Developing Innovative Regional Clusters: State of the Art

Philip CookeCentre for Advanced Studies

Cardiff University

Knowledge Economy World Trade – High Tech 22%

- KIBS 50% Key Cities 60-70% Knowledge Exports in UK, Italy & US Innovations/000 pop – US (SF, Boston,

NYC) Explanation -‘Spillovers’ from Metro

Agglomeration

Cities & the Knowledge Economy 4 top US cities 400% more K intensive In UK M4 200% more K intensive Even east London (poorest part)

above UK average E.g. Biosciences: Boston $1.1 billion

NIH; Munich 12,000 Life Scientists; Heidelberg 13 spinouts per year

Clusters Two basic types Porter ‘market’ led: Dalton (carpets) Cooke ‘science’-based: Cambridge (bio) Three variants in each ‘organic’ growth: Dalton/Cambridge ‘facilitated’ growth:Karlskrona/Oxford ‘induced’ growth: RTC/German Bioregio

What Do policy Makers Want? Carpets (organic/market) vulnerable to

competition from Developing Countries Science-driven ‘organic’ good but small

and (in bio) scarcely profit generating but good at ‘rent seeking’

Facilitated can be good, but slow – RTC started in 1950s. BioRegios don’t have much in the ‘pipeline’ (next slide)

European Biotechs, 2000Source: Cap Gemini Ernst &Young, 2000

Drugs in Pipeline

Number of firms

Number of IPO Firms

UK 128 223 48

Denmark 28 61 5

Ireland 23 29 2

Switzerl’nd 20 116 2

France 19 173 8

Sweden 18 158 9

Italy 7 50 2

Germany 6 317 15

Finland 5 81 1

Neths 5 77 4

Some Success Stories1. Galician Fashion Industry Market-driven, ‘Organic’: La Coruna 3W Competition Drives Upmarket Regional (international) clustering Producers Become Design Intensive Integrate Design, Prod, Mktg – ‘Zara’ Outcompete Benetton, which VI’s Zara 1991, K19 jobs, 2001, K33 jobs

2. Karlskrona, Sweden Naval Shipyards Close > ‘Facilitated’ Leadership: (Firm, College, City)

‘Triple Helix’ Vision: TelecomCity Cluster Drivers: Ericsson, Vodafone,

Sun, HP. 4,000 new jobs in the 1990s Networking: TC Association Social Environment: TC Youth

Clubbing

3. Oxford Biotech (facilitated) Oxford BioTechNet (network: lawyers, patent

agents, accountants, consultants, bankers, VCs etc). Fifty Core Biopharma firms.

Terms – Free or Low Cost Advice & Work Mentoring – (1) Planning (BP, Fundraising,

In-licensing, Incorporation etc) (2) Implementation (Systems,

Interim Management, Outsourcing, Regulatory etc.) (3) Growth Phase ( Fundraising, Out-licensing, Marketing, supply- Chain Management, etc.

Northern Ireland (Induced) ‘IT Challenge’ accepted, ‘innovation system’

linkage Nortel & Fujitsu R&D facilities create 1,000

jobs (public-funded FDI) High Grade Human Capital Recruited from

the 2 NI universities QUBIS and UU incubators Specialise in

Software & Biotech 2 local VCs Subsidised - create Belfast

cluster 200 telecom/internet software spinouts

4. Taiwan (ITRI) (Induced) Industrial Technology Research Institute Diffuses knowledge to SME clusters (Taipei) Mobile PCs lead, 1991 PPP consortium Data Switches dominating for PC networks

to Ethernet standard 1992/3 IBM PowerPC emulated; Int. Proc. in 24 hrs. R&D Alliances in Digital Communications &

Multimedia New moves into 1.2 litre 4-valve auto

engine for China market.

Knowledge Economies & Cities Why So Few Cities? Entrepreneurship-Growth-Investors (VCs) Key Cities Concentrate Knowledge

Managers (‘symbolic analysts’) ‘Creative Class’ likes ‘Knowledge Cities’

(Richard Florida’s ‘Gay Index’ v ‘Easy Rider’ ‘Hazard County’ & ‘Boss Hogg’)

Underperforming cities non-systemic in knowledge management. ‘System failure’

Concluding Questions & Answers Can knowledge-based cities be created? Yes,

with Leadership, Vision & Cluster Drivers What are the Best Clusters? In a Knowledge

Economy- Science-based (or Knowledge-intensive)

What’s the Secret of Clusters? They Work in Cities Due to Knowledge Spillovers

What are Knowledge Spillovers? Tips, Contacts, Specialised Services, ‘Intelligence, Insurance & Investment’ (The ‘3 I’s’)