Public Sector Strategies and Globalization

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Public Sector Strategies and Globalization
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The Goal of Public Sector Strategies

• Design and implement policies to optimize the
  net benefits of global economic integration.

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Specific Objectives

• Promote real economic growth
• Generate widespread net economic benefits
• Retain meaningful political and cultural
  sovereignty

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The Policy Context (Enright)

• Industries are globalizing
• But specific value-added activities tend to
  cluster in specific regions, e.g. Silicon Valley,
  Wall Street.
• How to encourage the emergence of high
  value-added clusters?

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Contributions to Clustering

• Home-country bias for HQ activities
• Agglomeration economies
• Specialized inputs
• Economies of scale
• technology spillovers
• Transportation cost savings

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Regional Characteristics

• Pool of specialized business and technical
  services
• Research universities
• Physical infrastructure
• Competition

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Cluster-Based Development Policies

• Improve the general business environment
• Information and promotion
• Infrastructure/education/training
• Business services

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Generic Models

• Organic Cluster Strategies
• Transplant Cluster Strategies
• Hybrid
• Catalyst versus Interventionist

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Ideal Cluster

• High innovation capacity
• Dense vertical and horizontal linkages
• Strong local preference

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The Dark Side of Cluster Strategies

• Urban-Rural Split
• Regional competition within countries
• Playing-off governments
• Special interest groups gain at expense of
  taxpayers

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Plant Upgrading

• Peters Holy Grail of cluster strategy is to link
  innovation activities to manufacturing activities
• Upgrading local production facilities is one
  realistic initiative

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Case Study Scottish Electronics Sector

• Main selection criterion for promoting subsidiary
  plant upgrading match with Scotlands sectoral
  strengths in electronics.
• Encourage co-location of advanced product
  development with mfg.

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Case Study- continued

• Competition from other jurisdictions
• MNC parent requirements
• local research competence and expertise
• proximity to world class manufacturing
• availability of engineering skills
• world class customers

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Case Study- continued

• Parent company did promote Scottish affiliates to
  centres of excellence
• Manufacturing sites often became strategic
  business units
• Agglomeration benefits are notable

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Case For Discussion

• Imagine that you have been hired by Governor
  Lockes office to develop a cluster strategy
  for Whatcom County. Specifically, the Governor
  wants to encourage the growth of foreign direct
  investment in Whatcom County. Discuss how you
  might undertake such a study.