Economic Development in Ireland Shared Learning For Suriname

Transcription

1 Economic Development in Ireland Shared Learning For Suriname 8 th February /13/2018 1

2 Agenda Introducing SIDC Suriname and Ireland Ireland and the Shannon Story Learning Application in Suriname Q & A

3 Regional Development Foreign Direct Investment SME Development Business and Industrial, Technology Parks & Incubation All aspects of Economic Zone Development Clusters Economic Development Services Economic Development Services

4 Economic Development Consultancy Often Seen as Advocating Tax Incentives Financial Incentives Low Cost Labour SIDC s Experience: Economic Development only works when the business environment is right which is the 1 st step in sustainable economic development!

5 Sustainable Economic Development Economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs International Institute for Sustainable Development SIDC - Sustainable Economic Development: Enduring Fit for purpose Green Modern Agile Developmental

6 Relevant Experience Saudi Arabia Bosnia South Africa Uganda KAEC Bonded and Re- Export Zone Implementation Plan Regional Development Programme New RDA Structure SEZ strategy Institution Building Training Feasibility Study Masterplanning Design Review 7

7 Agenda Introducing SIDC Suriname and Ireland Ireland and the Shannon Story Learning Application in Suriname Q & A

8 The Relevance of Ireland s Experience for Suriname Suriname Ireland

9 Suriname and Ireland Category Suriname 2017 Ireland 2017 Population 563, Million Land Area 163, 821 km 2 84,421 km 2 GDP $7.9 Billion $344 Billion GDP - Sectors Agriculture Industry Services Labour Force - Sectors Agriculture Industry Services 11.6% 31% 57.4% 1% 38.2% 60.7% 11.2% 19.5% 69.3% 5% 11% 84% Unemployment 9.1% 6.4%

10 International Business Environment Comparisons - Ireland Competitiveness 2016 / 17 (../138) Doing Business 2017 (../190) Innovation 2016 (../128) /13/

11 International Business Environment Comparisons - Suriname Competitiveness 2016 / 17 (../138) Doing Business 2017 (../190) Innovation 2016 (../128) N/A 165 N/A 2/13/

12 Ireland and Suriname Economy Percentile Ranking World Bank Suriname Ireland

13 Suriname and Ireland (1960) Category Suriname 2017 Ireland 1960 Population 563, Million Land Area 163, 821 km 2 84,421 km2 GDP $7.9 Billion $1.8 Billion GDP - Sector Agriculture Industry Services Labour Force - Sector Agriculture Industry Services 11.6% 31% 57.4% 25% 30% 45% 11.2% 19.5% 69.3% 22% 30% 48% Unemployment 9.1% 5.8%

14 Ireland in 1960 Parallels to Suriname Today? However Ireland in 1960 was dealing with similar issues that face Suriname today? 40 years of independence Strong influence from our colonial roots Poorly diversified economy: Reliance on one element in the economy - over 60% of what we exported was food unprocessed High Inflation Export lead growth Mass emigration - 400,000 people to emigration in the decade from Recognition of the need for change Start of the transition from closed to an open economy

15 Agenda Introducing SIDC Suriname and Ireland Ireland and the Shannon Story Learning Application in Suriname Q & A

16 Ireland Population: 4,773,000 Area (km 2 ), 70,882 Shannon Province Population: 430,000 Area (km 2 ), 10,232

17 Economic Development Timeline Independence 1922 Industrial Development 1959 SME Development 1978 Business Incubation 1990s Self Autonomy Protectionism 1930s Tourism Development 1960s Telesis report Clusters 00 s

18 Refinement of Government Economic Development Strategies Commodity-based agricultural export economy Industrialisation through protectionism and import substitution Foreign Direct Investment-led (FDI) industrialisation Development of Indigenous Industry High growth, valued added sectors - international competitive advantage - clusters of foreign and/or indigenous

19 Agricultural Policy ,000 farms (now 139,000) - mixed farming - tillage and pastoral Majority family owned subsistence level size c ha Government policy commodity based exports - supporting big farmers and encouraging exports of agricultural produce 1930s Depression move to self autonomy and protectionism guaranteed prices 1940s WWII further government intervention in farm production 1950s farm surveys accounts upgrading technology Emergence of culture of support for farming through grants and subsidies 22% of output by early 1960s 1970s EU and CAP Evolution of specialised farming systems - dairy and beef Agri-Foods Industry remained in control of the farmers through the COOP movement

20 Industrialisation Policy to 1950s No industrial revolution no raw materials Following independence Open market 5% of the labour forces in manufacturing By the 1930s protectionism in place Introduction of autonomy self sufficiency Inward looking - High tariffs on imports Inward Investment from the UK 1950s conclusion Irish industrialisation had reached a natural limit given the resources and size of the country

21 1950s Ireland 50% of Labour Force = Agriculture Decades of Protectionism Main Exports = Live Animals Main Trading Partner = UK Mass emigration UK; USA, Australia Need for New Direction = FDI 2/13/

22 Refinement of Government Economic Development Strategies - Industry Commodity-based agricultural export economy Industrialisation through protectionism and import substitution Foreign Direct Investment-led (FDI) industrialisation Development of Indigenous Industry High growth, valued added sectors - international competitive advantage - clusters of foreign and/or indigenous

23 Shannon Airport Historical Context Shannon surveyed by Charles Lindbergh for transatlantic operations First transatlantic service began from Shannon. First Airport Duty- Free Shop Development of Long-range Jet Aircraft 2/13/2018 Threat to Future of Shannon Airport Shannon Free Airport Development Company Set Up 24

24 Shannon Free Airport Development Company Ltd. Initial Brief Promote the use of Shannon Airport Through Industry and Tourism Development 2/13/

25 Shannon Free Zone Objective: Create productive job opportunities Strategy: Attract foreign direct investment (FDI) Implementation? 2/13/

26 Shannon Free Zone Promotional messages Tax Lower costs Grants Workforce Entrance to Europe English language Historical social connections Facilitation Free Zone Accommodation Welcome Flights Training Hand holding 2/13/

27 Shannon The world s first Industrial Export Processing Zone Duty Free 0% Tax Factories One Stop Shop Pilot testing export led industrial growth 2/13/

28 1966 3,555 Employed 19 Companies $32m Exports 30% of Total Irish Exports 2/13/

29 The Shannon Experience SFZ Test bed for attracting FDI to Ireland Concepts developed incentives, advance infrastructure buildings, facilitation and promotion were implemented nationally Shannon Model has been implemented across the world It was Shannon that inspired the creation of Special Economic Zones in China The Guardian 19/04/2016

30 FDI delivered 70 per cent of new employment and 90 per cent of increased exports in transportable goods Focus: Production units light assembly Very mobile easily closed Cost centres little decision making in Ireland Priority industrial sectors - electronics, pharmaceuticals and medical technologies Target winning companies before they became more widely known Profit Centres Higher end Value added manufacturing - Product Development, Local Decision Making

31 FDI as an Economic Development Solution? Cons Expensive FDI FDI FDI Attrition Often 2 nd Best Solution Short Term Gains Pros Creates Jobs Quickly Enables Technology Transfer Can Be Targeted at Areas of Need Multiplier 1 job jobs in the local economy Channel for development of SME linkage

32 Refinement of Government Economic Development Strategies - Industry Commodity-based agricultural export economy Industrialisation through protectionism and import substitution Foreign Direct Investment-led (FDI) industrialisation Development of Indigenous Industry High growth, valued added sectors - international competitive advantage - clusters of foreign and/or indigenous

33 Dualistic industrial structure of high growth, export oriented multinationals with low growth and contracting indigenous sector productive 22% loss of jobs in indigenous companies in the 1980s Major Policy shift (Telesis and Culliton) - Indigenous Good FDI Bad Incentives for FDI not the best fit for Indigenous Industry Development: Develop larger and stronger companies Concentrate supports on correcting areas of disadvantage the fundamentals right Capability building New Agency for SMEs Enterprise Ireland Bias towards high-technology production has also led to a significant increase in the skill intensity of employment.

34 SMEs Today Ireland was home to 230,000 SMEs. 99% of the businesses in Ireland Contribute over 10 billion to the Exchequer annually Provide employment to over 900,000 individuals 68% Make up over 90% of food manufacturing companies in the country.

35 SMEs as an Economic Development Solution? Cons Scale Success Rate Speed Pros SME development emerges as a key instrument in poverty reduction Spreading the employment base More Sustainable Jobs Not mobile Investing in County s future Promote an Entrepreneurial culture

36 Refinement of Government Economic Development Strategies - Industry Commodity-based agricultural export economy Industrialisation through protectionism and import substitution Foreign Direct Investment-led (FDI) industrialisation Development of Indigenous Industry High growth, valued added sectors - international competitive advantage - clusters of foreign and/or indigenous

37 Clusters - specialisation in key high-tech sectors Investment Centres International financial services emerged as a new sector Digital Media and Games companies Focus today on advanced manufacturing, high-end services and supplychain optimisation Work with existing companies to transform their operations and secure their sustainability.

38 Ireland Today

39 Agenda Introducing SIDC Suriname and Ireland Ireland and the Shannon Story Learning Application in Suriname Q & A

40 Are Special Economic Zones (SEZs) the Answer? Three out of four countries have at least one 4,300 50% haven t worked Incentives offered foregone revenue Too little spend on supporting infrastructure railway, ports and roads Natural limits doesn t work for all sectors Export focused works best

41 Lessons Learned SEZ Development 1. Clear & demanding vision rather than size matters 2. Leadership & action to turn vision into reality 3. Prioritisation & support at national level for local efforts 4. SEZ relies on efficient overall business environment 2/13/

42 Lessons Learned SEZ Development 5. Create and manage linkages with wider economy / society 6. Constantly review and renew 7. Sustain the effort no cut off date! 2/13/

43 Success Requires Continuous Change Manufacturing Firms Service Firms Maturity Reinvention 2/13/ Launch Growth

44 Ireland s Experience with SME Development Focus on building, sustainable competitive advantage Applying FDI Incentives Established Clients (10 + Jobs) HPSUs Micro Enterprises (< Jobs) Client Centric Segment the Client Base SME s Ireland get 4 times the support that FDI Receive Capacity and Capability Building Start-ups and Job Approvals - Measure/ Rescue Same Incentives as FDI Same Approach Numbers game Absence of targeted and continuous support services and financing programmes

45 Ireland is a small country and cannot be first or best in every field of activity need to focus. Reinforce niche areas of activity where Ireland has, or can build, sustainable competitive advantage Prioritisation of public funds into areas e.g. research that offer potential for economic recovery and social progress Increased collaboration (between academia and industry, within academia and research performing agencies) to maximise return on investment and optimise external funding Facilitating the transfer of technology to create jobs

46 FDI SME In isolation neither FDI or SME Development Work

47 Learning - Conclusions Macro Level: Embracing the outside world Importance of following a consistent strategy over a long period of time Maintaining balance in the economy no over reliance on any single sector - Agriculture; Tourism, Industry, Services FDI has been good foo Ireland - has helped in the process of establishing a modern, internationally competitive industrial base in Ireland Economic Development constantly evolving Driven by internal and external factors Need to be innovative and agile - Can t stand still No single solution Local Industry or Foreign Direct Investment focus on their own Blend of Both - interdependent Not done a good job in figuring out jobs for people who don t have Master s degrees.

48 Agenda Introducing SIDC Suriname and Ireland Ireland and the Shannon Story Learning Application in Suriname Q & A

49 Emerging Challenge of Economic Development: Economic Development: Is it possible to solve the problem of regional competitiveness in the knowledge century? Knowledge Service Industry Agriculture Time:

50 Suriname Provocative Suriname done good to date - more then 100 years from the exploitation of natural resources Knock-on benefits Resulted in infrastructure investment Potential to achieve a social dividend from for example Alcoa s withdrawal Now a growing recognition that there is a need to diversify the economy! Different mechanisms including SEZs being considered Excellent Partners Greenport with a proven track record in delivery Suriname has never had much of a public image, in either tourism or industrial development: Learn from best practice Build its own brand identity from the ground up Does not have to reinvent the wheel can fast track the economic development process

51 Suriname Now Needs New Solutions Greenport Marowijne: Public attention Significant Partners Soil Masonkondre; TU Delft; I=university of Antwerp and ADek Focus on agri-food; eco-tourism and creative Proposed physical infrastructure components including; Science Park SEZ Logistics Hub Macro-level Government of Suriname Interested in SEZs as agents of change

52 Integrated Development Greenport Good Starting Point However the GoS and Marowijne in particular can t depend on any one strategy Development needs to Integrated and include: Agriculture Delft /SOIL initiatives. However, size of the Surinam economy will mean looking at export markets almost from day one Focus on opportunities to add value locally Providing framework for SME start-up and development Exploit activity based tourism development both FDI and Suriname Investors Foreign Direct Investment (FDI) Focus on the business opportunity and who the customers will be and what they need. Move from Science to Technology Park Concept SMEs and FDI

53 Market Potential as an Onion! FDI SME Tourism Agri- Sector

54 Partnership in the craft sector The Success of Cooperatives in developed and developing countries Cooperatives in Action Craft Sector Cooperatives a case study 55

55 Advance Infrastructure In parallel to the attraction of FDI and the development of new SMEs Ireland pioneered the development of advance infrastructure including business accommodation: Industrial Warehouse Office Changing client profiles on the SME and FDI side led to the need to develop new solutions including Business Incubators, Technology and Science Parks

56 Continuous Improvement & Reinvention Shannon Free Zone (SFZ) Started in 1959 Movement over time from manufacturing to International Services National Technology Park (NTP) Started in Mid-1980 s Partnership Shannon Development University of Limerick, IDA MIT Role Model Manufacturing Knowledge Indigenous Time 2/13/2018 Time Services FDI Real Estate 57

57 Science and Technology Parks History The first examples Stanford University (USA) more than 40 years ago Cambridge University (MB) 1969 International Scientific Parks Association (GPMA) 63 countries Science park, technology park, technopark, techno park, technological zone, scientific research park,... Great Britain's Scientific Parks Association (IUCN) 70 Parks in the UK. 20,000,000 m2 of land, buildings and constructions

58 Comparison Development Type Features Pros Cons Science/ Research Tight entry criteria Clear image Seen as elitist Park Focus on R&D intensive Links to University Slow growth rate activity mission Low economic impact High rents Often owned by a University Technology Park Restricted entry/ flexibly applied Manufacturing not prohibited Distinctive image Business Park/ Open to all /no entry criteria Industrial Estate Maximisation of activity and rental income as driving force High Tech Image Higher economic impact Faster rate of growth All enquiries acceptable Meets needs of all industries Need to work on keeping clear identity; Higher costs of quality environment Commodity product Lots of competition No clear identity 59

59 Technology Park Property Incubator Management Entity Formal Links University Not just a high quality business location Requires active links with University or Higher Education Institution Incubator essential FDI and SMEs 2/13/

60 Shannon Development Knowledge Network Started With National Technology Park At University Of Limerick Extended To A Network Of Technology Locations Around The Shannon Region 2/13/

61 There are many different types of businesses and each type has different needs Local Services Arts Crafts Micro-enterprise Industrial Distribution Re Work Logistics Assembly Manufacturing High Tech R&D International Services Freight Maintenance Overhaul Food Property Solutions are Intended to Serve Business Needs Often a Limited View of Properties as Little More than Financial Assets

62 Property Solutions for Business Training Applied Research Education & Research Centre Micro-Enterprise Centre Local Services, Crafts, High Tech, R&D Technology/ Science Park Industrial Park Business Incubator General Industrial, Logistics, High Potential Start-ups Concept A Network of Fit for Purpose Investor Friendly Business Locations in across the Marowijne Objective Create a Network of Innovative, Sustainable and Mutually Reinforcing Enterprise and Education Activity Key Assumption To be Achieved through Greenfield Investment

63 Key Issues Not a Political Panacea build it and they will come Need to first understand: The potential market? What are their needs? How can we fill the gap? The role of the GoS? The Marowijne Value Proposition The services we need to offer? The cost and return? How we ll deliver - the organisational structure? Focus on the social dividend! 2 Property Solution Clarity of Purpose Market Focus Methodology Management Framework Finance Services Solution

64 Ireland and Agriculture Geographic location means easy to grow Ryegrass an excellent and inexpensive feed for livestock Agri-food industry - Beef (7.3 m cattle) and milk production c. 70% of agricultural output pig (8%); sheep (4%) and cereal (4%) Ireland s population c. 4.7 million means that we export 90% of our beef and 85% of our dairy product In 2018 sector will be worth 24 billion with exports of c. 1 billion per month 7.6% of Irelands economywide GVA; 10.7% of Ireland s exports and 8.4% of total employment. (DAFM, 2015)

65 44% Action Plan for Rural Development Rural Population 20 years Sustainable Rural Communities Growth in population adjacent to urban centres More remote areas population drop Education and Dual Incomes Pillar 1: Supporting Sustainable Communities Pillar 2: Supporting Enterprise and Employment Pillar 3: Maximising our Rural Tourism and Recreation Potential Pillar 4: Fostering Culture and Creativity in rural communities Pillar 5: Improving Rural Infrastructure and Connectivity Ireland Good at programmes less spectacular on delivery!

66 Ireland Kenya Agri Food Project 67

67 Interventions 1. Improved Trading Outcomes 2. Effective Value Chains 3. Stronger Policy/Planning Institutions 68

68 Irish Foundation for Co-operative Development (IFCD) Co-operatives are one of the most sustainable business models for new enterprise start-ups million jobs around the world, 20% more than multinationals Cooperatives in Europe and the Americas create more jobs than other forms of business in normal times, and are less likely to lay off workers in times of economic crisis. (Smith and Rothbaum 2013) Cooperatives therefore increase the share of labour in GDP, and thereby decrease inequality. IFCD channel through which to share the success and experience of Irish co-operatives working together in co-operatives and to those in developing countries Services overseas 69

69 Agenda Introducing SIDC Suriname and Ireland Ireland and the Shannon Story Learning Application in Suriname Q & A