What I’ve seen the last few days is a great ecosystem centred on economic development. This is local innovation in action and NZ could learn a lot from this at a time when we seem with obsessed with centralisation.
Suzhou Bureau of Commerce
I met with the team who are across every bit of data which is collected, analysed and reported. By the end my heading was exploding so thankfully I had a book to take away. One relevant statistic with all the talk of foreign investment in NZ (albeit it’s in housing which doesn’t generate export revenues): Suzhou has 17,000 enterprises from dozens of countries that have invested over USD$100b of foreign capital.
As outlined yesterday, growth has been achieved through starting with some initial strengths in the processing trade and then moving into more value add aided by foreign investment which also enables domestic investment. As part of the open economy, development zones create the ultimate atmosphere for business to grow.
Suzhou Industrial Park
Then it was onto Suzhou Industrial Park (SIP), which is a development zone similar in philosphy to Suzhou New District which I visited yesterday. It was set up in 1994 as a cooperation between the Singapore and China governments as a test area for the opening up of the economy where policies, incentives and business models being trialled.
The way they have attracted and proactively chased foreign investment from a number of continents is impressive, learning considerably from Singapore and then adapting for their own environment and continuously improving.
Fast forward to now and they have been so successful they are running out of land within the zone…what a great problem to have.
So how does all this apply to NZ, and locations of any size?
‘Ecosystem’ is one of those buzz words used in many industries, so I’m loathe to use it but there’s no better way to describe the understanding and application needed to get economies growing.
In simple terms (and I will miss some stuff)…Start with whatever industry(s) your region is good at and create an open environment with good infrastructure. Make it simple for businesses to operate and work with local government to develop a long term vision which changes along the way. Do the boring but highly important collection and reporting of the data that matters – not just GDP and employment but the really grunty stuff like number of patents created and percentage of exports. Use this data to not only guide decision making but to actively attract businesses and capital – both domestic and foreign. Add more value to products and services. This grows profits which creates higher wages, both of which create more taxes (aka business wins – government wins). Higher wages attract more talent which requires universities to provide training, and colleges to feed in to the universities, ditto for primary schools…who teach kids about business (and civics!) all the way through. Well connected universities spin out more research and alongside this people develop ideas which turn into intellectual property. These ideas require investment of all shapes and sizes generating work for support industries (lawyers, accountants, banks, advisors). While this pipeline of new business is growing, look after existing businesses. The challenge is to then grow and scale business and so the cycle spirals upwards.
The question is, what are the missing links in NZ?