Transcript Understanding regional economic development?

Regional Economic Development
Overview
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Understanding RED
RED policy
How are regional economies developed
RED goals and tools
Critical success factors
Lessons
UNDERSTANDING REGIONAL
ECONOMIC DEVELOPMENT?
What is a region?
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City/ Municipality
City region
District
Functional economic region
Province
Country
Cluster of countries
The world at night
Why Regions?
• Much of the economic action in the world
economy today goes on at a regional level
• It is often regions, not nations, that are
competitive in certain areas
• Regions therefore often drive national
economies
Regional Economic Development
The ability of a region to:
• Generate a rising standard of living for the region’s residents
• Compete successfully in a range of economic activities that allow
for economic and social advancement and increased inclusion
• Contribute to national development through its own efforts and
through interaction with the rest of the country
• Operates both within governmental spheres and within markets
where factors outside the control of governments
• Time frame in which economic development outcomes appear are
more akin to business cycles (12-15 years) than to the electoral
cycles (3-5 years).
Why RED?
• Nations deal with macro policies
and macro economics
• Focus on groups of firms and
industries
• Provinces focused on
development and equity
• Regions often draw upon common
resources, labor pools, inputs,
knowledge bases
• Local deal with day to day issues
of providing services
• Leaves a gap in the policy
framework for regions
• Regions about matching the
interactions, supply chains,
infrastructure requirements,
financial linkages, capabilities,
and logistics linkages necessary to
do business
• Regions can benefit from
coordinated investments in
infrastructure, education, training,
marketing, information gathering,
and related public goods
• Tend to cross jurisdictions and
therefore require cooperation
Lack of coordination at a regional level will tend to leave city, state or
provincial, or district economies isolated and uncompetitive
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Challenges of dealing with regions
• Regions vary greatly in size
• Different industries and clusters have different
geographic scopes
• Regional boundaries are therefore often fluid
• Political jurisdictions often do not match
economic areas increasing the challenges of a
coordinated approach
RED POLICY
RED policy evolution
Key question: Where is South
Africa and this region in this
continuum?
Smart approach
Territorial approach
Increase performance of
the nation’s economy
Focus on economic hubs
Planning based approach
International economy the
reference point
Balance and compensate for
disparities
Multiple stakeholders
involved in action
Focus on lagging regions
National economy key
reference point
Government key actor
Increase performance of
a region and its regional
economic network
Focused on value chain
economies
International economy
and the role of the region
in this economy the
reference point
Collaborative action
HOW ARE REGIONAL ECONOMIES
DEVELOPED?
There are identifiable features that foster the evolution
of regional economies
• Initial location
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Resource base
Location of markets
Related industries and spillovers
Particular entrepreneur or firm
Government impetus
• Subsequent development
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Skills and capabilities
Labor/ supplier/ buyer pools
Innovative performance
Competition and cooperation
New entrepreneurs and firms
Other external economies
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Competitiveness in…
Industries
Vertical Chains
Activities
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Competitiveness in…
Industries
Clusters
Activities
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Which activities are performed in the region?
Which are performed by local firms? Foreign
firms? Education?
Etc.
Professional
services
Business and
services
Financial services
Transport and
other logics
High-tech
manufacturing
Mid-tech
manufacturing
ACTIVITIES
Low-tech
manufacturing
INDUSTRY TYPES
Agriculture,
forestry, fishery
Regional Competitiveness Assessment
R&D
Product D & E
Process D & E
Components manufacturing
Assembly
Mktg & Branding
Supply Chain Management
Selling & Retail Mgmt
Distribution
After sales service
Strategy Setting
Firm Admin
November 2012
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RED GOALS AND TOOLS
Goals of RED
Requires balancing three different but interdependent goals namely:
• Economic growth: Increased demand for goods and services and
improved productivity
– The growth of a region usually requires changes to how resources are
organised, business and investment climate, connectivity and marketing.
• Economic development: Development of targeted sectors, locations, firms
and/or people who have the potential to be channels for growth
– Targeted interventions to support and shape the development of a targeted
group
• Economic Inclusion: Ensuring the benefits of growth and development are
shared in ways which improve participation of people who are otherwise
excluded or participating in sub-optimal ways
– Involves a combination of infrastructure, spatial, skills and education and
social support mechanism
• Key question: How has this region balanced these goals?
Economic growth tools
• Generally supported through tools that raise
productivity, increase market access, and stimulate
demand side interest. These include RED actions such
as:
– Business and Investment Climate improvements (eg
rebates, red tape reduction, fast tracking planning
approvals, etc)
– Interventions that improve the quality of the living
environment such as addressing crime and improving
settlements
– Investment Tools and Resources such as incentives and
investment agencies
– Infrastructure – soft and hard
– High end skills training
– Marketing and promotion interventions
Economic development tools
• To support the development of particular firms,
sectors, or locations RED process typically focus
on:
– Sector and cluster development programmes and
networks.
– SMEs and Entrepreneurship initiatives and support
services.
– Spatial development initiatives such as urban
redevelopment, regeneration programmes and
intensive district management.
– Sites and land redevelopment for specific purposes.
Economic inclusion tools
• To address inclusion RED strategies typically employ:
– Addressing spatial inequalities often with better access to
opportunity areas.
– Labour market interventions especially in skills and
employment and recruitment practices.
– Interventions to support the development of new
entrepreneurs and firms
– Preferential procurement and contracting for HDI and
smaller firms
– Social infrastructures such as health, schools, childcare
– Enabling policies in social welfare such as housing
subsidies and child support grants.
– Community economic development.
Tools
Key questions:
• What have been the primary tools used in
South Africa and this region to enhance
regional economic development?
• Have they been the right tools?
• What other tools are needed?
CRITICAL SUCCESS FACTORS
Critical success factors of RED
• Tailored strategy – not one size fits all or copycats
– Understanding the advantages of disadvantages of the region
– Understand the regional actors and institutional landscape
• Build on the existing economic strengths
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Work with existing strengths/ base and remove bottlenecks
Assess the potential of collective activities to remove barriers
Develop new activities and industries linked to existing economic base
Focus on retaining existing investors and then attracting new investors
• Develop a shared vision and regional identify
– Space of strategy and influence
• Relationships
– All about relationships between stakeholders – sectors, industries, firms,
government spheres, neighbouring regions
– Successful regions usually are tightly linked and integrated into a larger system
of production with other neighbouring regions (e.g East Asian manufacturing
complex links regions in China, Taiwan, Japan, Singapore, Vietnam etc playing
different roles in value chain)
– Space of influence not command
• Think of sequencing – don’t start with the biggest problem, start with the
ones that are easiest to solve – About “step by step by step”
LESSONS
No silver bullet
Step by step
Not an all or nothing game – becoming the leading region is difficult but
becoming more prosperous is possible
Dynamic Process
networks
dialogue
Act
Vision
Apply the
lessons
Research &
Reflect
partnerships
Markets are dynamic and changing. Regional Economic Development
programmes must be nimble, and be able to change as the context changes.
Get the basics right
Doing fewer silly things
Engage movers and shakers
• Emphasis on identifying and working with people
with energy and drive
– Distinct but complementary to more representative
participatory processes
– Requires fluid fast process support by efficient
administration
• But finding ways to push them out of comfort
zones through collective effort
• Projects without sufficiently skilled committed
champions invariably fail
Combination of products (infrastructure) and process (of engagement between
government and business/ industries in a cluster/ etc to find common ground).
Markets as drivers of innovation
• Requires excellent economic intelligence on local
economy
• Requires knowing who are the economic actors
• Looking at assets and opportunities not needs as
drivers of growth
• Identifying synergies between needs and opportunities
Relationships more important than research
Large portfolio with implementation
funnel
Encourages innovation, networks and preparedness to take higher
level of risk
Value chain focus linking micro with
Meso
• Drive growth at a meso level by linking with
growth centres to increase opportunity and
income
• Identify market opportunities within the value
chains of key sectors
• Identify opportunities for increasing value
provided by the region
• The benefits of improved macro performance do
not reach the community in an inclusive way.
Requires finding supportive ways of linking
emerging business to the growth opportunities
Dedicated ‘Embedded external’
facilitator
 Importance of an external facilitator to broker partnerships and
networks, the institutional base for economic development.
 Building the stakeholder momentum and harnessing the
energy requires capacity and capability and takes time
 Importance of institutional credibility of facilitator
– who initiates, who hosts, who pays, who oversees performance only
really answerable in specific contexts
Recognising and supporting external facilitation key to regions
ability to make a step change in its economic interventions
Too much money can be a hazard
Just enough resources to catalyse action often
enough and better
Thank you