Developing Entrepreneurial Economies in Rural Regions

1
Developing Entrepreneurial Economies in Rural
Regions

• Presented by
• Craig Mathisen
• at
• Rural Community Vitality in a Global Economy
  Conference
• University of Minnesota USA
• September 13-14 2002

2
Global rural decline and entrepreneurship?
3
Some rural issues in Australia

• Lack of certainty about incomes due to
• commodity price fluctuations
• deregulation of industry (globalisation)
• Increasing rules and regulation (environmental)
• Lack of investment (public and private) in rural
  areas
• Lack of appropriate infrastructure esp
  telecommunications
• Loss of jobs and people to urban areas
• Loss of political clout..rural people now a
  minority group
• Corporate farming has negative impact on
  communities
• Use technology to compete globally,,,shed labour
• Urban values imposed on rural communities
• Scenic amenity, environmental laws,
• Agriculture seen as old sunset industry

4
(No Transcript)
5
(No Transcript)
6
The small rural communities are getter smaller
Of the Local Government Areas that are losing
population 35 have populations under 3,000 11
are between 3,000 and 10,000 only 4 are larger
than 10,000
7
5 components to this presentation

• Sustainable firms in global economy
• Entrepreneurial economies (firms communities)
• Rural vs urban entrepreneurship
• Rural case study
• Actions to facilitate dynamic rural economies

8
1997-8 Clusters approach to regional development
9
Key Issues for Economic Sustainability

• 1. Sustainable 21st century firms
• will need to be
• fast to innovate
• flexible
• customised
• networked
• international focus
• 2. Location of firm must allow it to meet above
  requirements
• 3. Better /Faster /Smarter decision making
  required (in an increasingly complex world)
• 4. Innovation
• at all times in all circumstances

10
1.The Evolving Foundations of Economic Development
1950s - late 1980s
1990s -21st Century
TARGET INDIVIDUAL FIRMS INDUSTRY
SECTORS
TARGET GROUPS OF FIRMS
(clusters, networks)
ATTRACTION
ATTRACTION
EXPANSION
EXPANSION
Enterprises
Firms
CREATION
CREATION
Adaptable Human Resources

Accessible Technology
Accessible Natural Resources
Ample, lowest cost labour
Overall availability of capital
Available Physical Infrastructure
Financial Subsidies / Incentives
Basic Physical Infrastructure
Acceptable Regulatory Climate
Advanced Communications
Low Taxes and Minimal Regulation of Business
Operations
Attractive Quality of Life
11
Entrepreneurial Regional System
global niche markets
Entrepreneurial Firms
Entrepreneurial Supply chains
Entrepreneurial Economies
Entrepreneurial Communities
12
Critical elements of Strategy
1. Global marketplace
World
Qld
Aust
2. SUSTAINABLE Competitiveness of
Enterprises (existing emerging traded
linkages) (1 option Clusters)
MISSING LINK
4. COORDINATED EFFORT comprehensive package
public private community
5. Continuous Improvement
3. STRONG ECONOMIC FOUNDATIONS Technology RD
Communications Infrastructure Networks
Skills Quality of Life Marketing Capital
6. MEET COMMUNITY EXPECTATIONS (through networks
and indicators)
vision
13
1998 Rural community reaction

• If this strategy is correct, and we assume it
  is, then our rural community is doomed.
• We could never compete in the global economy

14
Some initial issues for developing
entrepreneurial rural economies

• The challenge of attracting investment in
  anything rural
• Rural communities and constant change
• Entrepreneurs as change agents
• The role of the community in supporting
  entrepreneurs
• Fostering entrepreneurial spirit
• Building long term relationships quickly trust!

15
Is rural entrepreneurship harder than urban?

• Some natural disadvantages
• low critical mass of like minded people
• access to markets
• access to information
• cultural influences
• access to finance and equity
• attitudes towards change
• positive approach and access to new learnings
• age, ethnic and gender issues

16
Is rural entrepreneurship harder than urban?

• Some unnatural disadvantages
• perception that the rural decline
• dying towns dying industries
• perception that ruralagriculture poor
  investment
• perceptions about the poor farmer
• perception that the more urban and regulated we
  become, the less adventurous we are
• losing that entrepreneurial spirit that rural
  and regional Australia was known for.

17
A simple four part ED strategy

• Plug the leaks
• Support existing business
• Encourage enterprising people and activities
• Attract compatible new business

18
Entrepreneurial emphasis to a simple four part ED
strategy

• 20 Plug the leaks
• 20 Support existing business
• 40 Encourage enterprising people and
  activities
• 20 Attract compatible new business

19
Actions to encourage enterprising people and
activities

• Support business information hunters
• your town library should be a cornerstone of
  economic development
• Build networks of like minded people
• critical mass
• Provide an idea support role
• opportunities are in the eye of the beholder
• Facilitator role for idea development
• Idea investor events
• Business mentors
• Business angels

20
A high performance community

• NOT a high growth community
• can be an individual town, a local authority,
  multi-community group
• Common interest in implementing 7 high
  performance action strategies

21
7 high performing action strategies

• Rapid uptake of modern telecomputing capacity
• promotion of entrepreneurship in public and
  private sectors
• jobs growth from within
• awareness, interest and participation in global
  market place
• economic development focus that build on local
  interests
• interfirm collaboration
• regional collaboration

22
Why are some communities more successful than
others?

• A Slight level of dissatisfaction
• A Positive attitude towards
  experimentation
• A High level of community discussion
• A History of Implementation

23
Successful communities Entrepreneurs

• A Slight level of dissatisfaction
• A Positive attitude towards
  experimentation
• A High level of community
  discussion
• A History of Implementation

• Uncomfortable with the status quo, and
  willingness to change
• Pursue and idea or dream without regard to
  resource constraints
• Openly discuss ideas and crave information from a
  variety of sources
• Risk takers. Failed start-ups try all over again

24
The Littleton entrepreneurial approach to
economic development

• Be a economic gardener, not a economic hunter
• nurture the 3 of small, fast growing firms
• increase information flows throughout the
  community
• build entrepreneurial support networks within the
  public, private and community sectors

25
Are all entrepreneurs to same?

• At least 4 distinct business types
• nascent
• novice
• serial
• portfolio
• Other
• intrapreneurs
• Civic entrepreneurs

26
3 Myths about entrepreneurship for rural regions

• Entrepreneurship always means high tech
• fastest growing firms produce follow market
  trends, not technology trends.
• Its about information flows and flexibility
• Entrepreneurship means rapid growth at cutting
  edge of innovation
• many successful firms are me-too firms, just
  doing something thats already been done, only a
  little better, or in a different market, a
  particular niche, while they innovate
  incrementally
• Entrepreneurship works in urban areas not rural
  areas
• most successful are serial entrepreneurs, that
  is, they have already owned one business.
• Most people in rural regions own their own
  business (including farming business)
• its the entrepreneurial climate that may need
  attention!

27
Benefits to rural communities for supporting
entrepreneurs

• Demonstrate good business traits
• Innovative
• Focused
• Risk takers
• Thrive on change
• Use local resources
• in new ways to produce new goods or services AND
  they own their own methods and products
• Thrive in communities where there is a widely
  publicly supported can-do attitude

28
Ingredients for a entrepreneurial culture

• Support enterprising people
• Even in the most depressed communities, there are
  people who are capable of doing amazing things
• Micro-enterprising
• small business is often big business in rural
  areas
• Information
• entrepreneurs are voracious when it comes to
  gathering information
• Support Networks
• Communities that have rich connections to the
  world beyond their boundaries are likely to be
  more successful

29
DPIs rural development strategic focus

• Encourage Individuals to form groups of like
  minded people
• Marketing Alliances
• Supply Chains
• Clustering
• Provide soft infrastructure skills
• Group dynamics
• Trust
• partnerships
• Focus on niche markets
• Focus on innovation by value adding to existing
  products
• Encourage Groups to take regional focus
• Encourage self help and capacity building

30
2 case studies
31
Central Packhouse Fresh Pty Ltd (CPH Fresh)
Established July 1997 - Six grower
members. Primarily grow, pack and market the
regions Capsicum, Zucchini, Squash, Eggfruit.
2000 - 16 grower members.
830,000 cartons valued A5.3 million employ 50
to 80 staff.
AMCOR Packaging
Vegetable Growers
P H Rural
Lindsay Bros. Transport



1.3 million investment in new packing equipment,
buildings, cool storage, quality assurance and
staff and logistics.
Central Packhouse Fresh Pty Ltd
Processors
Agents
Woolworths
Coles
Franklins
New Zealand
Hong Kong
32
Aus Food Exports Pty Ltd (AFE)
16 Firms 6 food sectors 1 stop shop 3 years to
set-up
33
Some rural and remote success stories

• Dates, olives, wild bush limes to 5 star
  restaurants
• Mutton done up as mutton campaign
• Organic beef to export markets
• Aquaculture 1000kms from sea
• Sheep for meat, rather than wool

34
A 5 point action plan towards developing an
entrepreneurial rural community

• Assess your communitys readiness
• (download High Performance Communities handbook)
• Identify your 3 of individuals/firms driving
  growth
• Provide them with information flows,
  communication and self help training to overcome
  tyranny of distance
• Include support for entrepreneurship as a
  fundamental part of your ED strategy
• Maintain the effort and accept that people will
  say we did it ourselves

35
Conclusions

• Entrepreneurial activity is a basic element of
  every economic development strategy
• yet it is rarely addressed in a strategic
  context.
• Rural community social networks are important
  elements of rural economic development networks
• Rural entrepreneurship is more difficult than
  urban
• and needs a multi-dimension policy approach

36
Conclusions

• Successful rural communities must have the
  ability to constantly adapt to ever-changing
  economic conditions, that is, be entrepreneurial
• An entrepreneurial approach to economic
  development does have a positive community impact
  in regions where people are struggling to cope
  with rate of change

37

• It is not the strongest of the species that
  survive,
• nor the most intelligent,
• but the ones most responsive to change

38
ENDCraig MathisenA/Director, Regional
ServicesDepartment of Primary IndustriesQueensla
nd. Australia. 4570e-mail craig.mathisen_at_dpi.qld
.gov.auphone 61 408 154 352