Archive for December, 2012

Smart Specialisation and Precincts

December 16, 2012

The European Commission is much involved in urban and regional development thinking, and it has been promoting the Smart Specialisation concept. It basically involves EC regions specialising in activities that align with their competitive advantages. And the Commission offers financial inducements to this end.

Now the churlish might argue that this policy shift has come a bit late to help Greece, Spain and Portugal. But the truth is that ‘regions’ hold a lot of sway in Europe – they are a fundamental part of its social and industrial fabric.

What about north America, Asia, Australia and elsewhere?

Well they’ve just scraped the surface to date. Various federal and state governments have established loose policy frameworks for things ‘spatial’, and they provide a springboard for Smart Specialisation policies. Indeed, there are three reasons why a Smart Specialisation agenda would be timely.

First, Smart Specialisation themes will appeal to Treasury/Finance economists, and thereby help get support for better regional funding programs.

Secondly, smart specialisation concepts can provide a vehicle for federal/state departments dealing with regional development to swing other departments into collaborating on projects.

Thirdly, advancing a locality’s competitive advantage wins respect from cynical voters. Politicians are forever being accused of using regional grants to pork barrel – but by concentrating on specialised areas, the scope to politicise grant making is reduced.

Precincts – a vehicle for specialisation

Precincts and hubs are a means of capturing locational synergies and nurturing regional specialisation.

Alfred Marshall (Principles of Economics, 1890) was espousing this stuff more than a century ago. He talked about particular locations having types of specialisation. Indeed he anticipated later discussion of the role of place as a point of information exchanges, and of innovation developing through that “something in the air” that arises when people mingle and exchange ideas.

Marshall identified four particular features of precincts – knowledge spillovers as a result of informal networking; access to a common pool of factors of production such as labour or R&D facilities; specialisation of production within supply chains; and the facilitation of ‘comparison shopping’ for buyers.

Precincts are, by the way, virtually synonymous with clusters, and my colleagues and I are quick to highlight this to government officials who still think clusters are about picking winners and that companies are so ‘wired to competition’ that they cannot collaborate. Rubbish of course.

Five tips for facilitating specialisations and precincts

Anyway, getting back to the subject, it makes good sense for councils and regional champions to use local specialisation and precinct concepts in their lobbying efforts to federal and state agencies. Below are some suggested initiatives that could complement your lobbying effort.

1. Map your specialised assets and the linkages between them. This is a natural start point, and a great marketing tool. Examples – The Napa Valley (US) and Food Barossa (Australia) have done a good job of identifying and explaining its specialty food producers.

2. Get international agencies to study or talk about your area of specialisation. Depending on where you are, you might use the OECD, UN agencies or the World Bank to raise international awareness, and the agendas then filtered back to your state. We can connect you to these agencies.

3. Commission university research studies on national issues at your local level. These can be good copy for the daily newspapers, which in turn educate external audiences about your local specialisation.
4. Leverage your champions. Example – Americans are great at this. Now Wellington and NZ is on the global film and technology map thanks to Peter Jackson and his insistence on filming the Hobbit trilogy and Lord of the Rings. Prime Minister Keys supported him. And Hobart is more than Errol Flynn’s birthplace – it has reinvented itself thanks to the Museum of Old and New Art (MONA) created by eccentric gaming mogul David Walsh.
5. Do something bold and innovative. Towns, cities and suburbs often have specialisations, but they’re hidden to the outside world. A bold project can lift the specialisation profile.
The Cockatoo Network, based in Canberra, wants regions anywhere to share their ideas on Smart Specialisation. We are also linking clusters across international borders to facilitate trade and investment. Please contact us at or visit our blog at investmentinnovation.wordpress.