Transcript Document 7405460

Innovation and Industrial
Clusters
Shahid Yusuf
DRG
World Bank
ISEAS, Singapore
June 13, 2008
Sources of Growth
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Middle and high income countries are deriving most
of their growth impetus from relatively few urban
centers which frequently host dynamic industrial
clusters.
An increasing share of growth will stem from gains in
total factor productivity (TFP).
Innovation is a major determinant of changes in TFP
and the driving force being the upgrading of cluster
capabilities and the transition to new clusters as
existing ones lose competitiveness.
What is an Innovative Urban
Environment for Clusters?
Its economic progress springs from a dynamic and diversified base
of industry and services.
 Dynamism and growth is the result of an urban system that
routinely generates ideas and absorbs ideas from the rest of the
world to produce new and innovative products, processes, and
services of commercial value.
Innovation as measured by patenting or the introduction of new
products/services, is greater in the larger cities and cities with
higher employment intensity (96 percent of U.S. patents from
metro areas and the 25 largest cities with 12 percent of the
population, accounted for 20 percent of patents). However, there
are exceptions e.g. Turku in Finland and Cambridge U.K.- where
universities and local authorities have created innovative
industrial clusters.
Key Characteristics of an
Innovative Urban Environment
Large urban centers (or a sub-national region where scale effects are achieved
through the networking of smaller cities) confer several advantages:
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Size and composition of regional economy;
Urbanization economies (from industrial scale and diversity);
Localization economies (from specialization, often in satellite or edge cities in
a metro area, or in polycentric sub-national regions with multiple interlinked
cities: however, doubling of distance from metro centers reduces productivity
by 15 percent);
Concentration of universities and research entities;
Density of labor market;
Quality of infrastructure and international connectivity;
Services providers (finance, legal, engineering, managerial) (Business services
tend to concentrate more in urban centers.); and
Concentration of company HQs.
Human Capital and
Urban Capital
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Knowledge, based on technical skills and R&D, is the
principal driver of productivity. Urban environment,
infrastructure, and services determine knowledge spillovers
and multiplier effects.
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Investment in the quality of primary/secondary education
linked with economic performance. Quality of education,
including tertiary education, affects innovativeness.
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Tertiary education attainment associated with high earnings
premium and low unemployment rates.
Entering a virtuous spiral:
What it takes
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Regional economy, industrial composition, knowledge producers,
intermediaries and firms.
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Large, prosperous regional economy with an expanding population influences
fortunes of cities.
Mix of industry and services in region/city affects incentives for research and
scope for innovating.
Proximity of current local technology to the frontier, can determine returns
from higher education and research.
Findings of basic research and tacit knowledge diffuses slowly, hence
universities and research institutes generating ideas are at the core of the
innovative city.
Translating innovation into commercial products/services is the function of
entrepreneurial firms doing applied research and development.
Promoting an uptake of research is the work of intermediaries- and also firms.
Coalition of supporting private interests, e.g. financiers, urban developers,
NGOs, and industrial and professional bodies.
Urban Knowledge System: Regional
and Industrial Composition
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Growing regions with large and stable economies,
support innovative cities and attract skilled
entrepreneurial workers.
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Scope for innovation depends on type of industries
and services, present or emerging. However,
innovation and gains in total factor productivity are as
likely in R&D/skill intensive activities (such as the
life sciences) as in others (such as retail, wholesale,
logistics, construction, and medical care).
Contributions to Total Factor Productivity by Industry
(U.S. Experience, 1960-2005 )
Urban Knowledge System:
the University
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Universities with research capabilities are a necessary ingredient.
They produce many of the ideas. Education levels of an urban
region correlated with entrepreneurship, and can stimulate R&D by
firms.
Returns to higher education and research greatest when industry
moving rapidly to incorporate advanced technologies. The best
research universities depend on strong graduate programs, multiple
public/private sources of funding, large R&D budgets and effective
allocation mechanisms, competitive pressures, and autonomy.
Special programs catering to firms as pursued by Stanford and MIT,
help raise funds from the business sector, leverage talent in firms
and build local partnerships.
Urban Knowledge System:
the University (Contd.)
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Specialization in core areas, and networking among second tier
universities, is a means for building technological capabilities in the
absence of large world class universities. Such networking, which allows
differentiation and specialization among providers of tertiary level training,
can build spheres of excellence and much needed critical masses of
complementary skills. Medicon Valley (Copenhagen and the Skane region
of Sweden) an example.
Multidisciplinary programs are increasingly important for raising
productivity of scientists and engineers.
Networking and knowledge circulation among universities via formal and
informal channels, a big plus e.g. co-authorship, multi-university research
teams, the EU’s Erasmus program etc.
University research contributes most to biotech/pharma, IT and electronics.
Urban Knowledge System:
The Intermediaries
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Municipal governments determine business environment, quality
of services, tax incentives and attractiveness of amenities for
knowledge workers. Through inter-jurisdictional coordination,
they can build, integrate and maintain infrastructure.
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University technology licensing offices (TLOs) can serve as
matchmakers between researchers and potential users.
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Regional, industrial bodies and other institutes can provide
incentives and mechanisms for universities and firms to link-up
and pool research assets (Cambridge-MIT, KIC initiative, TAMA
Association in Japan, TEFT program in Norway, Georgia (USA)
Research Alliance of six major universities, UCSD CONNECT,
the IC2 Institute at UT Austin and ITRI in Taiwan).
SPINNO/TEKES (Finland) assists new starts.
Urban Knowledge System:
The Intermediaries (Contd)
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Venture capitalists and angel investors can
provide start-up capital, coaching and contacts –
but depend on local financial institutions and tax
and company laws to gain traction.
Developers work with local public authorities to
create infrastructure and affordable housing for
urban industry and knowledge workers.
Other services providers underpin efforts of firms.
Urban Knowledge System:
Firms
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Bulk of applied research done by firms (between 50 and 80
percent). Access to universities advantageous because open
innovation is more fruitful. However, research intensity
depends on industry; services and resource based industries
do little research. Most R&D and patenting in few industrial
categories . In the EU, 42 percent is by electronics,
engineering, vehicles and telecom.
Proactive firms with own (exploratory) R&D programs and
strategies based on innovation, better able to seek out ideas
and work with universities. Major firms can serve as
anchors for clusters and regional innovation systems (within
a country as in the US, or across countries as with the
Medicon Valley). Examples are Novo Nordisk and Astra
Zeneca, in Medicon, HP in Silicon Valley, Boeing and
Microsoft in Seattle.
R&D Intensity
Hybritech and its Daughter Firms in
San Diego
Linkabit and its ‘Children'
1st
2nd
Generation Generation
3rd
Generation
Interactive Concepts 1983
Sciteq 1984
ComStream 1984
4th
Generation
WaveLogic (AZ) 1990
Osicom Technologies 1996
ComStream/SPAR 1992
Boatracs 1990
NextWave Telecom 1995
Solana Tech Development 1995
Rhythms NetConnections 1997-2002
NeoPoint 1997-2002
DriveCam Video Systems 1998
QUALCOMM 1985
SwitchPoint Networks (UT) 1998
Leap Wireless 1998
Ericsson 1999
Mobilian 1999
Kyocera Wireless 2000
Axesstel 2000
Actona (Israel) 2000
General Instrument VideoCipher 1986 Cornerstone 1986
Multichannel Comm Sciences 1989
Tiernan 1989
ViaSat 1986
MultiSpectra 1986-1991
PCSI 1987
Hughes Network Systems 1987
Motorola 2000
TrellisWare Technologies 2000
TurboNet 1996
Cirrus Logic 1993
Telogy Networks (MD) 1990
Uniden - San Diego 1994
Commsolutions 1994
Indra Technology 1987
Linkcom (Israel) 1988
Titan Linkabit 1990
5th
Generation
Sorrento Networks 1997
Rockwell Semiconductor 1997
Radyne ComStream 1998
Glencom (MI) 1994
ComCore 1996
ComSystem 1996
StarGuide Digital Networks 1998
ARCOMS 1995
Control Point Systems 1997-2000
Dot Wireless 1997
Verance 1999
Correlant 1999
Nuera 1996
ADC Wireless 1996
Rockwell Semiconductor 1997
RC Networks 1997
Istari Design 1997
Ensemble 1997
WaveWare 1997-2002
Silicon Wave 1997
Analog Circuit Technologies 1998
Motorola 1998
Texas Instruments 1999
WIDCOMM 1998
LSI Logic 1996
Primary Access 1989
Milpower 1989
Orckit (Israel) 1990
Torrey Science 1990
CommQuest Technologies 1991
Welkins Systems 1998
IBM/CommQuest 1998
E-Monitoring Networks 1998
Triton Network Systems 2000
Ellipsis Digital Systems 2000
Tahoe RF Semiconductor 2003
Copper Mountain Networks 1996
AirFiber 1998
Magis Networks 1999
Teradyne 1996
Gold Wire Technologies (MA) 1997
PacketAir Networks 2000
Texas Instruments 2000
Entrada/Torrey Pines Networks 2000
Conexant Systems 1997
RF Magic 2000
Entropic 2001
National Semiconductor 1998
Vativ Technologies 2002
Digital Generation (TX) 2001
X-Digital Systems 2003
Texas Instruments 2000
Broadband Innovations 1999
Tourmaline Networks 2000
Radyne ComStream 2001
La Jolla Networks 2002
CenterComm 1997
VideoFreedom 1993
Nomadix (Los Angeles) 1998
Path 1 Network Technologies 1998
Alantro (Santa Rosa) 1997
7th
Generation
All companies founded by prior firm's personnel except:
BUYER Firm acquired all or part of prior Linkabit-related company
EQUITY Startup w ith major equity financing from Linkabit successor
IPO
Created through Initial Public Offering of stock
MERGER Formed by merger of Linkabit successor w ith other firm
RENAMED Same as prior company, but a new name
SPINOFF Official corporate spinoff from prior Linkabit-related entity
TECH
Startup based on technology from Linkabit successor
Quality Systems Integrated 1994
Tachyon 1997
Lockheed 2003
3Com 1995
ComFocus 1991
Midnight Networks (MA) 1992
6th
Generation
Native Intelligence (Santa Rosa) 2000
NetSapiens 2002
Viadux 2002
Conexant Systems 1999
innoCOMM 2000
VIA Telecom 2002
Figure 8 Wireless 2001
CarrierComm 2002
Nat'l Semiconductor 2000
Staccato 2002
CCL and Daughter Firms in Cambridge, UK
Steve Barlow
Robert Swann
Phil O’ Donovan
Aphamosaic
James Collier
Glenn Collinson
Acquired by Elumin
founded by Dr. Hans
Wagner
Pelikon
Chris Fryer
Bill Baxter
Will Eve
Paul Anson
Mike Payne
Roger
Millar
Graham Martin
Colin Gray
Will Eve
ELMJET
Acquired by
Videojet
Technologies
1960
Mike Stroey
Xennia
Technologies
Dr. Collin
Smithers
Alan Hudd
Transversal
David Yip
David McKay
Stuart Hendry
Gavin Troughton
Adrian Lucas
Sphere Medical
Imerge
3D Molecular
Sciences
Elizabeth Hill
Mark Tracy
Nigel Playford
Ionica
Adaptive Screening
Flying Null Mike Crossfield
Diomed Tony Raven
Tim Eiloart
Gerald Avison
Ross Green, Mike Kellaway
Wavedriver
Acquired by
PowerGen
Automation Richard
Partnership
Archer
Demerged from
TTP Group
Symbionics
Dennis
Fielder
Plextek
1986-1990
Myriad
John Cassells
Barrie Griffiths
Steve Mullock
Kore
Technology
Ubinetics
Tony Millbourn
1996-2000
Vivid
Stephen Eason
Radiant
Networks
2001-2002
Acquired by
Mettler-Toledo
Acquired by
Cadence
Ali
Pourtaheri Tality
Acquired by
Vetura
TTPCom
ip.access
1991-1995
Yuno Ltd
QuantumBEAM
Gordon Edge, Bob
Pettigrew, Alan Green
TTP
1970
Dr. Robin
Smith-Saville
Cambridge
Signal
Mass
Process Ltd
Spectrometry Until 1985
Andrew DamesTechnologies
Absolute
Sensors
Mike Willis
Pivotal
David Paton
Mike Willis Resources
Steve Temple
Dr.
Xaar
Gordon
Edge, Bob
Scientific
Prelude Pettigrew
Generics
Dr. Robert
Hook
Dr.
Gordon
Tim Eiloart
Edge PA
CCL
Graeme MintoDomino
David Paton
DCS
Sensopad
Sentec
Cambridge Physical
Sciences
INCA Digital
Printers
Acquired by
Synaptics
Mark Howard
Richard Doyle
Andrew Dames
Cyan
Technology
Chris Barnardo
David Bending Roundpoint
Smartbead
Andrew
Technologies
Polatis Dames
Holotag
Cambridge Silicon
Radio
Chris
Davies
Yin M. Myint, Shailendra Vyakarnam
Caroline
Garey
TTP
Ventures
David Cornell
Creativity
Partnership
Fen
Technology
Anne Miller
Acumen
Bioscience
Richard Philpott
TTP
LabTech John Cassells
Urban Knowledge System:
Firms (Contd)
Firms headed by those with tertiary education
likely to hire skilled and technical workers
and encourage innovation.
 Firms operating in an urban region with
significant industrial/technological breadth,
more likely to diversify into new fields, once
old ones are commoditized and rents
squeezed.
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Sustaining Growth of the Innovative
City : National Level Policies
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National innovation system must underpin and stimulate
dynamic urban centers. Tax incentives, an education strategy,
public support of R&D and IP (intellectual property)
institutions, are among the policies required.
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Quality and research intensity of national universities and
openness to international students and competition (national as
well as regional), is a way of sustaining flow of ideas. Early
foundation of creative and STEM (science, technology,
engineering and math) skills forms the basis for gains from
higher education and the utility of lifelong learning programs.
Public programs and procurement for innovative products and
services buttress private demand. In some instances, public
enterprises and research institutes play key role.
Few urban centers have the potential of
becoming “innovative cities”.
Realistic assessment and expectations are the
basis for identifying and realizing potential.