CARDIFF AND THE LOCAL DEVELOPMENT PLAN

As I didn't realise I was being filmed during the recent evening organised by the Cardiff Civic Society in conjunction with the Institute of Welsh Affairs, to consider the Local Development Plan (LDP) for Cardiff, this is slightly embarrassing!

As some of you may know, Cardiff Civic Society has been researching, collecting data, making responses about the development of the city and most specifically its Local Development Plan for nearly five years. This process comes to a conclusion as the City Council Deposits its LDP for the Welsh Government to consider and this meeting was one of the last opportunities to express an opinion on the document and the way forward.

Anyway, here is my short contribution to the debate (and yes, no powerpoint slides!).

There are also contributions available from Mark Barry, Rhodri Morgan, Kevin Morgan and John Punter.


 

A TALE OF TWO BRIDGES? CREATING A SEVERNSIDE ECONOMIC REGION

Last month, I left the University of Wales after five years to take up a new chair in entrepreneurship and strategy at Bristol Business School.

It will be a fascinating challenge but not one that means that I will be leaving the world of business and enterprise in Wales.

I will remain as a business columnist for the Western Mail and its sister paper in North Wales, the Daily Post.

The Wales Fast Growth 50 – which is in its fifteenth year – goes from strength to strength and we have a full house for the award ceremony in October. I am also continuing to work closely with the Welsh Government to complete the second part of the access to finance review by the end of the year.

More importantly, of course, I will still be living in Wales and spending my income in the restaurants and pubs of Cardiff!

In fact, having been employed within the Welsh university sector since 1996 when I returned from Ireland to take up my first chair at the University of Glamorgan, a number of friends in the academic and business world have said that taking a post outside of Wales would actually be good for me and my perspective on the Welsh economy.

More importantly, the welcome I have had from new colleagues in Bristol has been second to none and I look forward to working with them closely to develop the potential of the business school in research, teaching and links with local business. However, the one challenge that I am more than willing to take on is that of examining how the two economies of South East Wales and the West of England can work more closely together as a coherent economic region in the future.

Whilst some would say (and excuse the pun) that trying to get these two regions to work together is a bridge too far, that has not been the case elsewhere in Europe.

Take the new economic area that has been formed between Malmo in Sweden and Copenhagen in Denmark following the construction of the five mile long Øresund bridge. This is now seen as being as a model for other transnational co-operation with new cross-border entities being formed to serve the entire region.

For example, local, regional and national authorities from both countries have cooperated in a regional policy forum called the Øresund Committee for the last twenty years whilst a consortium of twelve universities has been established which has opened up all their facilities to students, teachers and researchers from both sides of the bridge. In fact, the region markets itself as being focused on education and research and therefore being a hub for high-technology companies in areas such as pharmaceuticals, telecommunications, food, environment, logistics and design.

The Scandinavians are far more enlightened than other parts of Europe when it come to pragmatic collaboration, but could it be possible for South Wales and the West of England to put aside historical differences and work more closely to create a larger economic region that could be a real driver for both sides of the Severn over the next decade?

The way that politicians and policymakers on both sides of the bridge lobbied as one group for the electrification of the Great Western line is a perfect example of working together for a common cause.

More importantly, there are similar strengths industrially in both regions that, through co-operation, could create world-class clusters in areas such as creative industries, aerospace and life sciences. And there have already been positive steps in getting academia to work more closely together, with the Universities of Bath, Bristol, Cardiff and Exeter announcing a formal collaboration to bringing together a high concentration of research expertise and capability in the South West of England and Wales.

Yes, there would be concerns that the more prosperous Bristol would overshadow Cardiff and Newport, but the same debate has been true in recent years over the relationship between the South Wales Valleys and the capital city. In fact, it would show a far more confident and politically mature approach if Wales could examine how it can co-operate with other parts of the UK fourteen years after devolution.

So is there a case that can be made for a Severnside economic region of 2.5 million residents that can become a major powerhouse in the UK economy, especially at a time when the UK Government is looking to support economic divergence away from the economy of London and South East England?

Certainly, it is something that will be worth exploring during the next few months in the hope that the sum of the parts could be even greater than the whole and benefit the two regions on both sides of the Severn.

SWISS MADE - LEARNING ECONOMIC LESSONS FROM SWITZERLAND

For those of us looking as to how Wales can become a more competitive economy, we have examined smaller nations such as Denmark, Sweden or Ireland as examples of good practice.

However, very few have ever considered the case of Switzerland, with its population of eight million people, as a nation we should emulate.

Indeed, our attitudes may be best encapsulated by the famous lines that Orson Welles delivered in one of his most famous roles as Harry Lime in “The Third Man”.

“In Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce? The cuckoo clock."




Apart from the fact that the cuckoo clock was not invented in Switzerland, a new book launched in Wales last week suggests we may want to rethink our view of a country that many of us might have thought was only famous for watches, banking and chocolates.

'Swiss Made - The Untold Story Behind Switzerland's Success' by the financier James Breiding shows how this small and successful nation has developed into something that is now far more substantial both in terms of its global reach and industrial impact, being home to fifteen of the World’s 500 biggest companies. The World Economic Forum also rates Switzerland as the most competitive nation in the World today and only this week it was rated number one on the Global Innovation Index.

This high level of competitiveness and innovativeness is having a direct impact on the economy – its relative prosperity per head of population is amongst the highest in the World and unemployment is only three per cent of the working population.

Naturally, the author examined various factors that had led to this incredible economic success story, including an egalitarian society, the importance of communities, a lean government, a superb public education system, investment in apprenticeships and efficient public transportation.

However, I was most impressed by the attitude towards immigration which has been a key differentiating factor in Switzerland success as it became a haven for those persecuted in their own countries and who ended up establishing the foundations for today’s industries.

For example, Heinrich Nestlé was a refugee from Germany who set up what is now the biggest food company in the World whilst Nicolas Hayek emigrated from Lebanon to create the Swatch brand and singlehandedly rescue the watch industry in his adopted country.

Such openness has certainly contributed to making Switzerland an attractive location for business with companies such as Google and IBM choosing the country as a base for their European research operations,

This is also reflected in its universities with seven ranked in the top 200 in the World and having some of the highest proportions of international students of any higher education institutions in Europe.

The importance of knowledge to the economy is also reflected in the fact that it has the highest number of Nobel Prize winners per capita in the World, many of whom were born outside of Switzerland.

Of course, it could be argued that Switzerland’s stance on neutrality has also helped its economic position, especially during the Second World War when Swiss companies, especially banking, took advantage of war torn Europe. However, this fails to explain why this landlocked nation has excelled in a range of industries over the last two decades and there are lessons to be learnt from understanding how this has happened.

Fortunately, James Breiding’s book provides a long overdue revised view of the economic power of Switzerland and it certainly should be summer reading for all of us who want to learn how to develop a small successful economy.

INWARD INVESTMENT IN WALES

There must have been a huge sigh of relief from the Welsh Government earlier this month when Ernst and Young released their annual report on foreign direct investment.

With the results showing that with Wales having increased its number of foreign-backed projects by 244 per cent since last year, the Minister could be forgiven for opening a couple of bottles of bubbly to celebrate such a turnaround in its fortunes in this arena.

In fact, Wales saw its foreign-backed projects almost quadruple from nine to thirty one in 2012, the highest total for five years, creating 2051 new jobs in the process.

But it is not all good news as only 4 per cent of foreign investors chose Wales as the most attractive destination to set up foreign operations, the same as Scotland. In contrast, 45 per cent saw London as the best place to relocate. This suggests that there is still a long way to go before the Welsh Government gets its offering right in attracting new businesses to set up here. Certainly, as has been argued by a number of senior politicians already, the brand for Wales needs a lot of work to ensure that those from outside the country know exactly what is on offer.

So what other lessons are there from the Ernst and Young report for the Welsh Government to build on this success?

First of all, it would seem there is some thanks due to the UK Government in establishing a more business-friendly environment during the last twelve months, with nearly two thirds of investors interviewed for report believing that the UK had developed a more attractive tax regime during the last twelve months and just over half suggesting that future changes will be a significant influence on international companies’ decisions to relocate.

Indeed, the proposal to reduce corporation tax to 20 per cent by 2015 could be a magnet for getting more businesses to relocate to Wales and it is critical that this is used as part of any future marketing campaign to attract foreign investors.

In terms of the business sectors that could drive the growth of the economy over the next few years, there is some good news for Wales.

According to the international companies in the survey, financial services, telecommunications and manufacturing were ranked as the three most important sectors. Given that there is a sector-based approach to all three of these industries in Wales, there is an opportunity to get the right strategy in place to attract the best in the World. Perhaps the only disappointment, given that there is considerable investment going into this sector, is that the life sciences were not ranked highly by investors as an industry which will grow in the future.

One of the reasons for the growth in inward investment across the UK during the last twelve months has been the perception that the environment for inward investment has improved in a number of areas. These include having a flexible financial system that increases the availability of finance, increased support for SMEs and easier access to funding.

But investors are also attracted by non-financial factors including quality of life, culture and language, telecommunications infrastructure and the stability of the legal and regulatory environment. Certainly, these are aspects that the Welsh Government could and should emphasise as part of any offering to new businesses looking to come to Wales.

According to investors, if the UK wants to become a leader in innovation, then it must improve education and training, increase tax incentives for innovative companies and develop more attractive policies for sustainable investment. Again, the Welsh Government can, if it wishes, develop a different path in terms of more vocational and technical training whilst ensuring that universities develop courses that are relevant to those new industries that we want to attract  to Wales.

And whilst it cannot offer direct tax incentives to innovative companies, there are more creative ways in which it can ensure that Wales has a strong package of financial support to investors and their companies.

Therefore, whilst the latest figures on inward investment into Wales are to be welcomed, more needs to be done in ensuring that we become a more attractive location to companies around the World.

Certainly, the Ernst and Young report is a good place to start to get blueprint as to how politicians and policymakers could and should develop a strategy to achieve this.

TECHNIUMS - A FAILED AND EXPENSIVE EXPERIMENT?

The Triple Helix model, where government, academia and industry work together to create a vibrant innovation economy, is one of the new holy grails for policymakers around the World.

And over the last three years, a team of researchers at the University of Wales has been examining this process within the Welsh economy and recently completed a series of cases studies on this process.

One of the more fascinating examples we examined was that of the Technium programme. This was established at the beginning of the last decade to provide office space and support for high technology firms to commercialise university research and turn this into thousands of highly paid jobs within technology-based firms in Wales.

Unfortunately, such ambitious plans did not materialise and whilst ten Techniums were built across Wales at a massive cost to the public purse, they ended up largely unoccupied and expensive to maintain.

Indeed, an evaluation of the Technium programmes carried out by the consultancy firm DTZ revealed that each job generated by the project cost an average of £190,000 of public money and occupancy rates at the Pembrokeshire Technium were as low as four per cent.

Given this, and after much consideration, the Welsh Government finally pulled the plug on the initiative in 2010 and closed six down.

So what went wrong?

Whilst there have been various critiques of the Technium concept from academics and businesspeople, perhaps the most detailed comes from the evaluation by DTZ which noted a number of key flaws to the whole concept.

The first was the lack of any clear rationale for the roll-out of the programme beyond the first incubator in Swansea. One has to wonder why the WDA had then gone ahead with building Techniums across Wales before a ‘working prototype’ had been fully tested?

Secondly, there were no explicit objectives for the Technium programme and it would seem that the only rationale was to build as many of these as possible before the European funding ran out. Certainly, there seemed to be little consideration of whether there was demand, either from the local business community or from the universities, for this type of building. This particular critique, from the Western Mail in 2005, seems to hit the nail firmly on the head as to the serious problems in the programme event then.

Thirdly, it would seem that the monitoring and evaluation of the programme by Technium managers was practically non-existent which, given that many of those involved had very little experience of managing such projects, is not surprising.

But it would also seem that this failure on the ground was not noticed by those higher up within the system. As the former Economic Development Minister Andrew Davies pointed out, civil servants at the time did not keep ministers informed on the performance of the programme or on major decisions being taken which led to serious issues over its management.

Finally, occupancy rates were low and the provision of business support and its take up was minimal which would be expected if, as critics have pointed out, Techniums were actually not in any way innovative in their concept or, more importantly, in their execution.

Whilst space within each property was targeted towards innovative businesses, there was no real support provided on site to any of the firms located there, which is a critical element of what we see within successful incubator programmes around the World where financial and management advice is as important, if not more important, than the physical space in which the companies are based.

In fact, the recent success of cheap entrepreneurial spaces such as Indycube across Wales shows that spending a fortune on buildings is not the way to develop more entrepreneurial businesses, especially when it was clear that there was actually little connection between the Techniums and the wider innovation system in Wales.

So was it a waste of money? Cardiff University’s Professor Kevin Morgan thinks so. As one of the more strident critics of the whole Technium programme, he believes that the question remains as to why there has been no public inquest into the ‘failure of an experiment that cost around £111 million’.

And he has a good point, given some of the exaggerated claims made by some over the alleged success of Techniums that are now seen to be, at best, misleading.

I suppose if we had seen a Google or a Nokia emerging from one of the Techniums during the last ten years, the failure of the rest of the programme would have been forgotten.

But that was highly unlikely to happen when there was preference in spending nearly a hundred million pounds of taxpayers’ money on shiny new buildings rather than focusing on attracting the best scientists to Wales whilst, at the same time, encouraging a greater entrepreneurial spirit amongst students and graduates as they do in the great universities of Stanford, Cambridge and MIT.

Ten years ago, in a speech at a science and technology conference at the Celtic Manor, I questioned whether Wales “had enough science to commercialise within its public and private sectors that will fill all those Techniums with high technology businesses that will take make Wales a smarter wealthier nation?”

In fact, I said then that it was pointless concentrating public funding on commercialisation activities whilst the R and D base in academic institutions and private sector organisations was declining or at best, standing still. In the end, you cannot commercialise technology if there is little relevant technology to commercialise.

That is what those who put the Technium concept together at the time forgot but what is thankfully now slowly being rectified through programmes such as Ser Cymru that aims to attract the best brains in the World to Wales.

The shame is that it took a decade and nearly a hundred million pounds to learn that lesson but it is one that I hope the Welsh Government will take to heart from the failed experiment of the Techniums as it looks to implement its new innovation strategy over the next few years.

LOW CARBON ENTREPRENEURS AND THE NORTH WALES ECONOMY

Last week, a fascinating report landed in my email inbox.

Published by the Carbon Trust and Shell UK, “Low Carbon Entrepreneurs: the new engines for growth” looks at the critical role that small and medium sized enterprises (SMEs) can play in the low carbon sector. This includes both nuclear and renewable power, transport and activities within various manufacturing and services industries that essentially contribute, either directly or indirectly, towards reducing environmental impacts or adapting to environmental changes.

Whilst some may believe that it is still a relatively small industry, it was one of the few sectors to grow during the recent recession and it is estimated that such green business accounted for over a third of the economic growth in 2011/12. Indeed, the low carbon economy is estimated to be worth over £120 billion to the UK and currently employs 940,000 people.

And the good news is that the market is set to grow, driven by small dynamic companies that are focused on international opportunities. For example, a survey from the report shows that almost forty percent of low carbon SMEs are already exporting despite the fact that the majority have a turnover of less than a half a million pounds. Given that the global low carbon industry is forecast to be worth £4 trillion by 2015, this is certainly a sector that demands further support in its development.

Yet, when we look at the five main locations for the growth of low carbon SMEs in recent years, the report shows that the most successful areas have been London, Cambridge, Oxford, West Yorkshire and Hampshire.This must be enormously disappointing, but something of a challenge, for North Wales, where Anglesey has not only been branded as the ‘energy island’ as a result of potential investments into nuclear and wind power but, more importantly, has recently been given enterprise zone status by the Welsh Government to drive forward this sector. In addition, the status of Bangor University as having one of the highest concentrations of environmental science students in the UK means that there is a local skill base already available for businesses in the sector.

However, all is not lost. According to the report, the most common reasons for a low carbon SME’s current location were access to talented people and support from the local innovation network, both of which could be developed locally if the new Science Park touted for the Menai area focuses specifically on energy and low carbon sectors. More importantly, two thirds of low carbon firms would move location if there was regional funding available to help the business. This is certainly a vital lesson for those who are putting together the financial ‘offering’ that the Anglesey Enterprise Zone will have in order to attract businesses to the island in the future.

But there are also opportunities to develop new dynamic businesses in the region. A survey of participants in the Shell Livewire programme, the biggest online community for young entrepreneurs aged 16-30, shows that almost a third say they would like to start a new low carbon business or get involved in the low carbon economy but don’t know how to go about doing it.

Given this, there is certainly a real chance for North Wales to focus its efforts on helping young people within the region to get into the low carbon economy and to help build up a cluster of businesses in this sector. Therefore, whilst North Wales has been slow in getting into this growing sector, it does have several competitive advantages that, if managed properly, could see the region emerging as one of the main low carbon areas of the UK during the next five years and creating hundreds, if not thousands, of highly paid skilled jobs in the local economy.

WALES CAN LEAD THE WAY IN PUBLIC SECTOR INNOVATION

Last week, a report was published that, woefully, received little attention from the Welsh media but could, if implemented, have a transformational effect on the way that public services are delivered here in Wales.

Funded by NESTA, 'State of Innovation: Wales Public Services and the Challenge of Change' should be compulsory reading for every senior manager within government and the public sector in Wales. Authored by Matthew Gatehouse and Adam Price, the facts from the report were startling.

More than two thirds of our economic output comes from the public sector, a situation that is compounded by low private sector productivity, which means Wales remains the poorest part of the UK.

Nearly a fifth of the Welsh population is aged over 65, which is a higher proportion than the UK as a whole, putting pressure on an already stretched health and social care system that will only increase as life expectancy improves.

Pockets of Wales, especially in postindustrial areas, have some of the worse health of any parts of the UK, with 27 per cent of economic inactivity due to long-term sickness.  In addition, we also have higher comparative levels of child poverty.

Whilst in the past, governments have dealt with such issues by merely throwing money at them in the good times, that scenario is now at an end. Welfare spending is set to fall dramatically over the next few years and the funding that the Welsh Government receives from the Treasury will continue to reduce.

In the past, such government cuts have been accepted with largely a shrug of the shoulders, some industrial action but then a quiet acquiescence that we might as well accept it as there is little that can be done ‘in the current circumstances’.

However, this report blows that comfortable complacency out of the water by showing that stronger and healthier communities can be created if we embrace greater innovation within the public sector.

And we already have some strengths in place.

According to the report, Wales is big enough to scale beyond the purely local but small enough to organise a coherent national strategy.

Indeed, a radical programme of transformational change is possible because of this “Wales effect” i.e. the common sense of belonging, the strong personal relationships between the main players, the much shorter communication distances between national government and local delivery, and close connections between policymakers, practitioners and academic institutions.

This natural advantage, along with a dominant public sector, a strong academic base and close communities, means that there is a real opportunity for Wales to become a global leader in public service innovation.

And it is not that we are beginning from scratch.

There are already several cases of excellence of innovation within public services in Wales, including the “Your County Your Way” strategy led by Monmouthshire County Council; Time Banking Wales which is transforming local engagement in the South Wales Valleys; and the Gwent Frailty project which, as a partnership between five local authorities, Aneurin Bevan Health Board and the voluntary sector, is reshaping services in primary and community care around the care needs of people.

But despite such examples, there is more that can be done to ensure such innovation does not remain within isolated areas across the nation but becomes a normal part of the delivery of public services in the future.

There is also the opportunity to incentivise new partners in the private sector, such as technology providers, to turn Wales into a global test bed for those wishing to develop innovative solutions via digital technologies in areas such as health and education.

This of course, will require acceptance of greater risk within the public sector where innovation and accountability can go hand in hand, and failure is an chance to learn from mistakes rather than an opportunity to apportion blame when something goes wrong. With a new Permanent Secretary who, in his public statements so far, embraces such a culture, the Welsh Government could be leading such change across the public sector in Wales.

But it is not only the public sector alone itself that can make a difference to this agenda.
For example, with the creation of a new University of South Wales, there is an opportunity for this institution, with its roots in some of our most deprived communities, to become a catalyst for change in driving forward innovation within public services in Wales, especially by making innovation skills centre stage in management and leadership programmes in order to create a new cadre of innovators across Wales’ public services.

There is also a greater role that can be played by the third sector in Wales, especially in the creation of new social enterprises that can help deliver local services around their communities in a far more efficient way than many public bodies. Indeed, could the current review of mutuals and co-operatives by the former minister Andrew Davies herald a seismic shift in the way some public services are delivered in Wales?

In 2011, the economist Gerry Holtham wrote in an article in the Western Mail that instead of bewailing the fact that our public sector is too big, why don't we make virtue of necessity? As he noted at the time, whilst industries rise and fall, there will always be a need for good government in every part of the World.

THE CONSTRUCTION SECTOR - A BOOST NOW WOULD HELP THE WELSH ECONOMY

Last week, there was genuine surprise amongst most economists when it was announced that the UK economy had grown by 0.3 per cent in the first three months of 2013.

Many doomsayers had been talking down the prospects of growth and had predicted that we would fall into an unprecedented ‘triple dip recession’. Clearly that did not happen and we can now hope that this can be built upon over the rest of the year and that businesses and consumers will start feeling more positive about future prospects.

However, it is worth noting that this growth was driven solely by an increase in the service sector, with manufacturing and construction contracting over the period.

A high value added manufacturing industry is important to a competitive economy and therefore the lack of growth by Britain’s factories is worrying. However, given that around half of all exports are to the still depressed eurozone, this continuing decline should not be too surprising.

Many will continue to be dismayed that construction industry declined in the first three months of this year after a short-lived recovery at the end of 2012.

The fall of 2.5 per cent in the sector’s GDP demonstrates that much remains to be done to ensure that it remains one of the key levers for future economic growth across the UK, as suggested by the Chancellor in his recent budget. Indeed, it is estimated that if construction output had just remained flat rather than declining, UK GDP would have increased by 0.5 per cent.

Therefore, the industry still requires stimulus and support to ensure further expansion over the next few years. That is why it was somewhat puzzling that the Welsh Government recently stopped its plans for a new scheme to help homebuyers in Wales.

At a time when banks are reluctant to lend, NewBuy would have enabled anyone wanting to buy a new house or flat up to a value of £250,000 to do so with just a five per cent deposit. More importantly for the construction sector in Wales, it would have supported the building of 3,000 new homes.

One of the reasons put forward for not going ahead with this programme in June as originally planned was that, following the announcement of a similar scheme from the UK government, the housing industry in Wales had withdrawn support.

Yet is that really the case?

On the day that this was announced, I was sitting in a BBC Wales studio with the managing director of Redrow South Wales.

He was adamant that, in contrast to statements that had emerged from Cardiff Bay earlier that day, Welsh builders were in fact fully supportive of the NEWBuy scheme and that it was a total surprise that it had been scrapped.

In fact, given that the similar UK scheme was not starting until 2014, it was critical for the building industry that something was available for the rest of the year so to not only incentivise more housebuilding but also to get more first time buyers into the market and boost consumer confidence.
Redrow insist that they, and other housebuilders, still want NEWBuy to start in June and with research estimating that over 14,000 new homes are required every year in Wales for the next fifteen years, the general consensus is that it cannot start soon enough.

Indeed, such a misunderstanding could have serious consequences for the sector going forward and one can only hope that the Welsh Government will now make the effort to meet with representatives of the House Builders Federation as soon as possible to sort this out.

Certainly, something must be done quickly to boost the prospects for a construction sector that could and should be making a more significant contribution in delivering economic recovery.

GORWEL AND ITS ROLE IN PUBLIC POLICY IN WALES

Much of Margaret Thatcher’s political thinking was developed as a result of her work with two influential thinktanks, namely the Institute for Economic Affairs and the Centre for Policy Studies. 

Yet, despite the clear importance of such organisations in influencing policymakers and politicians, thinktanks have always been thin on the ground in Wales.

Twenty-five years ago, the Institute of Welsh Affairs was born as the first Welsh body of this type and has since become the voice of the left-leaning establishment in Wales.

It was the sole voice in this arena until the Bevan Foundation was set up a few years ago to tackle all aspects of poverty, inequality and injustice in Wales. A more provocative body, it has been fearless in addressing some of the issues that a more traditional organisation could address.

Yet, for those of us on the centre right of politics in Wales, it has been a relatively barren period for new political thinking over the last few years.

Fortunately, this has now been addressed by the Welsh Conservatives’ ‘big thinker’, the Deputy Presiding Officer David Melding AM, who has recently established Gorwel, an independent, non-party Welsh think tank. 

Its mission is to set out a better way to deliver public services and economic prosperity in Wales and to do this, it will produce research of outstanding quality on the core issues of the economy, environment, health, education, law and order, public sector management, and the right balance between government and individual.

Drawing on support from other parties, including the Liberal Democrats and Plaid Cymru, it is a bold move by David Melding to establish this body. And some of the recent events it has organised, on subjects ranging from economic development to energy issues to mutualism in Wales, have already generated considerable debate.

However, Gorwel’s real impact will be in the development of policy reports that challenge the orthodoxy of current thinking within Wales. And the first of these, released earlier this month, is a real cracker.

“Forward Planning: A Report on the Future Options for Planning in Wales” calls for economic development to be placed at heart of Wales’ planning system.

A rightly controversial paper on what can be an emotive subject, it states that linking planning to issues such as affordable housing or creating a solution to global warming may have a serious impact on the needs of businesses in Wales and therefore the Welsh economy.

It goes on to suggest that the new Welsh Planning Bill should explicitly state that a major purpose of the planning system is to promote economic development and employment opportunities, and that planning officers should be given a duty to promote economic activity through a ‘presumption to develop’ within the planning process.

It also calls for a temporary three-year relaxation of planning rules in Wales in line with the similar relaxation in England and for business organisations to be given formal consultee or advisory status as part of the Local Development Plan process.

Given the lobbying that goes on within Cardiff Bay on behalf of various parties involved directly or indirectly within the planning process, the report is a welcome breath of fresh air that brings some common sense thinking back into public policy in Wales.

Whilst many would agree that planning laws are important, there is a growing consensus that the pendulum has swung too far and, as a result, we have a process that works against encouraging economic growth in Wales.

One can only hope that officials within the Welsh Government will consider the findings of this, and other future reports from this new thinktank. If they do, then the signs are that Gorwel will have a very important part to play in the future of public life in Wales over the next few years.

RURAL WALES - DEVELOPING A STRATEGY TO SUPPORT SMEs

Western Mail Column 20th April 2013

As we keep hearing from politicians of all sides, small to medium sized enterprises (SMEs) are the backbone of the Welsh economy.

However, this is even more the case within rural areas of Wales where the SME sector accounts for 73 per cent of all employment, as compared to 53 per cent for industrial Wales.

It is therefore crucial for the economy of rural Wales that the right support structure is put into place to help this sector survive and prosper and, given the current economic climate, create jobs and prosperity.

With the Welsh Government busily putting together the Rural Development Plan for Wales 2014-2020, it is critical that this strategy takes into account the specific difficulties faced by SMEs in rural Wales, which are usually associated with a lack of infrastructure, distance to main markets and poor access to external information, as well as restricted local industrial environments and lack of qualified staff.  

Obviously, the basic problem for rural areas is their isolation from the main national and international markets. The relative lack of infrastructure within the rural regions of Wales may also be a problem, especially in terms of poorly developed transport and communication structures.

These issues may be exacerbated by the fact that many SMEs in rural Wales are often viewed largely as traditional enterprises with low rates of innovation and serving local markets although there are fabulous exemplars of innovation to be found in such companies such as Huit Denim in Cardigan, Gaia Technologies in Gwynedd, Dulas in Machynlleth and Mabey Bridge in Monmouthshire.

Of course, some may argue that if only large companies could be attracted to rural Wales, then this would help solve some of the economic problems within the area. However, much of the research on the economic development of rural locations suggest that such an approach would be largely misplaced, with multiplier effects within the local economy being low given that branch plants inserted into such regions rarely develop linkages into the local economy itself.

Instead, the focus of policymakers needs to be on encouraging a ‘ground up’ approach which involves the stimulation of local start-ups, the support and development of existing businesses, and the creation of local networks between different stakeholders in the economy, including firms, educational institutions, support agencies, and large organisations.

And rural Wales has the rare blessing of three universities – Bangor, Aberystwyth and the University of Wales Trinity St David’s - that are playing a vital role in stimulating the local economy. In fact, all should ask how they can continue to help to support the specific needs of local SMEs, especially in upskilling the management and technical competencies of staff within such firms.

On a wider scale, both the Welsh Government and local councils should examine how they can improve the local industrial environment so as to address the causes of low indigenous growth of firms in rural areas. As the competitiveness of firms often does not depend on location alone, SMEs must constantly develop their products, adopt new methods of production and gain access to new markets.

The problem is that many traditional firms in rural areas may lack the resources and expertise required to develop these initiatives and may require external advice and consultancy to help develop their potential.  Therefore, it is crucial that such services are tailored to the specific needs of SMEs and entrepreneurs based within a particular locality and the primary aim of any rural development strategy directed at stimulating indigenous development should be one which focuses on improving the specific competitive strengths of local firms.

Therefore, with two Welsh city regions being created centred on Cardiff and Swansea and North East Wales linking into the greater economic region of North West England, it is critical that policymakers do not forget rural Wales. Fortunately, the development of the Rural Development Plan does create a major opportunity to create an innovative economic strategy for the whole of rural Wales that will address the actual needs of local businesses, strengthen the infrastructure needed to address those needs and help increase the competitiveness of SMEs within the region.

Indeed, if done properly, this could be a model for other rural areas within Europe and will demonstrate that an entrepreneurial and dynamic environment, supported by a strong and responsive ecosystem, can be created outside the urban and industrial areas of Wales.

AN ECONOMIC STRATEGY FOR CARDIFF

I rather like Russell Goodway.

There, I’ve finally said it despite not always seeing eye to eye with the Labour councillor for Ely and, of course, having very different political views to his.

Indeed, as I have myself sometimes been described by some as the human equivalent of marmite, I can probably empathise with the perception that some people have of Cardiff Council’s cabinet member for finance, business and local government.

And whilst I am not always in agreement with what he has done in the past, there wasn’t much to argue with what he said as he stood in front of the capital city’s business community last Friday morning to launch a consultation to help develop a long-term economic development strategy for Cardiff.

Although businesspeople I have spoken to since suggested that more detail on the day would have been useful, Mr Goodway did finally admit that the Council couldn’t do this all on their own and that they need the private sector to step up to the plate with their ideas and support. One can only hope that such sentiment is realised and that businesses become far more involved in the future development of the city.

For anyone interested in the future of Cardiff, the Green Paper “Rebuilding Momentum” forms the core of the consultation process and is a good starting point. It identifies some of the real opportunities facing the capital city in the immediate future.

Cardiff is already the closest European capital city to London and the electrification of the Great Western mainline will bring the ‘big smoke’ even closer.

It is also estimated that the city’s growth will be higher than any other UK ‘core city’ over the next twenty years and as one of ‘Europe’s best places to live and work’ with superb cultural and sporting facilities, will be attractive to potential investors and their employees in the future.

However, there are also significant weaknesses.

For example, the city has been starved of regeneration funds since devolution, with the focus being on weaker areas in West Wales and the Valleys. And despite having an international airport on its doorstep, the connectivity to this vital travel hub is relatively poor compared to other similar cities such as Newcastle, with very few flights to business destinations.

Given this, it is proposed that in order to exploit existing opportunities and address current and future challenges, Cardiff will require a new and sophisticated approach that combines continued development of infrastructure and physical regeneration with strategies and initiatives to create more and better quality jobs.

Not many could argue with that conclusion but there is one criticism, hopefully a constructive one, which I would make regarding the consultation document.

I appreciate and understand the focus on bringing greater inward investment into the city, especially given the attractions of the new enterprise zone and the excellent work already being done by the financial and professional services sector panel in ensuring that companies consider the city as a base for their operations.

However, it is a major disappointment the word ‘entrepreneurship’ was missing from the document, especially as the analysis admits that Cardiff has lower rates of business start-up rates than competitor cities. It also points out that the number of businesses in the city is also comparatively low despite the level of employment growth over the last ten years.

Whilst inward investment is important to any economy, the development of new businesses within fast growing sectors is also critical to future growth. As we have seen from cities across the World such as New York, Hong Kong and San Francisco, their dynamism is a direct result of the entrepreneurial efforts of innovative businesses.

I believe, given the fact that it has a high skilled workforce, three universities and a focus on sectors such as the creative industries, that there is a real opportunity for Cardiff to become a magnet for not only attracting knowledge-based start-ups but in developing its own indigenous entrepreneurs if there is clear strategic approach.

Perhaps there is scope for a mini Entrepreneurship Action Plan for Cardiff that identifies the resources required by entrepreneurs to build a successful local economy and the role that can be played by the Council and other bodies in facilitating this. I hope those putting together the final document will consider this carefully when putting together the strategy for the city’s economy.

There is therefore much to be done to ensure that Cardiff achieves its full economic potential and this consultation is a good starting point.

For Councillor Goodway and his officials, only time will tell whether they will get real buy-in to these plans from other stakeholders such as the Welsh Government and the private sector and, more importantly, whether this rhetoric can be turned into reality over the next few years.

SEVERNSIDE AIRPORT - THE DEBATE CONTINUES

As the debate over the future of airport services in South Wales continues, this time with the Institute for Welsh Affairs (IWA) putting forward a proposal for discussion for a new Severnside Airport, I though it was time to republish an article I wrote on the subject back in 2006. 

Despite the reaction from some quarters, I still believe that such a plan should not be dismissed without due consideration, especially given its job creating potential (which was one of the factors behind the plan when it was first discussed in the House of Commons forty years ago).

I am sure the debate will continue so here is my tale from seven years ago.

"With new legislative powers being devolved to Wales in May, there is increasing interest as to whether the Assembly will be less timid in its approach to economic development and transport issues than it has been during its first two terms.

In particular, the absence of any large major project in developing the potential of our nation means that we continue to prop up the UK’s prosperity league table with little prospect of any major change in the future. The fact that we have qualified for another round of European Structural funding as one of the poorest regions in Europe is testament to this.

One future cure for this economic malaise could be the attraction of imaginative large infrastructure projects that could, and should, make a difference to the Welsh economy.

A few months ago, I was sent details of a plan that has been doing the rounds for a number of years, namely the development of major international airport within Wales. No, I am not talking about Cardiff Airport, which continues to be a small regional airport at best. Rather, it is the development of a major international airport to the east of Newport that would serve the whole of the Wales and West England region. This was considered as part of the UK Transport policy three years ago but was, unsurprisingly, rejected as unworkable (although many suggested this had more to do with the interests of existing airports in the South east of England than any independent assessment of the benefits to Wales).

The White paper on the future of air transport has stated that by the year 2020, the number of passengers per annum in the UK will rise from 180 million to 501 million, despite the increasing worries about climate change. Not surprisingly, the report focuses solely on the development of the London complex of airports, a move that, according to the report, will increase air misses and, more crucially, increase the impact on the environment considerably.

Can we ignore such developments in Wales when a proposed Wales and West International Airport (WWIA) could cater for a catchment area of up to 30 million passengers per annum? Clearly, there would be little reason for individuals who live or have business in the Wales and West England region, and who require intercontinental facilities, to use one of the London airports and, in doing so, travel an average surface travel distance of 130 miles. With the WWIA, this would be reduced to an average of 40 miles, thus creating an attractive option for many passengers. With the M4 and the main Swansea-London railway line adjacent to the proposed airport, links into the UK road and rail network would be easy.

It would seem that in developing an airport strategy for the UK, there has been very little consideration of how to minimise the environmental impact of the growing air traffic over the next decade. In contrast, it has been argued that transferring Trans-Atlantic flights from London to the WWIA would save an estimated 6 million tonnes of air fuel every year. In terms of construction, the landside operation of the WWIA could be built on brownfield land and no part of the sites of special scientific interest in the Severn estuary would be affected by the development. The airside operation would consist of an offshore runway in the Severn estuary and therefore no person would live under the flightpath or within the noise impact footprint.

The benefits for the economy could be enormous, especially for the Gwent Valleys region which is the second poorest area in the UK. As many are no doubt aware, an international class airport which handles both passengers and cargo requires a substantial labour force to maintain an effective operation, and the report suggests that a new airport could create up to 45,000 direct job opportunities and generate at least £1.25 billion for the local economy.

Therefore, the proposal to develop an airport equivalent to that of Manchester or Gatwick for Wales to make most of this nation independent of England for its air transport seems very compelling, especially as it would bring all the economic benefits that the London-based airports are currently so keen to retain for themselves.

Rather than dismiss this out of hand, I would urge the Assembly to have the courage and the vision to at least consider such a plan themselves. This would enable many unanswered questions about this development to be thoroughly examined in detail, especially its overall environmental impact.

More importantly, it will demonstrate to the outside world that we in Wales can match our rhetoric for economic development with bold intentions for our future prosperity".

THE WORLD'S GREATEST INNOVATOR?

In the period following the Second World War, the development of Western economies was characterised by the growth of knowledge intensive industries in electronics, computing, medical technologies and advanced manufacturing.

Whilst large companies have played their role in this development, at the heart of many of these changes have been technical entrepreneurs, namely those individuals who operate within technologically advanced industries that, with a degree of technical expertise, have branched out by themselves and set up organisations that base their competitive advantage on focus on their skills and experience.

With the rapid technological progress occurring in the last decade or so, particularly with the growth of the internet, technical entrepreneurship has become a primary consideration for governments at a regional, national and even transnational levels seeking to encourage, stimulate and sustain increased levels of growth in the field. For example, the Welsh Government has recently announced a £100m fund to help support technical entrepreneurs and the companies they have created in the life sciences sector in Wales.

During the last fifty years, it can be argued that the most famous examples of technical entrepreneurship have emerged from Silicon Valley – the birthplace of modern computing, social networking and online searching – where companies such as Hewlett-Packard, Apple and Facebook have made fortunes for their owners and changed the way we live our lives today.

Yet, in my opinion, the most influential technical entrepreneur that ever lived is not Bill Hewlett, David Packard, Steve Jobs or Mark Zuckerberg. Instead, that accolade should go to a humble English potter born over two hundred and eighty years ago in Staffordshire

The youngest of thirteen children, Josiah Wedgwood was born in 1730 and started in the pottery industry at the age of just 11.  Working in the family firm, he built up his expertise until he left his father’s business when he was 29 to set up on his own.

By this time, Wedgwood had mastered the art of pottery and set about introducing new products, processes and services that resulted in myriad inventions and commercial success on a hitherto unseen scale.

As would be expected of a technical entrepreneur, he came up with new scientific devices for his industry, such as the pyrometer for measuring very high temperatures in kilns.

But he also revolutionised the entire retail industry through introducing a myriad of innovations that we are all familiar with today, including money back guarantees, free delivery, illustrated catalogues, buy one get one free offers, regular sales, travelling salesmen and self-service.

He created the first real mass market by manufacturing affordable and desirable ceramics for the growing industrial classes who couldn’t afford the expensive Chinese porcelain that had dominated the markets for over 200 years previously.

He was also centuries ahead of his time in the way he considered innovation. For example, rather than patenting as most technology entrepreneurs today remain obsessed with, Wedgwood preferred to be first to market and was an early proponent of the open innovation model.

And pre-dating Steve Jobs’ synergy of art with technology by more than two centuries, he encouraged collaborative research through working with artists, customers, friends, rivals, architects and sculptors to develop his products.

He also demonstrated a remarkable aptitude for marketing and branding, and was the first in the ceramic industry to mark his products with his name, denoting ownership of his designs.  He also sought patronage from politicians and royalty alike and using this in his advertising.  Indeed, he used the royal patronage to develop overseas clientele as well, resulting in 80 per cent of his total production being sold abroad by the mid 1780s.

But he was not satisfied only with his business and like Bill Gates two hundred and fifty years later, he wanted to use his fortune to help society.

He took on a prominent role in public life, particularly in the battle for the abolition of slavery. He also helped to create the first British Chamber of Manufactures and played an important role in the development of infrastructure in England during the industrial revolution, building canals, turnpike roads and communications through personal investment in the ports and towns in which his goods were transported through.

Therefore, from inheriting £20 from his father, Josiah Wedgwood built up a very profitable and long lasting dynastic firm that resulted in a personal fortune of £500,000 (around £50m in current prices).

Indeed, it was this legacy that gave his grandson, Charles Darwin, the time to undertake his scientific
studies as a young man and to eventually come up with the theories that would result in one of the most important books ever written, the “Origin of the Species”.

And whilst the firm was hit hard as a result of the global crisis four years ago, collapsing into administration, Wedgwood has thankfully emerged from the rceession with a new owner determined to carry on the legacy of the original founder of the business in Stoke on Trent.

So the next time you are sitting having a cuppa, give a small toast to the man who not only created the ceramic vessel from which you are drinking but who, for his achievements in manufacturing, management, marketing and retail, should rightly be recognised as ‘the world’s greatest innovator’.

AN INNOVATION STRATEGY FOR WALES - LESSONS FROM FINLAND

Last week, I attended a conference organised by the Massachusetts Institute of Technology (MIT) to examine the future of manufacturing.

It was a timely event, as I am currently undertaking research into the development of advanced manufacturing in Finland during the last thirty lessons and the lessons that other small economies can take from this experience.

We heard from a range of experts in the field, including Professor Martin Schmidt of MIT, who has been advising President Obama on a new emphasis on manufacturing within the US economy.

The report from his review is fascinating, mainly because of the differences in the philosophy regarding economic development as compared to most parts of Europe. In fact, the conclusions to the report to ensure American leadership in advanced manufacturing comprehensively rejected a picking winners policy, either in terms of individual companies or specific sectors. Instead, it proposed pursuing an innovation policy for advanced manufacturing that would provide the best environment in which to do business, ensure that the most powerful new technologies are developed in the USA and that technology-based enterprises have the infrastructure required to flourish.

Given the way that manufacturing in the USA and many other advanced countries has been ignored in the last decade as financial services became the favoured sector and there has been rush to move production to low cost countries such as China, this report is long overdue.

Yet, during the two days in Brussels discussing the future of advanced manufacturing, there seems to be little appreciation of an example within Europe that could also act as a model for developing more innovative and competitive economy.

During the last fifty years, Finland has changed itself from an economy that was based largely on primary production and an unskilled agrarian workforce to one that is recognized as one of the most competitive in the World, particularly in the field of high technology manufacturing within key sectors such as information communications and telecommunications (ICT).

Most of this change took place during the early 1990s when the Finnish economy endured a major economic recession that included a major banking crisis, unemployment rates of 15 percent and high levels of government debt.

In response to these issues, the Finnish Government took a bold long-term view to focus its strategy on innovation and promoting, in particular, facilitating the development of high technology sectors such as ICT. Since 1995, the Finnish economy has been one of the fastest growing in the developed world, with an average growth rate of 3.5 per cent. Unlike other rapidly growing economies, most of the growth within Finland has been generated by the development of domestic companies.

Therefore, through indigenous growth in a number of key sectors, Finland has become recognised as one of the most innovative and competitive nations in the World and the World Economic Forum’s Global Competitiveness Report 2012-2013, which assesses the competitiveness landscape of 144 economies, ranked Finland third in the World in terms of a range of different factors driving productivity and prosperity.

And one of the main driving forces behind this success has been a specific government body that has driven and developed innovation throughout the Finnish economy.

Established in 1983, TEKES is responsible for administering public support for private and public sector R&D and innovation in Finland. Its mission is to promote the development of industry and services by means of technology and innovations. Its impact has been tremendous, being responsible for supporting more than half of Finnish innovations during the last thirty years. The latest report on its impact on innovation is shown below.


Whilst its programmes have been focused very much on supporting technology within companies and public institutions, there have been additional positive effects such as increased networking between companies and R&D organisations in targeted clusters and increased collaboration between researchers across different disciplines. Simply put, the focus on the innovation policy that the US Government now recognises as being critical to its own manufacturing sector has been one of the key successes in turning a small peripheral nation into one of the most competitive economies in the World.

And there are certainly lessons for Wales from this experience.

Indeed, whilst there are those who still hanker for the return of the Welsh Development Agency, it is clear that during its existence, its focus on attracting large foreign direct investment did little to support the long-term innovation performance of our nation. Its subsequent integration into the Welsh Government has also had a minimal impact on ensuring that Wales becomes the “small clever nation” which politicians have been calling for since the advent of the National Assembly.

As the Minister for Business is currently examining the development of an innovation strategy for Wales, one option in creating a more competitive Welsh economy would be to consider establishing a Welsh TEKES that would be an arms length organisation that would focus on developing the innovative potential that exists within this nation.

If we were to get only a fraction of the success that the Finnish economy has enjoyed during the last three decades, then it would be one of the more astute policy decisions that the Welsh Government will have made in developing the economy.

FOCUSING ON GROWTH COMPANIES FOR ECONOMIC PROSPERITY

Last week, I finished putting together the 2012 list of the fastest growing firms in Wales.

To be published in a special supplement in the Western Mail on September 19th, the list will show, yet again, that Wales has a number of excellent entrepreneurial and innovative businesses that have considerable potential to achieve further growth.

Indeed, the data on the fifty firms featured will show a record increase in turnover during the period 2009 and 2011, demonstrating that even within difficult economic times, Welsh business can be competitive in an increasingly turbulent global environment.

Thanks to their wealth and employment creating potential, such high impact firms are now becoming the focus of policymakers around the World. Indeed, whilst entrepreneurship remains a key goal for developing local economies, there is an appreciation that as many firms will never grow beyond providing a local service, there needs to be increasing focus on those businesses that have the potential to grow further and create jobs.

Not every business wants to grow - recent research by Gallup in the USA found that 75 per cent of small business owners in the USA did not want their companies to grow, preferring to remain small. Whilst these companies are important to their local economies, they should not be confused with the other 25 per cent that want to expand to create companies that are of real added value to the regional and national economy. In fact, national and regional governments around the World are now realising that focusing on high growth businesses, or the so-called gazelles, can give them more “bang for their bucks” in ensuring that public sector business support is targeted towards those that can create jobs in the economy.

The “Growing State Economies” report from the National Governors Association representing the fifty individual states in the USA, and which I have been discussing for the last three weeks, is unequivocal in its support for such businesses. Its author, Governor Heinemann of Nebraska, emphasised that high growth businesses are the primary source of job creation, prosperity, and economic competitiveness, and that public policy should be focused on growing them into large employers. But it is not only in the USA where there is an increasing policy focus on growth firms.

Across the border, their Canadian neighbours have finally appreciated that its economy is failing to develop enough gazelle firms, despite leading world-class research and development at universities, a highly educated population, and a favourable business climate. The proposed solution is to create a comprehensive “National Strategy for High-Growth Entrepreneurship” to address the key impediments to the success of high growth Canadian firms, ensuring that key actors such as national and provincial governments, the private sector and universities all take some responsibility for implementing such a plan.

Across the Atlantic, European nations have also been focusing on how to develop the conditions for further growth.

In Sweden, one of the few EU countries to avoid a major recession, they have created an Agency for Growth Policy Analysis. This is charged by the Swedish Government to shed light on the areas most significant to growth, strengthen Swedish competitiveness and create the conditions for more jobs and growing companies throughout the country.

Its Nordic cousin Finland has also recently announced that it will be focusing its government services on targeting growing firms, with the aim of becoming a European centre for growth companies in technology sectors. These include the “Funding of Young Innovative Growth Companies” initiative, which can provide financial support of up to one million euros per enterprise. It has also developed the ‘Vigo Accelerators” initiative, which uses selected independent companies, run by internationally proven entrepreneurs and executives, to help the best and the brightest start-ups to grow faster, smarter, and safer into the global market. The mentor entrepreneurs also co-invest in the companies they support.

In South Korea, there has been a policy focus on transforming traditional companies to high-growth firms, mainly through a Global Stars programme in which 100 SMEs are selected for a comprehensive support package in terms of technology, financing, and exporting. A similar programme has been set up in Singapore which assists promising local businesses with funding, management development, technology and innovation enhancement, and internationalisation.

Therefore, with governments across the world developing new co-ordinated approaches to ensuring that those companies with potential are given every opportunity to grow, there are certainly lessons to be learnt in terms of policy development by both the UK and Welsh Governments.

Certainly, if Wales is to emerge from the current economic downturn, then it will only do so by maximising the potential of its business community, particularly those who want to grow and create wealth and employment.

DEVELOPING ENTREPRENEURSHIP POLICY IN WALES - LEARNING FROM THE USA

In an earlier blog post, I discussed the development of a new economic approach by the governors of the individual states that make up the USA .

Having had the opportunity this week to fully digest the “Growing State Economies” report which sets out the priorities for such a strategy, it was heartening to note that the message was clear to those involved in economic development at a state level that they should stop competing against each other to attract investment from larger companies and move towards a more bottom-up approach to start and develop their own local businesses.

This is not going to be easy.

Data shows that individual states are, on average, still looking to spend twenty seven per cent more next year on strategic business attraction. And this is despite statistics that demonstrate that only two per cent of annual job gains across the individual states can be attributed to business relocations. Fortunately, for those keen to promote entrepreneurship at a local level in the USA, the message is slowly getting through to politicians and policymakers.

Indeed, the evidence suggests that in addition to attracting firms to a region, there is also an increasing focus by state policymakers on launching new companies and supporting existing businesses, with a growing appreciation that helping entrepreneurs start, grow, and renew businesses is one of the most important things a state or regional government can do to create jobs and raise living standards. In fact, funds for entrepreneurial development programmes by individual states will have grown by almost thirty per cent between 2012 and 2013 and, in the last year alone, over a third of US governors have introduced legislation or started specific programmes that are focused on boosting the numbers of startup companies.

So are there other lessons from the report for regional governments on this side of the Atlantic?

Are there key questions that need to be asked in relation to developing a clear policy agenda towards creating an entrepreneurially led economic recovery?

First of all, policymakers need to ask themselves whether their resources and attention are focused towards bringing in firms from elsewhere or towards growing their own entrepreneurs? Of course, this is a debate that has been going on for at least twenty years in Wales and yet we are no closer to the answer when it comes understanding the priorities of our Government.

For example, has the new office recently opened in London been established as a location to attract in new investment into Wales or as a place where Welsh firms can link in with potential clients based in one of the most prosperous and dynamic cities in the World?

Secondly, do policymakers have an agreed view of what they define as entrepreneurship and, more importantly, do they distinguish between the various types of entrepreneurs that can contribute to the economy? It is generally recognised that working with startups, where the focus is on developing products and finding customers, is very different to working with growing firms that struggle with quite different issues such as such as strategic planning, market diversification, and operational efficiencies. Yet, there is generally a lack of appreciation by policymakers of the different needs of business as they grow and develop with a more generalised approach to business support being the norm.

Thirdly, do politicians and their civil servants make use of insights gained directly from entrepreneurs and those who work with them? This is the one area in which it could be argued that Wales has made great strides recently with the creation of various industry panels to advise the Minister on key sectoral developments, as well as specific groups to develop policies in areas such as microbusinesses, business rates and city regions. Yet whilst such strategies are important, the real value is when they are put into action and that, as policymakers in the US have discovered, is not as simple as it sounds given that the imperatives of entrepreneurs may be in contrast to those of government officials.

Finally, do all the economic initiatives developed to support entrepreneurs take advantage of the complementarities between policies? This is a particular challenge for Wales where, historically, we have seen a very tribal approach to economic and business development, driven by a silo mentality where individuals “protect their patch” in terms of policy developments.

For example, we have a range of different programmes to support innovative businesses across Wales and to link them into the university sector. Yet, there seems to be little co-ordination between these programmes, resulting in the unacceptable situation where organisations are competing with each other for clients using the same pot of public funding.

Therefore, as the report from the governors of the different American states has shown, there are key challenges in developing a coherent policy framework to support entrepreneurship. One can only hope that regional governments in the UK, and indeed Europe, are up to this challenge in creating a more enterprise focused approached to economic development.