New feature enabled on the site

One thing about this blogging platform is that they are constantly adding new features.  I have enabled the feature that makes it easier for you to share any my posts with others. At the bottom of each post (just above the comments) there is a share button. Click it and share!

A few of you have asked me how often I plan to update this site. Generally I am trying to post an entry every two weeks. Perhaps you should subscribe to the site (top right) then you wont miss any new postings!

Thank you for all your feedback!

Shawn

Developing territories from the bottom up

Its been a while since I have made a post, largely because watching the discussions in our local press is so amusing and entertaining. I had to keep my fingers in fists not to type anything I would regret later. This is a poor excuse, so let me get back to the reason why you are reading this post.

Strangely, our discussions here in South Africa is not yet focused on the real issues of how to grow the local economies. Most projects contained in Integrated Development Plans are still un-systemic and often deal more with social than with business and growth related issues. Yes, with our history this is important. But I would immediately argue that it is possible to have systemic interventions (that unlocks growth and investment) that at the same time also has benefits or leveraged impact for the poor and marginalised.

Why are we not talking about building local meso-level institutions that not only supports local industries or address local issues, but at the same time draws on science and research to create new solutions? Why are so many local municipalities still doing such shallow Local Economic Development? At what point will the private sector at the local level realise that they need to be more reflective of their competitiveness and cooperation. OK, granted, this happens in some places. But not everywhere. And not enough.

It seems to me that so many solutions are still driven from the national level of government (and business) in South Africa. At what point will locals start demanding “economic” service delivery, which means infrastructure that supports the growth, profitability and expansion of business. Why bother with “small town economic development” if the potholes in the main road are as deep as opencast mines? (see the picture further down below)

Perhaps a reason for this hesitance to seriously and systemically engage in “Territorial Development” is because Local Economic Development is still seen as a narrow field of enterprise support through public planning instruments, instead of being seen as a multidisciplinary approach aimed at improving the local economic system. The systems perspective and an understanding of the complexity of this systems seems to be lacking. You cannot develop the tourism sector in a small town by itself, without dealing with retail, infrastructure, and many other issues.

I know there are many places that gets this right, and where a proper and interactive relationship exist between local government and local business.  But we need much more than a few anecdotal examples. We need to inspire our local businesses to invest, to grow and expand. Inspire them to paint their shops, and tidy their yards. Get them to think of new ideas, new opportunities. Only when we unleash the creativity of our existing businesses will new businesses emerge.

Look at the nice pothole below. The largest employer in this little town is moving to Johannesburg. Guess what, hardly any of its employees are staying behind and starting businesses. With them, they take their spouses, who are often providing services as teachers, medical staff, managers in other firms, and local consumers.

– Why would locals start a business here in this town?

– Why is fixing the potholes and the general look of the town not a major priority?

If business was important here, the main street would not look like this

– How can a few isolated “entrepreneurship” training and other isolated projects undo the impact of the large corporate moving away?

– Why can not a single business person here remember when last a local official contacted them to find out if there is anything that the municipality to can do to support the business in growing.

I think I know the answer. Business is simply not important here. LED in this place is about little projects and not about the bigger system. Business people also tend not to block roads and burn councillor houses.

Perhaps we should coin a new phrase “local private sector development” to describe what we should be doing as Territorial Development Practitioners. But then again, we know that you have to look at the whole system at the territorial level, so perhaps this title is not a good idea. To grow territories from the bottom up would need a focus on the private sector, but it would also require attention the public sector, both as a provider of critical infrastructure and other services, as well as a coordinator of many essential (and often overlooked) public goods. My main point is this. While the national frameworks are important, local energy is what matters. South Africa appears to be trying to build local economies from the top down (depending on national policy, grants and programmes), and not from the bottom up with based on an  understanding the local economy, opportunities and constraints, and then using local energy and resources.

Crossposting from Aid on the Edge of Chaos

I enjoy the Aid on the Edge of Chaos blog. Although I have listed them under “other blogs and podcasts I like”, I have decided to highlight two of their recent posts.

The first post, “From the Neoclassical Logic Piano to All That Jazz” is about a recent speech by Dr DeLisle Worrell, Governor of the Central Bank of Barbados. Worrell focused on the problems with economics today, with much of his talk given over to ‘complexity economics‘. If I said anymore here I would spoil a really good posting.

The second and more recent posting, “Complexity, crises and moving beyond recipes“, is about complexity in development. To quote from the posting directly “The argument that modern organisations have to deal with complexity on a daily basis is fast becoming one of the least controversial statements any analyst, policy maker or practitioner can make. But what this actually means in practice is up for debate.”

I don’t get any commission!
Go there, read it.

Announcing a series of 1 day training events in South Africa

At last, what so many of you have asked for….

We will host three separate 1 day training events in Pretoria, focused on the following:

26 August 2010                 Facilitating the diagnosis and improvement of local and regional value chains

Event Brochure in PDF

28 September 2010           Diagnosing local and regional innovation systems

Event brochure in PDF

28 October 2010                Understanding and addressing market failures in local and regional economic development

Event brochure in PDF

The cost involves R 1,850 (200 Euro) excluding Vat per one day event (fee includes materials, coffee breaks and lunch).

To register for an event or the complete series, complete the registration form on page 2 of ‘mesopartner Africa Capacity Building Series’ and send to ac(at)mesopartner.com

I will try my best to make these events fun and interesting for you to participate in! Some pictures of previous events:

 

Prerequisites for markets to function

UNCTAD releases Economic Development in Africa report 2010

UNCTAD release.

Two weeks ago the UN Conference on Trade and Development (UNCTAD) released the “Economic Development in Africa Report 2010-South-South Cooperation: Africa and the New Forms of Development Partnership” report. The report examines the recent trends in the economic relationships in Africa with other developing countries, as well as new forms of partnership that have emerged in the past years.

The report argues that South-South cooperation has the potential to enhance Africa’s capacity to deal with the challenges of poverty and poor infrastructure, the development of productive capacity, and emerging threats associated with climate change, as well as the food, energy, financial and economic crises. In this regard, the report argues that there is a need for African countries to mainstream South–South cooperation into their development strategies to ensure that it further contributes to the achievement of national and regional development goals.

Highlights of the report can be found here

What is the effect of Finland declaring broadband a basic right?

The news services are alive with reports that Finland has declared broadband of 1mb/s a basic right for all Finns.  Quite interestingly commercial service providers will be obliged to provide this service from 1 July to all households. No I can hear you all say “but that is a developed country, we have different priorities in a developing nation!“. And you would all be right. I agree completely with you. We have huge unemployment here in South Africa and the rest of Africa. Apparently, we (South Africa) have more people receiving grants than we have employed persons(also reported internationally today).

However, you have to wonder what the potential effect on our and other developing countries may be. Exactly what happens to the levels of innovation and of course comparative advantage when a whole society gains access to the internet at high speed for free? Will this affect our economy? In which way? How will this affect the so-called knowledge gap between industrialised and emerging economies?

Any ideas?

Stimulating demand led innovation in Africa

To do business in Africa is not easy. I am not being pessimistic with this statement. I am based in Africa because I believe in our opportunities here. But lets face some truths:

  • We are far from input suppliers (a problem for many and an opportunity for others)
  • We are far from our customers (I mean those international customers or the pockets we have on the continent)
  • Things take longer to arrive here (inputs and my Amazon book parcels), and
  • We stretch our infrastructure on a daily basis (roads, rail, health, education).
  • It is not difficult to trade between countries, or to find partners, markets etc. because of various barriers (I think Europe and Asia is ahead of us in overcoming technical and cultural barriers to trade – whether perceived or real)
  • Our societies spend a huge amount of time arguing, blaming and politicising that could probably be better applied to solving problems and exploring opportunities
  • We have many government and market failures (more on this in another post) that only benefits elites (public and private)

Most people think that we have to innovate to reach markets that are far far away, line Europe or the US. Or we think that we have to out-innovate the Asians. But we have something right here under our noses. We have demands from consumers, businesses, policy makers. These demands are not yet always expressed as needs. If you think it is important to save energy in Europe to save the planet (or save money), then we have an additional and more urgent reason to save energy – our constraints to produce enough to go around. Same for water, food, technology and other areas.

So why are we not exploiting the opportunities created by local demands and unexpressed needs?

I think part of the answer is about our policy incentives, and then another part is about our low self esteem. Ok. There is also the fact that innovation is increasingly becoming difficult, because consumers are getting so smart at selected the better products that combines elements of good design with functionality (functionality alone often doesn’t make the cut). What I mean with difficult is that you have to spend a lot of time searching for the right components, process technology (and perhaps even patents).Many of you will probably come up with other reasons as well.

But here is a question worth spending our collective brain power on: what can we do to stimulate more demand led innovation here in Africa?

The OECD last year had an interesting seminar on this topic. I am relieved to find that industrial countries are also thinking about these things (it means we are not so far behind), but I am very envious because we also need to be discussing these things in Africa. Perhaps our greatest resource is not our minerals. Perhaps it is the huge number of problems that we still have to solve, and the millions of demands that are not yet articulated. But how do we turn these challenges, problems (or opportunities if you like) into profitable ventures?

Any ideas?

The Worldcup of graphs

Gapminder has realised some fantastic graphs about the FIFA Worldcup.

For instance, for a view on how uneven the participation in the Worldcup is, click here. For instance, 53 countries in Europe competes for 13 spots in the Worldcup. Africa competes for 5, with Asia competing for 3. More than half of the teams competing in the Worldcup are from rich countries. Click here to see this visualised.

On the question of whether popilous countries far better, click here. Although it seems harder for a very small country to be successful, Slovenia and Uruguay shows that it is possible.

Next is the question of whether rich countries far better than poorer countries? Here you can see the correlation between income and the ranking made by the International Football Association, FIFA.

Gapminder is making statistics a beautiful game….

To this point, the spirit in South Africa around the Worldcup is great. I hope that our teams exit will not mean an end to the euphoria that is still ruling the cities.

Connecting innovation systems with local and regional economies

Many of you have asked me how I connect my current focus on innovation systems and technological upgrading with industries with my past experiences of local and regional economic development. I thank you for repeatedly asking this question, and apologise for not providing you with an answer. The reason for my silence was that I was also not exactly sure how to connect these topics. But I think I am now starting to understand how these topics relate to each other.

Let me try to explain this.

Before I continue I need to make sure that you understand that an innovation system is far more than one or two innovative firms.  Freeman (1987:1) defined an innovation system as “the network of institutions in the public and private sectors whose activities and interactions initiate, import and diffuse new technologies.” The emphasis is mainly on the dynamics, process and transformation of knowledge and learning into desired outputs within an adaptive and complex economic system.

So how does innovation systems work within regions or places? Well, it is often affected by issues such as trust, social and informal networks, formal relationships, common customers or common inputs and other factors. You will notice that it sounds very similar to the characteristics of a cluster in its early days. The main characteristic of a local or regional innovation system is that it is mainly focused on a specific geographic space and on the specific knowledge spill-overs that occur around certain firms, industries or institutions unique to that space.

You will immediately notice that innovation thus favours places with more people and more firms. You are right, a close relationship exist between density of interactions between people (provided for by towns and cities, nightlife, and frequent social exchanges) and the innovation system. It does not mean that innovations are limited to these spaces, but simply that they emerge faster or with more success in these spaces. This is largely caused by the increasing importance of knowledge exchange and interaction between firms, knowledge service providers and technological and educational infrastructure. But more about that in a seperate post.

I want to leave you with 3 questions that I have found to be useful to better understand the relationship between places and innovation systems. I use it frequently at the start of an assessment into an innovation system, or to stimulate thinking of public and private leadership.

1) Why are people innovating in this specific location (and not on another space)?

2) How does this space or place support innovation, and more specifically, how does it reduce the costs of innovation?

3) How do innovations in firms affect this space?

Bear in mind that with innovation I mean product, process as well as organisational or business model innovations.

Ask these questions and let me know what you find. I am sure that you will find that many places do not actively support innovation (unless you have some really determined or stubborn innovators there). Nor do they make it cheaper for people to innovate, exchange knowledge or stimulate joint problem solving (or opportunity exploitation). To me it also seems increasingly obvious that the role of cities and towns in Africa are not fully exploited in national economic development as spaces for innovation.

In South Africa, innovation happens mainly in 9 major and about a dozen secondary urban spaces. No amount of public policy will break this pattern until settlement patterns change, or until smaller places start to attract skilled people that can afford to innovate from cities.

So how can we support innovation systems in each and every town? How can we built regional and local institutions that reduce the cost and risk of innovation. Again, I dont mean only product development as an innovation. I mean process and business model innovation as well.

Until we can build our own local technological and educational institutions using local priorities and local resources from the bottom up the trend of urbanisation and migration to the major centres will continue. This is great in terms of reducing the costs of innovation, but it makes us very dependent on national policy, and only a few good local administrations. I would prefer a situation where we can build our local institutions around local issues, this giving firms in for example a mining region a head start in innovating around problems or opportunities related to mining.  For instance, in the Mpumalanga  province (South Africa) we have a lot of coal mining with its associated problems. Why is it so difficult to create a small but focused research institute or technological institute in a town that will focus on applied research and knowledge generation around environmental technology related to coal mining? Could this not be an impulse with environmental solutions as well as innovation as outcomes? I could imagine that such an institute could create positive externalities in a space that would lead to innovation that our both cutting edge and relevant to our society.

Now if you think about it, then Africa is rich with millions of ideas (also known as opportunities, challenges and obstacles) that could serve as impulses to create, stimulate or grow local innovation systems around relevant issues. Dont get me wrong, I dont mean that the public sector must do the research, and then the private sector must commercialise the research (although a little of this certainly helps). I mean that public funds or public private partnerships could be used to establish local institutions that create positive advantages for firms to innovate within regions through reducing the costs of finding relevant information (about a problem, opportunity or technology) and by highligthing opportunities for application of new ideas (by better articulating demand or applications). But there must be sufficient scale of infrastructure to allow the people with the right knowledge, experience and perhaps financial resources to settle in the region to exploit (or address) the opportunities through innovation.

Let me know what you find when you ask these questions.

PS. I know I will receive hundreds of angry e-mails that I am implying that rural areas are doomed.  Re-read my post before hitting ‘send’.

Sharing links: Scidev.net and the new manifesto

I frequently receive requests for more links, papers and ideas around how science can be related to development. Add Scidev.net to your favourites.  (Thank you, Lucho for bringing the website to my attention.)

At the same time you might want to look at “a new manifesto” that deals with new ways of linking science and innovation for development.  This is an update of the 70’s publication of a radical and controversial document that helped shape modern thinking on science and technology for development. It was called The Sussex Manifesto: Science and Technology to Developing Countries during the Second Development Decade.

Let me know what you think!