This week we welcome over 450 delegates from around the world to the Basque Country for the annual global conference of The Competitiveness Institute (TCI Network). This year’s conference seeks to address the critical issue of how to construct place-based competitiveness in times of rapid global change. Putting the conference together has been a real team effort, combining enormous amounts of energy and ideas from a whole range of stakeholders. The many months of planning, alongside other related research projects I have been working on recently, have led to some personal reflections on what it means to build place-based competitiveness.
While it is common to talk about corporate strategies, it is much less common to analyse territorial strategies. This is perhaps strange given that cities, regions and nations are building blocks of the world economy. Competitiveness is essentially constructed from place: people, firms and other institutions all need the right environment to thrive, and yet it is they themselves that must create that environment in the places where they are based.
Indeed, while part of the international scrutiny of the Spanish economy in recent months has focused on the problems of devolving policy competences to regions, there are in fact large advantages from regions and cities taking control of policy if coordination issues can be overcome. In particular, well-functioning regions and cities bring decision-making closer to the people and firms that make up the economy, and can enhance accountability, efficiency and the chances of making the right decisions to boost competitiveness. See for example the conclusions of this recent ESPON project regarding cities and territorial development in Europe.
So what makes for a successful region or city? The key is to harness the creativity and energy of its people and firms towards a common set of goals. Above all it is important that there exists a coherent and evolving strategy with which government policies can be flexibly aligned. This is where regions have a big advantage, as such strategies are much more difficult to construct at national level, where there is more geographical (and sometimes cultural) distance and less opportunity for face-to-face interaction between stakeholders.
As with corporate strategy, the central issue when it comes to constructing a territorial strategy is the type of soicioeconomic activities that should be developed, both now and in the future. Experience in different parts of the world has uncovered some guiding principles. Firstly, a territorial strategy should build from what is already there; it is much easier to develop new activities from existing strengths. Secondly, it is important not to specialize too much in one activity; this leaves the region vulnerable to changes in demand, prices, technologies, etc..
In general, evidence suggests that successful regional strategies are based on an ‘intelligent diversification’ that seeks and creates synergies across different socioeconomic activities. These synergies strengthen the productive and social texture of the region, making it both more resilient to changing circumstances and more innovative. To achieve this, an inclusive process that builds linkages between different stakeholders is critical. While never an easy process, it should encourage continual exchange of ideas and visioning of the shape of the future economy to ensure that the region is always one step ahead and, most importantly, heading where it wants to go.
It is exciting to think that right now people are travelling from around the world to convene in the Basque Country to discuss these sorts of issues, and I am looking forward to learning a lot from the discussions and sharing of experiences over the coming days. Indeed, while place is important in constructing competitiveness, transcending place through such global networks of mutual learning is equally important and should be a key part of any territorial strategy.
A shorter version of these reflections was published in Spanish as an opinion article in elconomista.es.