From Clusters to Regions Global Best Practices Economic Developers Council of Ontario 2017 Conference

Transcription

1 The Ministry of Economic Development and Growth From Clusters to Regions Global Best Practices Economic Developers Council of Ontario 2017 Conference February 2017

2 Company success and location In many industries leading companies concentrate in a few hotspots or clusters 2

3 Why? Source 2013 Christian Ketels 3

4 4 Case in point

5 So what is a cluster? Leading jurisdictions across the world are becoming increasingly sophisticated in their approaches to enhance the global competitiveness of their clusters. These jurisdictions drive specificity and rigor into their cluster approaches. Clusters are geographic concentrations of interrelated companies and associated institutions that trade in global markets. These interconnections cut across industries where firms share labor skill relatedness, input-output linkages or similar value chain activities/technologies. Importantly, this interrelatedness provides the basis for competition and collaboration within clusters resulting in high wage jobs, new business formation, increased productivity/innovation. 5

6 What does a cluster look like? Windsor Automotive Cluster Tier 3 Suppliers Core Manufacturing (1) Retail & Services Steel Aluminum Tier 2 Suppliers (Over 700 auto parts suppliers and over 500 tool, die and mould makers) Marketing, Distribution and Dealership Leather Rubber Tier 1 Suppliers (ABC group, IMS, Magna, Linamar, Marttinrea, Multimatic, MIS Electronics, Valiant, and The Woodbridge Group) Parts Services Transport and Logistics Plastics Glass Auto Assembly (General Motors, Ford Motor, Chrysler, Toyota, Honda) Insurance and Finance Government Agencies (Ontario Investment Office, etc.) Universities & Research Institutions (Automotive Centre of Excellence, Institute for Robotics, etc.) Industry Associations (Automotive Industries Association of Canada, Auto Parts Manufacturing Association, etc.) (1) Source: Invest in Ontario, 6

7 7 Cluster theory more than just theory

8 Cluster misconceptions 1 Clusters can be created 2 Clusters only work where there are large domestic markets 3 Clusters matter less in a digital age 4 Clusters in Ontario are different 5 Cluster theory is about nations 6 Cluster theory is 30 years old 8

9 What we want from clusters Policy can enhance and leverage natural dynamics 9

10 Investment & Value Creation Potential What is specialization? Advanced Assets Competitive (Marginally Sustainable) Highly Competitive (Sustainable Advantage) Basic Assets Not Competitive (Race to the Bottom) Weak Competitiveness (Fleeting Advantage) General Assets Risk & Differentiation Specialized Assets 10

11 Virtuous cycle of specialization and competitiveness Specialized (Disruptive) Technology Specialized Incubators Accelerators Specialized Capital Brand Specialization Advanced Training Programs Specialized Research Institutions Required by specialization May not be required by specialization 11

12 What is competitiveness? A nation or region is competitive to the extent that firms operating there are able to compete successfully in the global economy while supporting high and rising wages and living standards for the average citizen Competitiveness depends on the long term productivity with which a nation or region uses its human, capital, and natural resources Productivity sets sustainable wages, job growth, and standard of living It is not what industries a nation or region competes in that matters for prosperity, but how productively it competes in those industries Productivity in a national or regional economy benefits from a combination of domestic and foreign firms Nations and regions compete to offer the most productive environment for business Competitiveness is not a zero sum game Source 2013 Michael Porter 12

13 What determines competitiveness? Microeconomic Competitiveness Quality of the Business Environment State of Cluster Development Sophistication of Company Operations and Strategy Macroeconomic Competitiveness Macroeconomic Policies Human Development and Political Institutions Endowments Source 2013 Michael Porter 13

14 The Ontario context Ontario s present and future prosperity is drawn from the collective economies of its regions. Ontario s economy is currently transitioning from a natural resources and manufacturing focus to an innovation and knowledge economy. While some Ontario regions have fared better through this transition (e.g., the Golden Horseshoe), others are at risk of being left behind. Increased global competition from lower cost jurisdictions, ageing populations and rapid technological change have already eroded the traditional strengths of some Ontario regions. 14

15 Demographics and Market Proximity Natural Resource Features and Climate Existing Sectors Skill Specializations Advanced / Disruptive Technologies Basic Infrastructure (Bridges, Highways) Training Facilities, Specialized Capital New 2017 mandate for regional economic plans Distinct Vision and Action Plan building a Region s Sustainable Competitive Advantage Drivers/Enablers Geography Industry Cluster Mix Innovation / Physical Assets Plans will require choices, prioritization and sequencing 15

16 Guiding principles Leverage a whole of government approach to engage other ministries and levels of government including municipal and federal governments Engage a multiplicity of stakeholders in a collaborative process across the entire Broader Public Sector (BPS) such as universities and colleges Tailored to Community Focused and Simple Build on existing successes and strategies unique to each region Identify a finite set of actions that drive regional competitiveness Identify local champions and connectors who can galvanize the community and drive momentum Where appropriate identify quick wins in advance of final regional plans Leverage existing programs, policies and funding mechanisms Comprehensive and Sustainable 16