and Local Development in Andalusia, Spain A REVIEW BY THE LOCAL ECONOMIC AND EMPLOYMENT DEVELOPMENT (LEED) OF THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD) Marco Marchese, Jonathan Potter
ENTREPRENEURSHIP, SMES AND LOCAL DEVELOPMENT IN ANDALUSIA, SPAIN A review by the Local Economic and Employment Development (LEED) of the Organisation for Economic Co-operation and Development (OECD) FINAL REPORT
SMES and Local Development‘in Andalusia, Spain, has been undertaken by the Local Economic and Employment Development (LEED) Programme of the Organisation for Economic Co-operation and Development (OECD) in collaboration with Red de Espacios
and comments of RETA‘s management and staff. In particular, special thanks go to Mr. Felipe Romera, Ms. Lourdes Cruz, Mr. Daniel Gonzalez-Bootello,
the Investment Promotion Agency (EXTENDA; the Andalusia Institute of technology (IAT; the Andalusia Technological Corporation (CTA; the JEREMIE Funds programme;
In addition to Marco Marchese and Jonathan Potter of the OECD LEED Secretariat, the review team consisted of the following experts:
Human capital and the labour market, by Karen Chapple and Sergio Montero-Muñoz. Chapter III: The contribution of research organisations, by David Wolfe.
6 Human capital and the labour market...6 Contribution of research organisations...7 Entrepreneurship...9 SME development...
HUMAN CAPITAL AND THE LABOUR MARKET...32 Introduction...32 Policy issues...32 Assessment of the region...
127 Human capital and labour market...128 Contribution of research organisations...128 Entrepreneurship and start-ups...130 SME development...
135 EXECUTIVE SUMMARY The OECD Local Economic and Employment Development Programme (LEED) has undertaken a review on entrepreneurship, SMES and local development in Andalusia,
The study was carried out by an international review panel consisting of 6 international experts and 2 members of the Secretariat of the OECD LEED Programme.
i) the impact of human capital and the labour market on entrepreneurship and SME development; ii) the contribution of research organisations to entrepreneurship and SME development;
Human capital and the labour market The Andalusia labour market is affected by structural weaknesses High levels of unemployment,
large numbers of temporary workers and low productivity undermine the performance of Andalusia‘s labour market. Although the overreliance of the region on the construction industry and the subsequent housing bubble has contributed clearly to these problems,
even the sectors that employ highly educated workers are affected by structural problems. Regional human capital needs to be upgraded
which offers young college graduates financial support for their graduate work at top international universities, on the condition that they return to the region to work for at least four years.
Attendance of vocational training is on the rise In Andalusia a total of nearly 95 000 students attend vocational training,
The II Andalusia Plan for Vocational training, currently being prepared by the Ministry of Education, seeks to adapt vocational training to the new economy and new demand of jobs and occupations.
This will involve expanding online training; cooperating more closely with businesses, unions and others through advisory councils;
Vocational training has been very successful in the last decade in placing students in a job. That has resulted in an increased number of students during the 1990s
and workforce development programmes that makes it difficult for businesses to obtain appropriately trained labour and,
most pertinent for innovation, develop the pipeline of highly skilled workers that help transmit knowledge in regional clusters.
a separation between ministries concerned with entrepreneurship, education, and employment; and the lack of a workforce strategy tied to business cluster strategies.
but they lack sufficient and adequate staff Support for university research is provided through a range of institutions,
However, the function of OTRIS is hampered by limited staff to keep sufficient contact with local businesses.
This would correspond to an intermediate profile between academic and administrative staff that does not do research,
These staff limitations make it difficult for OTRIS to work with small firms and prompt them to focus their efforts on working with more R&d-intensive firms.
Regional universities are critical of this legal framework as it provides little guidance for determining how benefits should be shared in the course of contractual work.
University staff are prevented from holding more than a 10 per cent interest in private companies from being a member of a board of directors,
or taking a temporary leave from the university to form a private company. The act governing universities was amended in 2001 to allow university researchers a five year leave of absence without giving up their university position to participate in technology-based spinoffs.
etc. with a view to creating knowledge ecosystems that support local development, employment and social cohesion.
Both envisage attracting both talent (students, researchers, skilled workers, etc. and investment (national and foreign. Entrepreneurship Entrepreneurial culture is improving in the region There is a low but growing level of entrepreneurial culture in the region.
Although young people have seen traditionally the public sector as the natural route to the labour market, the sharp economic downturn in Andalusia may stimulate a greater willingness to embrace self employment and other forms of entrepreneurship.
This is clearly something to build on in the region via a greater focus on developing a culture of entrepreneurship at all levels of the education system:
The focus of the current programming period is on soft measures such as capacity building and institution building leading to greater competitiveness, innovation, and employment.
SME development The Andalusian business structure lacks medium-sized firms The Andalusia economy is dominated by SMES with over 99%of firms having less than 500 employees.
between 50 and 500 employees demonstrates an underlying structural problem in growing local enterprises to a level that can contribute more significantly to employment creation and regional growth.
The employment impact is certainly significant in a region that had hitherto been lagging in terms of new technology sectors;
The experience of RETA should be capitalised on The past work of RETA should be capitalised on for the future development of the region in at least three cases:
ii) the work of ICT literacy of SMES; iii) the survey of the innovative needs of local small firms.
although there is scope for the numbers of agents to be reduced and for a stronger sectoral flavour to their work.
This work could be followed up by ICT-specialised organisations that could assist small firms in introducing more complex solutions such as e-commerce.
Box 1. Main policy recommendations Human capital and labour market Link training programmes more effectively with sectors in order to improve firm productivity and innovation
Work across the silos of business and employment agencies by connecting business incentives with job creation in strategic sectors.
Establish cooperative education programmes engaging university students in alternating work terms with study terms throughout their undergraduate degrees.
including by targeting the new unemployed through self employment programmes. Setup a business incubation monitoring and evaluation system that assesses the performance of Andalusia incubators against EU current benchmarks.
and skills upgrading as channels for the promotion of innovation in the region. This will include involvement in future cooperative education programmes and retention of talented foreign students from local universities in technology parks.
Spatial variations within countries suggest that not all geographical parts of a country achieve similar levels of employment, skills development, business formation, economic growth and infrastructure development.
the regional economy of Andalusia has faltered badly with sharp drops in both gross domestic product (GDP) and employment.
offsetting only partially job losses and possibly accounting also for large numbers of self-employed workers in the construction and tourism industries.
The reliance on the temporary growth areas of construction and tourism also point to a major problem in the labour market.
SMES and Local Development has been carried by the OECD Local Economic and Employment Development (LEED) Programme in partnership with the Andalusian Technology Network (Red de Espacios Tecnologicos de Andalucía RETA).
and the Labour market It is recognised now well that the set of technical, cognitive, facilitative and operational skills competencies and knowledge,
often referred to as=human capital‘play a key role in the formation of a labour market and more generally in the development of an economy.
‘and the ensuing set of=knowledge-based‘skills have gained a higher profile than the offering of traditional manual, semiskilled and technically skilled labour.
2008) Human Capital and the Labour market Research and development Institutions: Framework and Governance Start-ups/New Firm Formation Existing Firms Innovation, Entrepreneurship and Economic Development Networks Input Factors for Framework Conditions Key Drivers of Innovation
The propensity of firms to be innovative through technological development is inevitably dependent on the skills levels of its employees and its owner-managers.
there are four labour market-related factors most critical to entrepreneurship in all its forms:(1) higher education;(
2) extensive work experience;(3) interaction with a variety of actors in the regional innovation system;
and generating policies that enable better forms of sustainable job creation. Methodology This report provides advice from an international perspective on how to strengthen SME and entrepreneurship policies in Andalusia.
i) human capital and labour market issues affecting entrepreneurship and SME development; ii) the contribution of research organisations to entrepreneurship and SME development;
Review panel visit The OECD Secretariat led an international panel of experts in a one-week peer review visit in Andalusia from 12 to 16 april 2010.
i) human capital and the labour market; ii) contribution of research organisations; iii) entrepreneurship and new start ups;
A final chapter summarises main conclusions and policy messages on entrepreneurship promotion and SME development for the region of Andalusia.
R&d as a%of GDP (2007) 0. 2 0. 2 University R&d as a%of GDP (2007) 0. 3 0. 4 Secondary education as%of labour force (2008) 20.7 16.8
Tertiary education as%of labour force (2008) 29.8 24.9 High-tech manufacturing as a%of employment (2008) 4. 8 2 Knowledge-intensive services as%of employment (2008) 28 9 26.9 Active
population (thousands)( 2008) 31 143 5 562 Labour market participation rate (2008) 73.4 68.9 Employment rate (2008) 65.1 56.6 Unemployment rate (2008) 11.3
17.8 Youth unemployment rate (2007) 18.1 23.3 Source: OECD Regional Database The socioeconomic context Andalusia is the southernmost region of peninsular Spain
and generally depicts a scenario of lower than average performance in R&d and innovation, education, and employment.
What was traditionally a region of outmigration 1. 6 million Andalusians migrated between 1955 and 1985 has recently become a region of immigration of mainly low-skilled workers.
This has come to reinforce labour intensive sectors such as tourism, construction, and partly agriculture. Fig. 1 illustrates population growth during the last eleven years,
This is in part the result of the influx of low-skilled migrant workers, but also a consequence of the growth of low added-value sectors that do not require high-level qualifications.
whereas vocational training has followed an opposite trend (from 4. 1%in 1998 to 5%in 2009).
Labour utilisation and labour productivity The recent economic crisis has struck Spain severely, and Andalusia has been no exception.
Whilst between 1997 and 2007 regional employment had increased at an annual rate of 6. 6%,higher by 2%than the national average,
since 2008 the labour market situation has deteriorated strongly, with unemployment rising from 11%to 27.2%in early 2010(+16.2%)compared to+12.7%for Spain as a whole.
The rapid soaring of unemployment has been the result of the industrial and labour market structures of the region.
On the one hand construction which had been one of the main sectors driving the economy in the booming period,
has also been one of those hit hardest by the recession, shedding in Andalusia a far higher number of jobs than at the national level. 1 On the other hand,
nearly half of new employment contracts over the last decade had been fixed of-term nature, many of which have been discontinued once the crisis has reached Andalusia.
Arguably, large regional unemployment also conceals a remarkable share of labour informality, which negatively impacts on labour productivity.
Autonomous Communities) with regard to labour productivity. This is the outcome of the local industry structure but also of low levels of formal tertiary education (see Table 1). Low labour productivity has also a dent on regional GDP per capita,
which we have seen being much lower than the national value. According to estimates by Reig (2010), differences in labour productivity accounted for 83%of spatial variation in GDP per capita in Spain.
Business demography and industrial structure Until the outbreak of the crisis, between 2005 and 2008, Andalusia had experienced a remarkable 10.6%growth in the number of registered businesses, with finance/insurance(+33%)and construction(+22
Micro firms (less than 10 employees) dominate the economy, representing over 90%of the total. This is typical of Figure 3. Andalusia's foreign trade and trade balance (1990-2008)( € 000s) Imports Exports Trade balance Source:
With regard to the industrial structure, until the 1. Employment in the Andalusia construction sector decreased in 2008 on annual basis by 13.6,
At present the regional government is geared mainly towards the promotion of the sectors listed below. Whilst some are new to the regional economic landscape,
Defence is an important subsector, with a turnover of more than EUR 1 500 million and over 11 000 workers employed.
Consultancies, joint research projects and university training programmes for employees were also relatively common involving between 15%-25%of the surveyed enterprises.
Between 5%-15%of the firms contracted R&d projects, use university facilities or exchanged staff,
whilst only less than 5%licensed patents or undertook joint start-ups with university staff (Fernandez-Esquinas et al.,
and more specifically of the Department of Science and Innovation, fall some of the main regional organisations committed to the promotion of economic development, among which the regional development agency IDEA, the trade promotion agency EXTENDA, the entrepreneurship agency ANDALUCIA
promotion of business clusters in strategic sectors for the region; attraction of domestic and international investments;
Through its network of 21 promotion offices in 19 countries, it provides information, consulting, training and funding for business internationalisation.
In the 1980s the emphasis was on the restructuring of labour-intensive sectors such as shipbuilding,
HUMAN CAPITAL AND THE LABOUR MARKET Introduction Human capital development and labour market dynamics play a key role in a knowledge-based global economy.
with a particular focus on the labour market characteristics of successful regional innovation systems. It then outlines the complex landscape of education and training
Though the system is hampered by many redundancies in training programmes, it also is experiencing gaps among different types of institutions,
Policy issues A rich literature debates the role of human capital formation and labour market dynamics in fostering entrepreneurship and innovation.
with particular focus on the role of education and labour policy in regional innovation. We first examine debates about human capital generally
then turning to the debates about labour market preparation for entrepreneurship. A final section describes the Spanish context.
Debates in the literature Higher levels of human capital create returns not only in terms of worker productivity but also of higher wages (Becker, 1965.
and the growth of these industries has altered fundamentally the labour market (Aoyama & Castells, 2002). In this new informational mode of development the source of productivity lies in the technology of knowledge generation, information processing,
resulting in rising demand for college-educated workers relative to their supply (Katz & Murphy, 2002).
wages are bid up for those workers who possess high levels of human capital while, due to falling demand,
wages fall or stagnate for less educated workers. Yet, institutions also play a role: national policies and international bodies regulate trade flows
The technical qualifications of employees (among other factors) even affect a company‘s attitude toward innovation (Coronado, Acosta, & Fernández 2008.
Not surprisingly, then, investment by firms in their employees‘human capital has been shown to encourage innovation and entrepreneurship (Sevilier, 2006.
Human capital that combines education and experience gives employees the adaptiveness so key to entrepreneurship (Wright, Hmieleski, Siegel and Ensley, 2007.
Work experience is important to innovation in part because a long career path brings broader social networks
Increasingly, researchers interested in regional innovation have focused on the role of labour mobility, particularly transnational immigration patterns.
To wrap up, the four labour market-related factors most critical to entrepreneurship appear to be: 1) higher education;
2) extensive work experience; 3) interaction with a variety of actors in the regional innovation system;
The idea is to adopt a system of easily comparable university degrees that would allow overcoming the current bureaucratic obstacles to the recognition of degrees and movement of students, researchers, faculty and staff within European universities.
The Spanish labour market differs somewhat from that of most European countries. Immigration to Spain from Latin american and EU15 countries has increased rapidly in the last decade.
However, a 1985 immigration law restricts the ability of immigrants to work, forcing them to obtain a job offer before seeking work visas and residency permits.
A 2005 opinion survey of the Spanish public found significant opposition to loosening immigration laws for workers, particularly among less-skilled Spaniards (Martínez i Coma and Duval-Hernández
2009). ) Social protection systems play a crucial role in reducing poverty and inequality in Spain,
Interestingly, Spain‘s unemployment benefits constitute a disproportionately large share of its social benefit package, relative to the EU15 countries on average.
Historically, Spanish labour market regulation has been notoriously rigid; the high costs of terminating employees are in part responsible for a shift towards temporary hiring contracts,
which are easier to end. As of June 2010, major labour market reform became provisionally effective; this will reduce the cost of permanent contracts and increase that of temporary contracts.
Employers will also have more flexibility in reducing working hours (and salary) of employees. These reforms may force Spanish labour market regulation to begin to converge with that of its northern European neighbours.
Although labour and immigration policies and programs come under the purview of the national government,
regions can still take action to attract immigrants by fostering a positive climate. For instance, the regional government of Madrid produced a business plan supportive of immigrants called New Madrileños,
Future Entrepreneurs after they realized that one out of four applicants for entrepreneurial assistance was foreign (Diario Independiente de Madrid,
) Assessment of the region Local labour market conditions The Andalusian labour market contains several structural weaknesses that distinguish it from the rest of the Spanish economy, namely:
the high level of unemployment, large reliance on temporary workers, and low productivity. Although the overreliance of the region on the construction industry and the subsequent collapse of the housing bubble clearly contributes to these factors,
even the sectors that employ highly educated workers are experiencing structural problems. Andalusia presents an example of=badly used human capital‘:
‘as the educational attainment of resident workers has increased, this is not employed appropriately enough to contribute significantly to economic growth (Cuadrado-Roura, 2010).
Already by 2009, unemployment among young adults (16-24) was considerably higher (38), %and among those with just a high school diploma, the unemployment rate stood at 56%(Instituto Estadístico de Andalucía, 2010).
The unemployment rate is closely related to the impermanence of much of the labour market: in 2007,45%of employed residents were in temporary jobs, 13.5%above the national average (Granados-Cabezas, 2010.
At the same time, as discussed further below, the last decade has seen students increasingly selecting traditional vocational training rather than university education (Junta de Andalucía, 2009.
In addition, the changing demographic structure in the region has affected labour market dynamics. The regional workforce is aging,
which uneducated workers out-migrate to one which attracts immigrant workers to work in unskilled occupations.
The immigrant population has increased from less than 1%of the total population in the early 1990s (mostly British and German retirees) to 8. 8%in 2009, mostly Latin americans (32%),African (24%)and EU-15 (20),
the Ministry of Employment; and the Ministry of Economy, Innovation and Science. In the mid 1980s, after education policies were transferred to Andalusia,
PAIDI‘s main focus is on technology transfer and the promotion of public-private partnerships between Andalusia public universities (dependent on the regional government) and companies.
with vocational training and non-university education remaining in the Ministry of Education. The idea was to use universities as innovation
Finally, the Regional Ministry of Employment has a less visible role in the Andalusia system of innovation described above,
despite having responsibility for employment policies, skills training for unemployed and employed workers (Formacíon Profesional por el Empleo FPL),
and integration of immigrant workers. Figure 8. Regional Agencies involved in human capital development Source: Personal elaboration based on the competencies of the three regional ministries as listed in www. juntadeandalucia. es as of July 2010.
on the condition that they return to the region to work for four years. By 2009, the program had funded about five hundred young Andalusians (Laurent, Periáñez and Petit de Gabriel, 2010.
Vocational training and apprenticeship programs The different systems of vocational training in Andalusia are as follows: 5 Erasmus is the EU flagship higher education program enabling 200 000 European students to study in a university from another member country each year.
Vocational training (Formación Profesional or FP) serves young people as a professional alternative to the Baccalaureate and university education.
Vocational training for employment (Formación Profesional para el Empleo or FPE) serves either dislocated or incumbent workers.
Initially conceived as an employment policy it is managed now by the Regional Ministry of Employment in coordination with the Ministry of Education.
Unions also collaborate in the training of workers with the Ministry of Employment. 6 Recently,
the government has created a new institution to regulate vocational training in the region: the Andalusia Institute for Occupational Qualifications (Instituto Andaluz de Cualificaciones Profesionales.
The Institute will be in charge of integrating the different vocational training systems (FP and FPE) based on a common system of occupational qualifications in collaboration with the national government and unions.
In Andalusia, a total of 94 710 students attend vocational training less than half the number that attend the public universities.
The II Andalusia Plan for Vocational training, currently being prepared by the Ministry of Education, seeks to adapt vocational training to the new economy and new demand of jobs and occupations.
This will involve expanding online training; cooperating more closely with businesses, unions and others through advisory councils;
teaching more foreign languages; and creating at least one vocational centre of excellence in each of the eight Andalusia provinces to improve public support and connections with businesses.
Vocational training has been very successful in the last decade in placing students in a job. That has resulted in an increased number of students during the 1990s
and CCCO) offer vocational training and apprenticeships both autonomously and in coordination with the Regional Ministry of Employment.
For instance, in 2009 they took part in an initiative of the Regional Ministry of Employment to train more than 1 000 students, workers and redundant workers of the aeronautic sector. 7 Spanish Minister of Education discourse in the Congress
The II Andalusia Plan for Vocational training will address several gaps in the system that can help link vocational training better to innovation and entrepreneurship for instance
. While the university offerings focus mostly on connecting high-tech workers and start-ups to entrepreneurship skills,
and low-skilled workers gain the capabilities they need to innovate more effectively. Below is a description of
but it also targets students (in high school, vocational training schools and universities) and women. ANDALUCIA EMPRENDE has more than 200 business incubators (Centros de Apoyo al Desarrollo Empresarial,
and vocational training schools, teaching students how to create and manage cooperative firms. For the highest level of vocational training students, ANDALUCIA EMPRENDE offers a business plan competition in
which the winners spend three days training in the business incubators. In collaboration with EXTENDA, they offer four training programs:
which promotes entrepreneurship in vocational training schools and secondary schools. Their training is based on improving the skills of employed people (in collaboration with the Ministry of Education)
1) a program to promote business education at vocational training centres; and 2) a university program promoting entrepreneurship,
Yet, such disconnects may hinder communication, foster more redundancy, and prevent training programs from adopting appropriate curricula
and workforce development programming that makes it difficult for businesses to obtain appropriately trained labour and,
most pertinent for innovation, develop the pipeline of highly skilled workers that help transmit knowledge in regional clusters.
a separation between ministries concerned with entrepreneurship, education, and employment; and the lack of a workforce strategy tied to=cluster‘strategies.
regional actors seem to have missed the more modest but important contribution of vocational training and education.
While hiring Phd-level workers might be key for highly innovative companies in IT or biotechnology sectors
or a new organizational method in business practices‘workplace organization or external relations takes place at these low-tech firms
Innovation and Science, there is only one vocational training diploma in Andalusia included under the Energy and Water professional family.
while others will benefit from skilled workers trained in energy efficient technologies. Bolstering the production chain of the cluster via training strategies will allow the expansion of the local market for these services
Limited coordination amongst the Ministry of Economy, Innovation and Science and the Ministry of Employment Second,
The Ministry of Employment remains separate. This new configuration clearly reflects and structures how regional actors think about labour markets,
innovation, and training in the region. The regional innovation system separates itself from the general education
and employment systems, suggesting that the official view of innovation is exclusively about R&d. It is not clear how this affects the distribution of resources,
as well as the depth of the region‘s economic problems, it is unfortunate that this separation of agencies may hinder strategic coordination, for instance of vocational training and industry clusters.
This contradicts established best practices about sector-based workforce development that tailors training to employer needs in specific industry sectors (Zandniapour and Conway
which taught SME executives how to develop innovative ideas for their businesses. Digital Cluster Program:
It utilized FUNDACION EMPRENDE s schools as well as a network of 250 consultants. The main IT solutions offered were antivirus (to 29%of clients), business management software (to 28%)and web and email (to 19%.
Opportunities for RETA Despite the challenges the redundancy in overall education and training system, the lack of university savvy about technology and entrepreneurship,
The preparation of the II Andalusian Plan for Vocational training, which will link training better to the new economy,
The university system is committed to support labour policy, technology, and entrepreneurship. While most effort of the regional government to promote entrepreneurship
but also by fostering low-tech innovation. 10 Policy recommendations In the area of human capital and the labour market,
In particular it can play a pivotal role by helping to link vocational training to the many other efforts.
trying to create a win-win situation by restructuring employment practices in a way beneficial to both employers and low-skilled workers (Marano and Tarr, 2004).
Connect business incentives with job creation Work across the silos of business and employment agencies by connecting business incentives with job creation in strategic sectors.
Fostering entrepreneurship alone does not guarantee that Andalusia can capture the benefits for its distressed labour market.
RETA might help the regional government identify examples of programs from other countries (such as the East Bay Green Corridor Partnership described below) that link incentives to job creation,
Job training seeks to help economically or educationally disadvantaged people access employment opportunities, while economic development programmes must help businesses become more competitive
and expand, often through productivity increases that will require high-skilled workers. Training workers can take months or years
while firms need quick and flexible access to labour to compete in the global market.
Despite these issues, regions are seeking to link workforce development to economic development more systematically,
not only attempt to improve wages and advancement potential for workers, but also try to change internal labor market practices such as management and mentoring in order to make workers more productive (Giloth 2000).
Because they focus on a single sector, these types of programs offer economies of scale and scope. They organize groups of firms that require similar worker skill sets,
obtaining economies of scale by working across a variety of different firms in one industry. Additional synergies come from bringing employers together to share concerns and best practices,
as well as help design appropriate curricula. When employers are involved directly in programs, curricula focus on the most appropriate skills,
trainees become more familiar with workplace practices, and the intermediary may act as an employment broker, introducing workers to prospective employers.
An impressive set of evaluations has shown that these initiatives have significant and positive impacts on the employability
wages, and upward mobility of their participants (Chapple, 2005; Elliott et al. 2001; Zandniapour and Conway, 2003.
These initiatives are seen as demand-responsive, i e.,, linked to firms, sectors, and clusters in the regional economy,
raising awareness of redundancies and potential synergies. The new market demand for energy efficiency will foster job creation in different ways.
First, initial energy audits and the simplest home improvements are performed by disadvantaged youth from the eight cities trained at the Rising Sun Youth Center.
Then, local firms certified to perform the more advanced work receive incentives if they hire locally.
The Gothenburg model is considered particularly successful because of the intensity of local collective learning spawned by the combination of spinoff firms from local corporate parents and technology staff mobility (Dahlstrand, 1999.
there is also much redundancy. The Gothenburg model provides a useful model for a region that has struggled to launch entrepreneurship programs at the universities.
The localization industry in 2006, a USD 9 billion business helps businesses design multilingual websites that work in different national contexts.
Employment and Occupational Structures of G-7 Countries. International Labour Review 141,1-2: 123-159.
Bates, T. 1990. Entrepreneur Human Capital Inputs and Small Business Longevity. The Review of Economics and Statistics, 72,4: 551-559.
Self employment Entry Across Groups. Journal of Business Venturing 10,143-156. Becker, G. 1965. Human Capital.
An Interim Report on the Sectoral Employment Initiative. Philadelphia, PA: Public/Private Ventures. Florida, R. 2002.
and how it's transforming work, leisure, community and everyday life. New york, NY: Basic books. Giloth, R. 2000.
The Labor market Progress of Participants of Sectoral Employment Development Programs. WASHINGTON DC: Aspen Institute. CHAPTER III:
In particular, research spin-offs and industry-university knowledge transfer (labour mobility, research collaborations, technology transfer agencies, university technology licensing programs, etc.)
as well as to the=thickness‘of the local labour market (Gertler and Vinodrai, 2005). Second, in addition to the conduct of basic research, universities provide both formal and informal technical support,
through the promotion of an atmosphere of intellectual diversity that tolerates different approaches to the solution of technical problems;
The DUI mode of innovation builds upon the skills and knowledge of employees throughout the firm, not just its research department.
University research is of value to innovative firms in terms of keeping them informed about where the knowledge frontier is moving in these disciplines and for the recruitment of highly trained personnel.
i) the promotion of the knowledge economy; ii) entrepreneurial development and innovation. Total expenditures on these two objectives are authorized at EUR 2. 38 billion over the life of the program.
The main focus of PAIDI is on technology transfer and the promotion of public-private partnerships between Andalusia public universities (dependent on the regional government) and private companies.
However, they are hampered in their performance of this role by the lack of sufficient and adequate staff to maintain contact with local businesses,
In general, the universities are critical of the current state of the legal framework governing intellectual property rights as it provides them with little guidance for determining how benefits should be shared in the course of contractual work.
It has 2 300 professors on staff and 40 000 students. The university has 270 active research groups,
as well as providing support services to facilitate work experience for its students in enterprises and the Foundation.
The centre also has used radio isotopes in medical research as well as training technicians for later work in hospitals.
The Office for Technology Transfer has twelve people on staff with strong technical qualifications. The office has three divisions
The meeting with Citius and the OTRI also highlighted the general problem with the issue of the national regulations governing university employment
and go to work for a start up company with any assurance that they will be able to return from that employment to their university position.
The staff limitations of the technology transfer offices make it difficult for universities to work with small firms and,
Secondly, there was a considerable amount of activity related to the training of human resources, both in terms of the specific training of personnel provided by the researchers for firms and internships of university researchers in private firms,
had few employees with higher education degrees and few of them had R&d departments. Among the remaining 305 firms that collaborated with universities,
Among the other firms, 15 to 25 percent engaged in some form of consultancy relationship with university staff,
) Table 2. Interactions with universities of Andalusian innovative firms (Percentage of'yes'answer to each type of interaction) Consultancy work 21.8 Patent exploitation 4. 6 Joint ventures
Use or renting of facilities 8. 1 Training of firm workers by the Universities 15.2 Other types of collaborative activities 1. 9 Source:
which it is seen as a competitor by some of the others organization in the region, such as CTA, the Employers association and even the universities,
Where the consultancy arrangement works out to the firm‘s satisfaction, studies indicate that they often move on to the next level of involvement with the university researcher
when RETA works with them to bring individual firms to the research office or OTRI to find suitable faculty collaborators.
RED-OTRI could use the results of the survey to begin to identify the faculty members on the various research teams at the individual universities with skill sets in demand by the second tier of innovative companies that RETA works with.
A cooperative education program usually involves engaging university students in alternating work study terms throughout the course of their undergraduate or first degrees.
and specialized knowledge into the private firms and also for bringing the=real world‘perspective of the firms back from their work terms into the university classroom.
and expanding university coop programs is the high cost incurred by the university administrations in locating work placements for their students.
It would require RETA to work closely with both the firms located in the technology parks as well as firms distributed more broadly throughout the region to identify the firms that would be interested in providing work placements for students in a cooperative education program.
especially when compared to other leading industrial countries in the OECD. More than three quarters of Canadian firms have less than 10 employees.
and the total share of business expenditures on R&d from firms with more than 250 employees is significantly lower than the OECD average.
and administered by staff of the NRC, IRAP is in many respects a stand-alone program run by its own Director-General.
The University of Waterloo currently has the largest cooperative education program in the world, with over 11 000 students (60 percent of the student body) and 3 000 employers, 281 of them local, involved
At Sybase, an enterprise software company that spun-off from the original WATCOM Corporation, with over 250 employees in its Waterloo campus alone,
15 per cent of its current employees are Waterloo co-op students, and more than half of their Waterloo staff consists of former co-op students.
and they get an opportunity to evaluate their performance in the workplace before hiring them.
which makes it easier to find firms willing to take the students on work placement.
or introducing a full coop education initiative in finding the work placements for students. For further information http://www. cecs. uwaterloo. ca/about Future Trends in Science and Technology Parks Description of the approach The third learning model corresponds to the third policy recommendation in that it draws
At the level of local, regional, national and supernational economies, the EC highlights the importance of entrepreneurship in terms of its contribution to job creation and growth
Structural reforms were launched in the fields of employment, innovation, economy, social cohesion, and environment. However, by 2005 it was apparent that the goal was overly ambitious.
Europe becomes a more attractive place to invest and work: 1. Extend and deepen the internal market;
8. Attract more people into employment and modernise social protection systems; 9. Improve the adaptability of workers and enterprises,
and the flexibility of labour markets; 10. Invest more in human capital through better education and skills.
The recent global crisis has however called for another major rethink of the Lisbon Strategy. The result was Europe 2020,
Five targets were set to boost growth and employment (EU, 2010: Raise the employment rate of the population aged 20 64 from 69%to at least 75%;
%Invest 3%of GDP in R&d by improving the conditions for R&d investment by private sector;
There is a relationship between the entrepreneurial spirit and economic results in terms of growth, consolidation of the business framework, innovation, job creation, technological changes and increase in productivity.
The crisis has taken a toll on local employment. The unemployment rate has risen steeply to 27.2 percent compared with 20 percent in Spain as a whole.
The youth unemployment rate is much higher: while it is 43 percent in Spain, estimates indicate that 39 percent of the registered youth unemployed are located in Andalusia.
which require employees to have completed a year of full employment before qualify. Many under-25s are unable to demonstrate 12 months‘worth of unbroken employment (The Leader, Andalusia Suffering Most from Unemployment
21.11.2009. The above synopsis indicates that the rapid economic growth and other gains experienced in recent decades,
access to physical infrastructure, promotion of growth, government programmes, and commercial/services infrastructure. Lowest scoring aspects:
According to anecdotal evidence, the impression is that young Andalusians continue to prefer the relative labour market security of the public sector. Nevertheless,
and the number of enterprises and employment has gone also up. At the same time, the analysis illustrates that the region has been hit severely by the crisis,
Start-ups, stock of enterprises and unemployment, notably youth unemployment, are being impacted severely. Moreover, the region has limited a relatively entrepreneurial where people enter public sector employment as their preference.
That said there is a certain degree of willingness to engage in future entrepreneurial activity and the current economic circumstances may stimulate this interest.
including self employment and start-ups, but this is likely to be hampered, to some extent, by the relatively low levels of human capital in the region.
and other limitations, there is a need for broader support to entrepreneurship and job creation. Institutions and policies for entrepreneurship Prior to assessing the challenges
Create and consolidate enterprises and employment through advice and support to firms, business training, and accommodation at the pre-incubation and incubation stages.
However, in qualitative terms (such as growth, employment, turnover, etc. the approach could be improved. Major constraints include legal barriers
and youth unemployment, suggest a need for a wider focus on entrepreneurship, including education, vocational educational training, self employment, assistance to all forms of start-ups,
not only those connected with R&d&i. Secondly, there is a clear divide between policy-making (the responsibility of the new Ministry of Economy
Challenges Firstly, the region must cope with the very high levels of unemployment (average of 27.2,
%peaking at almost 32%in Cadiz in April 2010), particularly youth unemployment, which has risen steeply in recent years.
The sheer levels of unemployment require the region to support all forms of entrepreneurship and start-ups in all sectors of activity (not simply those closely connected with R&d&i) and by all social groups,
whether or not in employment, needs to be upgraded. Despite the recent catch up effect driven by higher levels of business activity (e g. construction and tourism sectors) and GDP per capita (now 80%of the EU average),
The consequence is high levels of youth unemployment, a slow down in the number of migrants, emigration by EU ex-pats, etc.
and the general public is nervous about possible layoffs and responds by increasing savings at the expense of consumption.
although young people have seen traditionally the public sector as the natural route to the labour market, the sharp economic downturn in Andalusia may stimulate a greater willingness to embrace self employment and other forms of entrepreneurship.
This is clearly something to build on in the region via a greater focus on developing a culture of entrepreneurship at all levels of the education system:
The high and rising levels of general and youth unemployment necessitate the harnessing of all ideas, talents, sectors, etc. for the future of the region.
Moreover, the focus on entrepreneurship should not be restricted to future labour market entrants. The region could promote the establishment of dedicated (re) training programmes for existing business people (in employment
and/or recently made unemployed), focusing on new business models and approaches, combining elements of local skills and strengths,
and generally equipping those already in the labour market with the latest business concepts, tools and techniques.
Moreover, the large number of people entering the unemployment register will require rapid retraining and start-up support to engage in new forms of activity.
Promote self employment to tackle unemployment and diversify the economy The rising levels of unemployment, the need to diversify the economy (e g. away from construction, real estate, etc.)
combined with the population‘s latent interest to establish a business (GEM, 2006) call for a greater focus on providing opportunities for people to establish their own businesses though self employment or creation of firms.
Such an approach should not be driven solely by R&d&i considerations: a strong focus on innovation could restrict the flow of viable business ideas.
Turning to institutions in Andalusia, the region should review its policies in relation to the stimulation of self employment.
ANDALUCIA EMPRENDE is placed well to take responsibility for a more targeted programme of support for self employment.
or regional employment office in order to ensure that the social security system is aligned with the new regional priorities designed to facilitate a higher level of entrepreneurial activity.
they can generate synergies offering the prospects of strengthening innovation and employment generation; they assist the general process of stimulating entrepreneurial activity
thereby creating greater wealth, employment and opportunity. Rationale for the intervention Although the Andalusia region has recognised the importance of entrepreneurship
Their main role was to commission work from a range of different organisations to ensure the delivery of the programme.
i) the very high and increasing levels of general and youth unemployment; ii) the levels of human capital relatively low compared with elsewhere in Spain;
Transiting from unemployment into self employment Description of the approach Germany has suffered from persistently high unemployment rate,
as well as low self employment rates. Consequently, a programme known as the Start-up Subsidy (SUS Existenzgründungszuschuss) was introduced in 2003 under
Whereas the BA pays recipients the same amount that they would have received in unemployment benefits for a period of six months plus a lump sum to cover social security contribution,
Rationale for the intervention Germany had one of the lowest self employment rates in Europe (fluctuating between 10-11 percent)
and yet experienced persistently high levels of unemployment (between 7-9 percent). To overcome this constraint,
the German government prioritised active labour market policies, including vocational educational training, employment subsidies, job creation schemes and self employment schemes targeting the registered unemployed.
The policy has been successful in terms of uptake: whereas in 2002 3. 5 percent of the unemployed received the subsidy (37 000 start-ups), this increased to 9 percent (250 000 start-ups) in 2004 (Baumgartner and Caliendo, 2007.
Additionally, both the probability of being in self employment and/or paid employment and the personal income are significantly higher for participants.
Baumgartner and Caliendo, 2007, p. 26) Reasons for success Business experts must examine the start-up concept
and determine its viability. Such experts could include the Chambers of Industry and Commerce, Chambers of Crafts, Professional organisations, Expert Associations such as Business Development Service Providers and Financial institutions.
The new entrepreneurs also need to be given support both before the start-up phase (entrepreneurship training, business plan, etc.
Relevance to Andalusia and considerations for adoption The high and rising unemployment rate in the Andalusia region, especially as far as youth unemployment is concerned,
However, incubators are not a panacea for entrepreneurship and job creation. The experience of incubators in the EU has been mixed.
35 months 6 months-no max 3 years Number of management staff 2. 3 managers 1 9 managers 2 managers min Ratio
of incubator staff: tenants 1: 14 1: 2 1: 64 1: 10-1: 20 Percentage of managers time advising clients 39%5%80%50%Evaluating Services
Overall, business incubators are a very cost-effective instrument for the promotion of public policy objectives.
which incubators contribute to high-growth firms or the employment impact in terms of job creation), this suggests the necessity for an evaluation of the Andalusia incubator practice so far.
Baumgartner, H. J. and Caliendo, M. 2007) Turning Unemployment into Self employment: Effectiveness and Efficiency of Two Start-up Programmes, DIW, Discussion Papers 671, Berlin.
SME DEVELOPMENT IN ANDALUSIA Introduction SME development and growth is critical to fostering entrepreneurship, job creation and economic development in Andalusia as a result of the dominance of SMES in the regional economy.
Assessment of the region SMES in the Andalusia economy The Andalusia economy is dominated by SMES with over 99%of firms having less than 500 employees (see table below.
of mittelstand firms, medium-sized firms between 50 and 500 employees, demonstrates an underlying structural problem.
with a failure to grow indigenous enterprises to a level that can contribute more significantly to employment creation and regional growth.
This resulted in a shift of resources, particularly of capital and labour, from the more productive and internationally competitive sectors of the economy.
Table 7. Size structure of firms in Andalusia, 2008 Size of firm%of total enterprises%change 2007-8 Micro-enterprises 95.06-1. 73 Self employed (no employees
) 51.57 0. 38 1-9 employees 43.48-4. 3 Small firms (10-49) 4. 31-13.95 Medium sized firms (50
The most significant for existing SMES are the Andalusia Employers association (CEA), the main independent business association subdivided into territorial and sectoral associations,
The employment impact is certainly significant in a region that had hitherto been lagging in terms of new technology sectors;
although its strategy is to work with firms in particular sectors (e g. aeronautical, biotechnology, renewable energy)
Although this approach has recently been discontinued because of a reconsideration of RETA‘s model of work,
In the future, any regional organisation interested in relaunching this professional profile may want to widen the circle of advisers to include those with more business experience in particular sectors who are able to provide specific industry knowledge and practical problem-solving abilities.
How to identify ways of supporting the internationalisation of the SME sector Like most other European regions Andalusia has developed a well external trade promotion agency
and the upgrading of the sector s knowledge base more generally, for example through support for vocational training programmes.
The agency interested in this would need to work with the relevant industry organisations to ensure more effective dialogue between the agents and the firms.
More lower-level innovation support is also with regard to basic vocational training and technical support in areas such as product development, process innovation and marketing.
The availability of alternative employment in the growing economies of the nearby cities of Florence, Siena and Pisa resulted in an outflow of the farming population attracted by less arduous and more economically rewarding forms of employment.
the plan recognised that there were important forms of traditional skill and knowledge of products embodied in the workers and owners of SMES themselves.
The promotion of high quality, small-scale food production also coincided with a wider trend of more environmentally conscious and=slow-food‘based consumption patterns.
The fur industry is dominated also SME with over 2 000 independent producers in a labour intensive sector that has 3 000 direct employees but around 25 000 indirect jobs in supporting and dependent
Industries tend also to lack vertical integration with highly developed divisions of labour existing between rather than within firms (Christensen, 2010;
They have built also on a long tradition of collective organisation into business associations and trade unions in
Maskell, 1998): 80 percent of workers are in trade unions while members of employer associations account for 55 percent of private sector employees (Anderson and Mailand, 2005).
High levels of knowledge exchange between SMES are underpinned by close-knit business communities in each sector. Denmark is characterised by a plethora of networks and strong industry associations,
commonly in technical problem solving activities that involve lending material and equipment and even labour in some cases (Maskell 1998;
) Local tacit knowledge is reproduced also through a high level of commitment among firms to vocational training and apprenticeships;
A tradition of long term specialist apprenticeships between 5 and 10 years has continued through the 2000s despite increased competitive pressures on firms from foreign low cost competition (Christensen, 2010.
While most vocational trading is administered outwith the state, through collective agreement between the social partners, the Danish labour market model often referred to as=Flexicurity‘also provides generous provision for vocational training and retraining both for those in work and the unemployed.
This allied to the generous unemployment benefits available as part of the system is seen also as important in encouraging entrepreneurial
and risk-taking behaviour (Anderson and Mailand, 2005). Additionally, new firms tend to be established by skilled workers already with a background of working within particular industries, rather than those with professional managerial experience or entrepreneurial motives from the outside,
thus helping to reinforce processes of collective knowledge exchange between SMES (Maskell, 1998; Christensen, 2010.
Obstacles and responses Despite growing international competition from lower cost producers in China and Eastern European, Denmark‘s employment remained relatively stable up until 2007 but with the economic downturn and collapse of global demand in many key markets,
unemployment has climbed from 3. 6 percent to 5. 9 percent in 2009, forecast to rise above 7 percent in 2010.
although its=flexicurity‘labour market model whereby employers are given flexibility over the hiring and firing of labour while employees are given generous social protection
and rights to retraining has been attributed as a major factor in the resilience of Danish SMES through past crises (Anderson and Mailand, 2005, Madsen, 2006).
labour unions, social economy organisations. Greater autonomy from the regional government in developing sector specific agendas would allow Andalusia SMES to generate their own strategies with regard to innovation and productivity improvements.
But this needs to be matched by the self financing of institutions that can support tacit knowledge production, in particular with regard to greater levels of vocational training, information gathering and more practical forms of business support.
and employment creation (Birch and Cumbers, 2009). The UK has one of the strongest life sciences sector in Europe,
the Scottish universities have produced generations of well-trained graduates to service the life sciences labour market: indeed Scotland produces a proportionately larger number of graduates from its universities than other parts of the UK.
but also directly through recruitment to firms. The skills and experience such returnees bring to firms are invaluable when operating in the global economy.
the Scottish government recently introduced a Life sciences Modern Apprenticeship scheme which provides subsidies for SMES to take on trainees.
the role of the Collective bargaining System. FAOS Working Paper, Copenhagen. Asheim, B. Isaksen, A. Nauwelaers, C. and Todtling, F. eds) 2003 Regional Innovation Policy for Small and Medium Enterprises.
Flexicurity in Denmark, European Employment Observatory, Working Paper, University of Aalborg. Maskell, P. 1997 Learning in the village economy of Denmark.
employment rose at an annual rate of 6. 6, %as compared to only 4. 7%nationally between 1997 and 2007;
over the same time span, unemployment decreased at 4. 7%annually, halving the number of the unemployed from 442 000 to 212 000.
and the last EU-driven Andalusia Operational Programme for the period 2007-2013 earmarked EUR 2. 38 billion (nearly one quarter of the total) for the promotion of the knowledge economy and for entrepreneurial
i) human capital and labour market; ii) research organisations; iii) entrepreneurship and start-ups; iv) SME development.
unemployment has soared from 11%to 27.2, %only 3. 5%below the 1996 value preceding the phenomenal decade.
Human capital and labour market Three key issues have emerged in the area of human capital and labour market:
Conversely, unemployment among young adults (aged 16-24) with just a high school diploma stood at stunning 56%at the end of 2009.
Being the current entrepreneurship and innovation strategies mainly based on the promotion of R&d and industry-university technology transfer
This is shown, for instance, by the fact that the ministry of employment is involved not actively in the design of regional innovation and entrepreneurship strategies,
although it is responsible for vocational education, self employment programmes, and even for some entrepreneur training schemes. A by-product of this divide is that workforce development is aligned not as with cluster development as it could be.
Business consulting, private research contracts, collaborative research, training of human resources and supervision of graduates are also important modes of knowledge transfer that OTRIS should consider more than has done so far.
The two sources could be used to better address the needs of innovative firms, the future target of RETA‘s work.
Entrepreneurship promotion is therefore rightly at the top of Andalusia‘s concern, and one organisation in the regional institutional setting is devoted specifically to this aim (i e.
Moreover, with a surging unemployment rate above the 25%threshold, it would be important to capture the potential of self employment programmes for both reducing joblessness and increasing business activity rates;
Meanwhile, the dramatic surge of the regional unemployment rate (26%)urges the introduction of self employment programmes.
Self employment has the potential to alleviate unemployment, enhance the long-term income of participants, and positively impact on their career prospects by improving employability.
Currently, however, self employment programmes are in the remit of the regional ministry of employment. As a result, co-ordination and co-operation between the ministry of employment and the Ministry of Economy, Innovation and Science would be crucial in this domain.
This is all the more true because the success of self employment schemes is highly dependent on the training of participants,
who are often unfamiliar with business management practices. Incubators are one of the most favoured tools of business development promotion in Andalusia.
Only within the Malaga technology park (PTA) there are six of them. Surprisingly though, a regular evaluation mechanism of their performance has not yet been set up.
and prompt more redundant workers and employees to set up their own businesses. Here, the regional government could work closely with the Technological Corporation of Andalusia (CTA) to undertake a review of current levels of company spinoffs
The involvement of the regional ministry of education should also be sought as the main government body responsible for vocational training in the region.
As of 2008, micro enterprises (less than 10 employees) accounted for 95, %and small firms (10-50 employees) for 4. 3%of the whole enterprise population,
thus making up altogether over 99%of the total. The paucity of medium-sized firms (50-250 employees) points to an excessive business fragmentation that undermines the competitiveness of the region.
Innovation and internationalisation are both key to the growth of Andalusia‘s small firms. Three key policy issues have arisen in this area:
Technology parks have been one of the main instruments for the promotion of business modernisation, the underlying rationale being that clustering of technology-intensive firms enhances their growth and expansion.
Moreover, the focus has mainly been on export promotion, whereas foreign direct investment of local firms (e g. through joint ventures with firms overseas) has received much less attention.
RETA‘s future will also depend on its ability to learn from its previous work. The experience of innovation agents has been interrupted,
Some of the work started by RETA could also be resumed and brought forward by other organisations (e g. technology parks and technology centres).
This work could be followed up by ICT-specialised organisations assisting small firms to introduce more complex solutions such as e-commerce.
the work done by RETA over the last years should be capitalised, if anything to enhance the cost-effectiveness of regional government policies.
yet there is only one vocational training diploma in Andalusia included under the Energy and Water professional family.
while others will benefit from skilled workers trained in energy efficient technologies. Identifying and implementing programmes across the production value chains should help identify opportunities for new products, new connections,
and this is where careful planning of the work of intermediary agencies can be particularly useful.
which there is a time lag especially in regions with a relatively low technology antecedent This is evinced in the increased recruitment of R&d personnel, the quality improvement of traditional products,
when consideration is given to the problem of high levels of unemployment, especially youth unemployment in Andalusia. Entrepreneurship works when new firms are formed,
when new skills are developed and deployed, and when new talent is able to work with new products and services.
However, harnessing talent among these communities for work in growing sectors could open up opportunities for new products and markets.
Box 6. Main policy recommendations Human capital and labour market Link training programmes more effectively with sectors in order to improve firm productivity and innovation,
Work across the silos of business and employment agencies by connecting business incentives with job creation in strategic sectors.
Establish cooperative education programmes engaging university students in alternating work terms with study terms throughout their undergraduate degrees.
including by targeting the new unemployed through self employment programmes. Setup a business incubation monitoring and evaluation system that assesses the performance of Andalusia incubators against EU current benchmarks.
and skills upgrading as channels for the promotion ofinnovation in the region. This will include involvement in future cooperative education programmes and retention of talented foreign students from local universities in technology parks.
Overtext Web Module V3.0 Alpha
Copyright Semantic-Knowledge, 1994-2011