This work looks et the local innovation dynamics prompted by SME in the Maghreb region : the case of Algeria

1. Local innovation dynamics in Maghreb
Countries: harnessing local knowledge in
the wake of new institutional reforms
Prof. Abdelkader DJEFLAT
CLERSE/ Univ. of Lille, (France)
Chairman, the Maghtech network

2. Plan
 1/ Theories concepts
 2/ Institutional reforms in MCs and the
emerging local production and innovation
system: the algerian SMEs
 3/ Learning opportunities & access to
knowledge
 4/ Linkage Capability, Learning channels
and networking
 5/ Constraints in harnessing local knowledge
 6/ policy issues and possible research
avenues

3. Section I
Theories, concepts

4. Competitive productive
local system
quasi-spontaneous sets of links
a plurality of integrate
relationships.
evolutionary processes
interactive processes among
different actors in the innovation
process
intense process of interaction

5. Territorial productive systems =
polarisation
innovative activities
externalities : financial,
technological and networking
Efficient organisational set up :
two systems :
- Closed system
- Open system

6. Two main organisational set-
ups
 Open systems
 more oriented
towards the
international scene
 technological districts
 Integration (de facto)
in one or more
international networks
 Training and
education bodies and
local authorities
 the capacity to link up
local and international
spheres
 Closed systems
 Industrial districts of
the Marshalian type
 SMEs clusters
 the French ‘milieux
innovateurs’
 Innovation networks

7. Knowledge creation
 Closed system
 plurality of integrate
relationships
 Intense process of
interraction
 Transformation of tacit
into codified knowledge
 Collective learning
 Institutional thickness
 Open system
 Articulation
between
international firms
& LIPS
 Integration of
components into
international
networks
 Capacity in
renovating
knowledge rapidly
through access to
information, state
of the art
knowledge

8. Territorial productive systems
= polarisation
territorial
productive
systems
Efficient
organisational
set up
innovative
activities
Various
externalities

9. Productive encounters
Through the activation of generic
resources
Trough the specification of assets
as part of the strategy of an
innovative firm
Through the construction of a
territory

10. Social
capital
Social
networks
Building
capacity
Informal
rules
and institutions
Local
Governance
Local
Innovation
system
Pre-requisites: basic conditions

11. Pré requisites
Local Governance: involvement of
several actors of civil society
Building capacity: State, civil
society, private sector
Social networks: trust,
compatibility, location specific
Informal rules and institutions
Social capital: untraded but vital

12. LDC innovation & knowledge
system: disconnected
Social capital
Social networks Building capacity
Informal rules
and institutions
Local Governance
Local
Innovation
system

13. Major characteristics in
LDCs: hypotheses
Weak, local Governance:
involvement of one major actor
Building capacity: State but civil
society and private sector excluded
Social networks: mistrust,
incompatibility, location specific
Informal rules and institutions
Social capital: important but unused
for knowledge creation and diffusion

14. Section II
The emerging local production and
innovation system in the Maghreb:
the algerian SMEs

15. Institutional changes and decentralised
decision-making
 Decentralisation : decentralised productive and
local learning systems
 specific law for the development of science and
technology
 Investment code: for improved investment climate
 More autonomy to universities
 Privatisation of public assets and emphasis on
private sector SMEs

16. Contribution of SMEs to value-
added
Public sector 1994 1998
Contribution to
-imports
-exports
45%
71%
Contribution to
value-added in %
53.5% 46.4%
Private sector
Contribution to
-imports
-exports
66%
29%
Contribution in % 46.5% 53.6%

17. The study
70 SMES
63% limited liabilities
Various sectors of activtity
The western region of Oran
Mostly private sector

18. Distribution of SMEs in the
sample
0
5
10
15
20
25
Agro-food
industries
Textile & leather Chemicals and
Plastics
Trade Other services Various
manufacturing
distribution of SMEs by sector of activity
percentage

19. Distribution of SMEs according to date of creation
31
31,5
32
32,5
33
33,5
34
%
1988 - 1993 after 1993
date of creation
16 16

20. Section III
Learning opportunities & access
to knowledge

21. Investment capability
0
5
10
15
20
25
30
35
-product
improvements
-capacity
stretching
-newproduct
fabrication
-replacement
ofequipment
-others
Série1

22. Investments in knowledge acquisition
of SMEs.
(Aït Habouche 2004).
44,32%
25,00%
17,05%
10,23% 3,41%
Aucun
Fondde commerce
Publicité
Brevet /licence
Formation dupersonnel

23. Marketing capabilities
69%
28%
72%
Trade marks
Market studies
Qualitycontrol &
standardisation

24. Importance of innovation
54%
25%
67%
72%
Innovation an important
function
Existence of innovation-
related services
Technological
environment perceived
as stable
Information about the
environment bad or
insufficient

25. Drive for innovation
25%
53%
29%
market needs
competitive pressure
external expertise

26. Section IV
Linkage Capability, Learning
channels and networking

27. Users and suppliers
78%
28%
Formal contractual
relationship
Informal relationships

28. Partnerships with foreign firms
92%
8%
No lasting partnership
with foreign partners
Long-lasting relations

29. Relationships with universities and
training centres
4%
96%
Operational
relationships
with local
universities and
No formal
relationship

30. Relationships with local institutions
80%
100%
93% 93%
33%
Not involved
in local
development
programmes
No supplied
technological
services by
local
institutions
No support
for innovation
projects
No incentive
schemes for
innovation
from local
institutions
High support
from central
government

31. Support from local professional and trade
associations to innovation
80%
20%
Support from
local
professional
and trade
No support of
anykind

32. Networking: flows of innovation-related
services & knowledge
100%
7%
80%
information,
knowledge &
technology within
same sector
Innovation related
services
Informal relations

33. Section V
Constraints in harnessing local
knowledge

34. Obstacles
Weak and incomplete
NSI
-poor linkages
-no drive for innovation
-difficult domestic environment
Delinking and weak
networking
Access to finance -difficult access
-high competition from local firms
-capital and skills market failure
-venture capital in short supply-difficult
access to foreign currencies-limited access to
foreign aid

35. Obstacles (2)
Strong bureaucratic
stronghold-
long and heavy procedure
for land acquisition-long
procedures for permits and
licences
Procurements and supply of
various inputs
-lack of prior experience in
procurement-strong bias
towards importing finished
goods
Management of SMEs -below standard
management procedures &
techniques-Underscored
competition pressures

36. Concluding remarks
 Maghreb SMEs have limited capacity to mobilise local
knowledge either externally or within their own cluster:
 networking capacity still below international standards and
cannot be used to acquire efficient innovation capacity,
 technological capabilities are insufficient to efficiently
manage a fruitful relationship with the market.
 knowledge and learning environment is still fragmented,
immature and ill prepared for this task.
 Intermerdiate institutions do not play the expected role

37. Challenges and prospects
 the opening up of the economy following the establishment the
free trade zone with Europe by the year 2010.
 While innovation performances remain still unsatisfactory, the
dynamism, shown by the private sector and SMEs in particular in
recent year seem remarkable.
 The issue is how to recognize and effectively harness local
knowledge which has been accumulated by various institutions
and bodies.
 While greater awareness of importance of SMEs as a vehicle for
technical progress and innovation is being felt at top government
decision making level,
 the recognition of local innovation dynamics is below international
standards and practices.
 More and more studies and investigation in innovation success
stories at local level are needed. At policy-making level, further
progress is needed in making the environment more conducive to
knowledge accumulation.