Houston and Norway working together

The Cockatoo Network is currently devoting considerable resources to identifying mechanisms to encourage cross-border collaboration. Here is an interesting example involving two world-class nodes. It appears that one of the triggers for the relationship was Paul “Red” Adair, a great Houstonian, who made his name in Norway by resolving the Bravo Oilwell Blowout of 1977.

The Houston Chronicle recently ran an article as follows.

Norway and Houston have long-established and strong ties. Business is, and has always been, at the heart of our relationship. More than anything else, our relations have been influenced by shipping and oil.

Houston is a global maritime and offshore oil powerhouse and Norway’s third-largest U.S. gateway for seaborne trade. Last year, 579 Norwegian ships called at Houston, representing some $760.4 million worth of seaborne trade. Many Texas-based companies, such as Exxon Mobil, ConocoPhillips, National Oilwell Varco, Marathon Oil and FMC Technologies, have made major investments and built up significant operations in Norway. Moreover, technology transfer from Texas was essential to the Norwegian oil industry in the 1970s. The experienced oilmen who laid the foundations of the Norwegian offshore adventure were, to a large extent, Texans.

Houston is home to the largest concentration of Norwegian energy companies outside Norway. Furthermore, about 7,000 Norwegians today live and work in the Houston region, mostly in the energy, maritime, space and medical fields, as well as in higher education and research. Some 140 Norwegian companies have a presence in Houston, creating a number of workplaces.

Entrepreneurship Policy in the Nordic Countries

Most Nordic countries have been pursuing aggressive policies to promote entrepreneurship – a new report from Norway’s Nordisk Innovations Center assesses how they’ve performed.

 

The report recognizes that Nordic nations are making major investments, especially in areas related to R&D spending. It also notes an increasing convergence between entrepreneurship and innovation policies.

 

Yet the report criticizes the absence of effective program evaluations. There are poor linkages between researcher and policy makers, and most policies are developed in a top-down manner. Policymakers must do a better job of reaching out to entrepreneurs, and designing programs that meet their real needs and demands.

 

Go to Entrepreneurship Policy in the Nordic Countries; Perspectives of the Development Since 2003.

 

New emphases in aid field

 

 

 

The Annual World Bank Conference on Development Economics (ABCDE) in Tokyo in May 2006 highlighted some VERY timely issues worthy of contemplation by economic development practitioners.     

§          A call for new analytical and evaluation tools to help infrastructure choices in energy, transportation, water. ”Our approach to infrastructure must focus not just on economic growth or human growth,” said Bank President Paul Wolfowitz in his opening address “It must also focus on ‘smart’ growth…growth that is economically sound, environmentally friendly, socially acceptable, locally desirable, and most important, growth that makes a difference in people’s lives.

§          Infrastructure investments have often failed the test, said Japanese Finance Minister Tanigaki. “Hasn’t donor support simply left ‘white elephants’ behind? Have we paid enough attention to adverse environmental and social impacts? Have we had sufficient dialogue with stakeholders?”

§          WB Chief Economist Bourguignon argued for better understanding of linkages between infrastructure investments and growth; getting the right balance between public and private involvement; dealing with cross-border issues and externalities – shared road and rail links, shared pollution; establishment of systems to deliver better data and evaluation.

§          JICA will merge with the ODA lender Japan Bank for International Cooperation in 2008, forming “the world’s second-largest integrated development agency after the World Bank.” 

§          Richard Manning (DAC Chairman) noted that “emerging donors” – Russia, Korea, Poland, Turkey, Brazil, China, South Africa, India – are using aid to position themselves to transform their relations with other countries. This could result in a slowdown in developing-country reform efforts.

§          Manning applauded moves by the UK, Ireland, Norway, and Australia to untie 100% of their aid, and Canada’s decision to allow 50% of its food aid to be procured in the beneficiary region.  

 

Vestas takes the bait in Singapore

Hard on the heels of Heinz’ decision to base its regional headquarters in Singapore, Vestas Wind Systems, the world’s largest manufacturer of wind turbines, located its R&D team of 150 engineers there in 2005. It included a reported investment of $US319 million over the next 10 years.

The Danish company has installed more than 30,000 wind turbines in more than 50 countries, and has 35% of the world wind energy market. It has new plants in China, Denmark, Germany, Italy, Scotland, England, Spain, Sweden, Norway, India and Australia.  

Vestas’ efforts in Australia are instructive. Although Vestas windfarms have sprung up, and the company established an assembly plant at Wynyard (Tasmania), no serious value-adding occurred by way of a blade plant or R&D. There was the prospect of SA and Tasmania combining their purchasing power to spark something, but no one could connect the dots. But now Vestas announced the closure of the Wynyard plant at end 2006, with the loss of 65 jobs. This is a real surprise given that the plant was only commissioned a couple of years previously.

BusinessWeek reported in 2005 that the clincher for Vestas in Singapore was the chance to collaborate with local universities, which would team up with the Singapore EDB covering almost all of Vestas’ research costs. “The EDB offered us almost everything we wanted and more,” says Vestas Asia President Thorbjorn Rasmussen.

Nordics and NZ catch Dutch disease

CEDA (Australia) has recently published an extremely timely research paper ‘Innovation and growth in resource-based economies’ prepared by ex-UK academic, Keith Smith. Salient points include: 

It is sometimes argued that abundant natural resources are actually an obstacle to development. The “resource curse” keeps developing countries stuck in low value-added and low growth activities. The main economic explanations offered for the phenomenon are:
§          the “Dutch disease” – exchange rate appreciation as a result of the resources sector renders domestic activity uncompetitive, and labour supply decreases (as the resources sector draws off key labour inputs from the rest of the economy) combine to inhibit non-resource growth.
§          declining terms of trade and commodity instability prevent capital accumulation.
§          resources create rent-seeking behaviour that undermines entrepreneurship and growth.
§          resources sectors generally involve a lack of linkages with the wider economy. 

Finland, Sweden, Norway, Denmark, Iceland, New Zealand, the Netherlands, Canada, and Australia share some of these characteristics. These small, open economies have rested their development paths on resource-based sectors, and out of them have developed low- and medium-technology industries that have driven growth. Even where some countries – Sweden, Finland, the Netherlands – have developed significant high-tech sectors, they have supplemented the low- and medium-tech specializations. If we look at NZ, we find that innovation activity is widely distributed across all the major sectors, according with the “pervasiveness” characteristic. Within manufacturing, innovation is found across all segments, regardless of their formal classifications of technology intensity…NZ has innovative low-tech sectors. Innovation policy for resource-based economies can’t simply be based on high-tech sectors…Linkages, development blocks or clusters have not, in similar economies, emerged out of some general propensity to cluster growth – they have emerged from location-specific resources, and have developed in logical ways both forward and backward. The result is strong “vertical” clusters. For NZ, an important challenge is to technologically upgrade and innovate in food & beverages, textiles & clothing, printing & publishing, timber products etc. while also developing their upstream and downstream potential. 

Such linkages need not be directly into related manufacturing industries. The clearest case is Australia where the major financial markets in Sydney are heavily focused on specialised finance for the resource sector. Resource exploration involves major risks, and the investment markets in Perth and Sydney are heavily involved in managing the risk-spreading portfolios of the resource sector.  

A final question – Are there spillover effects related to resource extraction? Czelusta and Wright (2004) suggest that “if resources are developed through advanced forms of knowledge development, their spillover effects may be just as powerful as anything done in manufacturing”. 

Contact the editor for a copy of the full report. 

ILO report – Norway No. 1 re productivity on hourly basis

 

 

The International Labour Organisation has released its major biennial report on the world labour market.  §          The gender gap (female and male employment-to-population ratios) in East Asia and Developed Economies (12.9% points) and Middle East, North Africa and South Asia exceeds 40% points!§          Agriculture (36%) now second to the services sector (42%) as the main sector of employment. §          Productivity levels increased fastest in East Asia, where output per worker almost doubled. Considerable increases also in Central & South-Eastern Europe (non-EU) & CIS and South Asia.§          USA continues has the highest labour productivity levels (US$63,885), followed by Ireland (US$55,986) and Luxembourg (US$55,641). But Norway has highest productivity when measured on hourly basis (US$37.99), followed by USA (US$35.63) and France (US$35.08). View the 2007 ILO study, Key Indicators of the Labor Market.