Competitiveness: The Basque           Country Experience                                              12th INTERNATIONAL C...
“The Basque Country is one of the             few regions in Europe that has made             significant progress in upgr...
A LONG TERM VIEW 1980-2006      Contents             1.    Macroeconomic Context                           2.    Instituti...
1     A long term view                                      1980-2006                                      4Let´s take a l...
1.1 Macroeconomic Context                                         GDP per capita market prices 1980-2006                  ...
1.2 Institutions and Public Policies                                                                                 BASQU...
1.3 Industrial Policy         www.politicaindustrialvasca.net                                           7Competitiveness e...
1.4 Technology Policy          www.politicaindustrialvasca.net                            1980‐1996                       ...
1.5 Energy Policy                                                                             1982-1990                   ...
2          Economic Results                                       10After this brief review to industrial policy let´s go ...
2.1 Main indicators                                                    BASQUE COUNTRY                                     ...
2.2 Exports: Share and Sophistication     1200            EVOLUTION OF BASQUE EXPORTS COMPARED WITH OTHER                 ...
2.3 Productivity and Labour Costs in the Industrial Sector                                               60               ...
2.4 European Innovation Scoreboard                                                                                        ...
2.5 The Second Great Economic Transformation          LEHENDAKARI (President) Juan Jose Ibarretxe, July 2001         A soc...
3    New Strategy for                                  Competitiveness 2015                                       16From h...
3.1 Competitiveness Model                                          17First of all, referring to the “competitiveness model...
3.2 Open Innovation                       •Broad concept: Innovation is about creating value not necessarily              ...
3.3 Technological Strategy         TRADITIONAL SECTORS                                                                    ...
3.4 Size and Groups for competing in the Global Economy                                              Cultural change and t...
3.5 Internationalization of Basque Groups                      • 61 Basque groups producing overseas: around 230 plants   ...
3.6 Strategic Objectives and Results                                  EU 27=100                 EU 27=100                 ...
FINAL REMARKS        1.    The importance of Self-government and economic capacity of             institutions        2.  ...
REFERENCES  www.politicaindustrialvasca.net www.euskadi2015.net www.euskadinnova.net www.euskadi.net www.spri.es          ...
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Competitiveness the basque experience aa 10 07 08 notes en

  1. 1. Competitiveness: The Basque Country Experience 12th INTERNATIONAL CONFERENCE ON COMPETITIVENESS Donostia- San Sebastian 10 July 2008 ALBERTO ALBERDI LARIZGOITIAGood morning everyone. It is a pleasure for me to participate in thisConference; and first of all, I would like to take the opportunity, on behalfof the Government, to welcome you all to the Basque Country.The Government’s contribution here, with my presentation and thisafternoon’s presentation on clusters, should be understood from the pointof view of practitioners and our cooperation with the Basque Institute ofCompetitiveness, who I would like to thank for the organization of thisevent.Why study the experience of The Basque Country? First of all, it is justanother case in the regional sphere and as such, it may be representative.However, it is also a success story. We are not the only ones to saythis…. it has also been recognised by Michael Porter 1
  2. 2. “The Basque Country is one of the few regions in Europe that has made significant progress in upgrading its traditional industrial base” Michael E. Porter 2And not only by Porter. International interest in our experience has grownrecently, including that of the OECD, which is reflected in the visits wereceive and surely by the fact that this conference is being held here.We study experiences in order to learn and apply the knowledge acquired.For this reason, I believe that there are two key questions in anyexperience: one concerns strategy and the other deals with idiosyncrasy.As far as strategy is concerned, it is relevant to know whether the successwas due to deliberated strategies or whether they simply happened.Henry Mintzberg, the great debunker of strategy, says that the strategyimplemented is the result of two forces: deliberated strategy and theemerging strategy. The result is always a combination, becausepredominance of the former would imply a lack of learning andpredominance of the latter implies a lack of control.The second key question, is related to the presence of singular elements -idiosyncrasies- which are difficult to copy but have a decisive influence onresults.I do not intend to provide definitive answers to them both. I mention thembecause they were in my mind whilst preparing this presentation and Isuggest that you should take them into account. 2
  3. 3. A LONG TERM VIEW 1980-2006 Contents 1. Macroeconomic Context 2. Institutions and Public Policies 3. Industrial Policy 4. Technology Policy 5. Energy Policy ECONOMIC RESULTS 6. Main Indicators 7. Exports: Share and Sophistication 8. Productivity and Labour Costs in the Industrial Sector 9. European Innovation Scoreboard 10. The Second Great Economic Transformation NEW STRATEGY FOR COMPETITIVENESS 2015 11. Competitiveness Model 12. Open Innovation 13. Technological Strategy 14. Size and Groups for the Global Economy 15. Strategic Objectives and Results 16. Internationalization of Basque Groups FINAL REMARKS 3Therefore, I wish to commence my presentation with an initial section thattalks about context, institutions and policies, which I feel reflects theinfluence of these two key questions.In the second section, I will present some economic results that have alsobeen used as a diagnosis to tackle the New Strategy which is described inthe third part. 3
  4. 4. 1 A long term view 1980-2006 4Let´s take a look at a long term view from the eigthies to the present 4
  5. 5. 1.1 Macroeconomic Context GDP per capita market prices 1980-2006 MACROECONOMIC FRAME: Institutions and Economic Integration Source: Eustat, Eurostat and ow n 2002. The Basque C euro EU 27 1998: Set up of 28000 1989-91 Strong BCE and apreciation of the definitive rates rate of exchange of exchange (peseta) 1994 Second phase 23000 Monetary Union 1986 Integration in the European 1996-2006 Creation Economic of 270,000 new 18000 Comunity jobs (38% increase) 1980 New Convergence in GDP per capita Institutional at market prices Framework 13000 Statute of Autonomy 1992-1993 Deep Recession: 65.000 jobs lost 8000 1982-1986 Sharp Increase of Public Spending and public policies 1980-85 Industrial restructuring 3000 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Basque C 3132 3545 3980 4371 4890 5448 6132 6969 7952 9046 9993 10700 11383 11754 12600 13635 14573 15653 17108 18537 20030 20968 21870 23246 25090 26835 EU 27 14600 15400 16200 16900 17800 19000 19700 20400 20700 21600 22400 5Competitiveness is a micro question, provided that the macrofundamentals are good and the same for everyone. However, as we cansee here, the macro context is rarely the same for everyone, even withinthe same monetary area.Here you can see some historic events, institutional changes and relatedeconomic results and actions. In general it can be said that the process ofeconomic integration has been an extraordinary catalyst for the growth ofthe Basque economy.But macro-economic policies had highly visible effects on the growthtrend for the good and for the bad. An example of the second: the poorpolicies of the 1980’s worsened the crisis at the beginning of the 1990’s;contributing to a deep recession in which employment fell by 8%.Conversely, the favourable peseta/euro exchange rate to access the finalphase of the monetary Union had a positive impact on the foreign sector,which tripled exports in eight years and led to the decade of employment,which increased by 38%. 5
  6. 6. 1.2 Institutions and Public Policies BASQUE GOVERNMENT PUBLIC POLICIES Statute of Autonomy 1979- Spending as % of GDP 1981-2002 Institutional wealth. 1981-1989 1989-1998 1998- Fiscal consolidation Preparing for the EMU. Own treasury, collecting most 16 Econom ic restructuring, Infrastructures, New technology policy new policies and social policy and 18. Public Debt of the taxes and strong increasing expenditure increased debt 15 17. Tourism and C ommerce spending capacity 14 16. Business Promotion New welfare net: Universal 13 15. Agriculture and Fisheries Health, Education, Housing, 14. Economic Regulation Basic Income and social services 12 13. Research 11 “Europe 93” “Euskadi XXI” and 12. Other Infrastructures 10 “Euskadi 2000Tres” three Plans 11. Transports and communications. for Infrastructures and social 9 10. Basque language cohesion 8 9. C ulture 7 Strategies and plans on Cities, 8. Housing, Territory and Enviroment Territory and environment: the 6 7. Justice success of Bilbao 5 6. Education 4 5. Health Industrial Policy: Restructuring, 3 4. Social promotion, land, energy, clusters, technology, 2 3. Welfare and Social Assistance internationalization and 2. Security 1 information society 1. Administration 0 6Apart from macroeconomic context, institutions and policies as a consequence of theprocess of devolution is the other key question I was referring to.A public sector with enormous institutional wealth, (Government+ Councils+ TownHalls), high tax independence and expenditure capacity was created with theStatute. Actually current income rose from 4% of GDP to 24% and investmentreached 6% of GDP.Besides, an advanced social welfare network was built with subjective universalrights for individuals in essential public services, (health, education, socialservices…) and pioneering initiatives such as the set up of a universal basic income.Important initiatives were launched, such as the three plans for infrastructures andcohesion: Europe 93, with 1,076 million euros, Euskadi XXI, with investment of1,436 million euros and Euskadi 2000Tres with 1,045 million euros and which tookpublic spending capital to 6% of GDP.The entire territory was planned and revitalization strategies for cities and regionswere launched, among which the success of the modernization of Bilbao stands out,based on cultural infrastructures like the Guggenheim Museum.There was a commitment to industry and for building on the existing fabric,maintaining in a sustainable way a series of industrial policy actions ranging fromrestructuring, promotion, industrial land, technology, energy and the informationsociety. 6
  7. 7. 1.3 Industrial Policy www.politicaindustrialvasca.net 7Competitiveness essentially depends on all of these policies deployed over 25 years;but it is obviously necessary to pay special attention to the industrial policy, in whichtwo periods can be differentiatedRESTRUCTURING in the 1980’s–In light of the serious industrial crisis and high unemployment, both the State andBasque Governments established instruments and subsidies for the restructuring ofcompanies and social adjustment (in addition to unemployment benefit, recycling andrelocation of workers, etc.)Special aid plans for the re-launch of viable activities were also introduced.COMPETITIVENESS AND DIVERSIFICATION: End of the 1980’sOnce the worst part of the crisis was overcome and with growth brought about fromEuropean integration, policies were deployed with full intensity and diversity of lines:-Development of venture capital for the diversification of production.- Support for investment in job creation through subsidies and industrial land policy.-Priority Clusters Policy: towards competitiveness through cooperation-Fostering of total quality EFQM in the industrial sector, with the EuskalitFoundation, which has led to significant positions in Europe.--Commitment to endogenous development: support for technological anddevelopment projects in new sectors such as biotechnology.-Promotion of internationalization in the broadest sense, from initiating exports tooverseas plants. 7
  8. 8. 1.4 Technology Policy www.politicaindustrialvasca.net 1980‐1996 1997‐2005 2006‐ 2010 ORIENTATION  OFFER POLICY OFFER AND DEMAND  TOWARDS RESULTS  COMBINATION POLICY POLICY The basis for the actual Science and Technology  Consolidation and orientation of  Business diversification,  network were established the Basque S&T towards the  social competitiveness social and business needs SCIENCE,  TECHNOLOGY  AND  INNOVATION  PLAN 2010 bio BASQUE nanoBASQUE 2015 1982  1990  8 1997 2005  2010 However, there is a line of industrial policy which has been decisive in the case of the Basque Country, namely the technological policy, which to a large extent is a logical consequence of a competitive strategy focused on industry.We can also identify different stages here. We can define the first one as a SUPPLY policy, in which the priority was to consolidate the bases of the Basque Science and Technology Network. Technological Centres aimed at industry, R&D business units and the three Technology Parks were promoted. Actually ,the Technology Park of Bizkaia was the first to be built in Spain. In this period, public policy management capacities were also created with a specific unit for technology.From 1997, and following the experience of the previous two plans, there was a move towards a second stage which integrates supply and demand, so that technological development is led by production requirements. Supply capacities were consolidated but the demand of clusters and sectors were promoted and research into emerging scientific-technological areas was initiated.The development of the information society is incorporated into the public agenda, and extraordinary progress was made despite a low initial position.We are currently in the third stage in which it is necessary to consolidate and perfect the aforementioned and advance along new lines, which I will mention later. 8
  9. 9. 1.5 Energy Policy 1982-1990 1991-1995 1996-2005 2006- 2010 SHOCK POLICY DEEPENING THE CONSOLIDATION PREPARING FOR A NEW ERA STRATEGY AND BROADENING Saving and efficiency Security of supply, Development of 1st Diversification: natural gas and renewables Towards electric self- development of technology, infrastructure for gas sufficiency and Wind energy maturing renewables, and and electricity contributing to Kyoto aims Wind Energy Plan Bahía de Bizkaia 2000 LNG Import Terminal and Combined Cycle 1st Landfill biogas plant 2003 CADEM EVE NATURGA 1993 Plant ENERGY AND ENVIRONMENTAL 1981 1982 1987 S 1st Wind Farm Santurtzi IV Gaviota field 2000 Combined Cycle Plant Off-shore natural gas 2004 CIC EnergiGune 1986-1994 1st Buildings Certificate 1st Bio-fuel Plant Energy Research Centre SGE SHE 1993 1982 1983 2003 2007 Gasification Plan in tertiary sector Privatization of Bizkaia Energy 1st CHP Plan 1988 2003 Naturcorp Combined Cycle Plant 1982-1987 Design of Energy Infrastructures 2005 Zabalgarbi Plant POLICY 1995 Plan RSW Combined Cycle Euskadour 2005 Cross-border natural gas interconnection 2005 1st Energy Policy Plan Strategy 3E 2000 1982-1990 1991-2000 Mutriku OWC Plant Marine Energy Strategy 3E 2005 2009 (P) 1996-2005 Strategy 3E 2010 2001-2010 Actions Directed to Industrial Waste Management & Environmental Protection Basque Environmental Strategy IHOBE Sustainable Development 2002-2020 1983 Environmental Environmental Programme 2002-2006 Framework Programme 2007-2010 Framework 1982 = Index 100 1990 = Index 76 1995 = Index 72 1990 = Index 60 Energy Intensity 2006 = Index 66 INDICATORS ENERGY 11% 16% 2% 9% 14% 5% 6% 25% 1% Coal 4% Energy Mix Oil Natural gas Renewables 41% Electricity Import 16% 61% 50% 39% 1982  1990  1995 2005  2010  9As in the case of technology policy a special mention to energy policy is necessaryENERGY POLICY:• The Basque industrial crisis at the beginning of the 1980’s can not be separated from theenergy crisis due to several factors: the impact of energy prices, the high energy consumptionof our key industrial sectors and the high dependence on fossil fuels (coal and oil represented86% of the energy mix).• 1982-1990: beginning of a Basque energy policy based on improving efficiency,diversification and renewable energies.A reduction in primary energy consumption of 13% wasachieved compared to 1980, significantly improving the industrial and global energy intensity.• 1991-1995: consolidation of the strategy promoting cogeneration, technological developmentin renewable energy, improving gas networks. The energy intensity had improved 28 pointscompared with 1982, and natural gas represented 16% of energy demands compared to 1% in1982.• 1996-2005: intensification of efficiency programmes, incorporation of renewable installations,increased electric self-sufficiency and environmental contribution of the Basque energy policy.The energy demand was reduced by 10% over 10 years and energy intensity improved by afurther 14 points.• 2006-2010. At present, the Basque mix has changed significantly: natural gas represents39%, oil 41%, coal 6% and renewable energy 5%. Industry (46% of total energy consumptionin 2007) must continue to reduce its energy consumption and improve its competitiveness.The remaining consumers must move towards more responsible energy consumption,particularly as far as a more rational use of transport is concerned. In addition to intensifyingsavings and efficiency, a new era has arrived in which it is necessary to develop new andadvanced energy technologies, increase renewable energy (wind and biomass), andcontribute to the fight against climate change. 9
  10. 10. 2 Economic Results 10After this brief review to industrial policy let´s go to the second section andexamine some economic results 10
  11. 11. 2.1 Main indicators BASQUE COUNTRY THE FIRST GREAT ECONOMIC TRANSFORMATION 1986 1995 2006 1. GDP per capita (current prices) 6,132 13,635 23,600 2. GDP ppp Europe 15 =100 90 94 116 3. Labour market Workforce 870,368 935,610 994,700 Employment 687,454 712,673 954,175 Rate 48.4 66.5 Unemployment Number of people 182,914 222,937 40,525 Rate 21.0 23.8 4.1 4. Productivity Europe 15= 100 110.7 110.4 5. R&D expenditure % PIB 0.5 1.16 1.47 6. Energy intensity 100 72 66 7. Energy mix: oil % 61 50 41 8. Quality certificates 468 (1996) 4600 9. Internet access % population 2.5 (1997) 44.9 10. Visitors 986,021 2,007,548 11I began my presentation by saying that the Basque Country was a success story. Ibelieve that the combination of indicators that are presented here justify thisstatement.The GDP in ppp has increased by 26 points over the EU 15.According to the last figure de GDP per capita is 40% above EU27, afterLuxembourg and Ireland.Employment has increased by 39% with a reduction in the unemployment rate fromover 20% to figures of almost full employment.Productivity is 10% higher than that of the EU 15.R&D efforts that were very low, have tripledThe energy intensity of the economy has been reduced by 34% and the importanceof oil has fallen by 20 points.Finally, a new phenomenon of tourism has emerged, which has doubled the numberof visitors. 11
  12. 12. 2.2 Exports: Share and Sophistication 1200 EVOLUTION OF BASQUE EXPORTS COMPARED WITH OTHER Wo rld COUNTRIES AND THE WORLD ECONOMY 1993-2006 1000 1993= 100 United States Export growth has been well C HINA B razil above that of European countries 800 Euro pe and only surpassed by emerging Germany countries like India and China France 600 India United Kingdo m Basque C ountry Italy 400 China Japan Denmark 200 Sophistication of Basque Exports International India Comparison Finland 26000 1993 2003 2006 Source: OMC , Eustat and own elaboration B asque 0 Co untry France 24000 Germany 22000 Ireland Italy 20000 Mexico The sophistication index of 18000 Poland Basque exports has converged 16000 Rep. of with that of the European Union Korea Spain 14000 Sweden 12000 Source: Minondo 2007 Turkey (Ork estra) 10000 Basque 1996 2004 Country UE muestra 12Besides to complete the table of indicatorsTo sum up, all these indicators justifies what has been called the First GreatEconomic Transformation of the Basque Country. 12
  13. 13. 2.3 Productivity and Labour Costs in the Industrial Sector 60 PRODUCTIVITY AND LABOUR COSTS IN THE INDUSTRIAL SECTOR (143 European Regions) Stockkol 1995-2004 m 50 High labour costs Denmark 40 Ireland Low Productivity High Productivity 30 -10 10 30 50 70 90 110 130 BASQUE COUNTRY 20 77 de 143 10 Gross Value Added and Labour C ost at currente prices Source: Eurostat and own elaboration Low labour Costs 0 13The evolution of the Basque economy has been extraordinary, but like everything inlife, there is always good news and bad news.The good news is that we have become wealthy; the bad news is that we have doneso by working. Jokes apart, the real truth is that convergence has been supported byemployment rather than productivity, which in spite of being 10% above of EU 15 hashardly moved in relative terms in recent years, and therefore there is a long way togo especially if we look at European regions as a whole.Industry, the true driving force of the economy, because its productivity is almost20% higher than services, maintains a balanced position in unitary labour costs, butoccupies an intermediate position in the European productivity ranking estimated atcurrent prices.With the extension of the European Union to the East and the appearance ofemerging countries, the are a lot of economies that are beginning a rapid learningprocess based on the investment competitive phase, which we have just completed. 13
  14. 14. 2.4 European Innovation Scoreboard 300 GDPppp: UE 27= 100 Luxemburg 250 The Basque Country occupies a higher position in GDP than in the innovation 200 index Basque USA Country 150 Ireland Sweden Denmark Austria France Finland EIS: UE 27=0,45= 100 100 0,00 0,10 0,20 0,30 0,40 0,50 0,60 0,70 0,80 Check Republic 50 Rumania 0 0,80 0,70 BASQUE UEU27 0,60 COUNTRY 0 45 0,50 0 37 0,40 0,30 0,20 0,10 0,00 RO LV BG PL SK PT EL HU LT MT ES CH EUS IT SI CZ EUS EE EU27 BE FR NL AT IE LU UK DE DK FI SE 05 07 14We have already seen that expenditure on R&D of 1.47 was below the Europeanaverage of 2%. The same occurs with the European Innovation Scoreboard, which inspite of having risen from 0.33 to 0.37 is below that of the EU 27 (0.45).Even some emerging countries such as the Czech Republic and Latvia already enjoyinnovation indicators similar to those of the Basque Country.The Basque Country occupies a higher position in terms of GDP per capita than inInnovation, which means that competitive advantages from investment andexperience-based improvement processes (learning by doing, by Using, byInteracting) have been fully exploited.To continue moving up the competitive advantage ladder, the Basque Country mustmove towards a new competitive phase based on innovation and linked to scienceand technology.Awareness of this need to change models was recognised by the President of theBasque Government in 2001 in the following statement 14
  15. 15. 2.5 The Second Great Economic Transformation LEHENDAKARI (President) Juan Jose Ibarretxe, July 2001 A society that has achieved the level of development that The Basque Country enjoys today can no longer approach the future in terms of the adoption of foreign technologies and cost advantages. What it must do is tackle the challenge of innovation, quality and knowledge creation head on. •Following on immediately from this, he put forward the aim of what became called the second great economic transformation of The Basque Country, based on three factors: 1 2 3 Building the  Making The  Broadening  Information  Basque Country  Total quality  and  a European  for managing  Knowledge  reference in  organizations Society science and  technology INNOVATION & KNOWLEDGE 15 15
  16. 16. 3 New Strategy for Competitiveness 2015 16From here, the Competitiveness Forum Euskadi 2015 was created, as aparticipation instrument for all of the agents involved in industrial policy,which aims to develop and update the new competitiveness strategy.The Bases of the Strategy were developed in an initial stage and then theBusiness Competitiveness and Social Innovation Plan was drawn up. Alittle later, this was developed in greater detail, including technologicalstrategy with a new Science, Technology and Innovation Plan.These two plans considered together represent the Competitive Strategyof the Basque Country, which I am going to describe in general terms. 16
  17. 17. 3.1 Competitiveness Model 17First of all, referring to the “competitiveness model”, as you can see, the model isbased on three axes: trained PEOPLE with new values, INNOVATION in businessand society and DIMENSION and GROUPS to compete in the global economy.The People Axis has important implications on the whole area of Training, but is alsoreflected in the other two axes and in the set of strategic lines.The base of the triangle, also reflects other more indirect factors, but which are alsoimportant for the competitiveness policy. As seen in the analysis of the previousperiod, all of these policies are crucial. However, I am only going to refer to some ofthe keys of the two central axes of the industrial policy, beginning with Innovation andfollowed by Dimension. 17
  18. 18. 3.2 Open Innovation •Broad concept: Innovation is about creating value not necessarily creating things; it must include not only technological innovation (product and process), but also organisational and marketing innovation Principles •Results orientation: the aim is to transform knowledge into market value •Cooperation: External R&D is an important source of innovation •Driven by demand: following the needs of companies • Innova Enterprise: an Innovation agenda for every business no matter what size or sector ( objective of 2.000 companies) • Aldatu (Change): program for implementing non technological innovation New Tools and programs •Innova Cooperation for defining and driving the R&D needs of clusters and sectors. •Etorgai: program for developing strategic innovation in cooperation •New institutions (Innobasque, Ikerbasque, Basque Council) for intensifying cooperation, attracting talent and defining policy 18On the INNOVATION Axis the most important change is the idea of OpenInnovation 18
  19. 19. 3.3 Technological Strategy TRADITIONAL SECTORS NEW SECTORS BASED ON SCIENCE AND Transforming sectors in which our TECHNOLOGY economy is specialized Development of Scientific and Technological capabilities for the creation of new sectors SUPPORTING THE PRESENT SOCIAL BUILDING THE FUTURE ECOINNOVATION INNOVATION ELECTRONICS ENVIRONMENT NEW INDUSTRY HUMANITIES, SOCIAL ALTERNATIVE FOR SCIENCES, FABRICATION SERVICES BIOSCIENCES NANOSCIENCES ENERGIES INTELLIGENT BIODIVERSITY SYSTEMS ECONOMY TRANSPORT METEOROLOGY INTELLIGENT HIGH i- TOURGUNE EFFICIENCY ENVIRONMENT MANUFACTURING BIOBASQUE NANOBASQUE ENERGYGUNE ISTGUNE ENVIROBASQUE LANGUAGE INDUSTRY SOCIAL RESEARCH NEW MATERIALS COMMERCE METEOROLOGY FOOD SECURITY BUSINESS AND TRANSFORMATION ICTs CLIMATOLOGY ENERGY 19The technology policy has been also renewed, with two main strategies.A strategy to identify the capacities of the innovation system, indicating the scientificand technological areas that should be developed because they have a direct impacton the competitiveness of the current economic base. In the case of the BasqueCountry, the selection focuses on manufacturing and new materials, in food safetyand ICTs, as well as in the service sector ( commerce and tourism)Another strategy is not only to support the present but to also build the futurediversifying towards new sectors committed to what is known as the science push.Well developed examples are the cases of a bioscience sector (a knowledgecommunity with 300 researchers based around two Cooperative Research Centreswith business participation) and nanotechnologies (another community with 400researchers).Other Cooperative and Research Centres are being built in Manufacturing,Alternative Energies and Tourism. 19
  20. 20. 3.4 Size and Groups for competing in the Global Economy Cultural change and training for nurturing entrepreneurship Better support: BICs:, finance, seed capital Entrepreneurship Developing a model to foster entrepreneurship Program for entrepreneurial technological activities with Global Presence An integral Strengthen financing mechanisms Fostering growth approach to and Size New Capital Development Fund ( 400 Million Euro) business creation and Encourage the creation of Groups and Develop growth existing ones Raise companies awareness and accompany them in international expansion Internationalization Broadening the foreign network of agencies Creation of Basque Business Platforms in priority countries Training people and promoting cooperation 20Moving on to the second AXIS defined in terms of Dimension and Groups, but inreality what we are talking about is the Creation of Companies and their Growth andinternationalization.(Text on the slide)The change in the markets offers enormous opportunities to gain productivity, but onthe other hand, requires minimum capacity to make use of these advantages: to facethe internationalization of the activity and also for innovation. Innovation activitieschange the cost structure of companies : in the end sectoral concentration is directlyrelated to innovative efforts.The potential disadvantages are expressed in the different areas, and although it istrue that dimension is always a relative concept to the sector, our studies intocompetitiveness factors reveal that the figure of 50 jobs is a critical threshold whichmust be overcome in the industrial sector.In the Basque Country, there are 800 industrial companies with more than 50employees and 3000 with between 10 and 50. The former have double the jobs thanthe latter.On the other hand, although a company with around 100 employees can defend itselfin a global world, the existence of business groups with traction capacity on the localfabric and with greater international projection is undoubtedly important for a country. 20
  21. 21. 3.5 Internationalization of Basque Groups • 61 Basque groups producing overseas: around 230 plants Main Countries: Main Countries: Brazil, Mexico Brazil, Mexico and China and China Main countries Brazil 26 Mexico 26 China 22 Portugal 17 France 16 Germany 16 U.S.A. 15 Italy 13 Argentina 12 UK 11 Poland 9 Czech Republic 8 >20 10-20 5-10 Morocco 7 <5 India 6 Venezuela 5 21 21
  22. 22. 3.6 Strategic Objectives and Results EU 27=100 EU 27=100 2006: 131.3 2009: 131.4 Employment GDP 2004 R&D and EIS • Basque: 1.44 0.33 2004: 246,000 2004: 29.6 • EU 27 1.84 0.45 2006: 251,000 2006: 29.8 • 2007 • Euskadi: 1.47 0.35 • EU 27 1.84 0.45 22Our competitiveness model is based on people, innovation and business development. Iremember that the Vision of the Forum talks about productivity based on people andshared projects and therefore we are trying to achieve a creative, business and globalsociety. In accordance with this, we set productivity, innovation and the importanceof industry as strategic objectives. Namely, to achieve 131 level of productivity aboveEU 27, reach convergence on innovation index and to maintain the size of industry interms of GDP and its level of employment.We are clearly advancing towards the proposed objectives. The new productivity seriesindicates that in 2006 we fulfilled the objective of improving on the European Union byalmost five points. Industry, which has made an enormous contribution to thisproductivity, has not only maintained the absolute level of employment but also itsnominal weight in the GDP, due to intense deployment into foreign markets, throughexports, setting up abroad and group consolidation. R&D efforts have finally risen from 1.44 to 1.47 in spite of the enormous growth of theGDP, and we have also improved in the European Innovation Scoreboard, althoughwith imbalances and the need of speeding the rate of convergence to reach theproposed objective for the year 2009.We are now faced with a period of downwards movement, but we still believe that it ispossible to move towards the fulfilment of the strategic objectives, although with lessgrowth. 22
  23. 23. FINAL REMARKS 1. The importance of Self-government and economic capacity of institutions 2. Globalization (economic integration) is good provided that the macroeconomic context is stable and sound 3. It is important to build on your own real capacities: people, industry and technology were, and still are, crucial for us. 4. An entrepreneurial Vision for the country is also needed: definition and deployment of a lot of strategies and plans with a broad participation of stakeholders is necessary for building a deep concept of competitiveness (social, sustainable competitiveness) 5. Institutional Wealth, accountability, public private collaboration and cooperation within the clusters and sectors 23I must wind up and I would like to do so from where I started. What lessons, if any,can be learnt from the Basque Experience?In my opinion the following five points are important lessons that can be learned fromour experience:(Text on the slide)I would like to conclude by highlighting that there is a high idiosyncratic componentand that in spite of the numerous plans and programmes that have appeared in theslides, not everything was strategic choice.Remember what we said about deliberated and emerging strategy.And do not forget that “Life is what happens while we are busy making plans”.Thank you very much for your attention 23
  24. 24. REFERENCES www.politicaindustrialvasca.net www.euskadi2015.net www.euskadinnova.net www.euskadi.net www.spri.es 24 24

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