How to use
prioritization methods
in the course of
implementation of RIS3
S3 Platform – Peer review workshop
25 February 2014, Rīga
Introduction
• Methodology for selecting and reviewing RIS3 priorities
via identification of industry sectors with highest growth
potential.
• Method developed by a group of experts: Gundars
Kuļikovskis, Aiva Švēde, Gatis Ābele, Krišs Riekstiņš
during June, July – 2013 as part industry analysis for RIS3
Latvia
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
2
RIS3- Simplified
(1) Analysis
(6)
Monitoring
(2) Process
RIS3
Strategy
(5) Policy
mix
(3) Vision
Continuous
improvement
Review cycle
once a year
Analysis,
evaluation
(4) Priorities
Implementation
Design,
Adjustment
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
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Challenges
•
•
•
Identification of industries with highest growth potential for selecting
RIS3 priorities should be evidence based process, based on hard and
objective data
Were to create human capital to benefit from it, rather than feed to brain
drain
Implementing RIS3 is aiming at moving target. Re-evaluation of priorities
should be done on regular basis:
•
•
•
•
•
Important changes in external context should be expected during strategic
planning 7 year cycle
Non-linearity. Even successful policies result in unforeseen changes in internal
context
Process of re-evaluating priorities should be compatible with process of
initial strategy setup
Rent seeking is a problem at every step. Lobby groups are powerful and
government needs strong arguments
Cost of re-evaluation should be reasonable
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
4
RIS3 – strategy of economical
transformation
•
•
•
Economic transformation should lead to higher productivity at
individual as well as cumulative level
Innovation is the key to move to higher value products and activities
Successful smart specialization:
•
•
•
•
•
•
Increase trade - higher volume of exports & imports
Decrease number of technologically unrelated products produced locally
Increase value of products produced locally per volume
“What You export matters” by Ricardo Hausmann, Jason Hwang &
Dani Rodrik
Export is the key for growth
Moving to higher value products can be done only step by step using
existing and related production factors
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
5
Sectorial gap analysis
•
•
•
Value gap between Latvia and more developed countries is good
indicator of unrealized growth potential
Used 9 reference EU countries: Austria, Belgium, Denmark, Ireland,
UK, Netherlands, Finland, Germany and Sweden. We can expect that
these countries:
•
•
•
Done maximum in order to increase value
Similar environment and climate
There are no product requiring low skilled and low labour
Database of international trade (COMEXT). Data of international
trade of 2010, 2011 and 2012
•
•
•
4 digit product level which is highest degree of detail available
Export value (EUR) & volume (KG)
Only countries with significant volume or value of export. Country is
excluded in given 4 digit product group if it is not at the top 3 at any ofphysical volume, value or total value
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
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Gap calculation
•
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
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Results – growth potential by industry
sector
350
51
300
250
188
200
741
150
452
100
50
0 2
0
0.15
35
6550
75
242
309
124
200
400
600
348
169
800
1000
1200
-50
Kokrūpniecība
Pārtikas rūpniecība
Metāli
Ķīmiskā rūpniecība
Mašīnbūve un transportlīdzekļi
Lauksaimniecība
Datoru, elektriskās un optiskās iekārtas
Vieglā rūpniecība
Izdevējdarbība
Pārējā apstrādes rūpniecība
Nemetāliskie minerāli
Mēbeles
Papīra ražošana
Radošā industrija
Ieguves rūpniecība
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
8
Notes
•
•
•
Approach is very conservative. Movement to higher product value is in
very related product set . If we allow migration between the products the
gap is higher
The methodology is useful:
•
•
•
For measuring success of convergence of economy
For regions which by size is country due to type of data – Eurostat
Potential of industries does not reflect potential of direct investment into
industries.
•
•
•
For identifying sectors with potential for building up human capital
It might be that investment should be done in other: R&D, human capital,
internationalization etc. For example wood industry can move to higher value
product by employing nanotechnology
If the realization of growth potential is lack of investment then such investment
should be done by private capital
Most important lesson is shortlist of industries which have significant
value creation potential
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
9
Thank You!
Presentation@RIS3 Platform Peer Review Workshop. (C) 2014. FIDEA SIA.
26/02/2014
10