shift of my weight pushed the bike toward the ground, still spinning toward the trees. The motorcycle landed on top of me again, roaring loudly, pulling me across the wet sand until it hit something stationary. I couldn't see. My face was mashed into the moss. I tried to lift my head, but there was something in the way. I was dizzy and confused. It sounded like there were three things snarlingthe bike over me, the voice in my head, and something else â€Å"Bella!† Jacob yelled, and I heard the roar of the other bike cut off. The motorcycle no longer pinned me to the ground, and I rolled over to breathe. All the growling went silent. â€Å"Wow,† I murmured. I was thrilled. This had to be it, the recipe for a hallucinationadrenaline plus clanger plus stupidity. Something close to that, anyway. â€Å"Bella!† Jacob was crouching over me anxiously. â€Å"Bella, are you alive?† â€Å"I'm great!† I enthused. I flexed my arms and legs. Everything seemed to be working correctly. â€Å"Let's do itagain.† â€Å"I don't think so.† Jacob still sounded worried. â€Å"I think I'd better drive you to the hospital first.† â€Å"I'mfine.† â€Å"Um, Bella? You've got a huge cut on your forehead, and it's gushing blood,† he informed me. I clapped my hand over my head. Sure enough, it was wet and sticky. I could smell nothing but the damp moss on my face, and that held off the nausea. â€Å"Oh, I'm so sorry, Jacob.† I pushed hard against the gash, as if I could force the blood back inside my head. â€Å"Why are you apologizing for bleeding?† he wondered as he wrapped a long arm around my waist and pulled me to my feet. â€Å"Let's go. I'll drive.† He held out his hand for the keys. â€Å"What about the bikes?† I asked, handing them over. He thought for a second. â€Å"Wait here. And take this.† He pulled off his T-shirt, already spotted with blood, and threw it to me. I wadded it up and held it tightly to my forehead. I was starting to smell the blood; I breathed deeply through my mouth and tried to concentrate on something else. Jacob jumped on the black motorcycle, kicked it to a start in one try, and raced back down the road, spraying sand and pebbles behind him. He looked athletic and professional as he leaned over the handlebars, head low, face forward, his shiny hair whipping against the russet skin of his back. My eyes narrowed enviously. I was sure I hadn't looked like that on my motorcycle. I was surprised at how far I'd gone. I could barely see Jacob in the distance when he finally got to the truck. He threw the bike into the bed and sprinted to the driver's side. I really didn't feel bad at all as he coaxed my truck to a deafening roar in his hurry to get back to me. My head stung a little, and my stomach was uneasy, but the cut wasn't serious. Head wounds just bled more than most. His urgency wasn't necessary. Jacob left the truck running as he raced back to me, wrapping his arm around my waist again. â€Å"Okay, let's get you in the truck.† â€Å"I'm honestly fine,† I assured him as he helped me in. â€Å"Don't get worked up. It's just a little blood.† â€Å"Just a lot of blood,† I heard him mutter as he went back for my bike. â€Å"Now, let's think about this for a second,† I began when he got back in. â€Å"If you take me to the ER like this, Charlie is sure to hear about it.† I glanced down at the sand and dirt caked into my jeans. â€Å"Bella, I think you need stitches. I'm not going to let you bleed to death.† â€Å"I won't,† I promised. â€Å"Let's just take the bikes back first, and then we'll make a stop at my house so I can dispose of the evidence before we go to the hospital.† â€Å"What about Charlie?† â€Å"He said he had to work today.† â€Å"Are you really sure?† â€Å"Trust me. I'm an easy bleeder. It's not nearly as dire as it looks.† Jacob wasn't happyhis full mouth turned down in an uncharacteristic frownbut he didn't want to get me in trouble. I stared out the window, holding his ruined shirt to my head, while he drove me to Forks. The motorcycle was better than I'd dreamed. It had served its original purpose. I'd cheatedbroken my promise. I'd been needlessly reckless. I felt a little less pathetic now that the promises had been broken on both sides. And then to discover the key to the hallucinations! At least, I hoped I had. I was going to test the theory as soon as possible. Maybe they'd get through with me quickly in the ER, and I could try again tonight. Racing down the road like that had been amazing. The feel of the wind in my face, the speed and the freedom it reminded me of a past life, flying through the thick forest without a road, piggyback while he ranI stopped thinking right there, letting the memory break off in the sudden agony. I flinched. â€Å"You still okay?† Jacob checked. â€Å"Yeah.† I tried to sound as convincing as before. â€Å"By the way,† he added. â€Å"I'm going to disconnect your foot brake tonight.† At home, I went to look at myself in the mirror first thing; it was pretty gruesome. Blood was drying in thick streaks across my cheek and neck, matting in my muddy hair. I examined myself clinically, pretending the blood was paint so it wouldn't upset my stomach. I breathed through my mouth, and was fine. I washed up as well as I could. Then I hid my dirty, bloody clothes in the bottom of my laundry basket, putting on new jeans and a button-up shirt (that I didn't have to pull over my head) as carefully as I could. I managed to do this one-handed and keep both garments blood-free. â€Å"Hurry up,† Jacob called. â€Å"Okay, okay,† I shouted back. After making sure I left nothing incriminating behind me, I headed downstairs. â€Å"How do I look?† I asked him. â€Å"Better,† he admitted. â€Å"But do I look like I tripped in your garage and hit my head on a hammer?† â€Å"Sure, I guess so.† â€Å"Let's go then.† Jacob hurried me out the door, and insisted on driving again. We were halfway to the hospital when I realized he was still shirtless. I frowned guiltily. â€Å"We should have grabbed you a jacket.† â€Å"That would have given us away,† he teased. â€Å"Besides, it's not cold.† â€Å"Are you kidding?† I shivered and reached out to turn the heat on. I watched Jacob to see if he was just playing tough so I wouldn't worry, but he looked comfortable enough. He had one arm over the back of my seat, though I was huddled up to keep warm. Jacob really did look older than sixteennot quite forty, but maybe older than me. Quil didn't have too much on him in the muscle department, for all that Jacob claimed to be a skeleton. The muscles were the long wiry kind, but they were definitely there under the smooth skin. His skin was such a pretty color, it made me jealous. Jacob noticed my scrutiny. â€Å"What?† he asked, suddenly self-conscious. â€Å"Nothing. I just hadn't realized before. Did you know, you're sort of beautiful?† Once the words slipped out, I worried that he might take my impulsive observation the wrong way. But Jacob just rolled his eyes. â€Å"You hit your head pretty hard, didn't you?† â€Å"I'm serious.† â€Å"Well, then, thanks. Sort of.† I grinned. â€Å"You're sort of welcome.† I had to have seven stitches to c lose the cut on my forehead. After the sting of the local anesthetic, there was no pain in the procedure. Jacob held my hand while Dr. Snow was sewing, and I tried not to think about why that was ironic. We were at the hospital forever. By the time I was done, I had to drop Jacob off at his home and hurry back to cook dinner for Charlie. Charlie seemed to buy my story about falling in Jacob's garage. After all, it wasn't like I hadn't been able to land myself in the ER before with no more help than my own feet. This night was not as bad as that first night, after I'd heard the perfect voice in Port Angeles. The hole came back, the way it always did when I was away from Jacob, but it didn't throb so badly around the edges. I was already planning ahead, looking forward to more delusions, and that was a distraction. Also, I knew I would feel better tomorrow when I was with Jacob again. That made the empty hole and the familiar pain easier to bear; relief was in sight. The nightmare, too, had lost a little of its potency. I was horrified by the nothingness, as always, but I was also strangely impatient as I waited for the moment that would send me screaming into consciousness. I knew the nightmare had to end. The next Wednesday, before I could get home from the ER, Dr. Gerandy called to warn my father that I might possibly have a concussion and advised him to wake me up every two hours through the night to make sure it wasn't serious. Charlie's eyes narrowed suspiciously at my weak explanation about tripping again. â€Å"Maybe you should just stay out of the garage altogether, Bella,† he suggested that night during dinner. I panicked, worried that Charlie was about to lay down some kind of edict that would prohibit La Push, and consequently my motorcycle. And I wasn't giving it upI'd had the most amazing hallucination today. My velvet-voiced delusion had yelled at me for almost five minutes before I'd hit the brake too abruptly and launched myself into the tree. I'd take whatever pain that would cause me tonight without complaint. â€Å"This didn't happen in the garage,† I protested quickly. â€Å"We were hiking, and I tripped over a rock.† â€Å"Since when do you hike?† Charlie asked skeptically. â€Å"Working at Newton's was bound to rub off sometime,† I pointed out. â€Å"Spend every day selling all the virtues of the outdoors, eventually you get curious.† Charlie glared at me, unconvinced. â€Å"I'll be more careful,† I promised, surreptitiously crossing my fingers under the table. â€Å"I don't mind you hiking right there around La Push, but keep close to town, okay?† â€Å"Why?† â€Å"Well, we've been getting a lot of wildlife complaints lately. The forestry department is going to check into it, but for the time being† â€Å"Oh, the big bear,† I said with sudden comprehension. â€Å"Yeah, some of the hikers coming through Newton's have seen it. Do you think there's really some giant mutated grizzly out there?† His forehead creased. â€Å"There's something. Keep it close to town, okay?† â€Å"Sure, sure,† I said quickly. He didn't look completely appeased. â€Å"Charlie's getting nosy,† I complained to Jacob when I picked him up after school Friday. â€Å"Maybe we should cool it with the bikes.† He saw my objecting expression and added, â€Å"At least for a week or so. You could stay out of the hospital for a week, right?† â€Å"What are we going to do?† I griped. He smiled cheerfully. â€Å"What ever you want.† I thought about that for a minuteabout what I wanted. I hated the idea of losing even my brief seconds of closeness with the memories that didn't hurtthe ones that came on their own, without me thinking of them consciously. If I couldn't have the bikes, I was going to have to find some other avenue to the danger and the adrenaline, and that was going to take serious thought and creativity. Doing nothing in the meantime was not appealing. Suppose I got depressed again, even with Jake? I had to keep occupied. Maybe there was some other way, some other recipe some other place. The house had been a mistake, certainly. But his presence must be stamped somewhere, somewhere other than inside me. There had to be a place where he seemed more real than among all the familiar landmarks that were crowded with other human memories. I could think of one place where that might hold true. One place that would always belong to him and no one else. A magic place, full of light. The beautiful meadow I'd seen only once in my life, lit by sunshine and the sparkle of his skin. This idea had a huge potential for backfiringit might be dangerously painful. My chest ached with emptiness even to think of it. It was hard to hold myself upright, to not give myself away. But surely, there of all places, I could hear his voice. And I'd already told Charlie I was hiking â€Å"What are you thinking about so hard?† Jacob asked. â€Å"Well† I began slowly. â€Å"I found this place in the forest onceI came across it when I was, um, hiking. A little meadow, the most beautiful place. I don't know if I could track it down again on my own. It would definitely take a few tries† â€Å"We could use a compass and a grid pattern,† Jacob said with confident helpfulness. â€Å"Do you know where you started from?† â€Å"Yes, just below the trailhead where the one-ten ends. I was going mostly south, I think.† â€Å"Cool. We'll find it.† As always, Jacob was game for anything I wanted. No matter how strange it was. So, Saturday afternoon, I tied on my new hiking bootspurchased that morning using my twenty-per-cent-off employee discount for the first timegrabbed my new topographical map of the Olympic Peninsula, and drove to La Push. We didn't get started immediately; first, Jacob sprawled across the living room floortaking up the whole roomand, for a full twenty minutes, drew a complicated web across the key section of the map while I perched on a kitchen chair and talked to Billy. Billy didn't seem at all concerned about our proposed hiking trip. I was surprised that Jacob had told him where we were going, given the fuss people were making about the bear sightings. I wanted to ask Billy not to say anything about this to Charlie, but I was afraid that making the request would cause the opposite result. â€Å"Maybe we'll see the super bear,† Jacob joked, eyes on his design. I glanced at Billy swiftly, fearing a Charlie-style reaction. But Billy just laughed at his son. â€Å"Maybe you should take a jar of honey, just in case.† Jake chuckled. â€Å"Hope your new boots are fast, Bella. One little jar isn't going to keep a hungry bear occupied for long.† â€Å"I only have to be faster than you.† â€Å"Good luck with that!† Jacob said, rolling his eyes as he refolded the map. â€Å"Let's go.† â€Å"Have fun,† Billy rumbled, wheeling himself toward the refrigerator. Charlie was not a hard person to live with, but it looked to me like Jacob had it even easier than I did. I drove to the very end of the dirt road, stopping near the sign that marked the beginning of the trailhead. It had been a long time since I'd been here, and my stomach reacted nervously. This might be a very bad thing. But it would be worth it, if I got to hear him. I got out and looked at the dense wall of green. â€Å"I went this way,† I murmured, pointing straight ahead. â€Å"Hmm,† Jake muttered. â€Å"What?† He looked at the direction I'd pointed, then at the clearly marked trail, and back. â€Å"I would have figured you for a trail kind of girl.† â€Å"Not me.† I smiled bleakly. â€Å"I'm a rebel.† He laughed, and then pulled out our map. â€Å"Give me a second.† He held the compass in a skilled way, twisting the map around till it angled the way he wanted. â€Å"Okayfirst line on the grid. Let's do it.† I could tell that I was slowing Jacob up, but he didn't complain. I tried not to dwell on my last trip through this part of the forest, with a very different companion. Normal memories were still cangerous. If I let myself slip up, I'd end up with my arms clutching my chest to hold it together, gasping for air, and how would I explain that to Jacob? It wasn't as hard as I would have thought to keep focused on the present. The forest looked a lot like any other part of the peninsula, and Jacob set a vastly different mood. He whistled cheerfully, an unfamiliar tune, swinging his arms and moving easily through the rough undergrowth. The shadows didn't seem as dark as usual. Not with my personal sun along. Jacob checked the compass every few minutes, keeping us in a straight line with one of the radiating spokes of his grid. He really looked like he knew what he was doing. I was going to compliment him, but I caught myself. No doubt he'd add another few years to his inflated age. My mind wandered as I walked, and I grew curious. I hadn't forgotten the conversation we'd had by the sea cliffsI'd been waiting for him to bring it up again, but it didn't look like that was going to happen. â€Å"Hey Jake?† I asked hesitantly. â€Å"Yeah?† â€Å"How are things with Embry? Is he back to normal yet?† Jacob was silent for a minute, still moving forward with long paces. When he was about ten feet ahead, he stopped to wait for me. â€Å"No. He's not back to normal,† Jacob said when I reached him, his mouth pulling down at the corners. He didn't start walking again. I immediately regretted bringing it up. â€Å"StillwithSam.† â€Å"Yup.† He put his arm around my shoulder, and he looked so troubled that I didn't playfully shake it off, as I might have otherwise. â€Å"Are they still looking at you funny?† I half-whispered. Jacob stared through the trees. â€Å"Sometimes.† â€Å"AndBilly?† â€Å"As helpful as ever,† he said in a sour, angry voice that disturbed me. â€Å"Our couch is always open,† I offered. He laughed, breaking out of the unnatural gloom. â€Å"But think of the position that would put Charlie inwhen Billy calls the police to report my kidnapping.† I laughed too, glad to have Jacob back to normal. We stopped when Jacob said we'd gone six miles, cut west for a short time, and headed back along another line of his grid. Everything looked exactly the same as the way in, and I had a feeling that my silly quest was pretty much doomed. I admitted as much when it started to get darker, the sunless day fading toward a starless night, but Jacob was more confident. â€Å"As long as you're sure we're starting from the right place† He glanced down at me. â€Å"Yes, I'm sure.† â€Å"Then we'll find it,† he promised, grabbing my hand and pulling me through a mass of ferns. On the other side was the truck. He gestured toward it proudly. â€Å"Trust me.† â€Å"You're good,† I admitted. â€Å"Next time we bring flashlights, though.† â€Å"We'll save hiking for Sundays from now on. I didn't know you were that slow.† I yanked my hand back and stomped around to the driver's side while he chuckled at my reaction. â€Å"So you up for another try tomorrow.'† he asked, sliding into the passenger seat. â€Å"Sure. Unless you want to go without me so I don't tie you down to my gimpy pace.† â€Å"I'll survive,† he assured me. â€Å"If we're hiking again, though, you might want to pick up some moleskin. I bet you can feel those new boots right now.† â€Å"A little,† I confessed. It felt like I had more blisters than I had space to fit them. â€Å"I hope we see the bear tomorrow. I'm sort of disappointed about that.† â€Å"Yes, me, too,† I agreed sarcastically. â€Å"Maybe we'll get lucky tomorrow and something will eat us!† â€Å"Bears don't want to eat people. We don't taste that good.† He grinned at me in the dark cab. â€Å"Of course, you might be an exception. I bet you'd taste good.† â€Å"Thanks so much,† I said, looking away. He wasn't the first person to tell me that.

What’s Gone Wrong with the Third Italy

Msc BUSINESS ADMINISTRATION INTERNATIONAL BUSINESS CONTENT Introduction p. 3 Early glitches of the SMEs within the industrial districts p. 5 Analysis of two of the regional clusters at stake p. 6 What went wrong? p. 7 Concluding remarks p. 9 References p. 10 Introduction The purpose of this paper is to determine to which extent the economic areas known as ’Third Italy’ have not managed to achieve the well-desired status. The local development model has been presented as the perfect small-scale flexible capitalist type that has adopted a post-Fordist mode of production (Grancelli, 2007).The economic cluster referred to as Third Italy, was founded in the post-war period (1950s and 1960s) when the global economy was going through hard times of recovery. In the north-east part of Italy a new type of firms was developed. The question may be put why didn’t the other two important industrialized districts known as First Italy (the industrial heartland of the North) and the Second Italy (the backward South) have become the regions of wealth and economic growth.The answer lies primarily in the cultural values: the local culture of entrepreneurship and cooperation (Boschma, 1998) that to some extent doesn’t apply for other Italian regions. The following figure displays accurately the industrial zone of Italy: According to Bagnasco (1977) from a economic point of view Italy was divided into the ’Three Italies’: the North-west, the big companies, was tagged as ’central economy’, the shallow regions of the South seen as ’marginal economy’ and the central-North-eastern regions- known as Third Italy- haracterized by the presence of small firms that are defined as ’peripheral economy’. Nonetheless, the way in which the Third Italy region was defined didn’t hide the real facts; when compared to the North-west typology, productivity per worker and work unit-costs were sensibly lower. But t his didn’t disable the central-north-east cluster to have a significant development process that is confirmed by: a reduction of agricultural employees, an increase in manufacturing workers, growth in resident population, and an upward trend in Italy’s industrial national product (Bianchi, 1998).The â€Å"Third Italy† region, also referred to as Emilia-Romagna, forms a north-eastern group of counties that propelled themselves to a position of prosperity between the relatively wealthy north-western triangle of Italy and the relatively impoverished Mezzagiorno region south of Rome (Walcott, 2007). Localized production centres utilize export-oriented niche specializations to create place-based economies supporting local firms. Related residents supply both low labour costs and endogenously accumulated capital.Light industrial products include foods, clothing, shoes, furniture, and metal work for a craft-based market. Building on a textiles and leather goods special ization, that demands rapid responses to a notoriously fickle fashion market, familial and other locally forged trust-based ties enabled local star â€Å"Benetton† to become an international fashion retail chain. Knowledge of the local market was so finely tuned that offerings were famously differentiated even within the same city (Walcott, 2007).External economies of place propelled tightly organized local regions to maximize returns based on clearly defined sectoral specialization. In one example clearly defying physical topography, Silicon Valley imitators sprang up around the globe as hopeful high technology havens. A real estate set-aside does not an industrial district make, however (Walcott, 2007). Early glitches of the SMEs within the industrial districts In the early 1990s the one of the menacing forces against the Italian industrial clusters was the post-industrial transition.The internationalization of the economy endangers the developing process of small-scale fir ms. One good argument is the external market that provides expanded multinational, multi-product, multi-market companies (Holland, 1987). Even if the European Union is trying to help out these businesses by adopting policies and programmes the structural problems are not accurately aimed (Dastoli and Vilella, 1992: 179). Firms part of the Italian industrial district were running short of breath confirming that the market by its self regulation has launched an attack to the ’small is beautiful’ saying.Innovation plays a key part in the life of small and medium enterprises (SMEs) from the industrial clusters. It is noticed a decline in the importance of factors sources of external economies) that empowered the initial outset of the firms. The long used external sources were starting to lose grip in the face of the needed environmental efficiency (Bianchi, 1998). The changes that had to be performed weren’t a walk in the park. According to Bianchi (1990): the local entrepreneurs’ social culture and the past history successes disable the belief of urgent innovation investment.Also, economic barriers have prohibited small firms to access the large scale research and development, marketing and etc. (Regini and Sabel, 1989). Furthermore, two additional problems sprung up from the innovation process that need to be taken into consideration: ’product innovation’ in those zone of production with a highly design content that subtracts the formal innovation side rather than the technological innovation, because the first one includes creativity, imagination and taste, factors that are not easily obtained in business-set like this.The other difficulty is process innovation meaning that adopting a higher technological labour focused system would both increase productivity and decrease costs (Bianchi, 1998). Hadjimicalis (Hadjimicalis, 2006) introduces a set of arguments that could nevertheless be the real ones behind Third Italyâ₠¬â„¢s downturn. ’The lack of attention to the role of state’ implies the obsolete focus on different direct and indirect protectionist measures and regulations as in the work of radicals Stoper (1997) and Scott (1988).The most important protectionist measures as the Multi-Fibre Agreement that went in favour for Italy’s blooming manufacturing industries. The regulatory decisions have protected Italy along with other countries from ’unlimited competition’ in garments and textiles from the menacing low waged countries in the Eastern part of the world. Another governmental intervention was the fiscal regulation which consisted the hedging the exchange rates for the lira due to the devaluations throughout the 20th century and one of them when Euro currency was adopted in 2001.An interesting fact is that all those authors that supported the theories behind Third Italy industrial clusters as (Asheim 1999, Becattini 1990, Cooke 1988) haven’t seen th e harsh reality of such a business type: poor working conditions and safety conditions, longer work hours and low paid working hours. All the other specific characteristics of the small-scale enterprises from the region as: flexibility, innovation and embbededness of small firms (Hadjimichalis, 2006). Another term that was used to explain the success of Italian IDs is ’social capital’.It is the theoretical concept that has been used by various authors. A good perspective is seen through the lenses of Hadjimichalis: ’From individuals to communities, from firms to families, from cooperation to competition, from working conditions to unions, from trust and reciprocity to corruption and from the success to the failure of a place, all are called social capital’, this explaining clearly the real trend of firms within the Italian industrial clusters. Analysis of two of the regional clusters at stakeThe most remarkable evolution oscillations can be outlined in Em ilia-Romagna and Veneto provinces, where ’industrialisation without breaks’ (Fua,1983) was followed by a third party strategy ’without breaks’ which means that the regions have gained the prestige of stability organisms within the frontier of national development. The Piedmont and Lombardy are also good examples for the comparative advantage of their early launch and the lasting predominance of their industries provided the solid foundations for a strong post-industrial transition (Bianchi, 1998).Tuscany, on the other hand, has badly faced up to the need to restructure during the 1980s. Its historical memory describes best the anti-industrial attitude of its ruling class. Differences between the two provinces within the Third Italy are clear. The Emilia-Romagna’s type of industrial development is seen as unique and deeply rooted in the region’s culture and entrepreneurial activity (Heidenreich, 1996) and when compared to Tuscany’s ina bility to cope with a model of development that seems inapplicable to the case.Table 1 underlines the two differences in between the two regions described above. What went wrong? The industrial district of Third Italy (IDs) have suffered severe changes during the early 1990s because of the demand fall for Made in Italy products along with the emergence of new lower waged Eastern Europe companies and developing countries (Grancelli,2006). The active devaluation of the lira due to the euro introduction had a significant impact on the upward trend of Italian exports.The small-scale enterprises that have set a foothold into the creation of the so-called Third Italy region, were basically family businesses which put all into a network bowl had formed the leading industrial area of Italy and a model to follow on by the emerging countries. Following the same idea it could be said that the demographic decline has started a process of ’social construction of the market’ (Bagnas co ;amp; Triglia 1984; Dei Ottati 1995; Provasi 2002).The financial global crisis has put its fingerprint on the actual Italian industrial districts, but those enterprises that could jump incremental innovation and ensure a competitive position globally had somewhat survived the impact (Whitford, 2001). The latter example of firms shows that they have created vertically integrated organizational blueprints, and made foreign direct investments in contrast to the swept out firms that have just relocated part of their production (Grancelli, 2006) to low pay working force or to attract foreign workers in the home production facilities.According to Hadjimichailis (2006) : The erosion of the Italian industrial clusters was made through: ’ Relocation of production in Eastern Europe in search of low labour costs’ and this gave birth to: a severe increase in unemployment percentages and adding the hiring of immigrant workers within the Italian borders. Hadjimichailis (2006) als o introduces the ’bloody Taylorism’ term which is used in relation to the destination markets of the Italian entrepeneurs, Eastern Europe countries.This is used in connection to the SMEs of Veneto which were thought to re-establish Fordist factories due to delocalization processes. One example is the relocated production quotas abroad which ranged from 23% to 45% that resulted in a decrease of 28% of employment, 38% of production units in the region. This being said, the following concluding remarks could be made: ’Fordism is not only alive and well at the global scale, but it also returns as a solution to Italian firms’ from the industrial clusters, which were the models of flexibility and industrial district mythology (Hadjimichailis, 2006 : 95).The eastern slide of some of the sub-contractors from the Third Italy confirms the ideology that coordination between subsidiaries abroad and the parent company could not be only made through tacit knowledge of skilled workers and technicians remains an important factor even in a globally set value chain (Biggero, 2006). Those actors that have relocated their business into the Eastern part of Europe, Romania or other Balkan countries are seen as ’extroverted actors’ that also maintained relations within the home country district (Tappy, 2005).An important technological disequilibrium was introduced in the late 1960s – plastic materials for ski boots – by the lively research of external knowledge through some of leading firms. Another challenge of the north-eastern industrial clusters is the superior technological level of the products and putting a foot in the door of appealing mergers and acquisitions. Old, traditional and family driven businesses that are identified within the Third Italy areas need to see the ever changing strategy patterns as to going from a production to design phase which could attract cost diminishing (Cooke, 1998).It must not be neglecte d the power created by the tight bonded social network that has nurtured its roots for more than 50 years and before de ’90s has raised economic analysts’ eye browses throughout the world. Concluding remarks In order to survive, Italian industrial districts need to be fulfilling the following two conditions: their social and geographical division of labour remains globally competitive as compared to similar areas, sectors and other forms of industrial production, and their internal system of social reproduction remains unchallenged. Hadjimichalis, 2006) Mergers and acquisitions with famous brand names could be live threats for the small business embedded firms from the industrial zones of Italy. The power of Fordism has not dawned; in fact there is an increase of business deployment using this theory mainly in the Eastern countries. De-localization breaks the mesmerizing effect of small-scale flexible companies and builds up the multinational company picture having ver tical integrated characteristics.The presence of a huge wave of non-EU immigrants also changes the parameters of the Third Italy’s rather stable local social structure, with a cap on immigrations that could preserve craft traditions and the reproduction of skills. Even though ’Third Italy’ concept is turning ethereal, the back stage offers the resources, specific capabilities and core competencies developed throughout the years by the district firms to achieve competitive advantage in their markets but also to allow their sub-parts within the industrial system (Schiavone, 2004).As theories claim Third Italy revolves around the social capital theories that also could be a driver for economic performance (Granato et al. , 1996). In addition to too little social capital, too much social capital could have a negative impact on economic performance (Boschma and Lambooy, 2002). Finally, it could be assumed that the process of rethinking and reorienting of Third Italyà ¢â‚¬â„¢s entrepreneurial and family based firms has done a significant change to whole industrial aggregate. References Asheim B. (1999), â€Å" Interactive learning and localized knowledge in globalising learning economies†.Geojournal 49(4):345–352 Bagnasco, A. ,Trigilia, C. (eds) (1984), â€Å" Societa e politica nelle aree di piccola impresa: Il caso di Bassano, Venezia: Arsenale Editrice. agnasco†, A. ,Trigilia, C. (eds) (1984), Societa e politica nelle aree di piccola impresa: Il caso di Bassano, Venezia: Arsenale Editrice. Becattini G. , (1990) â€Å"The Marchallian industrial district as a socio-economic notion. In F Pyke, G Becattini and W Sengerberger (eds) Industrial Districts and the Interfirm Co-operation in Italy† (pp 132–142). Geneva: ILO Bianchi, G. (1998), â€Å"Requiem for the Third Italy?Rise and fall of a too successful concept†, Entrepeneurship;amp; Regional Development, 10 (1998), 93-116. Biggero, L. (2006), â€Å"Indus trial and knowledge delocation strategies under the challenges of globalization and digitalization: the move of small and medium enterprises among territorial systems† , Entrepreneurship and Regional Development, 18: 443-471 Boschma, R. A. , and Lambooy, J. G. 2002. â€Å" Knowledge, market structure and economic co-ordination: the dynamics of industrial districts. Growth and Change† 33 (3): 291-311. Boschma, Ron A. , Kloosterman R.C. (1998), â€Å"Learning from Clusters: A Critical Assessment†,  © 2005 Springer. Printed in the Netherlands. 139–168. Cooke P. , (1988) â€Å" Flexible integration, scope economies and strategic alliances: Social and spatial mediation†. Society and Space 6:281–300 Cooke P. , Morgan, K. (1998), â€Å" The Associational Economy†, Oxford: O. U. P. Dastoli, P. V. and Viclla, G. 1992â€Å" La Nuova Europa. Dalla Comunita all' Unione (Bologna: II Mulino) † Dei Ottati, G. (1995), â€Å"Tra mercato e com unita: Aspetti concettuali e ricerche empiriche sul distretto industriale†, Milano: F.Angeli. Fua, G. and C. Zacchia (1983) (a cura di), â€Å" Industrializzazione senza fratture, Bologna: Il Mulino†. Granato, J. , Inglehart, R. , and Leblang, D. (1996). â€Å"The effect of cultural values on economic development. Theory, hypotheses, and some empirical testsâ€Å". American Journal of Political Sciences 40 (3): 607-631 Grancelli, B. , Chiesi A. M. (2006), â€Å"Elites-in-the-making and their organizational behaviour: Cases in Russia and the Balkans†, in B. Dallago (ed. ), Transformation and European Integration. The Local Dimension, London: Palgrave. Holland, S. 1987), â€Å"The Market Economy, From Micro- To Meso-Economics† ( London: Weidenfeld ;amp; Nicholson). Hadjimichalis, C. (2006), â€Å"The End of Third Italy as we knew it ? â€Å", Editorial Board of Antipode. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA Heidenreich, M. 1996 â€Å"Beyond flexible specialization: the rearrangement of regional production orders in Emilia-Romagna and Baden-Wurttemberg†, European Planning Studies, 4: 401-420 Makdisi S. , Casarino C. , Karl R. E. , â€Å"Marxism Beyond Marxism† Routledge, London, 1996, pg. 155Provasi, G. (2002) (Ed. ), â€Å"Le istituzioni dello sviluppo, Roma: Donzelli Regini, M. and Sabel†, C. 1989 Strategic di riaggiustamento industriale (Bologna: II Mulino). Schiavone ,F. , Dezi L. (2004), â€Å"Managerial Styles within an Italian Industrial District:Two different successful storiesâ€Å" Scott A and Storper M (1988) â€Å"The geographical foundations and social regulation offlexible production complexes†. In J Wolch and M Dear (eds) The Power of Geography (pp 21–40). London: Allen and Unwin Storper M (1997) â€Å"The Regional World: Territorial Development in a Global Economy†. New York: Guilford Tappi, D . 2005) â€Å"Cluster, adaptation and extroversion. A cognitive and entrepreneurial analysis of the Marche music cluster†, European Urban and Regional Studies, 12/3: 289- 307. Walcott, Susan M. (2007) â€Å"Wenzhou and the Third Italy: Entrepreneurial Model Regions†, Journal of Asia-Pacific Business, 8: 3, 23 — 35 Whitford, J. (2001), â€Å"The decline of a model? Challenge and response in the Italian industrial districts†, Economy and Society, 30/1: 38-65. ——————————————– [ 1 ]. Theory that appeared after the ‘Fordism’ period in which a mass consumer was targeted, products standardized and costs lowered. Post-Fordism’ is characterized by ‘flexible specialization’ based on dense networks of flexible, strongly related, mostly small and medium-sized firms in mainly craft-based industries that are concentrated in specialis ed industrial districts(Boschma,1998). [ 2 ]. Copyright 2010 privileges set. [ 3 ]. SME-small and medium enterprises [ 4 ]. Putnam’s work on Italy (1993), Porter’s on clusters (1998) [ 5 ]. (Casarino, 1996) – After the Industrial Revolution, a mechanical engineer called Frederick W. Taylor proposed a new way to organize factories and shop floors with what he called the â€Å"Scientific Management†.

Wind Power Cluster in Denmark

Microeconomics of Competitiveness Final Report The Danish Wind Energy Cluster Warsaw School of Economics – 13th January 2010 1. IntroductionPage 2 PART I: DENMARK 2. Country BackgroundPage 2 3. Performance of the Danish EconomyPage 3 2. 1 Trade 2. 2 Budget and Fiscal Policy 2. 3 Gross Domestic Product and Productivity Growth 4. Cluster composition in DenmarkPage 5 3. 1 History of Cluster Policy in Denmark 3. 2 Today’s Context 5. The Business Environment in Denmark – National DiamondPage 8 5. 1 Factor Conditions 5. 2 Demand Conditions 5. Related and Supporting Industries 5. 4 Context for Firm Strategy, Structure and Rivalry 5. 5 Government – the Influence of Macroeconomic Policies 5. 6 Institutions for Collaboration PART II: THE DANISH WIND ENERGY CLUSTER 6. Historical Development of the ClusterPage 13 6. 1 Wind Energy in Denmark before the 1970s 6. 2 The Danish Wind Energy Cluster in the 1970s – The First Hesitant Beginnings 6. 3 The Danish Wind Ene rgy Cluster in the 1980s 6. 4 The Energy Policy of the Danish Government since the 1980s/1990s 6. 5 The Cluster of Modern Wind Turbines since 1990 7. Description of the Wind Energy ClusterPage 20 7. 1 Vestas: World’s no. 1 Turbine Manufacturer 8. Wind Energy Cluster – Cluster DiamondPage 22 8. 1 Factor Conditions 8. 2 Demand Conditions 8. 3 Context for Firm Strategy, Structure and Rivalry 8. 4 Related and Supporting Industries 9. Strategic Issues Facing Denmark and the Wind Energy ClusterPage 28 10. Policy recommendations for the appropriate constituenciesPage 30 11. ConclusionPage 31 Bibliography Required Disclosures 1. Introduction This paper gives an insight into the Danish economy and business environment. Furthermore, it describes the cluster composition in Denmark and how the policies towards clusters have changed in recent years. The core of the paper is the comprehensive analysis of the wind energy cluster in Denmark where the cluster is analysed with the use of Porter’s diamond model. Lastly, identification of strategic issues facing Denmark and the wind energy cluster will be presented and policy recommendations given. PART I: DENMARK 2. Country Background Denmark is located in Northern Europe between the Baltic Sea and the North Sea and has Copenhagen as its capital. Its population consists of approx. 5. 5 million inhabitants whereof 9. 1% is immigrants and their descendants. The official language is Danish, but the level of English proficiency is very high. The Danish constitution was codified in 1848 and today the country is governed by a parliament consisting of 179 members. The election period is four years but the prime minister can call an election at any time. Furthermore, Denmark has a constitutional monarchy with Queen Margrethe II as the head. The Queen is apolitical and only functions a representative for Denmark. Denmark joined the EU in 1973 and has always seen it as a good place for economic cooperation, but Danes have been more reluctant towards the political integration resulting in Denmark staying out of the Euro. Denmark is known for its Scandinavian welfare model, which ensures a high level of re-distribution through taxes. The model includes among other things the â€Å"flexicurity† system, which will be elaborated later (Ministry of Foreign Affairs of Denmark). 3. Performance of the Danish Economy Danish economy can surely be described as a modern one, oriented primarily at services. In terms of its resources, the economy depends to the greatest extent on human capital, which translates into a more labor-related approach towards business. With over 5. 5 million citizens, Denmark maintains a record low level of unemployment, roughly 2. 1%. All those indicators contribute to a pretty high standard of living. For this reason Denmark was ranked 16th globally in the Human Development Index, which reflects several aspects, such as live expectancy, knowledge and education standards measured by literacy rate and standard of living. . 1 Trade Denmark has a high social support for free trade. Over 76% of the population perceives globalisation as a positive phenomenon (Time). Danish basic trading partners are the countries from European Union (70%), followed by the United States. Denmark’s high involvement in global trade is reflected in the ranking of trade per capita, placing the country on the 9th place globally, with the result of $17. 5 thousand of trade per cap ita (World Fact Book). Danish major export markets are illustrated in the table below. Table 1: Danish major export markets in 2008 (Million DKK) |Germany |Sweden |UK |US |Norway |Netherlands |France |Italy |Finland |Spain | |103. 4 |85. 2 |48. 5 |35. 2 |32. 3 |26. 0 |26. 0 |18. 0 |15. 7 |15. 0 | Source: Danish Exporters As far as exported goods are concerned, the principal products are food, industrial instruments and machinery. Furthermore, Denmark exports chemical products, furniture and pharmaceuticals. In terms of imports, raw materials and semi-manufacturers, as well as consumer goods prevail. 3. 2 Budget and Fiscal Policy Over several previous years Denmark has been recording budgetary surpluses. However, at the same time the country is facing a debt at the level of 43 billion DKK. Because of extremely low unemployment rate, the government has to be very cautious in increasing their spending, as it may translate into dramatic overheating of the whole Danish economy (due to salaries’ increases). Under such conditions, the debt is expected to fall by 2015. Budgetary expenditures are financed primarily through high tax burdens. Denmark is by many described and perceived as a welfare state, which ensures many various social aids for its citizens. One of the most famous elements of the welfare safety net is tax-funded healthcare and unemployment insurance. In addition to this, Denmark has a well developed pension system, embracing all citizens from the age 65. In order to finance expenditures, the fiscal system assumes almost a 50% tax rate, which is by far the highest one in the world (OECD Tax Database). 3. 3 Gross Domestic Product and Productivity Growth Denmark has a high level of GDP PPP per capita, which places the country on the 16th place globally. Moreover, according to IMF data, the country holds a strong 5th position in the world in terms of its nominal GDP per capita (World Economic Outlook Database). The difference can be easily explained by a relatively high level of prices in comparison with other benchmarking countries. Denmark has been facing a gradual GDP growth for several years, which was disturbed by the global economic crisis. The crisis caused mainly an increase in the unemployment rate and drop of private consumption. In addition to this, Denmark suffered under a significant decrease in exports, which naturally translated into problems with trade balance. Although it is clear that such conditions affected GDP growth, economists claim that Denmark has already embarked upon the recovery path. Table 2: Summary of Danish GDP per capita PPP in USD Year |2002 |2003 |2004 |2005 |2006 |2007 |2008 |2009 | |GDP ($) |29637 |30305 |31766 |33528 |35672 |37163 |37304 |36725 | |% change |1. 73 % |2. 26 % |4. 82 % |5. 55 % |6. 39 % |4. 18 % |0. 38 % |-1. 55 % | Sources: Index Mundi report on Danish Economy (2009) In spite of sound economic growth in the preceding years, the country is perceived to have a strong underlying problem with its future development. It is projected that Denmark will have fourth-lowest productivity growth among OECD countries in the following years (Index Mundi, 2009). As well as this, heavy governmental transfer payments create an unhealthy situation for other parts of the economy. Therefore, they might also translate into an impediment in future growth. 4. Cluster Composition in Denmark Denmark is by far one of the most interesting countries from the perspective of clusters. It was among the first ones to introduce certain clustering policies and since that time it has been quickly developing in terms of the final composition. The country – due to its success – was also included in Porter’s Ten-Nation study about the connection between international competitiveness and the existence and strength of clusters (Yettin, et al, 1992). 4. 1 History of Cluster Policy in Denmark The history begins in the early 1990s, when the Danish government decided to implement first steps aimed at development of the cluster concept. The analysis, which was carried out at the beginning of the process, indicated several areas for further cluster development. These were: food products, IT, bio-health and construction. They were firstly defined as so-called Mega Clusters and then narrowed down in the late 1990s. At that time ‘real’ clusters were defined, e. g. industrial design, aluminium processing or biotech. Despite these efforts, the government was still choosing to proceed with an industrial policy, rather than a cluster-oriented one. The situation changed in the 2000s with the introduction of regional initiatives. That assumed strategic decisions being undertaken on the regional level, rather than on the central one. Thus, Denmark nowadays lacks a vivid clustering policy on the national level. However, at the same time there are numerous regional initiatives that contribute to the process. All in all, the shift from governmental planning to the decentralized system proved to be worth the effort, as it significantly supported the development of a sound clustering structure in the country. 4. 2 Today’s Context Clusters in Denmark emerge exclusively on the regional level. The country is divided into 5 administrative regions and 98 municipalities. Local authorities are the trigger for respective cluster policies. Their ideas can be implemented independently or be supported by special agencies, namely the National Agency For Enterprise and Construction, The Danish Forest and Nature Agency, the Danish Agency for Science Technology and Innovation and the Danish Council for Technology and Innovation (Cluster Observatory). Apart from that, the policies involve also third parties in the emergence process, which are companies, research- and educational institutions and distributors of technological knowledge. Their cooperation is expected to result in a long-lasting relationship, as well as knowledge creation. As far as certain clusters are concerned, the 17 regional growth environments were established in 2001. Depending on the geographical location of the region, the main clusters were assigned to specific places. They are illustrated in the table and figure on the next page. Table 3: Summary of Main Danish Clusters |Growth environments commenced in 2001 |Growth environments commenced in 2002 | |Furniture & Wood |Fishing | Wind energy |Foods | |Technology & IT |Sub-suppliers | |Biotechnology |Stainless steel | |Manufacturing |Offshore | |Horticulture |Transportation | |- |Aluminium | |- |Robot technology | |- |Event economy | |- |Finance | |- |Seed-growing | Source: Nordic Innovation Figure 1: Denmark Exports Portfolio by Cluster [pic] As far as challenges ahead are concerned, Denmark still has certain areas for improvement. First of all, the country has to put a strong emphasis on knowledge creation and development of competence environments. As most initiatives are planned and carried out on the regional level, such environments could serve as knowledge centers enabling cooperation of various players and clusters as a whole. Thus, it creates a huge responsibility for respective authorities to move a step ahead towards building a sound network and cooperation on the higher level. 5. The Business Environment in Denmark – National Diamond Analysis By using Porter’s â€Å"Diamond Model† as a framework the competitive strengths and weaknesses of the Danish business environment will be analysed. First it is nalysed how Denmark is performing on the four factors: Factor conditions, demand conditions, related & supporting industries and context for firm strategy, structure and rivalry. Then it will be analysed how the Danish government influences the different factors through macroeconomic policies and institutions. Lastly, it will be described how institutions support collaboration between the business environment, universities and the public sector. 5. 1 Factor Conditions Denmark is ranked no. 6 on infrastructure in the IMD World Competitiveness Yearbook. Especially the basic and technological infrastructure is high whereas the scientific infrastructure in Denmark only reaches a place as no. 15. With regards to education Denmark is ranked as no. 1. University and management education meet the needs of a competitive economy and the business community. Moreover, training of employees is a priority for companies which ensure that labour become more specialised and stay up to date on innovation and developments within their area. Even though, it looks like there is no finger to put on education in Denmark there are several future challenges. In the future Denmark must raise the contribution of human capital to productivity growth (OECD, 2009). With regards to the labour market there has been a slowdown in labour productivity and a strong growth in wages, which makes Danish labour relatively more expensive. The growth in wages has been reinforced by effective exchange rate appreciation. While the demand for labour is weak during the crisis there is still a need to raise labour supply in the future. A need that the Danes probably cannot fulfil and it may therefore be necessary to attract foreign highly-skilled labour. The current crisis has made it harder to lend money and the credit conditions in Denmark are tight at the moment (OECD, 2009). 5. 2 Demand Conditions An example of how the character of the home demand has helped build competitive advantage is the environmental awareness of Danish consumers. This has led Denmark to be competitive within for example water pollution control equipment, but also many other products related to the environment (Dess, et al. , 2004). The Danish consumers tend to be relatively demanding and quality-conscious. Furthermore, they like to boycott products if they somehow get bad news about the products (Agri-food Trade Service). This can pressure companies to meet high standards and prod them to innovate and upgrade (Porter, 2008). The challenges for demand conditions at the moment are the diminished household wealth and the rising employment, which decreases the Danes’ purchasing power. It is hard to say whether the demand conditions in Denmark create a good environment for businesses. It will be highly dependent on the specific business area. 5. 3 Related and Supporting Industries As mentioned, cluster focus on a regional level has increased and several local initiatives have been established (Nordic Innovation, Cluster Observatory). The continuous focus means that cluster development have good conditions and this could also be an indicator for a high level of related and supporting industries. Though, it is hard to give a general picture about related and supporting industries in Denmark. The fact that Denmark geographically is a small country could lead to the thought that the small scale market is not big enough to get suppliers to locate in Denmark. 5. 4 Context for Firm Strategy, Structure and Rivalry One of the main advantages for companies located in Denmark is the co-operative labour-employer relations and the so-called â€Å"flexicurity model†. When rights and forms of governance are developed on the Danish labour market both trade unions and employers’ associations are important players. Trade union density is about 74% and the density of employers’ associations is about 52%. The trade unions and the employers’ association agree that the â€Å"flexicurity† model is an advantage for the Danish labour market and the business environment. â€Å"Flexicurity† refers to the flexible Danish labour market and the high level of social security. The policy was first introduced in Demark in the 1990s as a response to high unemployment rate. First steps of implementation were undertaken in 1994 and concerned in-depth reforms of labor market, aimed primarily at reduction of structural unemployment, as well as introduction of solid welfare schemes. Companies can easier adjust to up and down turns in the economy because of easy hiring and firing as well as work time and wage flexibility. Trade unions accept this flexibility because its members are protected by the state, which provides them with high unemployment benefits and access to health services, education, etc. (Jensen, 2008). Owing to the â€Å"flexicurity† model, Danish economy cherishes now a low level of unemployment, as well as low social exclusion rates. However, the policy requires a trade-off of high fiscal burdens for citizens. Economic slack, weak exports and reduced investment in R&D means that local rivalry could be on a standstill (OECD, 2009). 5. 5 Government – the Influence of Macroeconomic Policies Government through its policies must ensure an environment where businesses can gain competitive advantage. In order to ensure a functioning capital market during the crisis the government has given guarantees to banks and its customers as well as capital injections. This has improved the capital market and given better access to capital for businesses. Because of the slow growth the Danish government has launched a â€Å"Growth Forum†, which will address the issue of productivity growth and how it can be improved. Another policy which helps creating good factor conditions for the Danish business environment is the strong labour market policies, which offer activation and training for unemployed as well as supplementary training for employees. In this way unemployed stay in touch with the labour market and it is ensured that their skills are up-to-date when businesses need them. Furthermore, labour market policies try to support international recruitment and to keep people on the job market longer before they retire to boost labour supply, which will be in high demand after the crisis. Fiscal policy has boosted disposable income and demand by a major tax reform, which means tax cuts for households. Moreover, the government has released the funds from a special compulsory pension saving programme, which give households further liquidity (OECD, 2009). Furthermore, the interest rate is now the lowest ever at 1. 15 %, which are good news for the households with a mortgage loan (Guardian, 2010). In 2006, the Danish government introduced a globalisation strategy for Denmark, which established a lot of new initiatives within education, research and development, entrepreneurship and an innovate society. One of the aims of the strategy is to make Denmark more ready and open for global business (Globalisering, 2006). Furthermore, in 2009 the Danish government has launched several measures to encourage a â€Å"green growth† recovery from the financial crisis. The initiatives include among others â€Å"green transport†, improved environmental performance of the agricultural sector and a home repair and renovation incentive to save energy (OECD, 2009). These strategies, policies and initiatives create a better environment for companies to compete in. Figure 2 pic]Source: Team analysis 5. 6 Institutions for Collaboration There are several institutions supporting and working together with Danish businesses. Universities like the IT University of Denmark, Technical Univer sity of Denmark and Copenhagen Business School work actively with companies, trades and industries (ITU, DTU, CBS). Furthermore, the Confederation of Danish Industries as a representative for many industries also has close ties to different business schools and universities (DI). â€Å"Invest in Denmark†, a part of the Danish Ministry for Foreign Affairs, helps foreign companies to locate in Denmark and create joint ventures with Danish companies (Investindk). Moreover, several knowledge centers like â€Å"Innovation Center Copenhagen†, â€Å"Mind Lab† and â€Å"Innovation Lab† work together with companies to innovate and upgrade technology and business in Denmark (Innovation Lab). PART II: THE DANISH WIND ENERGY CLUSTER 6. Historical Development of the Cluster 6. 1 Wind Energy in Denmark before the 1970s Due to the Denmark’s large coastline, the climate is characterised by consistent and relatively strong winds. The absence of other natural sources than wind influenced Denmark to take a pioneer’s role in starting an effort to implement wind technology as basis for electrification and to experiment with it (Vestergaard et. al, 2004). The first windmill in Denmark was mentioned 1259 in Flong. The modern wind energy utilization has a tradition that covers more than 100 years of research in meteorology and wind turbine manufacturing. In 1891 Poul La Cour, a Danish professor in natural science at the Askov Folk High School, and a team of scientist built the first wind turbine funded by the Danish government. La Cour was drawing on the results of two contemporary Danish engineers and scientists. H. C. Vogt and J. Irminger participated together with the American P. S. Langley in formulating modern theory on aerodynamics and lift drag with the purpose to experiment with wind power to product electricity (Vestergaard, et al. , 2004). In 1918 a fourth of all Danish rural stations (120) used wind turbines to generate power. After the World War I the Danish interest in wind Energy waned, because of the sufficient supply of fossil fuel. The machines were rapidly outdated – in 1920 only 75 turbines were left (Andersen, 1999). By the 1930s Denmark was ahead of many other countries in the wind turbine industry and turbines became traditional in the Danish countryside. La Cour gave courses at the Askov Folk High School so that it became possible to study wind energy for Danish „wind electriciansâ€Å". Soon La Cour and one of his students became the most prominent manufacturers in Denmark. However at that time there was still no real international competition. One of the students in wind energy was Johannes Juul who attended La Cour? s courses in 1904 and later worked as chief engineer for a power company, SEAS. Juul started an R&D programme in wind energy utilization. This R&D effort formed the basis for his design of a modern electricity wind turbine built in 1957, which is today well known as the 200kW Gedser machine. The Gedser machine was installed in 1959 and was in operation until 1967 (DWIA, 2008). 6. 2 The Danish Wind Energy Cluster in the 1970s – The First Hesitant Beginning In the 1970 there was an awakening green movement in the Western countries. This was encouraged by the first and second oil crisis in 1973 and 1979. Denmark which was enormously dependent on imported oil pursued an active policy of energy savings, increasing self sufficiency, and diversification of energy sources until the mid 1980s. Since then, energy policy has increasingly promoted the use of renewable energy to ensure environmentally sustainable economic development (Krohn, 2002). This increasing political focus on environmental protection and sustainable development provided the framework for the development of the Danish wind energy sector. The practical and technical development in the 1970s was first carried out by few entrepreneurs, tradesmen and people with high ideals about renewable energy. Christian Riisager was a carpenter from west Jutland. In the mid 1970s, he was one of the first who successfully designed a turbine to be marketed and connected to the grid. The turbine was a 15kW turbine which generated more electricity than the household could consume, the excess electricity went into the grid. The Riisager turbine was the basis for modern wind turbines with high towers and three blades. Riisager produced more than 70 turbines and later he established the firm Wind-Matic (DWIA, 2008). Karl Erik Jorgensen also started to make wind turbines in the mid 70s. In 1978, he teamed up with Henrik Stiesdal, a young student and worked on a three-blade turbine. In 1978 they developed a 30 kW turbine with an enhanced safety system. Vestas, which manufactured agricultural machines at that time, bought the turbine on a license and started in-house production and development of wind turbines (DWIA, 2008). While these innovative designs of small machines appeared politicians began to take interest in the new development. Partly because of the energy supply crisis, partly as a reaction to the popular opposition to nuclear power in Denmark. An incentives programme in the form of capital grants for installation of wind turbines (30% of installation costs) was established in the end of the 1970s and was dropped in 1989. In 1977 the Risoe National Laboratory which was originally established to research in nuclear power formed its entrance to wind turbine R&D. A measurement programme co-funded by the US department of energy was carried out by the Risoe National Laboratory (Andersen, 1999). Risoe also draw on a tradition on boundary layer meteorology and wind climate studies. The Technical University of Denmark continued the studies of aerodynamics and wind tunnel experiments, so that their research on wind climate, model laws, terrain roughness, and shelter effects formed the scientific platform for Risoe? s work on the Danish and European Wind Atlas which was initiated in the late 1970s. Risoe National Laboratory also occupied the approval job for different types of wind turbines (Andersen, 1999). In order to ensure that the government supported turbines also had a certain quality and safety, legislation on type approval for wind turbines was established. Today more than 100 scientists and engineers are working for the institution which has an important department in wind energy with considerable interactions with the wind energy community worldwide. Risoe? s work on turbine safety has been important in ensuring the reliability of modern wind turbines (Krohn, 2002). On May 4th 1978 the Association of Wind Turbine Owners was formed, and the first Wind turbine guild or cooperative was established in 1980. 6. 3 The Wind Energy Cluster in the 1980s The Gedser wind turbine itself was built and financed by the power company SEAS. In the early 1980s Danish power companies took early interest in wind energy and in large wind turbines and built two experimental machines, one pitch regulated and one stall regulated, of 630 kW each. But the cost of energy from the large turbines was so high that series manufacturing was not even envisaged (Krohn, 2002). Riisager's and other manufacturer’s success motivated some manufacturers of agricultural machinery to enter in the growing turbine manufacturing sector which provided promising commercial possibilities. Among these companies were Vestas, Nordtank, Bonus (now Siemens Wind Power), Nordex, and later Micon (Krohn, 2002). The Danish Wind Industry Association, a non profit association, whose purpose is to promote wind energy at home and abroad, was founded in 1981. Manufacturers soon became members of the association so today there are more than 220 members across Denmark. The condition of receiving the 30% construction subsidy from the government was that the turbine had been approved by the new test station for small turbines set up by the Risoe National Laboratory. The Role of Risoe National Laboratory so changed from being that of a controlling entity to a more technology-mediating unit. In 1982 the test station issued the first combined load paradigm, which established that all wind turbine components had to be dimensioned for twice the load compared to the traditional norm. The result of this policy was that the Danish wind turbines gained the reputation for being reliable and robust (DWIA, 2008). The Wind Energy Department of Risoe National Laboratory became worldwide known for its expertise with tight connections to the Technical University of Denmark and also increasingly connections with Aalborg University (electricity aspects). Gains of productivity thanks to the European Wind Atlas in the years 1980 – 1985 could be realised by better sitting of wind turbines. The Danish type approval certification scheme has been a very dynamic tool to foster better design procedures in wind turbine manufacturing companies. It has also been important in winning the confidence of professional investors worldwide (Krohn, 2002). In the early 1980s the State of California began a programme of supporting wind energy development. Danish manufacturers having the longest track record had already developed several generations of successively larger machines in small series. The California market expanded dramatically, allowing an enormous volume of production of wind turbines. The Danish manufacturers supplied thousands of turbines to the USA from 1982. Bonus, Vestas and Nordtank all participated in the wind boom launched in California until the market came to an abrupt halt in 1986. The problem was that manufacturers had become dependent on a single market. When the California wind programme ended in 1985-1986, a large number of the 20-odd manufacturers went bankrupt because they had few alternative markets for their products (Krohn, 2002). The economic collapse in the industry caused an elimination race in the following years. All the small manufacturers disappeared or were taken over by Vestas, Bonus, Nordtank, Micon and Nordex. Thus began a long haul for the remaining manufacturers, who then tried to broaden their market base to include several countries (DWIA, 2008). 6. 4 The Energy Policy of the Danish Government since the 1980s/1990s In 1985 the Danish government decided that nuclear power should not be an element of future energy supply. Beside the 30% subsidy of the construction costs for wind turbines which endured until 1989 the government began, since the mid 1980s, to push an active agenda with the aim to implement renewable and diverse energy sources (Meyer, 2007). In a 15 year plan for large scale implementation of wind-generated electricity countrywide the government pronounced the country’s goal of meeting 10 per cent of Danish electricity consumption by wind in the year 2005, implying an installed base of 1,500 MW of installed wind capacity (Sharman, 2005). Danish government had very wide ranging powers for regulation of utilities. These regulations took many forms, including energy efficiency and demand-side management measures. Integrated Resource Planning was an integral part of the procedure through which the power companies obtained permission to install new generating capacity. Other measures included price and accountancy controls. The government had ordered the utilities to install 400 MW of wind power on land to date. The first two orders of 100 MW each were already issued in 1985 and 1990. The latest onshore order for 200 MW to be completed before the year 2000 was issued in 1996. In 1998 a new order was issued for 750 MW of offshore wind power. The Danish energy plan â€Å"Energy21† from 1996 set up a target of even 4000 MW of offshore wind power in 2030 (Krohn1, 2002). To avoid disagreements between utilities and wind power producers over conditions for grid connections and tariffs, the Danish government introduced in 1992 regulations about the feed-in tariff, which was fixed at 85% of the utility production and distribution costs (Meyer, 2007). 6. 5 The Cluster of Modern Wind Turbines since 1990 In the early 1990s Vestas, Bonus (now Siemens), Nordtank, Micon and Nordex represented the wind turbine manufacturers in the Danish cluster. Most of them had a track record of more than 10 years. The size of the wind turbines grew enormously in a perpetual race to develop renewable energy which was capable to compete with the conventional technologies in terms of electricity output and price. At the beginning of the 90s, the average wind turbine had a capacity of 200-300 kW, which had grown to 1-2 MW in the late 90s. Successful domestic turbine manufacturers became world leaders in the wind turbine production (DWIA, 2008). A service sector to maintain and repair installed equipment developed. The industry left, after further consolidation, two large manufacturers in Denmark, Siemens Wind Power A/S (owned by German Siemens AG) and Vestas Wind Systems A/S and several businesses which are involved in the industry and organised in the Danish Wind Industry Association. In 1991 the Vindeby offshore wind park opened and in 1995 the wind farm at Tunoe Knob, equipped by Bonus and Vestas. The offshore market played a more and more important role for the cluster and 95% of the offshore installed turbines are of Danish origin (DWIA, 2008). In 2001 Danish wind turbine companies had a market share of 50% of the world market (Krohn, 2002). The percentage of electricity provided by wind power rose from less then 5% in 1995 to almost 20% in 2003. The total installed base of wind power was some 1,100 MW at the end of 1997. This made Denmark to the third largest wind power country in the world. All turbines were produced domestically. In 1997 there were 10,000 people employed in the wind power sector, a number that grew up to 23,500 in 2007. In 2006 the Danish Wind Industry Association created the Talent Factory to improve the career opportunities among engineering students (DWIA, 2008). More than 80% of the 6,300 wind turbines in Denmark were owned by energy co-operatives, or individual farmers. 150,000 Danish families owned wind turbines or shares in wind co-operatives in 2002 (Krohn, 2002). 7. Description of the Wind Energy Cluster Today Denmark hosts some of the world’s largest wind turbine manufacturers. Vestas Wind Systems, a truly Danish company is situated in Denmark (Vestas). Furthermore, German Siemens Wind Power and Indian Suzlon have established their global head quarters in the country (Siemens, Invest in DK1). Also German Nordex (formerly Danish) and Spanish Gamesa have established respectively offices and R centres in Denmark (Nordex, Gamesa). These are big global players; In 2008 Vestas counted for 19% of the world market, Gamesa for 11% and Nordex and Siemens 7% respectively (EcoSeed). Other smaller manufacturers are Norwin A/S, Wincon A/S and Gaia Wind Energy A/S. There is a strong branch of associations connected with wind energy and among them are the Danish Wind Industry Association (www. windpower. org), Danish Energy Industries Association and Danish Wind Turbine Owners’ Association. In 2007, wind energy in Denmark produced about 7,173 GWh. This corresponded to 19. 7% of domestic energy supply or to the consumption of about 2. 03 million Danish households, compared to 16. 9% in 2006 and only 1. 9% in 1990. In 2007, wind power capacity accounted for 3,124 MW (i. . 24. 1% the total electricity capacity), 424 MW being offshore wind turbines. In 1990 wind power capacity was 343 MW (Energy Statistics, 2007). Projections by the Danish Wind Industry Association estimate an increase of the yearly instalment of new c apacity of about 17% by 2011, reaching more than 200,000 MW. As far as offshore turbines are concerned, 7,600 MW are expected to be installed by the same year (EREC). Wind turbine manufacturing, maintenance, installation and consultancy services account for some 16,000 jobs in Denmark, while component supplies and installation of these Danish turbines currently create another 8,000 jobs worldwide. The global job creation of Danish wind turbine companies are substantially larger than these figures indicate: only about 9 billion DKK (1. 2 billion EUR) is due to turbines manufactured in Denmark. The rest are manufactured in Germany, Spain, India, Italy, and the U. S. , i. e. in countries where there is a substantial home market (Krohn, 2002). 7. 1 VESTAS: World’s no. 1 Turbine Manufacturer As Vestas is the world leader on the global market for wind energy and one of the key drivers of the Danish wind energy cluster a short description of the company will be given. Vestas was founded in 1898 by H. S. Hansen, a blacksmith, in Denmark. He and his son manufactured steel windows for industrial buildings. In 1945, his son established the company VEstjysk-STalteknik A/S, whose name was shortened to Vestas. In 1979, Vestas delivered the first wind turbines. Vestas have installed over 39,000 wind turbines in 63 countries on 5 continents. In 2008, Vestas installed a new turbine every three hours worldwide, generating more than 60 million MWh a year. Vestas has developed from a pioneer in the industry with a staff of around 60 people in 1987 to a global, hi-tech and market-leading company employing more than 20,000 people. Vestas reached revenues of EUR 6,035 million with operational margin of 11. 1% in 2008 and they got global market share of 19% (5,581 MW). Vestas’ core business comprises the development, manufacture, sale and maintenance of wind turbines. Their expertise in modern energy covers more than just wind turbines. They specialise in planning, installation, operation and maintenance. Their competencies cover everything from site studies to service and maintenance. Vestas is distinguished by a high degree of vertical integration. At the same time, production and sourcing are carried out as close to the market as possible. In 2008, Vestas opened the world’s largest research and development centre for wind energy in Aarhus (Denmark) which will house more than 900 employees (Vestas). 8. Wind Energy Cluster – Cluster Diamond Now Porter’s Diamond model will be used to analyse the competitive strengths and weaknesses of the Danish wind energy cluster. 8. 1 Factor Conditions Factor conditions important to the wind energy cluster are the natural resource in form of wind conditions and the scientific base as well as human capital within the field of wind energy. Denmark has relatively modest to good average wind. Onshore wind resources are highest in the Western part of the country, and on the Eastern islands with coastlines facing South or West. The country has very large offshore wind resources and large areas of sea territory with a shallow water depth of 5 to 15 m, where sitting is most feasible. These sites offer higher wind speeds (Krohn1, 2002). The relatively good wind conditions have been an advantage in the past when the wind energy cluster was growing and still operated primarily in the home market. As the operations have gone global the Danish wind conditions are not so important anymore. In stark contrast to Germany, Sweden, the USA, Canada, and the UK, publicly financed R projects played a relatively minor role in initiating the early development of the Danish wind turbine industry. The early stimulus came in the form of investment grants, supporting market development for small scale privately owned turbines. Later, the Danish Government and the EU have financed a significant number of basic research projects, and given some support to development projects (Krohn, 2002). One of the reasons for Suzlon to establish its global headquarters in Denmark was exactly the specialised knowledge the country possesses. The chairman of Suzlon declared: â€Å"Denmark is global leader in know-how for wind-energy. That is why our global head quarter will be here. † (Invest in DK1). On the educational front, the universities offer specialized wind engineer educations and the research centres offer various training courses targeted especially at the wind energy industry, for instance the Technical University of Denmark (DTU) – Wind Master Education; Aalborg University – Wind Master. Engineering College of Aarhus (IHA) has developed a specialisation in wind turbine construction with the main focus on mechanical components (DWIA, 2008). Risoe Wind Energy Department, University of Aalborg and University of Aarhus have jointly established a knowledge centre – Danish University Wind Energy Training (DUWET) which offers a research based supplementary education for employees in the wind industry. DUWET collects wind energy knowledge and research and offers courses and specialist training for anyone in the industry. A consortium consisting of the research centres Risoe National Laboratory, Danish Hydraulic Institute (DHI), The Technical University of Denmark (DTU), and Aalborg University form a national power centre within wind energy research and thus a vital part of the wind energy cluster. Therefore, the scientific base for the wind energy cluster is highly developed and provides the cluster with highly skilled labour. 8. 2 Demand Conditions Denmark is somewhat unique among wind turbine markets, since the market really grew out of a popular interest in alternative generating technologies, partly in opposition to the use of nuclear power, partly as a result of the energy supply crisis in the late 1970s, when oil prices skyrocketed due to OPEC action and political and military unrest in the Middle East. The well-organised Danish wind turbine owners have been a very important driving force for debugging and improving Danish wind technology in its earlier years (Krohn, 2002). Private individuals, either as members of wind energy co-operatives, or as owners of a wind turbine (farmers) account for more than 80% of the 5024 wind turbines in Denmark (DWIA, 2009). This number shows the strong interest of Danes in wind energy and their support for building new wind farms. The Danish home market is what created the modern Danish wind industry originally, and gave it the testing ground to sort out both wind technology and manufacturing technology. The openness and interest of the Danish consumers have definitely supported the demand in the early years of the cluster and pushed its development. Today few wind turbines are set up in Denmark compared to the world market and the local demand has lost some of its importance. 8. 3 Context for Firm Strategy, Structure and Rivalry Danish energy policy has indirectly played an important role in fostering the commercial success of the Danish wind industry. The Danish energy policy for renewable energy has been a model for many markets in the world. In countries as close as Germany, France or Spain and as remote as China or Argentina Danish support schemes for renewable energy have been copied and/or adapted to local circumstances. Danish long-term energy planning such as â€Å"Energy 21† has been widely quoted throughout the world. One of the basic reasons why wind energy has such a prominent place in Danish energy planning is the need to reduce greenhouse gas emissions. According to the Kyoto Protocol Denmark has to reduce emissions of greenhouse gases by 21% in relation to 1990. The targets apply from 2008 to 2012 (COP15). More than one third of that target is being met using wind energy to replace coal-fired power generation (Krohn3, 2002). Thus, the Danish policies give good conditions for renewable energy companies. Denmark has introduced feed-in tariffs for renewable energy plants connected prior to 21 April 2004. Renewable energy plants receive the spot market price plus a subsidy to provide a guaranteed price of 8. 1 eurocents/kWh, applicable for 20 years from date of connection. Renewable energy facilities connected after 21 April 2004 are getting production incentives. Wind plants receive the spot market price plus a 1. 3 eurocents/kWh production incentive which will be applicable for 20 years from the date of connection. Moreover, additional subsidies of 1. 6 eurocents/kWh are provided for new facilities that replace decommissioned wind turbines 450 kW and smaller (Porter, 2006). The Energy Agreement of 21 February 2008 contains an objective of increasing the percentage of renewable energy to 20% of the gross energy consumption by 2011. In the projection, the renewable energy share in 2011 is 20. 5% (Energy Statistics 2007). Improvement of incentives to encourage the installation of wind turbines is among the initiatives which will follow up the political accord of 21 February 2008. The new act comprises the framework for overall local government planning for wind turbines and a guarantee fund of DKK 10 million to subsidise the funding of local wind turbine guild preliminary investigations etc. and a model for local co-ownership. In connection with onshore wind turbine planning, the government will enter into an agreement with the National Association of Local Authorities in Denmark on municipal planning for 75 MW each in 2010 and in 2011. In addition, work is being done on establishing a payment scheme which will cover neighbours to onshore wind turbines for losses in property values as a result of wind turbine installations. The continued expansion of offshore wind turbine facilities will make an important contribution to achieving renewable energy targets. The work of offering two offshore wind turbine farms of 200 MW each or possibly one farm of 400 MW started in 2008 with a view to commissioning in 2012. In addition, work started on the updating of the offshore wind turbine action plan, which examines the location of new farms, the possible adjustment of the tender model, considerations of previous building maturity and open doors with payment as onshore turbines. Subsidies for new wind turbines will be increased to 25 oere/kWh for 22,000 peak load hours and 2. 3 oere/kWh in balancing costs and 0. 4 oere/kWh for the â€Å"green fund† (Energy Policy Statement, 2008). Rivalry can hardly be explained on a local level anymore as the wind turbine manufacturers have gone global and are operating all over the world today. In the earlier stage of the cluster, rivalry on the Danish market was tense – resulting in many take-overs and mergers and ending with one single true Danish company, Vestas. 8. 4 Related and Supporting Industries The background of the Danish turbine manufacturers was different from wind power companies in the U. S. , Sweden, or Germany. Names like Boeing, Lockheed, Westinghouse, MBB, and Siemens indicate a strong background in aircraft and generator manufacturing. Interestingly, however, practically all of today's remaining larger wind turbine manufacturers have a machinery manufacturing background rather than an aircraft background. Although modern wind turbine technology resembles helicopter technology, the operating requirements are very different (Krohn, 2002). A number of industrial enterprises have developed important businesses as suppliers of major components for wind turbines. LM Glasfiber A/S is the world's largest producer of fibre glass rotor blades for wind turbines, with an employment of more than 1,000 people. Danish manufacturers of electronic wind turbine controllers likewise have a very large market share worldwide. DanControl Engineering A/S, Mita Teknik A/S and DWC A/S produce controller and communication systems. Svendborg Brakes A/S is a leading vendor of mechanical braking systems. Also Danish subsidiaries of large international industries such as Siemens, ABB, SKF, FAG, etc. have developed businesses in the wind power industry (Danish Energy Authority, 2002). Other industrial service enterprises have created important businesses in servicing the wind power industry. For example companies are specialised in providing cranes for installations of wind turbines; providing transport of turbines, towers and blades domestically and for export. Service and maintenance of the more than 6000 wind turbines in Denmark is carried out by the manufacturers’ own service departments. But also a handful of independent service companies have been established for instance DWP Molleservice A/S and DanService A/S. Moreover, there are also specialised service providers like banks (Ringkoebing Bank has specialized in financing wind power projects), insurance companies, engineering and management consultancies (Andersen, 2003). The major Danish consultancies in wind energy utilisation are BTM Consult Aps, E Data, Tech-wise A/S, SEAS Wind Energy Centre, WEA ApS and Tripod ApS (Danish Energy Authority, 2002). Figure 3: Cluster Diamond [pic] Source: Team Analysis 9. Strategic Issues Facing Denmark and the Wind Energy Cluster Denmark is at the moment the leading centre within the field of wind power. However during the recent years a significant change in technology and markets has taken place. Denmark is faced with the challenge to maintain its leading position in spite of growing competition from firms operating in lower cost countries, especially China. The wind energy cluster and the political system must assume a proactive position towards this change to ensure that Denmark will strengthen its position as unique value creator. Denmark must provide the most effective wind power that ensures its best integration in the accumulated energy system, so that Denmark in the future can still provide wind power technology to energy systems with a large proportion of wind power. The industrial environment is built on a foundation which consists of a significant effort in research and education as well as innovative development focused on environmentally sustainability. This field of wind power is influenced by cooperation and knowledge-sharing to find technological development tracks. Nevertheless this foundation has been weakened regarding the cooperation within the industry, new technological tracks within the industry and education and recruitment. The Danish research-environment has a leading position within a number of areas, but great challenges in step with the rapid development of international markets put a lot of pressure of the Danish knowledge centre to hold on the talented researchers and students. In order to maintain the unique Danish position, an extraordinary effort must be put in. The strategic issues are focusing on both, development of the wind power industry by improving wind turbines and effectiveness of wind power, and the improvement of the knowledge centre regarding research and education. As innovation and demonstration focusing on the testing of windmills has previously been one-dimensional there are strategic issues to mentioned, that recommend an accumulated strategy for esting and demonstration of components and turbine parts, wind turbines and wind farms and wind power plants in the energy system, so that the facilities cover the whole value chain. Creating one strategy for the whole value chain with sub-strategies for each of the three dimensions would strengthen the integration and the competitiveness of the wind power industry. Another important issue regards the research effort. The long-term university research and education should be strengthened by prioritisation of fundamental or generic technologies that are part of the development of wind turbines and power plants. This also considers the whole value chain, so from turbine part until integration of the wind power into the electricity supply system (e. g. urbine design, blades, wind loads and sitting, integration into electricity supply system and offshore technology). Including a roadmap and measurable criteria for every area, this strategy could be developed by using the existing research environment as a basis and build on the efforts from previous research. Especially offshore technology research should be strengthened and framework conditions for cooperation between research institutions and industry. This could b e provided through common guidelines for the frames of cooperation. Following these recommendations, Denmark will be prepared to face the current challenges. 10. Policy recommendations for the appropriate constituencies National and regional authorities As Denmark faces now serious challenges in terms of the development of their cluster structure, it is essential that respective authorities undertake significant steps in order to prepare the environment for sustainable growth. First of all, it is worth mentioning that authorities have to actively participate in funding of regional growth environments. As well as this, they should encourage and support the emergence of appropriate initiatives, especially in those regions, where other constituencies have already been mobilized. Clusters in Denmark have proven to be a sufficient and effective tool in innovation policy and therefore it is necessary to sustain and improve their presence. Next, authorities have to focus on building sound economic framework, in order to create investment-friendly environment. As inflow of capital is inextricably connected with Denmark clustering strategy, it is necessary to maintain an incentive-oriented structure of attracting new investors. That step is also crucial in case the authorities are unable to further finance certain projects. Therefore, respective responsibilities have to be shifted to private sector. Companies and trade associations With the emergence of clusters, companies are starting to play increasingly more important role. They should – along with trade associations – be able to clearly formulate their needs and be able to influence the authorities to implement them. As well as this, it becomes their responsibility to focus more on investments in innovation. That is why it is necessary for respective companies and supporting associations to work together in creation of competence and knowledge centers. Universities As far as academic involvement is concerned, universities specializing in certain arts should play a supportive role in development of clusters. It has proven to work in the past, as Copenhagen Business School provided companies with field research and required theoretical frameworks. Therefore, the ties between academic and business world have to be tightened, so as to achieve a 360-degree cooperation of all the constituencies involved in projects. 11. Conclusion In this paper I analysed Denmark and its wind energy cluster. Denmark has a very stable and solid economy, but also faces some serious challenges in increasing productivity growth and educating and attracting human capital. Denmark’s heavy tax burden might be a hindrance. The wind energy cluster is by the end of its growth stage in its life cycle and now needs to innovate to keep growing. 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