What is the new economy in Oxfordshire? Helen Lawton Smith Department of Management Birkbeck, University of London & Oxfordshire Economic Observatory, Oxford University Presentation at Department of Planning Seminar Series, Oxford Brookes University, March 6 2014 Overview •What are the features of Oxfordshire’s ‘new economy’? • How is it similar and different to the ‘old economy’? • What are its exceptional features? • How is it changing? • As an entrepreneurial region, how is it being sustained? Main sources of evidence used today • DPhil thesis School of Geography Oxford University 1990 • – The Location and development of advanced technology industry in Oxfordshire in the context of the research environment • Current study- where are they now? • OEO reports since 2001 – oeo.geog.ox.ac.uk including Enterprising Oxford (2003, 2007) – OEO team: Lawton Smith, Glasson, Chadwick, Romeo, Waters • OEO contribution to SQW Oxford Innovation Engine Report (2013) • Lawton Smith, Glasson et al (2013) ‘Enterprising Regions:evidence from Oxfordshire and Cambridgeshire’ Assessing the innovativeness of a region • what is specifically regional in the innovative process in the region under consideration? – Direct and indirect evidence • what are the alternative possible explanations for regional economic performance in the regions under consideration? • what is the conceptual model of this relationship? (Storper 2000) Storper and an evolutionary economic geography approach • ‘it is not enough to simply summarize the evidence on regional hightechnology growth in the 1990s, with standard indicators such as number and size of firms, employment, some remarks on products, etc. But that is not generally what is meant in the literature by evolutionary. This term comes specifically from evolutionary economics, and is inherently tied up with notions such as interdependence among actors, the way that such interdependencies and spillover effects create histories and render certain kinds of developments possible and impossible, and so on, all of which are generally summarized in the notion of path dependencies. To analyze such path dependencies (or evolutionary trajectories), then, there has to be careful attention to the factors that bind actions together and generate specific pathways in time and space. Its much more than just describing, however competently, the fact of how a given regional high tech economy grew in the 1990s.’ (Storper 2000) Examples of other conceptual models relating to innovative entrepreneurship and regional growth • • • • Innovative milieux (Camagni 1991) Regional innovation systems (Cooke 1992) Clusters (e.g. Porter 1995) Knowledge spillover theory of entrepreneurship (Audretsch and Keilback 1995) • Feldman and Francis (2006) three stage growth model • Regional triple helix spaces (Etzkowitz 2008) • Fritsch and Schindele 2011 – labour markets and entrepreneurial activity Governance: entrepreneurial regions • ‘entrepreneurial regions are defined by growing high levels of entrepreneurship and innovation, and as regions with outstanding entrepreneurial visions’ (EU, 2013). • must also be places where there is co-ordinated entrepreneurial activity to put those visions into practice so that ecosystems function effectively. • agency of research institutions, local government, skills agencies and so on working together. An economic transformation: from a rural town with a famous university, a car industry to a high tech economy • Oxfordshire was in the top 19 counties of high technology industry in 1981 (Hall 1985) and R&D did not feature in the list of key sectors in the City of Oxford in that year. – Highest employment categories in Oxford City motor vehicle manufacture and education – both 16% (8.5% and 12.3% respectively in the county) • Mid-1980s, 182 R&D-intensive advanced technology firms employing 10,659 people • 35 university spin-offs • late 1990s - developing as a national and internationally important high-tech economy based in the South East of England, part of the Thames Valley, itself the richest and most dynamic economy in the UK outside London (Economic Development Strategy for Oxfordshire 1998/9, 4). • 2014 growing high-tech economy but on some indicators is underperforming comparator regions – Cambridgeshire and Thames Valley Oxfordshire’s new economy: exceptional features • Rapidly growing number of high-tech firms, clustered in a few sectors (manufacturing and service) • strong science base • highly skilled labour market • anchor high-tech firms • business survival rates better than England levels and any other county council area. • Networks e.g. Oxford Trust (Science Oxford), OBN, Venturefest Advanced Technology Industry in Oxfordshire: Employment Change by Activity March 1987 Activity Heading (1980 SIC) 1979 1987 No. No. Est's Est's 1979 Emps 1987 % Change Emps Chemicals/Pharm/Biotech Engineering Computers, office machinery, electronic data processing eqpt Electrical equipment Telegraph & telephone eqpt Electrical Inst. & Control Radio & electronic capital goods Components & other electronic eqpt Racing car manufacture Vehicle components Scientific & Precision Instr. Other Manufacturing 2 5 8 9 95 490 87 385 -27.5 -23.8 3 5 1 4 9 10 1 53 10 5 4 1 9 6 39 651 20 576 187 4 109 1000 260 2111 460 988 72 1885 562 46 362 530 295 2270 +1079.0 +51.7 +260.0 +226.6 +200.0 +600.0 +232.1 -47.0 +13.5 +7.5 Computer software 4 25 302 577 +91.1 R & D/Consultancy 13 32 1886 2140 +13.7 50 182 7731 10659 +37.9 Total 6 2 4 1 _____________________________________________________________________ Number of employees Total employees sectors) (all As % of total employees 320,600 100 Eurostat high-tech sectors manufacturing services total 4,000 16,000 20,000 1.2 5.0 6.2 Wider high-tech sectors manufacturing services total 13,100 29,900 43,000 4.1 9.3 13.4 SOURCE OEO/SQW 2013 Oxfordshire’s largest high tech sectors (wider definition) by employment 2013 • computer, electronic and optical products (3,500 employees), • motor vehicle manufacture (3,500), • publishing activities (5,500), • computer related activities (8,200), engineering & technical consultancy (7,100) scientific research and development (5,700). • Biomedical sector?? Anchor high-tech firms • Some earliest firms and largest firms originated in Oxford University or had a university connection • Penlon 1943 • Littlemore Scientific Engineering Ltd 1953 • Oxford Instruments 1959 • Research Machines (RM), 1973 • Sophos 1981 Oxfordshire labour market • One of most highly qualified labour markets in the county – Three-fifths of Oxford residents in employment are in managerial or professional occupations, compared to around two-fifths in Great Britain • 2011, 21,000 students at Oxford University, 11,752 UGs and 9, 621 PGs – Rising student numbers e.g. Oxford University had only 5,312 PG students in 2000/1 hence a rise of over 5000 in 10 years • About a third Oxford University (32.62%) and Oxford Brookes University (34.6%) students stay in the county after their first degree. GVA per hour in Oxfordshire, Source ONS, 2013 Managers, directors and senior officials A significant amount of knowledge and experience of the production processes and service requirements associated with the efficient functioning of organisations and businesses. Professional occupations A degree or equivalent qualification, with some occupations requiring postgraduate qualifications and/or a formal period of experience-related training. Associate professional and technical occupations An associated high-level vocational qualification, often involving a substantial period of full-time training or further study. Some additional task-related training is usually provided through a formal period of induction. Percentage of employed residents in SOC 1-3 in Oxfordshire Skills enhancement and development in sustaining growth Education – Oxford University Said Business School & Dept of Cont. Ed Oxford University entrepreneurship education. • Oxford Brookes Apprenticeships – Training provided by government labs and Oxford University – Specialist motorsport training – New university technical college in Didcot – vocational education focusing on science and engineering Entrepreneurial culture, Entrepreneurship and cluster development Entrepreneurship Spin-offs Buildings Science parks Networks Image Human capital Recruitment Training Vocational Public access to knowledge Incubators Cluster focused technical assistance Network facilitators, developing academic and non-academic networks Mentoring services Place marketing and development, promoting brand image, organization of showcase events Recruitment of graduated undergraduate and post-grad students Vocational courses – technical and teaching e.g. technicians trainingPlacement schemes Continuing professional development and extension programmes Public lectures and public access to libraries, museums, galleries, sporting facilities Direct multiplier effects Governance Engagement in decision-making processes Contribution to sustainable development Staff, student and visitor spending Purchase of goods and services Contribution to tourism Support for inward investment economic cultural sustainability transport Source: Patel 2002, Glasson 2003, author’s survey. Universities and local economic development contribution to the quality of the built environment contribution to property-led urban regeneration provision of student accommodation effects on parking and traffic problems other land use issues Science and technology-based assets • Global brand, conveying an image of academic excellence • Oxford University, with outstanding research and teaching, and Oxford Brookes, one of the best performing new UK universities • Unique grouping of ‘big science’ and other research facilities, including the UK Atomic Energy Authority (UKAEA) Centre for Fusion Research; the Science and Technology Facilities Council (STFC) Rutherford Appleton Laboratory; Diamond Light Source, the UK’s synchrotron facility; the Medical Research Council’s facilities at Harwell, and the Satellite Applications Catapult Centre • High level military education at Shrivenham (Cranfield U). Oxford Science Park 1991 Review of Technology Transfer Arrangements 1994 New head of Isis Innovation 1997 Regional Liaison Officer appointed 1999 1960s 1970s University & Industry Committee 1965 1980s 1990s Isis Innovation 1988 Isis Angels Network 1988 Industrial Liaison Officer 1989 2000s Begbroke Science Park 2000 Oxford University Consulting 2001 OxSEC 2001 Venturefest 2001 Entrepreneurship Said 2006 Oxford Spin-Out Equity Management 2008 Knowledge Exchange & Impact sub-committee 2009 Oxford Invention Fund 2011 Timeline of major Oxford University ‘third stream’ initiatives Isis Innovation, Oxford University technology transfer company (1988, 1997) • Isis Angels Network 1988 • Oxford Innovation Society 1990 • Review of Technology Transfer Arrangements 1994 • New CEO of Isis Innovation 1997 • Oxford University Consulting 2001 • Oxford Spin-out Equity Management 2008 • Oxford Invention Fund 2011 Locational factors mid-1980s • Proximity to the founder’s home was the critical factor; – 87 establishments (53%) gave this as a reason. • 17% spin-offs by existing companies (17) • Access to labour was mentioned by only 20 establishments – of much more significance for manufacturing than for R & D establishments and not at all for software houses. • 8 manufacturing firms, 2 R & D and 2 s/w gave access to technical information was the most important reason (7.3%). • Very few were likely to move out of the county • 20 establishments moved into Oxfordshire. • Overseas rather than local markets important • High levels of local subcontracting 2011 Questionnaire Objective: what was locally important more or less than in previous decades? • • • • Company’s sector focus and product portfolio Company’s human resources The Oxfordshire location Company’s engagements with academia, research laboratories, local companies and public authorities • Company’s financial and innovation performance • Company’s internationalization • Other insights into the relevance of the Oxfordshire location to the firm and its growth. Reasons for being in Oxfordshire Source: Survey 2010--2011, Survey 1996-1997, Survey 1986-1987: 7 companies Illustrative companies Date Type established Employees 2012/13 NAG (Numerical Analysis Group) 1976 Scientific and technical software 90 Penlon 1943 Medical instrumentation anaesthetics 47 SOPHOS 1981 ICT data security and protection 1682 MR Magnet Technology 1983 Medical Instruments imaging 470 SOPHOS Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012 Number of Sophos’ R&D Centres Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012 I Relevance of regions for Sophos’ Recruitment Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012 The Three Most Important Reasons for SOPHOS to Stay in Oxfordshire Survey 2011-2012 Survey 1996-1997 Survey 1986-1987 First important reason to stay in Oxfordshire Founders/key staff home Attractive local living environment for staff and directors Pleasantness of surroundings Second important reason to stay in Oxfordshire Access to skilled labour Access to high quality skilled labour (research staff in particular) Close to founder's home Third important reason to stay in Oxfordshire Presence of other high technology firms and services Reputation and prestige of a Cambridge/Oxford address Oxford image Source: Survey 1986-1987, Survey 1996-1997, Survey 2011-2012 MR Magnets: three most important reasons for remaining in Oxfordshire Access to skilled labour 1 Quality of life 3 Access to universities and research institutions Relocation costs Presence of other high-technology firms and services Location Founders/key staff’s home Local informal networks Local formal networks Other (please state) 2 Local governance City Deals (2012) (National Funding) • intended to give participating areas ability to use funds better for local needs such as training and skills, roads etc. Oxford and Oxfordshire City Deal vision ‘to accelerate the growth of the city region’s knowledge-based economy’ Regional Growth Fund (National Funding) • 2.6 billion fund across England 2011 - 2016, which supports projects and programmes that are using private-sector investment to create economic growth and sustainable employment Oxford and Oxfordshire Local Economic Partnership (LEP) • Both universities represented at the Pro-Vice Chancellor level – http://www.oxfordshirelep.org.uk/cms/ Sustaining growth: the research base and local growth strategies • Science Vale UK – Harwell, Milton Park, two local district councils (Vale of White Horse and South Oxfordshire), the Oxfordshire Local Economic Partnership, Oxfordshire County Council and the Science and Technology Facilities Council (STFC) http://www.sciencevale.com/ • University science parks, proposed bioescalator and University of Oxford’s plans for growth Conclusions: sustaining growth - what needs to be overcome? • Numerous interconnected factors responsible for high tech economy growth relating to its exceptional features • But 2013 SQW report highlighted • Chronic shortage of early stage investment capital + intransigent banks • Extensive national visa requirements for highly-skilled foreign workers. • Lack of leadership from within Oxford University in local systems of governance + lack of leadership per se? • Lack of linkages between University of Oxford and high-tech firms. • National policy works on assumptions that more effect needs to be invested in local growth strategies focused on innovation – must therefore be things to fix!