Innovation cluster & competitiveness

The Caribbean Centre for Competitiveness (CCfC) recently held a forum entitled, Innovation, Clusters and Competitiveness—the role of the University and a University-based Competitiveness Centre. This initiative was the first major outreach by the centre since its inception and launch at the Lok Jack GSB Distinguished Leadership and Innovation Conference in March 2011. The centre has the mandate to increase the effectiveness of productive development policies in the Caribbean by increasing the institutional capacity of the region to generate and share knowledge as it relates to private sector development and competitiveness. 

The initial funding for the centre is being provided by the Inter-American Development Bank, the United Kingdom’s Department for International Development and CEDA.  

 

 

Cluster development is seen as an alternative path to regional integration. Thus far, regional integration has followed the dictum of the Balasa Model, which envisions integration as a process in stages where there is a gradual removal of barriers moving towards full political union. In the region, this has been operationalised through the mechanisms of Caricom and later the CSME. Caribbean scholars, Clive Thomas and Havlock Brewster, have questioned the applicability of the Balasa Model in the Caribbean citing weak internal linkage as a major drawback. To this end, they recommend that integration take place through a process of inter-sectoral linkages. For instance, they cited the integration of the bauxite industry in Guyana and Jamaica with the energy sector in Trinidad. 

 

Value creation

The thrust towards the development of regional clusters is centered on integration along the lines of thinking as suggested by Thomas and Brewster. Clustering is intended to lead to the development of related and supporting firms and industries so as to form a basis for value creation and relevant innovation. The major purpose of the CCfC’s forum was a presentation from Prof Adam Holbrook from Simon Fraser University in Canada. Holbrook brings with him a wealth of knowledge and experience in the area having been heavily involved in policy research in this area as it relates to the Canadian experience. The professor dissected the issues of innovation and clustering into separate units and presented some useful lessons and models on each area. We must bear in mind that a model would be contextualised using certain underlying assumptions. As such one cannot expect that the assumptions that would hold true for Canada would readily fit the reality of Caribbean states. 

 

As is commonplace with such models, while very useful as a starting point, it would need to be adapted to the relevant and peculiar circumstances and characteristics of Caribbean economies. There are some similarities between the Canadian and Caribbean situations. Canada (except for Quebec) was a former colony of the British Empire and a part of the Commonwealth. As such the institutional arrangement for legal, political and bureaucratic systems would hold some similarity. Some of the clusters that were indentified in Canada, such as oil and gas, tourism, art and culture and financial services, are the same as established and potential sectors for the Caribbean. Also, the professor described the Canadian economy as being “city states” and is regional in nature. He emphasised that each region has its distinctive societal aspects: language, history and entrepreneurship. The Caribbean regional situation can also be described as being “city states.” This, however, is where the sameness ends and the difficult contextual questions must be answered.

 

Equalisation payments

We must bear in mind that the CCfC has as its focus the entire Caribbean region, so the recommended is that it must have a regional focus. Canada might be described as regional “city states,” as they are made up of many provinces from the Yukon Territories to Newfoundland, are all under one political directorate that is headed by the Canadian Prime Minister. This is unlike the Caribbean region where we are all independent countries with our own political, economic and social agendas. When we consider the regional governance structure and the practical difficulty there is in coming to any sort of agreement on major issues, the Caribbean “beast” looks different from the Canadian.  To take this further, each of the independent Caribbean states is at different levels of development, economically and institutionally. The Canadian economy is classified as being developed and where there might be regional disparities, its political arrangement makes rebalancing less visible and palatable. 

 

As was pointed out by Holbrook, the eastern territories, which are not major exporters, receives “equalisation payments.” Further, the level of institutional development and capacity would be more uniform across Canada than the Caribbean. Given this, policy initiatives for competitiveness and development would take on a different look than for us in the Caribbean. There are wide disparities in the level of development of regional economies. If we take this from the perspective of competitiveness, we see that according to the classification in the World Economic Forum (WEF) Global Competitiveness Index, T&T and Barbados are economies in transitions (stage 2 to stage 3) while the other countries would be classified as factor driven economies (stage 1) or in transition from stage 1 to 2. According to competitiveness guru, Prof Michael Porter, in the lower stages infrastructure, development is the usual focus for competitive progress.

 

For economies in the higher stages, however, competitive developmental strategies must hinge on institutional development and capacity building. This difference in priorities could be a significant intermediating variable in forging a regional perspective on competitiveness, of which cluster development is a part, and can be a potential “sticking point” to regional agreement. These issues are by no means insurmountable, but merely needs to be factored into the debate and discussion in forging a path to regional cluster development and operationalisation. There are also other issues that were raised in the forum such as private/public partnership and collaboration, the issue of channelling university research into industrial practices and product development and lessons learn from previous efforts at cluster development. The fact is innovation and cluster development need to be urgently addressed at the regional level and the CCfC is a welcomed impetus to this end. On a related note, the Lok Jack GSB is in the process of collecting the data for the WEF Global Competitiveness Report (2012/13). We look forward to the support from business leaders in filling out the executive opinion survey which forms the major input in generating this Global Competitiveness Index.

 

Balraj Kistow is a

member of faculty of the Arthur Lok Jack GSB

www.lokjackgsb.edu.tt