presentation by kay choe
TRANSCRIPT
1
Presentation by Dr. K. CHOE
Co-Chair, Committee of Urban CoP Asian Development Bank
2 December 2010TCI International Conference in Delhi, INDIA
Cluster-based City Economic Development [CCED]:
Analytical Methodology Assessing Clusters Competitiveness
Application to Colombo Metropolitan Region
2
K. Choe Project Director(ADB HQ Manila, Philippines)
R. Brian International Advisor(SPMS, Australia)
C. Vaidya Team Leader for India(NIUA, Delhi)
R. Singh APEX Ltd.(in association with NIUA, Delhi)
R. Jayaratne Team Leader for Sri Lanka(SEVANATHA, Colombo)
N. Nazem Team Leader for Bangladesh(CUS, Dhaka)
Contributors to CCED Approach
3
ADB HQ in Manila, PHI
ADBSTRATEGY 2020
ü Inclusive Economic Growth
ü Environmentally Sustainable Growth
ü Regional Integration
WHY IS IT IMPORTANT TO PAY ATTENTION TO
URBANIZATION ?
5
INDIA: Share of GDP Contribution by Urban and Rural
Population Share
Urban 28%
Rural 72%
GDP Share
From Urban Economic Activities
83%
From Rural Agricultural Primary Industries 17%
Source: CIA World Data book 2008
Urban Sector Economy:Higher Productivity
Why CCED?
Urban as Engines of Economic Growth:Positive Correlation as a Country Transforms its
Economic Structure from Agriculture to Manufacturing/Service Sectors
URBANIZATION AND GDP/capita ASIAN DMCs
y = 1060.1e0.0304x
R2 = 0.6016
0
5000
10000
15000
20000
25000
0 10 20 30 40 50 60 70 80 90 100
% UrbanizedSource: WB 2007. World Development Indicators
GD
P/c
ap (P
PP
200
5 $c
onst
ant)
Nepal
India
PRC
Malaysia
South Korea
A Premise:
If urban economy is considered as “ENGINES OF ECONOMIC GROWTH, it’s better to take advantage of the urbanization process” as a tool for triggering economic growth, rather than restricting the opportunities of
economic growth!
But, We have poor knowledge of Understanding
‘What Makes a City Competitive for Local Economic
Development ?’
URBAN ECONOMIES ARE COMPLEX…..
9
A New Way of Pursuing Local Economic Development:Cluster-based City Economic Development
Evaluating Cities CompetitivenessGovernment as Facilitator and Partner
Private and public sectors collaboration: triggering local economic development
Assessing Competitiveness of Industry-Clustersdriven by private sector
Increasing Income/Job Opportunities, thus Reducing Poverty
10
CCED Analytical Methodology:Built-in Innovation and Replicability
Competitive Industry prioritized
II
Industry-Clusters networking and P/P Partnership platform
VI
VII
IV
BP & Action Plans
III
V
Assess Cities Competitiveness
l Profiles of National Economic Strategy
Multi-sector Industry Competitiveness Analysis
Industry GIS Mapping & Industry Cluster Structure Analysis
Gap Analysis in Competitiveness
Project Design and Infrastructure Feasibility Studies
Executing a Project for Cluster Development
Select industry-clusters in the selected cities
Select cities
Decide the scope of urban areas
11
Illustration of CCED ApproachFollowing the 7 Steps of
Analytical Process
Pilot Case of Rubber/Latex Industry Cluster
Colombo, Sri Lanka
STEP II: Analysis of Cities Competitiveness
Key Index: Total 43 attributes under 6 key Drivers which are critical for enabling the business environment for economic, urban and social development of a city:1. Cost of doing Business: How expensive is it to operate a
business in the city?2. Dynamics of Local Economy: Am I making profit out of my
business in the city?”3. Human Resource and Training: Are the people well-
equipped to work?”4. Infrastructure: Are the roads, bridges, electricity, telephone
lines etc. in good condition ?”5. Responsiveness of Local Governments to Business
Needs: Is the city government able to respond to short-term and long-term business issues?”
6. Quality of Life: How well-off are urban residents in terms of quality life and environment?”
STEP II
13
Assessing Cities Competitiveness
• Not just selecting a city, but where and what to strengthen ? the city be more competitive…….
Decision to Select
Colombo
Colombo:• relatively strong human resources, • good infrastructure• but poor responsiveness of local gov’t to business needs
STEP II
Which clusters should be targeted
?
STEP III
STEP III. Identification of Key Industries
15
Wholesale & Retail Trade
Textiles & Wearing Apparel
Financial,/ Insurance & Real Estate
Hotels & Restaurants
Chemicals & Chemical Products
Rubber & Plastic Products
IT / IT Enabled Services
Transport/ Storage/Communication
-
0.50
1.00
1.50
2.00
2.50
3.00
-40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45 50 55
LQ 1
997
% Change in LQ (1997 to 2006)
The “Location Quotient Bubble Graph”--- separates industries in to fourquadrants whether it’s growing or declining over time (x-axis), and whetherit’s presence in the local area is bigger than national average (y-axis). Thesize of the ‘bubble’ indicates the size of employment in that industry sector
Colombo Case (Bubble Analysis)STEP III
WHO ARE THE CANDIDATES FOR CLUSTER DEVELOPMENT?
Presence of Willingness
Absence of Willingness
Feasibility & Competitiveness XLow feasibility & no market competitiveness
X X
Commitments to Co-OP & Government Support
Grow
th Potential Exists?
STEP III
Can Clusters be Created or Activated ?
When is the time to intervene ?• Spatially Agglomerated only: spontaneous• Incubation Stage: spatial agglomeration, some
kind of coordination activities on-going, but not yet functional as a collective
• Action Stage: created a formalized organization to represent the interests of the cluster collective, but still needs external support
• Functional Stage: fully functional representing the interests of the cluster as a collective, and a self-sustainable mechanism has established.
STEP III
STEP IV. Understanding Value Chains & Elements Affecting
Clusters Competitiveness
STEP IV. a, b, & c
STEP IV.a GIS Mapping of ClustersSTEP IV.b Structural Mapping of Cluster
Value-ChainSTEP IV.c Porter’s Diamond Analysis
19
1998 2006
STEP III.a Cluster (GIS) Mapping: Changes in Rubber & Plastic Industry-Cluster, Colombo Metropolitan Area
1997
Does a cluster boundary matter ?
STEP IV.a
20
Colombo Case (Structural Mapping)Rubber Industry Cluster: Forward-Backward Linkage
STEP IV.b
21
STEP III.c Porter’s Diamond Analysis of Industry-Cluster Selected
And, Assessing Competitiveness of Industry Clusters
• Porter’s diamond model : – Attribute Analysis on 5
Factors of Competitiveness for Private Sector Business Environment
– Competitiveness Gap Analysis
Porter’sDiamondModel
STEP IV.c
22
Colombo Case: Analyzing Competitiveness of Rubber Industry-Cluster
Government – Policy & Support
Å Availability of skilled workforce
Å Good quality infrastructure services/logistics
Å Good quality telecom services
Å Easy and guaranteed supply of domestically sourced good quality natural rubber at competitive prices
Å Good working conditions Θ Lack of education and
training facilities Θ High cost of services (energy
in particular)
Å Global recognition for manufacture of quality products
Θ Small domestic market Θ Slow responsiveness and
innovativeness to change Θ Lack of demand expansion
capacity for new products Θ Lack of readiness to face
risks. Θ Less emphasis on product
branding and marketing
Å Presence of reputed foreign firms Å Proactive Business Associations Θ Low level of knowledge sharing Θ Low level of technology application
Θ Lack of Business development services
Θ Low response time and quality of local support services
Θ Firms inability to exploit value addition potential
Å High focus to enhance Natural Rubber production (Land extent)
Θ Lack of government support for
industry development (R&D, Cost of Utilities, Long-term plans)
STEP IV.c
(5 Factors and 22 Attributes )
23
STEP V. Deficiency Gap Analysis to Understand the Bottlenecks of
Competitiveness of Industry-Clusters• Identify deficiencies which hinder
competitiveness of Industry-Clusters in the city or urban-region (from Porter’s Diamond Analysis)
• Deficiency gaps are prioritized based on immediate urgency, medium term, and longer-term priority so that these priority actions are reflected in the Cluster Business Plan.
STEP V
24
Colombo Case (Deficiency Gaps in
Rubber Industry-Cluster)
0.000.501.001.502.002.503.003.504.004.505.00
FACTORCONDITIONSLabour
Infrastructure
EndowedResources
SocialEnvironment
DEMANDCONDITIONS
Markets
NewProductsBusinessEnvironmentFIRMSTRATEGY,
STRUCTUREAND…
Structure
Collaboration
TechnologyOrientation
RELATEDSUPPORTINGINDUSTRIES
SupplyChains
ValueAdding
GOVERNMENT
CurrentCompetitivePositionRubberCluster
FutureDesiredCompetitivePositionRubberCluster
Thefollowingactivitiesarepartoftheactionplantoreducedeficiency:1.Rubbercompoundingcenter2.R&Dfornewproductsdevelopment3.Watersupplyandeffluenttreatment4.Expandedmarketsandenhancingmarketpenetration
5.Improvedsupplychainmanagementpractices
6.Vocationaltrainingcenter7.Improvedaccesstofinanceand
logistics8.Jointprocurementofrawmaterial
STEP V
How to Enhance Competitiveness of Industry-Clusters?
Where to Invest ? &
What to Invest first ?
STEP VI
STEP VI. Project Preparation and Feasibility Studies for Supporting
Infrastructure
26
STEP VI. Concept Proposal for Priority Action Areas and Project Design
• Industry-cluster’s business plan provides a long term vision and strategic action plans
• Industry-cluster group consults with its stakeholders and prioritize project components
• Project feasibility to design a bankable project
STEP VI
27
Colombo Case: Project Concepts for Rubber Industry Cluster
Development• Proposal: Rubber Industry Park or cluster
support facilities to operate at peak efficiency levels, offering a unique competitive advantage to industry clusters. Key components of the propose project are,– water supply – common effluent treatment plants – cluster supporting services, such as vocational
training center and raw material warehouses, and – improvement of value chain management, including
logistics
STEP VI
28
Observations & Policy Implicationsa. Disconnection between national economic policy and urban
development policy è Urgent need for policy reforms to link economic and urban policies, and support programs to demand-driven approach
b. Significant structural weaknesses in urban economies èNeed to improve governance, government industry support, logistics of value-chains & vocational training
c. Tools for competitive analysis techniques (location quotient, shift-share analysis, bubble analysis) provide detailed insights to understand the cities economic structure and dynamics è Need to improve the benchmarking data, collection, availability.
d. CCED mechanism engages in industry representatives, key public agencies and knowledge industry è Motivates and creates action learning as well as collaboration
e. CCED analytical approach proved to be powerful tool to understand complexity è Enables informed policy decision; “WHERE TO INVEST” and “WHAT TO INVEST FIRST” for Maximum economic impact with limited resources.