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What is the new economy in Oxfordshire?
Helen Lawton SmithDepartment of Management
Birkbeck, University of London& Oxfordshire Economic Observatory, Oxford
University
Presentation at Department of Planning Seminar Series, Oxford Brookes
University, March 6 2014
Overview
•What are the features of Oxfordshire’s ‘new economy’?
• How is it similar and different to the ‘old economy’?
• What are its exceptional features?
• How is it changing?
• As an entrepreneurial region, how is it being sustained?
Main sources of evidence used today
• DPhil thesis School of Geography Oxford University 1990 • – The Location and development of advanced technology industry in Oxfordshire in the context of
the research environment
• Current study- where are they now? • OEO reports since 2001 – oeo.geog.ox.ac.uk including
Enterprising Oxford (2003, 2007)– OEO team: Lawton Smith, Glasson, Chadwick, Romeo, Waters
• OEO contribution to SQW Oxford Innovation Engine Report (2013)
• Lawton Smith, Glasson et al (2013) ‘Enterprising Regions:evidence from Oxfordshire and Cambridgeshire’
Assessing the innovativeness of a region
• what is specifically regional in the innovative process in the region under consideration? – Direct and indirect evidence
• what are the alternative possible explanations for regional economic performance in the regions under consideration?
• what is the conceptual model of this relationship?
(Storper 2000)
Storper and an evolutionary economic geography approach
• ‘it is not enough to simply summarize the evidence on regional high-technology growth in the 1990s, with standard indicators such as number and size of firms, employment, some remarks on products, etc. But that is not generally what is meant in the literature by evolutionary. This term comes specifically from evolutionary economics, and is inherently tied up with notions such as interdependence among actors, the way that such interdependencies and spillover effects create histories and render certain kinds of developments possible and impossible, and so on, all of which are generally summarized in the notion of path dependencies. To analyze such path dependencies (or evolutionary trajectories), then, there has to be careful attention to the factors that bind actions together and generate specific pathways in time and space. Its much more than just describing, however competently, the fact of how a given regional high tech economy grew in the 1990s.’
(Storper 2000)
Examples of other conceptual models relating to innovative entrepreneurship and regional growth
• Innovative milieux (Camagni 1991)• Regional innovation systems (Cooke 1992)• Clusters (e.g. Porter 1995)• Knowledge spillover theory of entrepreneurship (Audretsch
and Keilback 1995)• Feldman and Francis (2006) three stage growth model• Regional triple helix spaces (Etzkowitz 2008)• Fritsch and Schindele 2011 – labour markets and
entrepreneurial activity
Governance: entrepreneurial regions
• ‘entrepreneurial regions are defined by growing high levels of entrepreneurship and innovation, and as regions with outstanding entrepreneurial visions’ (EU, 2013).
• must also be places where there is co-ordinated entrepreneurial activity to put those visions into practice so that ecosystems function effectively.
• agency of research institutions, local government, skills agencies and so on working together.
An economic transformation: from a rural town with a famous university, a car industry to a high tech
economy• Oxfordshire was in the top 19 counties of high technology industry in 1981
(Hall 1985) and R&D did not feature in the list of key sectors in the City of Oxford in that year.– Highest employment categories in Oxford City motor vehicle manufacture and
education – both 16% (8.5% and 12.3% respectively in the county)• Mid-1980s, 182 R&D-intensive advanced technology firms employing 10,659
people • 35 university spin-offs
• late 1990s - developing as a national and internationally important high-tech economy based in the South East of England, part of the Thames Valley, itself the richest and most dynamic economy in the UK outside London (Economic Development Strategy for Oxfordshire 1998/9, 4).
• 2014 growing high-tech economy but on some indicators is underperforming comparator regions – Cambridgeshire and Thames Valley
Oxfordshire’s new economy: exceptional features
• Rapidly growing number of high-tech firms, clustered in a few sectors (manufacturing and service)
• strong science base• highly skilled labour market• anchor high-tech firms• business survival rates better than England levels
and any other county council area. • Networks e.g. Oxford Trust (Science Oxford),
OBN, Venturefest
Advanced Technology Industry in Oxfordshire: Employment Change by Activity March 1987 Activity Heading (1980 SIC) 1979 1987 1979 1987 % Change No. No. Emps Emps Est's Est's Chemicals/Pharm/Biotech 2 8 95 87 -27.5 Engineering 5 9 490 385 -23.8 Computers, office machinery, electronic data processing eqpt 3 9 39 460 +1079.0 Electrical equipment 5 10 651 988 +51.7 Telegraph & telephone eqpt 1 1 20 72 +260.0 Electrical Inst. & Control 53 576 1885 +226.6 Radio & electronic capital goods 6 10 187 562 +200.0 Components & other electronic eqpt 2 5 4 46 +600.0 Racing car manufacture 4 4 109 362 +232.1 Vehicle components 1 1 1000 530 -47.0 Scientific & Precision Instr. 9 260 295 +13.5 Other Manufacturing 4 6 2111 2270 +7.5 Computer software 4 25 302 577 +91.1 R & D/Consultancy 13 32 1886 2140 +13.7 Total 50 182 7731 10659 +37.9 _____________________________________________________________________
Number of employees
As % of total employees
Total employees (all sectors)
320,600
100
Eurostat high-tech sectors
manufacturing services total
4,000 16,000 20,000
1.2 5.0 6.2
Wider high-tech sectors
manufacturing services total
13,100 29,900 43,000
4.1 9.3 13.4
SOURCE OEO/SQW 2013
Oxfordshire’s largest high tech sectors (wider definition) by employment 2013
• computer, electronic and optical products (3,500 employees),
• motor vehicle manufacture (3,500), • publishing activities (5,500),• computer related activities (8,200),
engineering & technical consultancy (7,100) scientific research and development (5,700).
• Biomedical sector??
Anchor high-tech firms
• Some earliest firms and largest firms originated in Oxford University or had a university connection
• Penlon 1943 • Littlemore Scientific Engineering Ltd 1953 • Oxford Instruments 1959• Research Machines (RM), 1973• Sophos 1981
Oxfordshire labour market• One of most highly qualified labour markets in the
county– Three-fifths of Oxford residents in employment are in
managerial or professional occupations, compared to around two-fifths in Great Britain
• 2011, 21,000 students at Oxford University, 11,752 UGs and 9, 621 PGs– Rising student numbers e.g. Oxford University had only 5,312
PG students in 2000/1 hence a rise of over 5000 in 10 years
• About a third Oxford University (32.62%) and Oxford Brookes University (34.6%) students stay in the county after their first degree.
GVA per hour in Oxfordshire, Source ONS, 2013
Percentage of employed residents in SOC 1-3 in Oxfordshire
Managers, directors and senior officials
A significant amount of knowledge and experience of the production processes and service requirements associated with the efficient functioning of organisations and businesses.
Professional occupations A degree or equivalent qualification, with some occupations requiring postgraduate qualifications and/or a formal period of experience-related training.
Associate professional and technical occupations
An associated high-level vocational qualification, often involving a substantial period of full-time training or further study. Some additional task-related training is usually provided through a formal period of induction.
Skills enhancement and development in sustaining growth
Education– Oxford University Said Business School & Dept of Cont.
Ed Oxford University entrepreneurship education.
• Oxford BrookesApprenticeships
– Training provided by government labs and Oxford University
– Specialist motorsport training– New university technical college in Didcot – vocational
education focusing on science and engineering
Entrepreneurial culture, Entrepreneurship and cluster development Entrepreneurship Buildings Networks Image
Spin-offs
Science parks
Incubators
Cluster focused technical assistance
Network facilitators, developing academic and non-academic networks
Mentoring services
Place marketing and development, promoting brand image, organization of showcase events
Human capital
Recruitment Training Vocational Public access to knowledge
Recruitment of graduated undergraduate and post-grad students
Vocational courses – technical and teaching e.g. technicians training-
Placement schemes
Continuing professional development and extension programmes
Public lectures and public access to libraries, museums, galleries, sporting facilities
Direct multiplier effects Staff, student and visitor spending
Purchase of goods and services
Contribution to tourism
Support for inward investment
Governance
Engagement in decision-making processes economic
cultural
sustainability
transport
Contribution to sustainable development contribution to the quality of the built environment
contribution to property-led urban regeneration
provision of student accommodation
effects on parking and traffic problems
other land use issues
Source: Patel 2002, Glasson 2003, author’s survey.
Universities and local economic development
Science and technology-based assets
• Global brand, conveying an image of academic excellence • Oxford University, with outstanding research and teaching,
and Oxford Brookes, one of the best performing new UK universities
• Unique grouping of ‘big science’ and other research facilities, including the UK Atomic Energy Authority (UKAEA) Centre for Fusion Research; the Science and Technology Facilities Council (STFC) Rutherford Appleton Laboratory; Diamond Light Source, the UK’s synchrotron facility; the Medical Research Council’s facilities at Harwell, and the Satellite Applications Catapult Centre
• High level military education at Shrivenham (Cranfield U).
Oxford Science Park 1991 Review of Technology Transfer Arrangements 1994 New head of Isis Innovation 1997 Regional Liaison Officer appointed 1999
1960s 1970s 1980s 1990s 2000s
University & Isis Innovation Begbroke Science Park Industry Committee 1988 2000 1965 Isis Angels Oxford University Consulting
Network 2001 1988 OxSEC Industrial Liaison 2001 Officer Venturefest 1989 2001
Entrepreneurship Said 2006 Oxford Spin-Out Equity Management 2008 Knowledge Exchange & Impact sub-committee 2009 Oxford Invention Fund 2011
Timeline of major Oxford University ‘third stream’ initiatives
Isis Innovation, Oxford University technology transfer company (1988, 1997)
• Isis Angels Network 1988• Oxford Innovation Society 1990• Review of Technology Transfer Arrangements
1994 • New CEO of Isis Innovation 1997 • Oxford University Consulting 2001 • Oxford Spin-out Equity Management 2008• Oxford Invention Fund 2011
Locational factors mid-1980s• Proximity to the founder’s home was the critical factor;
– 87 establishments (53%) gave this as a reason.
• 17% spin-offs by existing companies (17) • Access to labour was mentioned by only 20 establishments
– of much more significance for manufacturing than for R & D establishments and not at all for software houses.
• 8 manufacturing firms, 2 R & D and 2 s/w gave access to technical information was the most important reason (7.3%).
• Very few were likely to move out of the county• 20 establishments moved into Oxfordshire. • Overseas rather than local markets important• High levels of local subcontracting
2011 QuestionnaireObjective: what was locally important more or
less than in previous decades?
• Company’s sector focus and product portfolio• Company’s human resources• The Oxfordshire location• Company’s engagements with academia, research
laboratories, local companies and public authorities• Company’s financial and innovation performance • Company’s internationalization• Other insights into the relevance of the Oxfordshire
location to the firm and its growth.
Reasons for being in Oxfordshire
Source: Survey 2010--2011, Survey 1996-1997, Survey 1986-1987: 7 companies
Illustrative companiesDate established
Type Employees
2012/13NAG
(Numerical Analysis Group)
1976 Scientific and technical software
90
Penlon 1943 Medical instrumentation - anaesthetics
47
SOPHOS 1981 ICT data security and protection
1682
MR Magnet Technology
1983 Medical Instruments - imaging
470
Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012
SOPHOS
Number of Sophos’ R&D Centres
Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012I
Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012
Relevance of regions for Sophos’ Recruitment
The Three Most Important Reasons for SOPHOS to Stay in Oxfordshire
Survey 2011-2012 Survey 1996-1997 Survey 1986-1987
First important reason to stay in Oxfordshire
Founders/key staff home
Attractive local living environment for staff and directors
Pleasantness of surroundings
Second important reason to stay in Oxfordshire
Access to skilled labour
Access to high quality skilled labour (research staff in particular) Close to founder's home
Third important reason to stay in Oxfordshire
Presence of other high technology firms and services
Reputation and prestige of a Cambridge/Oxford address Oxford image
Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012
MR Magnets: three most important reasons for remaining in Oxfordshire
Access to skilled labour 1
Quality of life 3
Access to universities and research institutions
Relocation costs
Presence of other high-technology firms and services
Location 2
Founders/key staff’s home
Local informal networks
Local formal networks
Other (please state)
Local governance
City Deals (2012) (National Funding) • intended to give participating areas ability to use funds better for
local needs such as training and skills, roads etc. Oxford and Oxfordshire City Deal vision ‘to accelerate the growth of the city region’s knowledge-based economy’
Regional Growth Fund (National Funding)• 2.6 billion fund across England 2011 - 2016, which supports
projects and programmes that are using private-sector investment to create economic growth and sustainable employment
Oxford and Oxfordshire Local Economic Partnership (LEP)• Both universities represented at the Pro-Vice Chancellor level
– http://www.oxfordshirelep.org.uk/cms/
Sustaining growth: the research base and local growth strategies
• Science Vale UK– Harwell, Milton Park, two local district councils (Vale
of White Horse and South Oxfordshire), the Oxfordshire Local Economic Partnership, Oxfordshire County Council and the Science and Technology Facilities Council (STFC) http://www.sciencevale.com/
• University science parks, proposed bioescalator and University of Oxford’s plans for growth
Conclusions: sustaining growth - what needs to be overcome?
• Numerous interconnected factors responsible for high tech economy growth relating to its exceptional features
• But 2013 SQW report highlighted• Chronic shortage of early stage investment capital
+ intransigent banks• Extensive national visa requirements for highly-skilled foreign
workers.• Lack of leadership from within Oxford University in local
systems of governance + lack of leadership per se?• Lack of linkages between University of Oxford and high-tech
firms.• National policy works on assumptions that more effect needs to be
invested in local growth strategies focused on innovation – must therefore be things to fix!