IPAs and cluster promotion : A new field for private-public partnerships

1. IPAs and cluster promotion : A new field for private-public partnerships Fabrice Hatem, AFII, EMN Unctad Workshop on policy advocacy Geneva, November the 23th

2. New stakes for developed economies • Loss of competitiveness/attractiveness in some activities (low and medium added-value manufacturing, offshoring of some services) • New market opportunities in high added value, innovative and services activites • A specialization on those activities can help to : 1) make up for the loss of more « traditional » ones ; 2) and/or perenize some of them by an upgrading of their content in added value and innovative capabilities • Ex : business functions (R&D centers, SSC…), industries (biotechs), niche markets for new products/services (dermocosmetics, nutraceutics…)

3. New agendas for economic development policies • Transition to Information and knowledge-based economy (ex : Lisbon agenda in the EU) • increase R&D capabilities (finance / human ressources) • Develop education and train people at all levels (technicians, engineers, scientists, vocational training) • Develop partnership networks (ex : public/private, SME/large groups) for innovative projects (new products/process, organisation of the value chain) • Encourage entrepreneurship, especially in knowledgde-based activities (start-up in ITC, life sciences…) • Favour the strenghtening of excellence centers (clusters, industrial districts, metropolitan districts for services activities)

4. Attractiveness policies can help to achieve those goals • Attractiveness/promotion policies reflect those new stakes and goals of the territorial development policies in developed economies…but also in developing and transition economies • Developed countries : examples of Ireland (from manufacturing to biotechs), Singapore (focus on the knowledge economy), The Netherlands (new promotion policy aimed at attracting high added value projects), Sweden (promotion policy focused on life sciences, ITC, HAV services…) • But also developping and transition economies : exemples of the Czech republic (from garments to R&D centers), Northern Mexico (from black and white TV sets to flat screens), Tunisia (from sub-contrating in shirts to co-contracting in medium added value textile/garment products)

5. What… and whom should we try to attract ? • Knowledge-based activities (ex : software, biotechs, nanotechs…) • Innovative and HAV segments in traditional industries (ex : technical textiles, dermocosmetics,…) • New kind of services (ex : private kindergardens) • R&D financing (venture capital, subcontracting of R&D). Ex : Israël, Walles • R&D centres (ex : Crolles project in France, automotive development centers in Hungary..) • Qualified manpower (students, researchers, engineers, entrepreneurs). Ex : home sweet Home programm in the french region of Provence). • Other added value or strategic activities (Headquarters…)

6. The key- role of clusters in innovation • Definition : spatial concentration of research, training, production, and financing activities, sustained by targeted public developement policies, and organized through partnership networks for the development of innovative projects and know-how transfers • Play a key role in innovation and growth for the most advanced economies (favour diffusion of innovation, critical mass effects on specific techniques and/or industries, entrepreneurship culture). • According to OCO Consulting census of european clusters, UK and France are well endowed for ITC and software, Italy and Spain for textile, UK for financial activities, Germany for automotive, Switzerland for pharmaceuticals, etc. • Some are already full-scale clusters (Crolles and Sophia for ITC In France, Midlands software in the UK), other are only potential ones (ex : microelectonic devices in Morocco).

7. Cluster and attractiveness : a double way relation • Cluster as a factor of efficiency for promotion policies : territorial diffenciation effect, implication of new partners (private companies, labs,…), magnet effect (launching of new projects, endogenous dynamics as a factor of attractiveness). Ex : « pôles de compétitivité » in France. • FDI and external parnerships as a factor of strenghtening of the cluster : agglomeration and critical mass effects (supply and markets), ressources (skills, know-how, financing…), integration in international cooperation networks and spillover effects, remediation to weaknesses in the local offer and/or valuation of an inexploited potential (ex : clinical tests for vaccines in the Lyon area). • Nevertheless, beware of excessive enthousiasm : 1) attractiveness does not only rely upon clusters ; 2) the notion of « clusters », as seen upwards, is sometimes blured ; 3) the existence of large-scale spilover effects is not totally proved by the litterature ; 4) there is an on-going debate on the risk of « technology captation » by foreign investors (ex : chinese) in high tech.

8. Role of IPAs in cluster development • Contribute to the identification of the existing/potential cluster and/or act as an order-taker of more global development policies (« Downward loop ») • Benchmark those clusters against their competors ; carry out a SWOT analysis of the cluster • Policy advocacy function. Identify weaknesses and/or potential development fields and advocate remediation policies (« Upward loop ») • Territorial development function : directly take part in the cluster development (ex : real estate, definition of the territorial product, support activities and structure as in Paris : Paris biopark, Paris cyber village…) • Device a promotion policy : target potential investors (those who are both possible and profitable to attract), set up objectives and programmes, device promotional material.

9. Cluster promotion open new fields of partnership • The existence of cluster is in itself a strong asset for the implementation of promotion policies (differenciation/magnet effects) • IPAs can help local cluster partners to market their projects (adress notebook, known-how in promotion activities such as seminars, roadshows, organisation of B2B meetings, go-between role) • Local partner master high-level technical skills which can be mobilized by IPAs in their promotional activity (legitimization effects vs the potential investor). • Direct participation in cluster development projets (ex : neurosciences in Sweden ; international-oriented tertiary functions and media activities in the Marseille/Euromed project) • After-care is also a way to promote cluster developement through a good integration of the foreign company in its local environnement, leading to a development of linkages and the launching of new projects.

10. Thank youfabrice.hatem@afii.fr