Challenges and barriers to innovation in the Romanian technology : The case of the industrial district Timisoara (2004 RUC...
Contents II   Economic Indicators of Italy and Romania III  FDI in Romania  I   Comparison: Italy and Romania IV   Industr...
Introduction Italian industrial disctrict   Timisoara = Transfer and increase of  Innovation / Technology “ Foreign firms ...
1. Comparison between ITALY and ROMANIA 60 million USD 2.09 trillion USD 30,200 -5% 22 million USD 106,7 bil USD 11,500  -...
2. Economic Indicators of Italy Source: The World Bank/CIA The world Factbook Statistics Population GDP (official exchange...
2. Economic Indicators of Romania Source: The World Bank/CIA The world Factbook Statistics Population GDP (official exchan...
Remarkable GDP growth  (※ ICE 2008) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2004 2005 2006 2007 2008 1.5 0.6 1.8 1.5 0.5 Italy France ...
2003 2004 2005 2006 2007 2008 Trade ITA-ROM ※  ICE 2009 Trade –  ITALY - ROMANIA 2009 1 st  Q +4% +3.89% +3.4%
o   Export to Italy (’08) - Textile and footwear - Metals an and Metal production o   Export to Romania (’08) - Machinery ...
<ul><li>- What is FDI? </li></ul><ul><li>- Why do companies  invest abroad? </li></ul><ul><li>Investment made to acquire l...
<ul><li>-  Ways to implement  FDI </li></ul><ul><li>–  Quality FDI (from Italy) </li></ul><ul><li>Non-Equity Methods </li>...
Source: OCSE 2008 1962-2007  (%) By Country 11.5 15.0 5.6 3.8 28.4 U.S.A Japan Netherlands Germany UK France Recent FDI Tr...
“ ...is synonymous of large scale and mass production, increasing international competition on labour cost , production pr...
your text Industrial distirict  Industrial District - Business structure dominated by small, locally owned firms - Scale e...
<ul><li>Timisoara industrial district is specialised in textile and leather goods sectors   GDP: around 135 million euro  ...
Italian  presence  in Timisoara <ul><li>5223 international companies </li></ul><ul><li>2839 Italian firms  (started 1994) ...
Italian  presence  in Timisoara Italian companies in Timisoara: -1st in the export from Romania -1st number of the compani...
Why do the Italian companies move to Timisoara? <ul><li>- Cheap labour cost ; </li></ul><ul><li>-  “Monkey see, monkey  do...
Why do the Italian companies move to Timisoara? <ul><li>- Good tasportation connection </li></ul><ul><li>- Industrial and ...
6. Innovation in the Romanian technology <ul><li>“ Knowledge and technology transfer in the industrial districts assumes d...
Innovation in the Romanian technology <ul><li>MUTUAL LEARNING: </li></ul><ul><li>The presence of tacit  knowledge  is cent...
Innovation in the Romanian technology <ul><li>MUTUAL LEARNING: </li></ul><ul><li>- The Italian firm often delegates a wide...
Innovation in the Romanian technology <ul><li>MUTUAL LEARNING </li></ul><ul><li>PROBLEMS:  </li></ul><ul><li>The  transfer...
Innovation in the Romanian technology <ul><li>INCREMENTAL INNOVATION: </li></ul><ul><li>Most of the innovations derive fro...
Innovation in the Romanian technology INCREMENTAL INNOVATION - Most of the new knowledge that comes to the Timisoara distr...
Innovation in the Romanian technology INCREMENTAL INNOVATION PROBLEMS: - Imported technology: low degree of innovation in ...
Innovation in the Romanian technology <ul><li>THE ROLE OF TECHNOLOGY: </li></ul><ul><li>-  New jobs in Romania and new inf...
Innovation in the Romanian technology <ul><li>THE ROLE OF TECHNOLOGY </li></ul><ul><li>PROBLEMS: </li></ul><ul><li>-  The ...
Innovation in the Romanian technology <ul><li>CULTURAL  AND ORGANISATIONAL BARRIES </li></ul><ul><li>-  Many entrepreneurs...
Thank You! Grazie! Va Multumesc! Contact:  [email_address]   www.linkedin.com
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Innovation In Romania (Timisoara Industrial Discrict)

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Challenges and barriers to innovation in the Romanian technology
The case of the industrial district Timisoara - Conference at Fraunhofer MOEZ - Germany

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  • * 2007 년 상반기 수입은 17 억 달러 (19.5% 증가 ) * 2006 년 수입은 29 억 달러 (5% 증가 )=&gt;30 억 달러 육박 &lt; 한 - 이 교역현황 &gt; 2002 년 // 2003 년 // 2004 년 // 2005 년 //2006 년 // 2007 년 上 수출 //2,217(7.5)//2,561(15.5)//3,408(33.1)// 4,297(26.1)//4,286(-0.2)// 2,164(-0.1) 수입 //2,274(27.2)//2,382(4.8)//2,500(5.0)//2,778(11.1)//2,916(5.0)//1,700(19.5)   주 :(  ) 는 전년 동기 대비 증가율   자료원 : KITA
  • Innovation In Romania (Timisoara Industrial Discrict)

    1. 1. Challenges and barriers to innovation in the Romanian technology : The case of the industrial district Timisoara (2004 RUC) Claudio Pellegatta MOEZ workshop
    2. 2. Contents II Economic Indicators of Italy and Romania III FDI in Romania I Comparison: Italy and Romania IV Industrial Cluster in Italy/Romania V Why Italian firm move to Timisoara? VI Innovation in the Romanian technology
    3. 3. Introduction Italian industrial disctrict Timisoara = Transfer and increase of Innovation / Technology “ Foreign firms are briging a lot of technology and when a worker move from a factory to another one, they bring their knowledge....” Marlien Pirtea – Entrepreneur in Timisoara “ ....We are larning a lot from Italian firms, this is a good chance for us to learn and after to open own business activity like we did....” Mihaela Boran - Director of Prefecture of Timis
    4. 4. 1. Comparison between ITALY and ROMANIA 60 million USD 2.09 trillion USD 30,200 -5% 22 million USD 106,7 bil USD 11,500 -6.9 % Population GDP GDP per capita GDP growth ※ Source: CIA The World Factbook (2009) Italy Italy Italy Italy Romania
    5. 5. 2. Economic Indicators of Italy Source: The World Bank/CIA The world Factbook Statistics Population GDP (official exchange rate) Real GDP Growth Real GDP Growth ( '08) - 5% - 1% Labor force 24.95 million Unemployment rate 7.5% Inflation rate 0,6% Trade 2009 est. Export $ 369 billion Major Export Items Import $358,7 billion Major Import Items Chemicals , fuels Stock of FDI 610.5 bil machinery , textiles and motor 2,09 trillion $ 2009 est. 60.000.0000 $49.2 billion machinery and equipment, fuels Stock FDI at home Export Destination Import Source Others 64,7% 8,5% France 15,3% Germany China 6.2% Netherlands 5,3% Others 53.49% China 22.07% 12.32% 7.10% US 5.02% Others 69.5% Germany 13% 12% 6% France 4,2% 30,7% Industry 65,1% Services GDP Composition by Sector (2009 est.) Labor Force by Occupation (2009 est.) Agriculture 25% 73% Services Industry 2% Agriculture
    6. 6. 2. Economic Indicators of Romania Source: The World Bank/CIA The world Factbook Statistics Population GDP (official exchange rate) Real GDP Growth Real GDP Growth ('08) -6,.9% 7,1% Labor force 9.33 million Unemployment rate 7.6% Inflation rate 5% Trade 2009 est. Export $ 38.1 billion Major Export Items Import $49.2 billion Major Import Items machinery , fuels Stock of FDI 1.001 bil machinery , textiles and footwea r 160.7 b. $ 2009 est. 22,215,421 $49.2 billion machinery and equipment, fuels Stock FDI at home Export Destination Import Source Others 41,1% 11.4% ITALY 16,3.% Germany Hungary 7.4% Russia 6% Others 53.49% China 22.07% 12.32% 7.10% France 5.02% Others 39.5% Germany 16.5% 15.6% 7,4% ITALY 30% 23% Industry 47% Services GDP Composition by Sector (2009 est.) Labor Force by Occupation (2009 est.) Agriculture 35% 53% Services Industry 12% Agriculture
    7. 7. Remarkable GDP growth (※ ICE 2008) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2004 2005 2006 2007 2008 1.5 0.6 1.8 1.5 0.5 Italy France 1.5 1.9 Germany 1.9 2.5 UK 3.0 1.7 Romania 1.7 2.0
    8. 8. 2003 2004 2005 2006 2007 2008 Trade ITA-ROM ※ ICE 2009 Trade – ITALY - ROMANIA 2009 1 st Q +4% +3.89% +3.4%
    9. 9. o Export to Italy (’08) - Textile and footwear - Metals an and Metal production o Export to Romania (’08) - Machinery and equipment - Fine Chemicals, Textile Trade – Comparison Romania ITALY
    10. 10. <ul><li>- What is FDI? </li></ul><ul><li>- Why do companies invest abroad? </li></ul><ul><li>Investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. </li></ul><ul><li>Supply Factors: </li></ul><ul><li>Costs (Production & Distribution) </li></ul><ul><li>Availability (Natural Resources & Key Technology) </li></ul><ul><li>Demand Factors: </li></ul><ul><li>Marketing / Environment </li></ul><ul><li>Political Factors: </li></ul><ul><li>Economic Development Incentives </li></ul><ul><li>Avoid Trade Barriers </li></ul><ul><ul><li>T </li></ul></ul>3. FDI in Romania (Timisoara)
    11. 11. <ul><li>- Ways to implement FDI </li></ul><ul><li>– Quality FDI (from Italy) </li></ul><ul><li>Non-Equity Methods </li></ul><ul><li>Licensing </li></ul><ul><li>Franchising </li></ul><ul><li>Equity Methods </li></ul><ul><li>Joint Ventures </li></ul><ul><li>Acquisitions & ‘Greenfield’ Investments </li></ul><ul><li>Many but relatively low </li></ul><ul><li>Small & Medium-sized Companies </li></ul><ul><ul><li>T </li></ul></ul>FDI in Romania (Timisoara)
    12. 12. Source: OCSE 2008 1962-2007 (%) By Country 11.5 15.0 5.6 3.8 28.4 U.S.A Japan Netherlands Germany UK France Recent FDI Trend By Industry (US$ million) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 900 100 9, 000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Other Services Manufacturing New vs. Additional FDI (US$ million) 8,000 7,000 5,000 4,000 3,000 2,000 1,000 900 100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 6,000 Long-term Loans Additional New 10,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 900 100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Greenfield M&A 5.0 Others 69.3 Total 30.7 (US$ million) By Type
    13. 13. “ ...is synonymous of large scale and mass production, increasing international competition on labour cost , production prices and technology and knowledge contenent...” SME EXTREMELY FLEXIBLE PRODUCTION IN NETWORKS INNOVATE PRODUCTION (by Sebastino Brusco, Priore and Sabel) 4. Industrial distirict
    14. 14. your text Industrial distirict Industrial District - Business structure dominated by small, locally owned firms - Scale economies relatively low - Substantial intra-district trade among buyers and suppliers - Key investment decisions made locally - Long-term contracts and commitments between local buyers and suppliers - Low degrees of co-operation or linkage with firms external to the district - Labour market internal to the district, highly flexible - Workers committed to district, rather than to firms - High rates of labour in-migration, lower levels of out-migration - Evolution of unique local cultural identity, bonds - Specialised sources of finance, technical expertise, business services available in district outside of firms - Existence of ‘patient capital’ within district - Turmoil, but good long-term prospects for growth and employment Italian variant (in addition to the above) - High incidence of exchanges of personnel between customers and suppliers - High degree of co -operation among competitor firms to share risk, stabilise mar ket, share innovation - Disproportionate shares of workers engaged in design, innovation - Strong trade associations that provide shared infrastructure, management training, marketing, technical or financial help - Strong local government role in regulating and promoting core industries Source: Marshall (1922) Paci (1973), Graziani (1975), Brusco (1989), Becattini (1990)
    15. 15. <ul><li>Timisoara industrial district is specialised in textile and leather goods sectors GDP: around 135 million euro </li></ul><ul><li>Veneto </li></ul><ul><li>Timisoara 4 th city in Romania for number of inhabitants </li></ul><ul><li>Connection: every day 3 direct flights Treviso/Venezia-Timosoara </li></ul>Veneto/Timisoara Industrial district
    16. 16. Italian presence in Timisoara <ul><li>5223 international companies </li></ul><ul><li>2839 Italian firms (started 1994) </li></ul><ul><li>In Timisoara: - Italian language (Veneto accent) </li></ul><ul><li>- Italian Restourants (32) </li></ul><ul><li>- Several Italian Banks (7) </li></ul><ul><li>- Timisoara is also called “the eighth Veneto Province” </li></ul><ul><li>Benetton, Max Mara, Iveco, Agip, Ansaldo Spa, Monte di Paschi di Siena Geox,Intesa Sana Paolo, Banca Popolare di Vicenza, Tenaris, Gruppo Pizzarotti, Natuzzi Spa, Pirelli Spa, Gruppo Astaldi, Unicredit </li></ul>
    17. 17. Italian presence in Timisoara Italian companies in Timisoara: -1st in the export from Romania -1st number of the companies -1st number of the workers employed - Around 2% of the population in Timisoara are Italians - 2 nd Investments in Timisoara By Chamber of Commerce of Timisoar a
    18. 18. Why do the Italian companies move to Timisoara? <ul><li>- Cheap labour cost ; </li></ul><ul><li>- “Monkey see, monkey do”: is the usually behaviour of the firm in the ID. When one distirct firm moves abroad and gets good results, other firms in the district follow him; </li></ul><ul><li>- Language (Roman empire: Romans heavy colonized the Dacia province (gold and silver), period of intensive Romanization. The vulgar latin gave birth to proto Romanian language) </li></ul><ul><li>- Economical advantace (no pay tax for the first 3 years) </li></ul><ul><li>- No so far : 2 hours by plain </li></ul>
    19. 19. Why do the Italian companies move to Timisoara? <ul><li>- Good tasportation connection </li></ul><ul><li>- Industrial and residential land are cheap and available </li></ul><ul><li>- Less restrictive legislation from the local government </li></ul><ul><li>- Technical schools / Know how </li></ul>
    20. 20. 6. Innovation in the Romanian technology <ul><li>“ Knowledge and technology transfer in the industrial districts assumes different forms, which relies on specific kind of social relethionships that exists among district firms. Knowloedge in a board sense. Knowledge is not only accumulation of information but it is also a social process” Garavelli (1999) </li></ul><ul><li>- MUTUAL LEARNING </li></ul><ul><li>- INCREMENTAL INNOVATION </li></ul><ul><li>- THE ROLE OF TECHNOLOGY </li></ul><ul><li>- CULTURAL AND ORGANISATIONAL BARRIES </li></ul>
    21. 21. Innovation in the Romanian technology <ul><li>MUTUAL LEARNING: </li></ul><ul><li>The presence of tacit knowledge is central for the innovation capacity in industrial districts. It is also this knowledge type which is the foundation for learning by doing , the learning process which takes place during the production process through numerous attempts and a trial and error process. Tacit knowledge and trust also make the new innovations, knowledge and product secrets function as a common good for the district because of the co-operation and proximity of the firms </li></ul>
    22. 22. Innovation in the Romanian technology <ul><li>MUTUAL LEARNING: </li></ul><ul><li>- The Italian firm often delegates a wider range of activities like design, choice of costly effective materials, etc. to the local supplier, and sometimes even to learn from Romanian firms; </li></ul><ul><li>- When an Italian firm searches new access to market in East Europe it’s better for them to use Romanian textile designing. They could be closer to the tastes of income consumers in East Europe than Italian designers; </li></ul><ul><li>- It permits involvement of the supplier, elaborated communication structures, and a co-operation in the problem- solving activitie; </li></ul><ul><li>- Companies in the ID imitate the new systems that their neighbour acquires ; </li></ul>
    23. 23. Innovation in the Romanian technology <ul><li>MUTUAL LEARNING </li></ul><ul><li>PROBLEMS: </li></ul><ul><li>The transfer between Italian firms and to the subsidiaries and to the local suppliers could be weaker in the future without a long term deeper knowledge transfers to the Romanian firms in Timisoara district. In fact, there is a risk that some Italian companies may soon return , as the rise of Romanian wages and the total logistical costs involved with a subsidiary (both of cargo and of commercial, supervision and technical personnel) may in time overtake the initial cost advantage. </li></ul><ul><li>PS. in the last years Italian companis are going more in the east to find better labour cost and incentives (China, Vietnam, India, Iran, Pakistan...) </li></ul>
    24. 24. Innovation in the Romanian technology <ul><li>INCREMENTAL INNOVATION: </li></ul><ul><li>Most of the innovations derive from imitations of other companies, which are improved or adjusted to the need of the company. Innovations of this type are called incremental innovations – innovations, which arises from within the production process, which gradually changes the products </li></ul><ul><li>&quot;International firms have a medium high technology and most of the innovations in the district come from imitations of the Italian firms, which are improved or adapted to the need of the company.” </li></ul><ul><li>Paolo Lemma Director ICE -Italian Trade Agency, Timisoara </li></ul>
    25. 25. Innovation in the Romanian technology INCREMENTAL INNOVATION - Most of the new knowledge that comes to the Timisoara district from outside, comes with technological transfers, embedded in new technology, machines or patents, and is a very important source for transferring new innovations and research results.
    26. 26. Innovation in the Romanian technology INCREMENTAL INNOVATION PROBLEMS: - Imported technology: low degree of innovation in textile sector; - There are no any co-operation between reasearch istitute and enterprise; - “The opposite of incremental innovations is radical innovations, which are completelynew products, or ideas often produced in laboratories. The learning process, which demands research, is often described as learning by searching.” Buckley (1996); - Timisoara sme’s are technology transformers and not innovators;
    27. 27. Innovation in the Romanian technology <ul><li>THE ROLE OF TECHNOLOGY: </li></ul><ul><li>- New jobs in Romania and new infrastructure; </li></ul><ul><li>- Romanian firms could overcome the “mother” Italian firm in few years thanks to (knowledge) the some quality but with cheaper price; </li></ul><ul><li>- All Romanians underlined the lack of managers and skills as a problem for the Romanian production and that the learning process from foreign firms could resolve this problem; </li></ul><ul><li>- Globalisation process: before my trip to Timisoara I have read many authors said that foreign firms have bad influence in the developing countries. Instead during my interviews, I saw, and people told me, many of the positive aspects of the globalisation process. This is curious because in the Western countries is often the opposite v iew. </li></ul>
    28. 28. Innovation in the Romanian technology <ul><li>THE ROLE OF TECHNOLOGY </li></ul><ul><li>PROBLEMS: </li></ul><ul><li>- The focus on incremental innovations is due to the fact that Romanian SME operate in general in medium to low technologies. Most of the factories are based on textiles and footwear, light machinery and auto assembly, mining, timber, construction materials, metallurgy, chemicals, food processing, petroleum refining; </li></ul><ul><li>- Companies are also often too small to make the necessary investments in R&D or in training and new computer systems; </li></ul>
    29. 29. Innovation in the Romanian technology <ul><li>CULTURAL AND ORGANISATIONAL BARRIES </li></ul><ul><li>- Many entrepreneurs consider themselves, as independent entrepreneurs who often are continuing the family factory. Many of these have been used to having the full control of the production and are not use to cooperate with scientific institutions; </li></ul><ul><li>- Very few entrepreneurs of SME are in possession of a university degree, which does not make the co-operation any easier; </li></ul><ul><li>- Mostly manufacture production and often also artisan, makes it difficult to understand the need for using information technology or CAD/CAM systems </li></ul><ul><li>- Many of the SMEs are during the transformation process (technology), and are slowly incorporating the new communication and control systems </li></ul>
    30. 30. Thank You! Grazie! Va Multumesc! Contact: [email_address] www.linkedin.com

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