Economic Development in Ireland Shared Learning For Suriname faculteit/Afdelingen/… · South Africa •SEZ strategy •Institution Building •Training Uganda ... infrastructure

Economic Development in

Ireland – Shared Learning For

Suriname

8th February 2018

1 2/13/2018

Agenda

Introducing SIDC

Suriname and Ireland

Ireland and the Shannon

Story

Learning Application in

Suriname Q & A

Business and Industrial,

Technology Parks &

Incubation

All aspects of Economic Zone Development

Foreign Direct Investment

SME Development

Regional Development

Economic Development

Services

Clusters

Economic Development Services

• Tax Incentives

• Financial Incentives

• Low Cost Labour

SIDC’s Experience:

Economic Development only works when the business environment is right – which is the 1st step in sustainable economic development!

Economic Development

Consultancy – Often Seen as

Advocating

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

Relevant Experience

Saudi Arabia

• KAEC

• Bonded and Re-Export Zone

• Implementation Plan

Bosnia

• Regional Development Programme

• New RDA Structure

South Africa

• SEZ strategy

• Institution Building

• Training

Uganda

• Feasibility Study

• Masterplanning

• Design Review

7

Agenda

Introducing SIDC



Story


Suriname Q & A

The Relevance of Ireland’s Experience for Suriname

Suriname Ireland

Suriname and Ireland - 2017

Category Suriname 2017 Ireland 2017

Population 563,000 4.7 Million

Land Area 163, 821 km2 84,421 km2

GDP $7.9 Billion $344 Billion

GDP - Sectors

Agriculture

Industry

Services

11.6%

31%

57.4%

1%

38.2%

60.7%

Labour Force - Sectors

Agriculture

Industry

Services

11.2%

19.5%

69.3%

5%

11%

84%

Unemployment 9.1% 6.4%

2/13/2018 11

International Business Environment Comparisons - Ireland

Competitiveness

2016 / 17 (../138)

Doing Business

2017

(../190)

Innovation

2016 (../128)

24 7 18

2/13/2018 12

International Business Environment Comparisons - Suriname

Competitiveness

2016 / 17 (../138)

Doing Business

2017

(../190)

Innovation

2016

(../128)

165 N/A N/A

Ireland and Suriname – Economy Percentile Ranking – World Bank

Suriname Ireland

Suriname and Ireland (1960)

Category Suriname 2017 Ireland 1960

Population 563,000 2.8 Million

Land Area 163, 821 km2 84,421 km2

GDP $7.9 Billion $1.8 Billion

GDP - Sector

Agriculture

Industry

Services

11.6%

31%

57.4%

25%

30%

45%

Labour Force - Sector

Agriculture

Industry

Services

11.2%

19.5%

69.3%

22%

30%

48%

Unemployment 9.1% 5.8%

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

1951-60 • Recognition of the need for change • Start of the transition from closed to an open economy

Agenda

Introducing SIDC



Story


Suriname Q & A

Shannon Province

Population: 430,000

Area (km2), 10,232

Ireland

Population: 4,773,000

Area (km2), 70,882

Economic Development Timeline

Independence 1922

Self Autonomy

Protectionism

1930s

Industrial Development

1959

Tourism Development

1960s

SME Development

1978

Telesis

report

Business Incubation

1990s

Clusters

00’s

Refinement of Government Economic Development Strategies

1

Commodity-based agricultural export economy

2

Industrialisation through protectionism and import substitution

3

Foreign Direct Investment-led (FDI) industrialisation

4

Development of Indigenous Industry

5

High growth, valued added sectors - international competitive advantage - clusters of foreign and/or indigenous

Agricultural Policy

• 1922 - 230,000 farms (now 139,000) - mixed farming - tillage and pastoral

• Majority family owned – subsistence level – size c. 10 -15 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

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

1950s Ireland

22 2/13/2018

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

Refinement of Government Economic Development Strategies - Industry

1


2


3


4


5


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

Threat to Future of Shannon Airport

Shannon Free Airport

Development Company Set Up

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Initial Brief

Promote the use of Shannon Airport

Through Industry and Tourism

Development

Shannon Free Airport Development Company Ltd.

25 2/13/2018

Shannon Free Zone

Objective:

Create productive job opportunities

Strategy:

Attract foreign direct investment (FDI)

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Implementation ?

Tax Workforce

Lower costs Entrance to Europe

Grants English language

Historical social connections

Promotional messages

Facilitation

Free Zone Flights

Accommodation Training

Welcome Hand holding

Shannon Free Zone

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Shannon – The world’s first Industrial Export Processing Zone

Duty Free

0% Tax Factories One Stop

Shop

Pilot testing export led industrial growth

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3,555

Employed

19

Companies

$32m

Exports

30% of

Total Irish

Exports 1966

2/13/2018 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

• 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

1960 1980

FDI as an Economic Development Solution?

Cons

Attrition

FDI

FDI FDI

Pros

• Creates Jobs Quickly

• Enables Technology Transfer

• Can Be Targeted at Areas of Need

• Multiplier – 1 job – 1-1.5 jobs in the local economy

• Channel for development of SME – linkage

Often 2nd Best Solution

Expensive Short Term Gains


1


2


3


4


5


• 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.

1980 1990

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.

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


1


2


3


4


5


• 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 supply-chain optimisation

• Work with existing companies to transform their operations and secure their sustainability.

1990 2018

Ireland Today

Agenda

Introducing SIDC



Story


Suriname Q & A

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

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

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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!

43 2/13/2018

Success Requires Continuous Change

0

10

20

30

40

50

60

70

80

90

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Manufacturing Firms

Service Firms

Reinvention

Growth

Maturity

Launch

44 2/13/2018

Ireland’s Experience with SME Development

Applying FDI Incentives

Start-ups and Job Approvals - Measure/

Rescue

Capacity and Capability Building

Segment the Client Base

Client Centric

• Established Clients (10 + Jobs)

• HPSUs • Micro Enterprises

(< Jobs)

• Same Incentives as FDI

• Same Approach • Numbers game

SME’s Ireland get 4 times the support

that FDI Receive

• Focus on building, sustainable competitive advantage

• Absence of targeted and continuous support services and financing programmes

• 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

1990 2018

FDI

SME

In isolation neither FDI or SME Development Work

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.

Agenda

Introducing SIDC



Story


Suriname Q & A

Emerging Challenge of Economic Development:

Agriculture

Industry

Service

Economic Development:

Time:

1960 1970 1980 1990 2000

Knowledge

Is it possible to solve the problem of regional competitiveness in the knowledge century?

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

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

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

Market Potential as an Onion!

FDI

SME

Tourism

Agri-Sector

• Partnership in the craft sector

• The Success of Cooperatives in developed and developing countries

• Cooperatives in Action

• Craft Sector Cooperatives a case study

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

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

Real Estate

FDI

Indigenous

Knowledge Manufacturing

Services

Time

Time

57 2/13/2018

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

Comparison

Development Type Features Pros Cons

Science/ Research

Park

Tight entry criteria

Focus on R&D intensive

activity

High rents

Often owned by a University

Clear image

Links to University

mission

Seen as elitist

Slow growth rate

Low economic impact

Technology Park Restricted entry/ flexibly

applied

Manufacturing not prohibited

Distinctive image

High Tech Image

Higher economic

impact

Need to work on

keeping clear identity;

Higher costs of quality

environment

Business Park/

Industrial Estate

Open to all /no entry criteria

Maximisation of activity and

rental income as driving force

Faster rate of growth

All enquiries

acceptable

Meets needs of all

industries

Commodity product

Lots of competition

No clear identity

59

Technology Park

Property Formal Links

Incubator University

Management Entity

Not just a high quality

business location

Requires active links

with University or Higher

Education Institution

Incubator essential

FDI and SMEs

60 2/13/2018

Shannon Development Knowledge Network

Started With

National

Technology Park At

University Of

Limerick

Extended To A

Network Of

Technology

Locations Around

The Shannon

Region

61 2/13/2018

There are many different types of

businesses and each type has different needs

Property Solutions are Intended to Serve Business Needs

Often a Limited View of Properties as Little More than Financial Assets …

Local Services Arts Crafts

Micro-enterprise

Industrial Assembly

Logistics Freight

Distribution

Re Work

Maintenance

Overhaul Manufacturing

High Tech R&D

International Services Food

Objective Create a Network of Innovative,

Sustainable and Mutually Reinforcing Enterprise and

Education Activity

Property Solutions for

Business

Concept A Network of Fit for Purpose

Investor Friendly Business Locations in

across the Marowijne

Technology/

Science Park

Business Incubator

Industrial Park Micro-Enterprise

Centre

Education & Research Centre

High Tech, R&D

Local Services, Crafts, …

General Industrial, Logistics, …

High Potential Start-ups

Training Applied Research

Key Assumption To be Achieved through Greenfield Investment

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!

Clarity of Purpose

Market Focus

Property

Solution

Services

Solution

Management Framework

Finance

3 4

5

1

2

6

Methodology

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 economy-wide GVA; 10.7% of Ireland’s

exports and 8.4% of total employment. (DAFM, 2015)

Action Plan for Rural Development

Sustainable Rural Communities

• 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!

Rural Population – 20 years 191-2011

• Growth in population – adjacent to urban centres

• More remote areas – population drop

• Education and Dual Incomes

44

%

Ireland – Kenya Agri Food Project

67

Interventions

1.

Improved Trading

Outcomes

3.

Stronger Policy/Planning

Institutions

2.

Effective Value Chains

68

Irish Foundation for Co-operative Development (IFCD)

• Co-operatives are one of the most sustainable business models for new enterprise start-ups - 100 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

Agenda

Introducing SIDC



Story


Suriname Q & A

Documents

Economic Development in Ireland Shared Learning For Suriname faculteit/Afdelingen/… · South Africa •SEZ strategy •Institution Building •Training Uganda ... infrastructure