Borderless Innovation… Maintaining Competitiveness in the 21 st Century

1. Borderless Innovation…Maintaining Competitiveness in the 21st Century

2. Introduction • Kenn Morris • Founder & Director of Crossborder Business Associates • California-based crossborder market research and strategic consulting firm specializing in border business and policy • Former Director of UCSD San Diego Dialogue’s Crossborder Innovation & Competitiveness Initiative • Lead researcher and lead author of Dialogue’s Borderless Innovationreport

3. Overview of Comments • Context of Challenge: Why Worry? • Border & NAFTA: Outdated Paradigm • Vision for Borderless Innovation in San Diego-Baja California Region • Application of vision to Arizona-Mexico, border states, and North America

4. 21st Century Competitiveness: Why Worry? • “World is Flat”: More than just China & India • China: long term challenge • Regional tech clusters: Large number of existing – and emerging – regions of technology & innovation across globe • Many regional economic development strategies not prepared • An issue for US, Mexico…and North America

5. Why Worry? • Despite existing economic & social linkages, US-Mexico relationship stuck at “border” • Few cases of open, public dialogue about weakening North American competitiveness • Fewer examples of policy leaders working to foster new paradigm for North America • New vision beyond NAFTA needed

6. A Regional Approach to Borderless Innovation • San Diego & Baja California: region of innovation, R&D, technology manufacturing • Given economic & social linkages, felt that a latent opportunity to catalyze regional synergies was possible… • …But no comparable data existed • Crossborder Innovation & Competitiveness Initiative: identify “clusters of opportunity” in high value-added sectors in the binational region • Focus on selected technology intensive clusters: biomedical devices, aerospace & defense, software, and others

7. Cluster Findings • Biomedical Devices • Over 30,000 employed in Cluster (2003) • San Diego: 6,800 • Baja California: 23,700 • BC: highest number of FDA-certified BD companies in Mexico (65+) • Many: Class 10,000 & 100,000 clean rooms • 13 had HQ or operations in SD County • Range of products – heart pumps & stents, lenses, pacemakers, more…

8. Cluster Findings • Aerospace & Defense • Over 23,000 employed in Cluster (2003) • San Diego: 18,300 • Baja California: 4,800 • BC has highest concentration of aerospace companies in Mexico • Mexico: 9th largest aerospace supplier to US • US-MX BASA agreement pending

9. Binational S&T Workforce • …Larger than expected, and growing • Surveyed large regional universities • Issuance of engineering and software of note: • More engineering degrees issued by major BC universities than in SD (…industrial) • UABC graduated more individuals with software degrees than UCSD

10. A New Regional Model for SD-BC • Recommendations for San Diego-Baja California • Crossborder Innovation & Competitiveness Centers(leverage existing organizations and institutions) • Research and comparable S&T data (foster understanding) • Private investor networks (foster investing) • Increased educational linkages (physical & online) and regional workforce training programs • Promote shared infrastructure investments (energy, water, digital) • Increased security integration & enforcement

11. …Realized: Broader Implications • Implications for all of California • Biomedical devices: Over 53,000 employed in CA • Aerospace (Southern California) • Automotive • Software • Semiconductors • …As well as the US-Mexico border states

12. Implications: Aerospace & Defense • AZ: Large concentation of aerospace companies (Raytheon, Honeywell, Boeing, etc.) • Aerospace education: Embry-Riddle, U of A, Maricopa Community College…and the ASU/ITESM crossborder Masters degree in Aerospace Logistics • 35% of US aerospace employment in 4 US border states • Within 1100 miles of Phoenix, most of aerospace employment in the US and Mexico • Sept. 26th: Mexican Aerospace Conference…in Scottsdale

13. …Implications: Silicon Border • Technology park in Mexicali, goal of 1-2 Fab facilities • If successful…potential synergy with CA and AZ semiconductor clusters (esp. Intel, Motorola, TI, Freescale, etc.) • … Not to mention concentration of semiconductor related employment (160k+) in 4 US border states

14. A Model – for the 21st Century • North American Crossborder Innovation & Competitiveness Initiative? • Take concept beyond San Diego-Baja California • Requires regional assessments in border states, and analysis of city-city and region-region “clusters of innovation & opportunity” • Some hope: • North American Council on Competitiveness • Emerging understanding of regional opportunities and economic development agreements (AZ-Sonora, maquiladora supplier promotion of TREO) • Opportunity for “Third Nation” to catalyze technology manufacturing and competitiveness for 21st Century – if we choose path of Borderless Innovation

15. Borderless Innovation…Maintaining Competitiveness in the 21st CenturyThank You – GraciasKenn Morriskenn@crossborderbusiness.comCrossborderBusiness.comCopies of Borderless Innovation report: www.sandiegodialogue.org