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TCIOceania14 Why cluster development?


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TCIOceania14 Why cluster development?

  1. 1. Why Cluster Development? and Why New Zealand is Underperforming Tony Caughey 30 May 2014
  2. 2. Australasian Cluster Conference University of Technology, Sydney Why Cluster Development? and Why New Zealand is Underperforming Tony Caughey 30th May 2014 2Northern Leading Ltd
  3. 3. NZ Government’s Four Economic Priorities 1. Responsibly managing the Government’s finances 2. Building a more productive and competitive economy 3. Delivering better public services within tight financial constraints 4. Rebuilding Christchurch Northern Leading Ltd
  4. 4. Productivity Goal +2% pa (labour) Competitiveness Goal Incr GCR Rankings Global Competitiveness Report Base Line: 23/144 countries (2012) Goal: Unquantified Ministry of Business, Innovation and Employment Statement of Intent 2013-2016 May 2013 Northern Leading Ltd
  5. 5. Labour Productivity 5Northern Leading Ltd
  6. 6. Our Productivity Paradox “The mystery is why a country that seems close to best practice in most of the policies that are regarded as the key drivers of growth is nevertheless just an average performer” • - OECD 2003 6Northern Leading Ltd
  7. 7. World Economic Forum Global Competitiveness Report 144 countries, 113 variables Overall Rankings 2012 2013 New Zealand 23rd 18th Australia 20th 21st NZ ranks highly in: ease of starting a business (1st) lack of bribes (1st) judicial independence (1st) NZ ranks poorly in: mobile phone subscriptions (48th) availability of scientists and engineers (69th) cluster development (64th) Northern Leading Ltd
  8. 8. State of Cluster Development World Rankings Global Competitiveness Reports Northern Leading Ltd New Zealand 73rd Australia 37th
  9. 9. 9Northern Leading Ltd
  10. 10. What is Competitiveness? For a Region: 1. firms are able to compete successfully in the global economy 2. while supporting high and rising living standards HBS US Competitiveness Project 10Northern Leading Ltd
  11. 11. 17 Essential Elements: • MACRO ELEMENTS – Macroeconomic policy: – Effectiveness of the political system – Protection of physical and intellectual property rights and lack of corruption – Efficiency of legal framework – Complexity of the national tax code – K-12 education system: • MICRO ELEMENTS – Logistics infrastructure: – Communications infrastructure: – High-quality universities – Context for entrepreneurship: – s with strong linkages to the private sector – Availability of skilled labor – Flexibility in hiring and firing of workers – Innovation infrastructure: – Appropriate regulations – Strength of clusters: – Quality of capital markets: – Sophistication of firm management and operations: 11Northern Leading Ltd
  12. 12. Building a more productive and competitive economy Business Growth Agenda (BGA) 1. Building innovation 2. Building export markets grow exports from 30% to 40% of GDP by 2025. 3. Building safe and skilled workplaces 4. Building infrastructure 5. Building resources 6. Building capital markets Plus Regional Economic Activity Report Northern Leading Ltd
  13. 13. Developing Clusters requires: 1. Recognition in the BGA 2. Central government to establish a contestable fund for industries and regions to apply 3. A 5 year time horizon (review after 3?) 4. Teaching in Universities Northern Leading Ltd
  14. 14. Conclusion • Developing clusters will improve competitiveness • Global Competitiveness Report • HBS Project on US Competitiveness • New Zealand is the “rock star” economy that is failing to develop its clusters. • The BGA is necessary but not sufficient to solve our Productivity Paradox and improve CGR rankings to where they could be. • “Cluster Development” needs to be put on the BGA • With a contestable fund to generate action. 15Northern Leading Ltd