Implications of the New Economy for Cities: Innovation and Clusters - PowerPoint PPT Presentation


PPT – Implications of the New Economy for Cities: Innovation and Clusters PowerPoint presentation | free to view - id: 12ae24-ODA0Z


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation

Implications of the New Economy for Cities: Innovation and Clusters


Program on Globalization and Regional Innovation Systems. Implications of the New ... flagship' initiatives to strengthen the whole region ... – PowerPoint PPT presentation

Number of Views:73
Avg rating:3.0/5.0
Slides: 25
Provided by: valueds339


Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Implications of the New Economy for Cities: Innovation and Clusters

Implications of the New Economy for Cities
Innovation and Clusters
  • David A. Wolfe
  • Program on Globalization and Regional Innovation
  • Centre for International Studies
  • University of Toronto
  • Presentation to the Symposium on Thinking Smart
  • Institute of Political Economy, Carleton
  • Ottawa, November 15, 2002

The Knowledge-Based Economy/Society
  • Knowledge is the driving force in economic growth
  • - KBE/S defined as "economies which are directly
    based on the production, distribution and use of
    knowledge" (OECD 1996)
  • Change in mode of production and distribution of
  • New dynamic between the formation of tacit versus
    codified knowledge
  • As more factors of production are widely
    available (ubiquified), increased value is placed
    on those that are location bound (tacit)
  • Increase in the importance of networked knowledge
  • Acceleration of the process of learning
  • both individual and social (Lundvall)

Innovation in the Knowledge Economy
  • Innovation is defined as
  • the processes by which firms master and get into
    practice product designs and manufacturing
    processes that are new to them, whether or not
    they are new to the universe. . . (Nelson and
    Rosenberg 1993)
  • Definition includes
  • New forms of organization
  • Institutional innovations
  • Innovation is by definition a discontinuous
  • gales of creative destruction (Schumpeter)
  • disruptive technologies (Christenson)

The Innovation Systems Approach
  • Network of institutions that interact to
    initiate, import and diffuse new technologies
  • government policy
  • corporate RD
  • education and training system
  • structure of industry
  • Patterns of interaction between firms as
    collective learning process in acquisition and
    use of new knowledge
  • internal organization of firms
  • network of interfirm relationships
  • role of public sector
  • degree of RD intensity
  • nature of RD organization

National System of Innovation
From the National to the Regional
  • Shift in focus from the national to the regional
  • Recognition that spatial proximity facilitates
    the sharing of tacit knowledge and capacity for
    localized learning
  • Firms clustered in a region share a common
    regional culture that facilitates learning
  • Localized learning is facilitated by a common set
    of regional institutions
  • Regional Innovation System
  • The set of economic, political and institutional
    relationships occurring in a given geographic
    area which generates a collective learning
    process leading to the rapid diffusion of
    knowledge and best practice (Nauwelaers and Reid)

Spatial Scales
  • National
  • Industry structure - Corporate organization and
  • Legal/regulatory framework
  • Fiscal (taxation) and macroeconomic environment
  • Framework of industrial relations and labour
  • Financial system
  • Government policy
  • State/Provincial
  • Regional areas of specialization
  • Research infrastructure higher education sector
  • Specialized training institutions
  • Industrial attraction and retention
  • Government policy/support
  • Local /Cluster
  • Physical infrastructure transportation and
  • K-12 educational system
  • Civic governance

Role of Regions in Innovation
  • Innovation is social process
  • Networks and relationships facilitate the
    translation of new ideas, ie. research into
    commercial products
  • Innovation includes
  • New forms of organization
  • Institutional innovations
  • Innovation is place-based
  • Occurs in an institutional, political and social
  • Spatial proximity facilitates sharing of
    knowledge and capacity for localized learning
  • Localized learning is facilitated by common set
    of regional institutions

Knowledge Spillovers in the RIS
  • Strong geographic spillovers between public
    research centres and industrial RD
  • Distance Matters
  • Firms located close to research centres benefit
  • Benefits of knowledge spillovers (Martin and
  • Increasing the stock of useful knowledge
  • Training skilled graduates
  • Creating new scientific instrumentation
  • Forming networks and promoting social interaction
  • Increased capacity for scientific and
    technological problem solving
  • Creating new firms

Sources of Competitive Advantage
  • Untraded interdependencies - technological
  • Knowledge and practices transferred between firms
  • Tacit dimension
  • Transferred through networks
  • Networking - based on trust
  • Shared intelligence of group of firms
  • Grounded in a regional economy
  • Social capital - shared norms and trust (Morgan)
  • Trust is a unique asset it has value, but no
  • Earned by discharging obligations to your
  • Facilitates cooperation among firms and sectors
  • Expedites learning and speeds the flow of

Conceptions of Social Capital
  • Features of social organization of a region that
    facilitate coordination and cooperation among
    economic actors
  • Capital refers to asset
  • Social connotes that it is attained through
  • Two concepts of social capital
  • Communitarian attributable to historic and
    cultural factors buried deep in the regions
  • Performance-based built up through the dense
    interactions of firms engaged in interrelated
    economic activities that generate high level of
    trust in mutual dealings
  • Silicon Valley swift trust (Brown and Duguid)

Cluster Definitions
  • Defined as
  • Clusters are a geographically proximate group of
    interconnected companies and associated
    institutions in a particular field linked by
    commonalities and complementarities. Clusters
    encompass an array of linked industries and other
    entities important to competition. . . .
    Including governmental and other institutions
    such as universities, standard setting agencies,
    think tanks, vocational training providers and
    trade associations. (Porter)
  • A cluster is a concentration of firms across
    several industries that create quality jobs,
    export, share common economic foundation needs,
    the public sectors of economic development,
    legislators, universities, community colleges,
    K-12 educational community, workforce
    development, support foundations and all
    community stakeholders. (Breault)

Cluster Characteristics
  • Competitive advantage of clusters
  • Superior access to specialized inputs reduces
    transaction costs - availability of specialized
    and experienced personnel thick labour market
  • Diverse specialization focus on core
    competences and increases flexibility
  • Improves capacity to innovate through access to
  • Stimulates process of firm formation through
    startups and spinoffs

Critical Factors for Cluster Emergence
  • Strong, diverse and tech-savvy talent pool
  • Floridas three Ts (thick labour market)
  • Presence of established pillar companies
  • with global reach
  • Supply architecture and demand drivers
  • Strong knowledge infrastructure
  • Research universities, government labs etc.
  • Specialized support services such as
  • Tech-savvy law and accounting firms
  • Risk tolerant venture capital and angel investors
  • Supportive policy framework and
  • Sustained development strategies by civic
    entrepreneurs and local governments (social

Institutions of Collaboration
  • Formal and information organizations that
  • Facilitate exchange of information and technology
  • Foster cooperation and coordination
  • Create social capital and improve competitiveness
  • Creating relationships and establishing trust
  • Facilitate organization of collective action
  • Create collective institutions
  • Identify common strengths or mutual needs
  • Contribute to development of a common economic

Creating Social Capital
  • The presence of collaborative institutions and
    organizations, such as cluster organizations,
    professional networks, research-industry
    consortia and entrepreneurial support networks,
    greatly facilitates this environment. These
    alliances, networks and other relationship-buildin
    g mechanisms create connections and linkages
    vital to economic development in a
    technology-driven world. . . . many regions
    fortunate enough to have university research
    assets underuse these knowledge economy
    resources, precisely because relationships have
    not been established to connect the university
    and local industry. . . Relationships matter.
    (Montana et al. 2001)

Collaborative Institutions
  • General
  • Chambers of Commerce
  • Professional Associations
  • University partner groups
  • Joint public/private advisory councils
  • Local economic agencies or business associations
  • TOP, Communitech, OCRI, etc.
  • Cluster Specific
  • Industry associations
  • Specialized professional bodies or societies
  • Groups of core cluster companies
  • Incubators

Benefits of Clustering
  • Competition and cooperation are complementary
  • The old dichotomies no longer apply
  • Cluster members are both suppliers and buyers
  • Provide complementary inputs
  • Beneficial outcomes of cluster collaboration
  • Creates trust linkages among firms
  • Facilitates specialization
  • Focus on core competence
  • Builds critical mass
  • Improved marketing
  • Enhanced resources for the cluster
  • specialized financing, education, policy supports
  • Attracts customers, new investment, skilled
  • Growth of a thick labour market

Ontarios ICT Clusters
  • Ottawa
  • 1100 firms across four major segments
  • Origins linked to NRC labs and CRC
  • Fateful decision to locate BNR labs in 1958
  • Differentiated by strong research focus
  • 90 of RD in industrial telecommunications
  • Major firms
  • Newbridge (Alcatel), Nortel, Cisco, JDS, Corel,
    Mitel, Zarlink, Tundra, Mosaid
  • Supported by strategic federal policy MSD
    program 1989
  • Dynamic photonics cluster
  • Strong links to PRO and NRCs Photonics
    Fabrication Facility
  • Recent formation of Ottawa Photonics Research
  • 52 of 900 m in VC investment in Ottawa in 2001

Institutions of Collaboration
  • Ottawa
  • Strength of local institutions of collaboration
  • OCRI founded in 1983
  • 700 members, 4.5 million budget
  • Sponsors 120 events annually
  • Absorbed economic development function of the
    City of Ottawa
  • Dense network of partnerships with federal and
    provincial agencies
  • Works closely with NRCs Regional Innovation
  • Economic Generators Initiative, 1999-2000
  • The Ottawa Partnership (TOP)
  • 300 individuals participated
  • Formulated 33 specific goals for 7 clusters
  • flagship initiatives to strengthen the whole
  • SmartGrowth, Talentworks, Starting Startups
  • 10 of 33 goals have achieved tangible results

Policy Support for Cluster Development
  • Federal Government
  • Invest in foundations of science and technology
  • Improve innovation policy context
  • IP protection
  • Tax incentives to foster RD and university
    Industry collaboration
  • Align federal resources with cluster development
  • NRC cluster strategy
  • Coordinate federal agencies in regional and local
  • Encourage regional economic development
  • Support regional foresight/strategic planning
  • Provide federal matching funds for innovation
    focused provincial and local strategies

Policy Support for Cluster Development
  • Provincial Government
  • Invest in foundations of science and technology
  • Expand research capacity
  • Sponsor programs to encourage cluster development
  • Focus business recruitment around strong clusters
  • Create regional dimension to economic development

Policy Support for Cluster Development
  • Regional and Local Government
  • Strong support for K-12 education system
  • Upgrade business infrastructure
  • Transportation infrastructure
  • Communications infrastructure
  • Develop regional strategy that involves all
  • Encourage common vision and collaboration among
    firms, universities and training centres
  • Foster cluster development

Policy Support for Cluster Development
  • Cluster Specific Institutions for Collaboration
  • Promote cluster awareness
  • Engage in dialogue of clusters competitive
  • Develop training and management programs
  • Build incubators, angel networks and supportive
  • Participate with government in recruitment
  • Expand cluster to include all constituents