ANALYSIS REPORT ON COMPETITIVE ADVANTAGES AND …

ANALYSIS REPORT ON COMPETITIVE ADVANTAGES AND POTENTIAL FOR INNOVATION

FOR ECONOMIC DEVELOPMENT

North-East Region

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Specific issues related to innovation

• The performance of North East Region companies and

clustering potential analysis

• Specialization potential : global utility method

• Comparative advantages (Balassa indicator)

• Foreign direct investment in North East Region

• Competitive advantages: GDP / capita, labor productivity

• Innovation potential

• Growth potential based on RD&I

• SWOT Analysis


North East Region companies performance

Agriculture

• In 2011, in the agricultural sector, 2,060 active local units were present in the North-East Region, which achieved a turnover of EUR 724 million and had a total of 18,173 employees. At county level, most companies were based in Suceava, and the fewest in Botosani. Between 2008-2011, the number increased by 8%.

• An agglomeration of companies is noticed in the "cultivation of cereals" (29.66%) and “logging” activities (17.52%).

Industry

• In 2011, in the North East Region 6499 active local units were operating in the industry sector, companies which achieved a turnover of EUR 5,173 million and recorded a total of 143,565 employees.

• In the North-East, the mining industry accounted a total of 124 active local units, most of which operated in Suceava and Bacau. However, this industry is not representative for the region, the number of active local units in 2011, accounts to only 0.24% of the total number of companies in the region, turnover to only 0.34% of regional turnover and number of employees only 1.16%.



Indicator 2008 2009 2010

Number of active local units 7597 7323 6574

Share of active local units from total number 12,61% 12,58% 12,59%

Turnover (million RON) 16397 13979 15368

Share from regional TO 23,39% 23,13% 25,04%

Number of employees 152701 126356 117726

Share of no. employees from regional level 32,49% 31,09% 31,49%

Labour productivity (thousands RON / employee) 107,37 110,63 130,54

Net investments 2121 1101 1457

Main indicators in manufacturing industry, North-East Region, 2008-2010

Source: National Institute of Statistics, 2012


Food industry

• In 2011, from the total number of active units in the national food industry (7833), 13.28% were present in the North-East Region. Most of them operated in Suceava County (228), Bacau (204) and Iaşi (204).

• In terms of turnover in 2011, the major companies are located in Vaslui - Vascar and Mandra; Iasi – Nutrimold; Neamt - Prodprosper LLC and Kubo Ice Cream Company LLC; Bacau - Pescao Group Ltd

• A concentration of companies was noticed in: – 1011 - "Processing and preserving of meat" - in the

municipalities Botosani and Darabani (BT) and Paşcani (IS);

– 1013 - "Manufacture of meat" - in Șcheia, Rădăuți and Fălticeni (SV);

– 1051 - "Manufacture of dairy products and cheese" - in Vatra Dornei, Șcheia and Câmpulung Moldovenesc (SV) and in Miron Costin, Răchiți and Dorohoi (BT).

Textiles and clothing industry

• The number of local units active in textiles and clothing in the North-East in 2011 was 887 companies, down 30% compared to 2008. Most active local units were found in Iasi (26.15%) and Neamt (25.25%).

• Top main companies in this industry, in terms of turnover in 2011, are: from Neamt - Rifil SA and Yarnea LLC; and from Botosani - Carreman Romania LLC, Rolan Tex LLC, Formens LLC

• A concentration of companies was noticed in : – 1310 – ”Fiber processing and spinning textile yarns” (in

Botoșani)

– 1413 – ”Manufacture of clothing” (in Iași and Botoșani).



Foowear industry

•Number of local productive units is low within North-East Region.

•In 2011, there were only 194 companies, and most of them were concentrated in Suceava County, where we find the largest turnover in 2011– Marelbo Prod Com SRL și Denis SRL

•All analyzed companies are operating in 1520 - "Manufacture of footwear", being more concentrated in Bivolaria, Suceava County, and Huşi, Vaslui County

Wood industry

•In 2011 there were 1190 active local units, value that ranked the region as being the second in national context. Most of the companies from this industry are placed in Suceava county (45%) and Neamț county (27%).

•The main companies, as turnover in 2011, were Egger România SRL in Suceava county and Holzindustrie Schweighofer Baco SRL in Bacau county.

•It can be noticed a concentration in the domains: 1610 - ”Cutting and planning of wood” (in Sadova, Falcău and Voievodeasa from Suceava county; in Piatra Neamț - Neamt county) and 1623 – ” Manufacture of other builders' carpentry and woodwork” (Izvoare and Târgu Neamț from Neamț county and Gura Humorului and Fălticeni from Suceava county).



Furniture industry

•In 2011, there were 442 active companies in this sector in the North-East Region, from which most were operating in Iasi County (22.85%) and "Manufacture of furniture" and "Manufacture of furniture for offices and shops."

•From the analysis, it became a focus in 3109 - "Manufacture of furniture", especially in Rădăuți, Suceava County.

Computers industry

• Of the 852 national local units active in this industry in 2011, in the North-East Region are operating only 10% of them, most based in Iasi County (48 of the total 86).

• Concentration can be determined in the following fields: 2651 - "Manufacture of instruments and appliances for measuring, testing and navigation" (in Botosani) and in 2620 - "Manufacture of computers and peripherals equipment" (without territorial concentration).

Electrical equipment industry

• Electrical equipment industry is represented, in 2011, by a number of 49 local units active in the North-East Region, of which most located in Iasi and Bacau (13).



Other major manufacturing industries analyzed

• Paper industry

• Chemical industry

• Manufacture of rubber products

• Non-metallic mineral products industry

• Metallurgical industry

• Manufacture of metal construction industry

• Manufacture of machinery and equipment industry

Other branches and sectors of interest analyzed

• Production and supply of electricity, gas, steam and air conditioning

• Water supply, sewerage, waste management and decontamination activities

• Construction works

• Wholesale and retail

• Transportation, storage and postal and courier activities

• Real estate transactions



Services Sector: Information and communications

• In the North-East Region, in 2011, there were 1429 active local units, of which 45% are located in Iasi. The turnover of the companies in this area is 1.75% (276 mil.Euro), and the number of employees is 2.07% (8443), in 2011.

Services sector: Hotels and restaurants

• In 2011, in this sector were working in the North-East Region, 2544 local units. The turnover of these, in 2011, was only 1.33%, and the number of employees was only 3.85% of the total (15,688). In Suceava County operates most of these units (25.07%).



Until now, there are 6 clusters in North-East Region as:

•cluster of medical imaging Imago-Mol Iași,

•cluster of textile and clothing industry ASTRICO Săvinești,

•cluster of tourism APT Bucovina,

•cluster of IT New Media – ICONIC Iași,

•cluster of food technology Ind-Agro-Pol,

• cluster of IT&C in Euronest IT&C Iași.

Most of them are affiliated with the National Association of Romania Cluster (CLUSTERO), some being among the founding members (ASTRICO).

• GEA Strategy & Consulting identified the existence of the following industrial concentrations at the level of the region: – 1* - wood industry– Bacău, Neamț

– 2* - wood industry – Suceava

– 1* - furniture industry – Suceava

– 1* - cereals – Neamț

– 1* - meat products - Suceava

• After sectoral analysis carried out within the three years, we can define several industrial clusters with potential for development or consolidation: – 1. Food industry

– 2. Textile and clothing industry

– 3. Wood industry

• Also, besides these results, it should be operated and supported those sectors where partnerships were initiated and actors have expressed their interest in association in clusters (ICT, tourism, creative industries).



Potential of specialisation: global utility method

• The following indicators were used, at the level of North-East Region (compared to other regions): number of active local units, turnover of active local units, investment of these units, staff, all relative to the region’s population.

• The sectors that were the basis for the analysis are: mining and quarrying, manufacturing, production and supply of electric and thermal energy, construction, trade, transport, hotels and restaurants, information and communication, real estate, education and health.

• The years that were the basis for analysis were: 2008, 2009 and 2010.


Global utility at regional level, 2008-2010

Source: National Institute of Statistics


Comparative advantages (Balassa indicator)

• Regarding the foreign trade, especially exports, as can be seen from the chart below it has a minimum in 2009, but the temporal profile value increased by 30%. In 2012, the value of exports was 2,232,017,000 euros and imports was EUR 2,181,537,000. Thus, 2012 is the only year in the range of analysis where there is a positive trade balance.

• The highest values of the trade balance are obtained for goods under CN groups: Group IX - "Wood charcoal and articles of wood" group XI - "Textiles and articles thereof" group XII - “Footwear "group IV -" Food products ".


Exports and imports, North-East Counties, 2012, thousands EUR


Exports Imports



• RCA Indicator - revealed comparative advantage: values greater than 1, then the region recorded a comparative advantage for the product and as much as the indicator values lower than 1, the comparative advantage will be lower.

• Within the analytical range 2006-2012, North East Region recorded comparative advantages for the following product groups under CN: 61 - "Articles and clothing accessories, knitted or crocheted“, 62 - "Articles and clothing accessories, other than knitted or crocheted, 28 -"Inorganic Chemicals", 65 -“Objects for covering the head and parts thereof ", 44 -"Wood charcoal and articles of wood ", 63 -"Other made up textile articles “

• Botosani: comparative advantages for the following groups of products: 61 - "Articles and clothing accessories", 56 - "Wadding, felt and nonwovens", 63 - "Other made up textile articles", 62 - "Clothing and clothing accessories", 65 - "-“Objects for covering the head and parts thereof", 42 - “Leather goods“

• Iasi – comparative advantages for the following groups of products: 62 - "Clothing and clothing accessories, other than knitted or crocheted" 63 - "Other made up textile articles", 61 - "Clothing and clothing accessories", 08 - “Fruits“, 94 - "Furniture”.




• Neamt - comparative advantages for the product groups 61 - "Clothing and clothing accessories", 62 - "Clothing and clothing accessories, other than knitted or crocheted“, 73 - "Articles of iron or steel“, 44 - "Wood charcoal and articles of wood", 59 - "Textile fabrics impregnated, coated, covered or laminated“, 20 - “Products from vegetables, fruit, nuts or other parts of plants".

• Suceava – can be observed a significant comparative advantage for the product group 44 - "Wood charcoal and articles of wood", 61 - "Clothing and clothing accessories, knitted or crocheted" 94 - "Furniture", 16 - "preparations of meat, of fish or of crustaceans ", 64 -" Shoes ".

• Vaslui - comparative advantages in some commodity groups such as: 20 - "Preparations of vegetables, fruit, nuts or other parts of plants", 61 - "Clothing and clothing accessories, knitted or crocheted" 94 - "Furniture", 63 - "Other made up textile articles", 62 - "Clothing and clothing accessories, other than knitted or crocheted".

• Bacau - comparative advantages for the following groups of products: 19 - "Preparations of cereals, flour, starch", 62 - "Articles and clothing accessories", 28 - "Inorganic Chemicals", 61 - "clothing articles and accessories "88 -" Aircraft, spacecraft, and parts thereof ", 64 -" Shoes ".



Foreign investment

• North-East Region is ranked, in the national context, in 2011, on the 7th both in terms of number of firms registered with foreign contribution and in terms of the total subscribed share capital, according to statistics of National Trade Register.

• The amount of foreign direct investment in the region in 2011 was 1.627 million euros, last on the national total.

• In 2011, the total investments (26,254 mil. euros) done in greenfield businesses, North- East Region managed to attract only 3.4%, exceeding only the South-East and South-West Oltenia.

• Most investors are operating in industries with relatively low added value and prefer to turn to Iasi, Suceava and Neamt. Most investors are from countries such as Belgium, the Netherlands and Austria


Region/Counties Number of

companies

Amount of

subscribed capital

Thousands EUR

Noth-East 7.820 1.440.795,3

Bacău 1.579 695.182

Botoșani 519 30.019,5

Iași 2.611 181.663,3

Neamț 1.302 193.301,4

Suceava 1.462 307.802,7

Vaslui 347 32.826,4

Number of companies with foreign contribution and

subscribed share capital in the period 1991- 2011, balance on

31.12.2011

Source: NTC, 2013


Competitive advantages: GDP/capita

According to a study prepared by GEA Strategy and Consulting, the competitive potential index (CPI) indicator calculated on the basis of GDP/capita, exports/occupied population and level of technological development, the North-East Region counties are placed within the following ranges:

– Iași – 0,2≤cpi<0,3 – average competitive potential

– Suceava, Neamț, Bacău, Vaslui – 0,1≤cpi<0,2 – low competitive potential

– Botoșani – cpi<0,1 – nonexistent competitive potential

Competitive advantages: labor productivity

In 2010, the highest labor productivity was recorded in the "Production and supply of electricity“ sector (EUR 101,285 thousand/person) followed, at long distance by trade (EUR 65,752 thousand/person). The sector with the lowest labor productivity is "hotels and restaurants" (EUR 15,230 thousand/person).

However, labor productivity can be calculated as ratio of gross value added and occupied population.

In 2010 by applying this formula for calculating the highest levels of productivity the following results were calculated: industry (EUR 15,638 euros/person employed), information and communication (EUR 11,944/person employed), construction (EUR 9,225/person employed).



Innovation potential

Innovation and technology transfer entities:

• Technology Information Center ”INDTECH Nord-Est”

• Technology Information Center ”CIT Vaslui”

• Science and Technology Park TEHNOPOLIS Iași

• HIT Industrial Park, Hemeiuș Bacău

• Business Incubator for SMEs in Botosani (2 locations: Administrative Center and Microproduction Center)

• Bucovina Economic Center

• Business Center Tutova Bârlad

• Business Resource Center(CRAV)

• Business and Exhibition Center ”Mircea Cancicov” (CAEx)

• Multicultural Business Center – Cacica

• Business Center Iași

• Support and business development center ”Carol”

• Axa – Green business consulting center

• Incubator and business center for business support

• Innovation University Center, business development infrastructure park for SME’s and private investors


Networks dedicated to innovation activity:

• Center for Technological Innovation Bacau, regional structure that has as main objective to promote innovation policies by providing support in innovation activities to companies;

• National Institute of Invention Iasi Branch - that has as main objective fundamental and applied research, engineering, performance and promotion of industrial property protection;

• RENITT - Support for economic and social development, promote technological innovation; ARoTT - supporting technology transfer and innovative entities, promoting products and innovative technologies and providing access to research results.

• Also, in addition, the project ASVILOC PLUS "Agencies that support the value of innovation systems in local and regional economies" under the Transnational Cooperation Programme South East Europe and in which, the North East Regional Development Agency was part , as a partner, established since February 2010, a support structure entitled "North-East Regional Innovation Laboratory ".



Innovative companies

• During 2006-2008 the number of innovative companies increased, mainly in the industry sector, and most of them are small sized.

• During 2008-2010, the number of innovative companies decreased by 25%.

• At regional level the total number of enterprises with technological innovation represents 13.4% of all existing national (2006-2008) - totaling 791 companies. Of these, three-quarters are active in industry and a quarter in the services sector. Furthermore, almost 70% of these companies have up to 50 employees, and the rest are medium and large.


Number of innovative and non innovative companies, North-East Region


Number of innovative companies

Number of non-innovative companies


Innovative companies

• The chart aside presents the situation of companies which have product and process innovation, so that out of 787 companies that were the subjects of investigation during 2006-2008, 15.62% achieved only product innovation, and 36.46% achieved only process innovation. The remaining 48% have both product and process innovation.

• The difference between the number of companies that achieve product and process innovation (787) and the number of innovative companies in the table above (1554) is represented by those businesses that perform other two types of innovation: organizational and marketing.


Innovative companies by type of innovation, North-East Region Source: National Institute of Statistics, 2012

Product innovation

Process innovation

Product and process innovation


Innovation expenditure

• North-East Region is the last in the national hierarchy in terms of innovation expenditure.

• The biggest innovation expenses aimed purchases of machinery, equipment and software (75.56%) achieved, of course, in a large share in industry (88.04%).

Patents

• North-East Region is ranked fifth in the national hierarchy in terms of number of applications for patents at the European Patent Office (EPO).

Articles and scientific publications


County/Year

NE Region

Number of articles and scientific publications, North-East Region Source: AdAstra.ro


Growth potential based on RD&I

Research and development expenses

• Regionally, the share of expenditures made is only 0.28% in 2010, decreasing from the period 2007-2008. Basically, most of these expenditures are made by Iasi and Suceava Counties.

• In 2010, in the North-East Region, the expenses made from by public funds hold a share (71%), four times higher than those made by businesses (18%).

R&D expenditures, by source of funding, North-East Region, % Source: North-East Regional development plan 2014-2020

Foreign Other Public funds Companies


R&D Organizations

• During 2001-2006 in the North East 12 Centres of Excellence in Higher Education Institutions were set up.

• In 2011, in the North-East, 49 local units conducted research, development and innovation activities, 6.9% of all registered at national level. Compared with other regions, North-East Region ranks fourth.

• In the North-East Region one national research institute operates, under the authority of the National Authority for Scientific Research and four national research institutes, subordinated to the Romanian Academy. All these are located in Iasi. To them six other research institutes, nine research centers, a research station and 6 companies are added.


Field of activity (NACE codes)

0-9 persons

10-49 persons

50-249 persons

Total %

Research and development in biotechnology

1 1 0 2 4,08

Research and development in natural

sciences and engineering

37 4 4 45 91,83

Research and development on social

sciences

1 1 0 2 4,08

TOTAL 39 6 5 49 100

Distribution of CDI in North East following NACE codes and number of employees in 2011



R&D Organizations

• In this region the following public universities are present: – “Al.I.Cuza” University

– “Gh. Asachi” Technical University

– “Grigore T. Popa” University of Medicine and Pharmacy

– ”Vasile Alecsandri” University

– „Stefan cel Mare” University

– „Ion Ionescu de la Brad” University of Agricultural Sciences and Veterinary Medicine of Iași

– ”George Enescu” University of the Arts

and private: – ”George Bacovia” University

– ”Apollonia” University

– ”Petre Andrei” University

– ”Mihail Kogălniceanu” University

– ”Dimitrie Cantemir” University

• North-East Regions sums up 31 doctoral schools in which most doctoral students chose technical profiles or agronomy


University

Location

Number of

PhD

schools

Number of

PhD

students

“Al.I.Cuza” University Iași 13 725

“Grigore T. Popa” University of Medicine and Pharmacy

Iași 1 307

“Gh. Asachi” Technical University Iași 10 849

„Ion Ionescu de la Brad” University of Agricultural Sciences and Veterinary Medicine of Iași

Iași 2 264

”George Enescu” University of the Arts Iași 3 109

„Stefan cel Mare” University Suceava 1 271

”Vasile Alecsandri” University Bacău 1 72

The situation of Universities PhD schools of the North East Region, 2013 Source: http://www.doctoranzi-romania.ro


Research and development personnel

• In terms of number of employees in R&D activity, the North-East was one of the few regions that was marked by an upward trend - if in 2003 there were only 2,926 employees, in 2008 the number increased to 4172 people. Since 2009, due to the effects of the financial crisis, the activity of the research was limited, and the number of employees decreased to 3,376 in 2010. In 2011, an increase in the number of employees by 5% was noticed. Basically, at the end of 2011, the total number of employees in R&D represented 8.40% of the national level.


NV C NE SE SM BI SV V

Number of employees in research and development (number of people)

2007 3923 2641 4156 2201 4376 20360 2506 2321

2008 4146 2897 4172 1930 4484 21366 2321 2186

2009 4185 3732 4044 1865 3676 19577 2290 3051

2010 4018 3113 3376 1713 3543 16932 2315 4055

2011 3809 3526 3561 1515 2253 22234 2282 3183

Of which Researchers

2007 2321 2257 3269 1776 2724 14361 2175 1857

2008 2784 2504 3387 1267 2823 14347 2071 1681

2009 2863 2823 3244 1331 2372 13399 2082 2531

2010 2952 2842 2966 1302 2342 13225 2127 2951

2011 2457 2027 3190 1096 1321 11398 1701 2299

Employees from RD / 10,000 people employed

2007 33,1 25,2 32,9 20,8 36 168 28,6 26,7

2008 34,9 27,7 33,4 18,2 37,3 166,7 26,8 25,5

2009 36,2 37,3 33,5 18,4 31,7 160,4 27,4 37,4

2010 34,8 31,1 28 17,2 30,7 139,4 27,8 50

2011 32,9 35 29,9 15,4 19,5 181,6 27,5 39,1

Trend in the number of employees in research and development in the North East compared to other regions of the country, 2007-2011



SWOT Analysis

Strong points • Identification of industrial agglomerations

which could by „clusterised” – wood and furniture industry, machinery and equipment industry, rubber products industry

• Existence of six clusters – medical imaging, clothing, tourism, new media, ICT, food industry

• Strong link between PIB/capita and expenses on research-development

• The share of SMEs in total firms is high (99.7%) and similar to the national and European level

• The existence of dedicated network innovation activity and the Regional Innovation Laboratory

• Second place in the national ranking in terms of the number of innovative enterprises, most of them making both product and process innovation

• Existence of Centers of Excellence in higher education institutions

• The existence of the 79 recognized research centers CNSIS

• Business infrastructure well represented at regional level

• High number of PhD’s and doctoral schools in the region, most of them choosing real and technical profile

• Skilled labor in RDI

• High rate of youth employment


Weak points • Low value of GDP in the North-East Region - intra-

regional disparities accentuated

• Structure of gross value added at the county level is heterogeneous

• Employment rate in the region much lower than the national average

• Uneven distribution of active local units in counties in the region (highly concentrated in Iasi and highly dispersed in Botosani and Vaslui)

• Density of SMEs very low, placing the region in last place nationally

• Reduced spirit of initiative of the population in terms of number of new enterprises

• Low levels of foreign direct investment in 2011 - 7th place nationally, most investments are in areas with low added value

• Low competitive potential for Suceava, Neamt, Bacau, Vaslui and inexistent competitive potential in the county of Botosani

• Last place in terms of innovation expenditure

• Labor productivity below the national average

• Low share of expenditures on research and development in the region's GDP

• Results of the CD enterprises below national average (turnover, number of employees)

• Low number of employees in research and development in the region

• Reduced collaboration between business environment and universities / research institutes - low technological transfer

SWOT Analysis


Opportunities • The share allocated to the Member State

level of R&D and innovation and the competitiveness of SMEs for the period 2014-2020

• Develop a national strategy for research, development and innovation 2014-2020

• Funding opportunities for research and development projects by national and structural funds

• Development of business environment as a result of establishment of business support infrastructure

Threats • Legislative, political, economic and

institutional instability

• Reduced ability for co-financing

• Emigration of qualified personnel, particularly in the areas of knowledge-intensive

• The reluctance of enterprises to invest in research and development activity

• Lack of coordination among different sectorial policies with implications for the development of the RDI sector

SWOT Analysis


Contact:

NORTH-EAST REGIONAL DEVELOPMENT AGENCY

Address: Str. Lt.Drăghescu nr.9

City: Piatra Neamț, Neamț County

Phone: +40 233 218071

Fax: +40 233 218072

E-mail: [email protected]


mailto:[email protected]

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ANALYSIS REPORT ON COMPETITIVE ADVANTAGES AND …