Transcript IS cluster - World Bank

The LATVIAN IS CLUSTER: CASE
OF INDUSTRY – UNIVERSITY
COOPERATION
Valdis Avotins, Latvian Investment & Development Agency
WB KE Forum III, Budapest, March 23-26, 2004
CONTENTS
1. what did we have
• starting point
• reforms completed
• industry clusters
2. what we do have
• Government role
• innovation policy
3. what do we want to have
LATVIA: CRISIS, STABILIZATION, REFORMS
AND DEVELOPMENT (but what kind of?)
GDP/per capita
1st phase - degradation
(till 1991)
6th phase –
endogenous
innovative
economics
(2005 - …)
5th phase –exogenous
innovative economics
(2000 -2005)
Prof. U.OSIS
2nd phase - riddance
(1991-1993)
Inflation
4th phase - recovery
(institutional reforms:
1994-2000)
3rd phase - stabilization
(1993-1994)
LATVIA: GROSS DOMESTIC PRODUCT
10
3,7
2,2
5
0
-5
-10 -12,6
-15
-20
-25
-30
-35
-11,4
2,8
8,4
7,9
6,7
7,5
-0,9
-32,1
1991
6,8
4,8
GDP at constant prices
(changes in % of previous period)
1993
1995
1997
1999
Reforms in Latvia
2001
2003*
Long-term strategy
Privatization of large enterprises
Riga Stock Exchange
Latvian Privatization Agency
Latvian Development Agency
LVL
Stabilization policy
Fiscal and monetary policy
Price liberalization
Prof. U.OSIS
TODAY ...
• Innovation Policy at the top of policy agenda at national level
• Macroeconomic stability: macro-economic reforms completed
• impressive FDI inflow; acquisition of new technology and skills
Still weaknesses ...
• The economy depends on low tech and low value added goods
• Low level of national savings, high current account deficit
• Outworn infrastructure
• Poor quality of education and research system
• Regional and social disproportions
LONG TERM ECONOMIC STRATEGY (2001)
Objective : to achieve the EU average GDP per capita level in the next 20-30 years
•intensive utilization of knowledge and high technologies, transition from labourintensive economy to knowledge-intensive economy
•by renovating traditional sectors of economy on modern technology basis and by
developing new post-industrial knowledge-intensive sectors
INNOVATION POLICY (2003)
KEY OBJECTIVE - to enhance national innovation capacity :
 formation of the society open to innovative activity
 Creation of a harmonized and innovation-friendly environment;
 Creation of innovative SMEs base and promotion of their further growth
 efficient cooperation between all elements of the innovation system
GOVERNMENT INITIATIVE – INDUSTRIAL CLUSTER PROJECT
Project funded by EU Phare in 2001
Project objective – strategic economy
restructuring based on the Clustering
idea: improvement of competitiveness of
Latvia’s export potential through
collaboration between cluster participants
based on the shared vision
Covered four industrial sectors IS, Forestry, Composite materials,
Engineering (Optic Fibres)
EXPERIENCE OF FORESTRY CLUSTER
• Members: Wood working companies, large sawn mills, SMEs,
furniture industry and University of Agriculture
• Fueled by Latvian Forest Industry Federation
• Cluster Concept approved by Government (2002)
• Forest Development Fund (MoA, Federation)
• Woodworking Development Institute at University of Agriculture
 Certification, standards, tests, measurement techniques, chemical
technologies, cross-sectoral education and R&D supply
• Forest Cluster Information Centre
 Information, market analyses, timber usage promotion
• Regional Centres of Competence (Jekabpils, Ventspils)
• Design of long – term Forestry Industry Strategy
ROLE OF INFORMATION SYSTEMS
SECTOR IN LATVIAN ECONOMY
 Fastest growing export sector (55%), 3000 engineers
 In 2002, gross sales of packaged software: 0,76% of GDP
 The most potential sector for future development
Ernst & Young, 1999; Arthur Andersen, 2001; ITC, 2003
 Sector is supported by several government strategic documents:
National Program: Informatics; National Development Plan
Industrial Development Plan, Long Term Strategy for National Economy
 Product characteristics :
high value added
“Clean” product
no need for energy resources
LATVIAN ICT SECTOR
The main specialisations and products
Public institutions
Banking & finance
Business process re-engineering,
Integrated networks, ASP, Databases &
data storage, Specific applications
Data transmission & storage IS,
Transaction software, Financial
applications, WAP solutions, Client
handling systems
Wireless & cable
communications
Data transmission & storage IS, Large
customer registers, WAP solutions, Call
Centers, ASP solutions
Transport
Software development
IT consultations
Hardware architecture
Networking & data
transmission solutions
EDI systems, warehousing, distribution &
transport software, aviation software
Healthcare
P atient & case-record registers, medical
equipment support software, telemedicine
Service & manufacturing
Education & science
L
AN, Internet & Intranet solutions, Digital
signal processing
C lient handling systems, Accounting &
financial software, Network architecture,
WEB solutions, office software, ASP
services
LATVIA: A PART OF THE NEW ECONOMY
Vision of Latvia’s IS cluster by 2010
Latvia would be a leading software services exporter in Eastern Europe
Cluster of more than 10 000 qualified specialists
Annual export of services over 1 billion USD
Sourcing of additional HR from Russia and Belarus
Provision of ASP services, know-how and products
Current expertise in implementing large-scale projects would be
enhanced by 2010
Establishment of an R&D center for the development of IS projects
GOVERNMENT SUPPORTS DEVELOPMENT
OF KNOWLEDGE BASED SECTORS
IS cluster
 Articulated and agreed cluster strategy (vision, mission and values)
 IS Cluster Code of Ethics signed by all involved companies
 Back – office: Cluster resources pool and costs assessed
 Several legislative initiatives started with government of Latvia
 Communication network created - www.is.lv
Role of Government :
 State aid to export marketing and export training
 Development of IT education and professional standards
 Support to IT University College network
 Development of Postgraduate IT&T professional training centre
 Participation in process of improvement of business environment
(through identification of the main problems and legislative initiatives)
INDUSTRY – UNIVERSITY COLLABORATION
•EU and US IT course programs have been adopted, certified and are used in
Riga Technical University, the University of Latvia, and the Institute of
Transport and Communications
•Significant support / donations: Siemens, CISCO, FESTO, IBM, Samsung
Electronics
•Practical IT skills are acquired in Latvian software houses
•Local firms provide significant contribution (research prizes, scholarships,
donations, etc.)
•University and company collaboration to promote the interest of youth in IT
•Centre of Competence: MII, University of Latvia and DATI Group
•Collaboration for advanced mainframe studies: Exigen, UoL, ITC
RAPIDLY GROWING AMOUNT OF IT STUDENTS
Priorities in 2004
Number of IT students
6000
4804
5000
•Keep No of graduates
3876
4000
3000
4961
2538
•Doctor level students
2940
2000
•Quality of education
1000
0
1998/99
1999/00
Source: Ministry of Education and Science
2000/01
2001/02
2002/03
•Life-long learning
CREATION OF IT UNIVERSITY COLLEGE NETWORK IN LATVIA
Regional Centres of Competence
•Valmiera Cybercity project
•Ventspils ITTE
•Jelgava Bioinformatics Centre
Baltic network of Private
Baltic Computer Academy
Universities
Professional education (colleges & adult training)
2500 students – HP, IBM,
Microsoft, Novell, CIW
UPGRADING OF INNOVATION CLIMATE
Cycle of Reform
1.
Identification of
problems
2.
Government/ business
dialogue
4.
Monitoring and
evaluation to assess
impact
3.
Implementation
by decision-makers
Political Champion Deputy Prime Minister
Institutional Partners:
Foreign Investors Council in Latvia (FICIL)
Latvian Chamber of Trade and Industry
Foreign Chambers of Commerce
National Economy Council
Industrial Clusters (ICT)
Small and Medium Business Council
Other Industry Business Associations
Friendly Business Environment for ICT
• “Green Card” scheme for highly qualified IT professionals
 Simplified immigration and employment conditions for up to 90
days for up to 100 ICT professionals per calendar year
 Short-run remedial solution: designed and implemented by LIDA
• Fiscal (Tax) Incentives for Diploma Education
• Non-application of salary tax for employer’s expenses for diploma education
of employees in ICT areas
• Long-run stimulus: researched by Ernst&Young by LIDA commission
• Responsible institution: Ministry of Finance
• Planned to come into effect June 2004
SOFTWARE OUTSOURCING IN LATVIA BACKGROUND AND TRENDS
Today
• Subcontracting activities, dependent on few contractors
• Lack of critical mass for large projects
• Skill sets are fragmented
OPPORTUNITIES
• Key selling factor is still a cost efficiency
Future sector trends
• Provision of additional value added services that are based on core
competencies
• Capabilities to undertake and manage large scale projects, need for
scalability
• Corporate marketing effort, knowledge of key customers
• Developing and maintaining unique knowledge
need to innovate
and move up the
value chain where
cost and price
sensitivities are not
as critical
BALTIC IS CLUSTER INITIATIVE
• Initiative of Latvia’s IS cluster
• Creating Baltic IT Brand
• Provision of joint Baltic competences to
sizeable projects
• Collaboration for Global markets
• Create Baltic IT Forum / Network
SYNERGY BETWEEN UNIVERSITY AND INDUSTRY
For university
Scientific exposure &
project acquisition
Success
Joint projects
benefits
positively affects
Solution of
fundamental
problems
Sci. publication
generates
may
require
necessary for
Basic research
expertise
provides
University
Education of
applied scientists
For industry
benefits
Research into
innovative
products
IP, revenue
generates
provides
Determines key
areas
Market driven ideas
Highly trained staff
stimulate
provides
designes
Based on Ulm university model
needs
orders
Study Programs,
Professional standards
Industry
LESSONS LEARNED
• Macro:
 Innovative, but mostly exogenous, innovation absorbing – specific to
transitional economy, in the process of restructuring
 Exogenous development is time, capital and space limited
 The alternative for the future – endogenous innovative development
• Micro
 Achieved needed growth of IT graduates (>1000 Y)
 Network contributes to IT growth
 Standards implemented
 Confidence achieved
 Growth by members and volume (export 55%)
LATVIAN INVESTMENT & DEVELOPMENT AGENCY
Perses iela 2, Riga, LV 1442, Latvia
Phone: +371 7039400
Fax: +371 7039401
E-mail: [email protected]
http://www.liaa.gov.lv
Ministry of Economy
Brivibas 55, Riga
LV 1519, Latvia
www.em.gov.lv