A Global Review of
Innovative Practices in Regional SME
Exporting Strategies and Foreign
Direct Investment Attraction
Innovate Michigan! Summit
Heritage Room,
MSU Kellogg Center
Thursday, September 6, 2012
Introduction
• MSU CCED team conducted research to:
• Identify innovative practices in regional SME exporting
strategies and FDI attraction on a global scale.
• Answer the following questions:
• How can regions act strategically to increase SME exporting?
• What are the ways to increase support for exporting in regions?
• What outreach strategies can be used by local entities to encourage
SMEs to begin exporting?
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The Nexus Between Exporting and FDI
• Common goal shared by exporting and Foreign
Direct Investment (FDI):
• Cause additional economic assets to flow into a
region from outside that region.
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International Review of
Innovative Practices in
Regional Export Strategies
Singapore, Germany, Canada, South Korea, Japan,
Italy, Australia, Estonia, Azores Island (Portugal)
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International Review of Innovative Practices in Regional Export Strategies
Singapore
• Singapore Economic Development Board (EDB), est. 1961, has
international reach designed to attract foreign direct investment.
• Substantial FDI is attracted to Singapore by its open legal
framework and transparent policies.
• The Singapore Ministry of Trade and Industry targets SMEs through
SPRING Singapore and the Exporter Development Program.
• Serving as a trade hub and exporting its trade services, Singapore
provides an example for successful exporting strategies.
• Using its geographic advantages, Singapore has become a multimodal transportation hub/gateway to SE Asia.
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International Review of Innovative Practices in Regional Export Strategies
Germany – SME Exporting
• SMEs account for 98% of German exporters
• Transportation and manufacturing are biggest exporters.
• Exporting 47-50% of German GDP since 2007 (World Bank).
• Each region has a development bank that enables SMEs
to access business development loans.
• Regional cluster internationalization strategies.
• Regional cross-border trade program between German
North Rhine-Westphalia and Netherlands called INTERNED.
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International Review of Innovative Practices in Regional Export Strategies
Germany – Regional Clusters
• Extensive utilization of clusters pushes Germany’s
strong export performance.
• Clusters provide a means by which smaller companies can
attain a global reach.
• Cluster Objectives:
• Pool regional competencies.
• Initiate collaborative technology development.
• Carry out mutual networking.
• Learn from like clusters.
• Conduct training and educational activities for companies within the
clusters.
• Generate international business.
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International Review of Innovative Practices in Regional Export Strategies
Germany – FDI Attraction
• Germany Trade and Invest
• Mission: Promote Germany as an investment location and
identify investors.
• Established 2009.
• Advises and supports foreign investors.
• Assists German companies seeking foreign markets.
• Provides client-specific information and consultancy services.
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International Review of Innovative Practices in Regional Export Strategies
Canada
• Export Development Canada
• Provides export insurance and intelligence on market
trends and export strategies.
• Team Canada, Inc.
• Helps SMEs develop export plans, identify target markets,
and plan export financing.
• Trade Team B.C. (Regional)
• Provides one-on-one coaching and foreign market
contacts for SMEs.
• Helps SMEs prepare to enter the export market.
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International Review of Innovative Practices in Regional Export Strategies
South Korea
• FDI attraction and export promotion in South Korea centers around
the use of Foreign Trade Zones.
• Free Economic Zones within the FTZs provide incentives for foreign
investments and advanced physical infrastructure,
• Also streamline customs procedures and export regulations for
foreign companies.
• Invest Korea works with foreign investors as a one-stop service to
establish foreign businesses in Korea, promoting regions to
investors.
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International Review of Innovative Practices in Regional Export Strategies
Japan
• Japan External Trade Organization (JETRO) offers companies a
business matching database,
• Enables companies to search/find business partners online.
• JETRO works with regional governments to:
• Attract foreign investment.
• Develop business incentive programs.
• Promote the region overseas.
• Identify foreign investors.
• Train regional government personnel in investment-promotion.
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International Review of Innovative Practices in Regional Export Strategies
Italy
• Italy aims to improve SMEs’ position in foreign markets
•
By designating 3 regions and developing 8 regionally-focused support programs.
• Piedmont region (northwest Italy) is powerhouse performer.
•
•
•
Home to 200 R&D centers and 12 locally-supported innovative clusters.
Contributes 41% of all Italian exports and
32% of the national GDP.
Australia
• TradeStart network assists export innovation in rural regions where:
• Exporters are growing at 3X the rate of their metropolitan
counterparts and
• Exports account for one in four of all jobs.
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International Review of Innovative Practices in Regional Export Strategies
Estonia
• SME development is hinged on regional development.
• Specific support measures are provided for each of the
13 regions.
• Estonian Exporters Database enables Estonian
companies to provide foreign buyers information on the
products the company offers.
• Foreign companies can use the database to pursue Estonian
partners and joint ventures.
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International Review of Innovative Practices in Regional Export Strategies
Azores Islands, Portugal
• Small chain of islands 1,000 miles off the coast of
Portugal.
• Provides insights into the key drivers of
internationalization for SMEs based in remote or isolated
areas.
• Illustrates the importance of using a network of social
ties supporting exports.
• Through communication between native SMEs and its emigrant
communities.
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Review of Innovative Practices in
Regional Export Strategies
in the United States
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National Export Initiative (NEI)
• Announced by President Obama in 2010.
• NEI aims at doubling exports by the end of 2014.
•
2011 National Export Strategy was developed by the federal Trade
Promotion Coordinating Committee with 70 recommendations in 80
priority areas.
• Only 1 of the 70 recommendations involves a regional approach.
• Four SME priority areas:
1. Identify SMEs that can begin/expand exporting.
2. Prepare SMEs to export successfully.
3. Connect SMEs to export opportunities.
4. Support SMEs once they find export opportunities.
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National Export Initiative (cont.)
• In preparing SMEs, it is recommended that export
opportunities be promoted among competitive industry
clusters.
•
U.S. Small Business Administration (SBA) has provided 20 contracts to
support SME counseling through regional innovation clusters.
• Next Step
•
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Identify clusters interested in follow-up engagement with export service
providers.
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SelectUSA
• Created to showcase the U.S. as the world’s premier
business location a year ago (June 15, 2011).
•
Provides easy access to federal-level programs and services related to
business investments.
• Works with EDOs and stakeholders to help regions attract investments.
• Offers cluster analysis to regions and helps companies maintain their
competitive advantage.
• Michigan Success Story
• In a collaboration with Michigan Economic Development Corporation
(MEDC) and local agencies, attracted Canada-based bumper mfr. AGS
Automotive’s investment of $20 million in its Sterling Heights facility.
• Retained 50 jobs and will create 100 new jobs.
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U.S. International Trade Commission (ITC)
• Published 3 major reports in 2010 on role of SMEs in
exporting and comparative analysis of exporting
activities & barriers faced by U.S. and European SMEs.
• “Small and Medium-sized Enterprises: Overview of
Participation in U.S. Exports.”
http://www.usitc.gov/publications/332/pub4125.pdf
• “Small and Medium-sized Enterprises: Characteristics and
Performance.”
http://www.usitc.gov/publications/332/pub4189.pdf
• “Small and Medium-sized Enterprises: U.S. and EU Export
Activities, and Barriers and Opportunities Experienced by
U.S. Firms.”
http://www.usitc.gov/publications/332/pub4169.pdf
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Brookings Institute U.S. Regional Strategies
Minneapolis- St. Paul
• Export initiatives coordinated by a network of
export service providers, including:
• Universities, chambers of commerce, local EDOs, private
consultants, finance and legal advisors, logistics experts.
• Minneapolis-St. Paul marketing focuses on
advantages in health and wellness sectors.
• Proximity to Medtronic, 3M, St. Jude Medical, and the
Mayo Clinic.
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Brookings Institute U.S. Regional Strategies
CenterState, NY (Syracuse area)
• Regional marketing efforts will be concentrated first on
boosting exports to Canada.
• "Tag-a-long" program to link strong exporters with
growing SMEs.
• One-stop, streamlined export assistance service.
• Build export awareness through marketing.
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Brookings Institute U.S. Regional Strategies
Greater Portland, OR
• Export initiatives coordinated by:
• Portland Development Commission; Metro Regional
Government; Port of Portland; Portland State University;
Columbia River Economic Development Council; Portland
Business Alliance.
• “We Build Green Cities”
• Marketing strategy targeting strong green technology sector for
exports.
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Brookings Institute U.S. Regional Strategies
Los Angeles
• Established the Los Angeles Regional Export Council
(LARExC).
• Linking new exporters to old in one-on-one programs.
• One-stop website for regional export assistance: “Los
Angeles Region Exports.”
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Trade Development Alliance of
Greater Seattle
• Collaboration between Seattle and surrounding cities &
ports.
• Goal
• Promote Seattle Region as international gateway and
commercial center to foreign and domestic companies.
• Use its comparative geographic advantage.
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Georgia—
Port of Savannah-Atlanta Logistics Hub
• Georgia Center of Innovation for Logistics has held
yearly logistics summits since 2010.
•
Past keynote speakers have included the Governor of Georgia and
representatives from the Georgia Ports Authority, U.S. Department of
Commerce, Volkswagen, Coca Cola, UPS, Norfolk Southern, and GE
Energy.
• Georgia is also home to:
Georgia Tech’s Supply Chain and Logistics Institute.
• Atlanta Technical College’s Logistics/Supply Chain career training
program.
•
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Review of Innovation in
Bi-National Collaboration
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Innovation in Bi-National Collaboration –
North America
• Pacific NorthWest Economic Region (PNWER),
1991
• Statutory, cross-border, public-private partnership chartered
by 5 U.S. states and 5 Canadian jurisdictions.
• Washington, Oregon, Alaska, Idaho, Montana.
• British Columbia, Alberta, Saskatchewan, the Yukon, and Northwest
Territories.
• Primary Goal: Share best practices and policy solutions to
improve the regional economy.
• Greater Sault Region – Sault Ste Marie, Michigan,
USA and Sault Ste Marie, Ontario, Canada
• Signed Sister City Agreement signed on August 16, 2012
with collaborative economic development goals.
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Innovation in Bi-National Collaboration –
Europe
• INTER-NED – Netherlands/West RhineWestphalia
• Targets German and Dutch SMEs and freelancers.
• Marketplace Baltic Region
• Cost-free Swedish import help desk provided by Association
of Swedish Chambers of Commerce and Industry for Baltic
Sea Region businesses.
• Germany and Korea – Bi-national Cluster Cooperation
• Cooperation between complementary clusters in two
countries.
• 1986 - Cooperative learning agreement.
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Innovation in Bi-National Collaboration –
Europe (cont.)
• Transitional Network of the Greater Region of
Germany, Luxemburg, Belgium and France.
• Aimed at assisting skilled craftspeople adjust to
administrative, legal, technical, linguistic, and cultural
differences that accompany trade to bordering regions.
• Econet Platform: Austrian, Czech, Slovak SMEs
• Designed to foster innovation and competitiveness in region.
• Includes seminars and SME consulting.
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SME Market Drivers and
Regional Environment Factors
• Spanish studies on embracing the positive impact of the
“national name brand” of Spanish agriculture.
• Growth-related factors seem important as internal
motivators.
• SMEs are also motivated in their internationalization
decisions by factors within their environment.
• Social ties, supply chain links, etc .
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Collaboration in Bi-National Regions
• Four bi-national and multi-national trade assistance
programs in EC.
• e.g., Österreich Service helps German SMEs comply with
Austrian regulations.
• U.S. border and near-border EDDs often have inherent
export and bi-national collaboration advantages.
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Exporting & FDI Innovative Practices
MSU CCED Research Team
J. D. Snyder
Kenneth E. Corey
Kevin Doyle
Jeff Gepper
Matt Snyder
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Thank you!
We appreciate your feedback.
J. D. Snyder
Project Director
MSU Center for Community and Economic Development
SnyderJ6@msu.edu
517-353-9555
www.knowledgeplanning.org
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