Advantages of Branch Clusters for Old Industrial Regions

Among network formations, we can select cluster models that cover a wide range of social and economic aspects, organizing collaboration between diverse businesses located on a certain territory. Presently Ukraine has gained enough experience and knowledge to increase economic growth by itself, but the principles of domestic and foreign management practice in the field of creation and operation of clusters can be used to implement the development strategy of the region. Together with the basic traits of clusters' classification, we identified their successful implementation; we outlined the major cluster models and provided examples of the most successful ones in the world including trans-border and Ukrainian. One of the outcomes was that the main peculiarity of sectoral clusters is their networking organization form of entire production process: from supply to sales. We also found out what economic benefit the formation and functioning of such clusters gives and pointed out basic conditions for a sectoral cluster forming as a vital, sustainable, successful and efficient structure. A sectoral cluster is the most efficient model for old industrial regions, their businesses do not merge completely, but establish a mechanism of collaboration, by so doing they preserve their individual status and cooperate with other businesses inside and outside the cluster. This is different from other entities. The basis of sectoral cluster forming is economic relations in the form of long-term contracts based on interaction between different actors within the cluster. A sectoral cluster gives the opportunity to small businesses to combine advantages not only of small but of large businesses as well. Sectoral clusters chiefly use horizontal linkages and specializations contributing to each other, producing higher results by using the advantages of businesses location and regional management possibilities. Sectoral clusters like government bodies are responsible for region development; they can attract additional investments, initiate innovative processes and solve certain social issues in the region. For old industry regions, namely sectoral clusters are the efficient mechanism that will provide successful functioning of business rationally using the economic potential of the region and will establish its sustainable development.