Professionals Center for Business Research Volume 1- December 2014 (12) * Md. Joynal Abdin (mdjoynal@gmail.com ) Cluster Development for Inclusive and Sustainable Economic Growth Md. Joynal Abdin 1* 1 Program Officer at the Planning, Monitoring and Evaluation Wing of the SME Foundation, Bangladesh Abstract: Cluster is a concentration of a large number of similar manufacturing units sharing common opportunities, threats, strengths and weaknesses in a particular area. It is easier to ensure all industrial support into a particular location for industrial development of a country. Least developed countries like Bangladesh could go for cluster based small and medium enterprise development approach to foster economic growth, generate employment, and finally alleviate poverty. Hundreds of enterprises share few common problems in a cluster and it is worthwhile to take a hand to solve a problem for hundred enterprises than that of a smaller group or few scattered entity. A group of capable entrepreneurs could be trained up to create a leadership / mentorship group for the entire cluster. Creating machine operators, trouble shooters, and skilled workers in a particular trade is comparatively less costly and feasible in terms of sustainability in a cluster. A common financial / technical / technological / marketing support could help the whole community equally. A country could ensure balanced development by developing different clusters located all over the states. Smaller investment could be sufficient for establishing an assembling unit in a cluster where all backward as well as forward linkage industries are available. Therefore cluster development could be a powerful tool for inclusive and sustainable growth of a country. Keywords: Cluster Development, Clustering, Industrial Cluster, SME Development through Clustering, Cluster Based SME Development, Industrialization through Cluster Development Introduction: Bangladesh is a least developed country in South Asia with about USD 140 billion Official GDP. Bangladesh economy is growing with on an average 5% - 6.5% annual growth (GDP growth rate) during last two decades. It is transforming from traditional agriculture based economy into industrial economy. Contribution of agriculture into GDP in reducing day by day but till now it is employing 47.5% of workforce in this sector. Contribution of agriculture into GDP is about 13.09% (FY: 2012-13), contribution of industry into GDP is about 29% (FY: 2012-13), contribution of service sector into GDP is the highest 57.91% (est.) [1]. Because of traditional technologies and processes agriculture is not capable to give adequate return against the total employment of the sector. Unemployment, underemployment, political chaos etc. are hindering economic growth and lingering poverty alleviation. South and Southeast part of the country have well communication with the Sea ports and are becoming industrialized. But a large portion of the northern region is out of electricity, gas and transport connectivity with the ports. As a result that part is depending upon local agriculture or domestic market based industries. Total number of labor forces (workable population, 15+) in Bangladesh is about 56.7 million among those 54.1 million are employed [2]. That means, there are about 2.6 million unemployed or under employed population in Bangladesh with an annual growth rate of 3.39% per year. About 1.8 million new labor force is coming into the job market in each year. Ensuring employment to this large number of population is a major challenge for the state. Creating entrepreneur, skilled labor, operators, troubleshooters, professionals through cluster development could be a best option for employment generation as well as poverty alleviation. There are 177 SME Clusters located at 51 districts of Bangladesh. All of these are naturally grown clusters. Taking development interventions in these clusters could lead us balanced development of all region. Minimum resource allocation could offer optimum out because of united location of the entrepreneurs in these clusters. Development of these clusters could generate new employment, increase GDP growth and foster poverty alleviation. Literature review: There is no universally accepted definition of a cluster, experts in different regions of the world defined cluster as per respective national economies. Porter (2003) defines a cluster as a “geographically proximate group of interconnected companies, suppliers, service providers and associated institutions in a particular field, linked by