Recovery as an Opportunity

Video Script:

"Recovery as an Opportunity"

Delivered at the Canadian Economic Development Conference

(Canadian EDAC Conference 2020)

"Recovery as an Opportunity”

Slide 1

All the way from Melbourne, Australia, I want to thankyou for the opportunity to speak at your conference. I trust that the conference is going well for you and that the cities and teams that you represent will benefit. And I hope that you are finding new ideas about rebounding, rebuilding and recovering from this pandemic. My aim in the few minutes we have together is to also add to the ideas that you are being presented with.

Slide 2

So, what am I going to cover? The full title of my speech is this: “Turning Economic Recovery into Opportunity – Rethinking Economic Development Activities”. Specifically, its about knowledge. For knowledge is one key to creating a resilient future. I’ll be looking at how we can leverage the latent human capacity in our communities to strengthen local economies over the long term.

I’m going to be talking about the knowledge economy and each of its components. Then, I’ll be reviewing the benefits that can be derived from this particular ecosystem and finally, and importantly, some actions you can take. Some practical suggestions for building your locale’s knowledge economy.

Slide 3

There are two pillars upon which this presentation rests. They are my set of work experiences and my PhD research. Regarding experience, of relevance is my work in education and involvement with both the local business community and economic development teams.

Regarding my PhD, I’m looking at long term economic outcomes for growing outer-metropolitan locales. And there are three lenses through which I am looking at these changes: place-based economic development strategies, strategic foresight and the knowledge economy.

In short, my focus is on how we think about and prepare for the industries of the future?

So, let’s get into it.

Slide 4

How should we think about success? What are we aiming for?

Imagine this. It is 2030, and here you are standing looking around at your city, your locale, your town, your community. You are reflecting upon all of the work, all of the discussions and disagreements of the previous 10 years. The meetings and the contracts. The advocacy, the daily routine, the times of exhaustion and the highlights of the celebrations.

Looking back at 2020 from the vantage point of 2030, what does success look like?

Will you be measuring success in terms of the people you know and the size of your population? Or, the number and types of successful businesses? The profitability that stakeholders are reporting and the vitality of the economy? Or, could you be measuring success in terms of individual and community health and the lifestyles that are on offer.

Or could there be other points of reflection. Such as those to do with social indicators and the use of technology.

So the question is this, what does success look like?

Slide 5

And I put it to you, that I believe the pathway to success is built upon human capital.

This conference is about rebounding, rebuilding and recovering. And at risk of stating the obvious, it is human capital that provides the knowledge that enables us to rebound, rebuild and recover.

For me, this is how we can rethink economic development activities.

By looking afresh at human capital and leveraging its potential.

Slide 6

What outcomes can you get from human capital? What can you do with human capital? Here are but three.

First, acquire skills. We invest in education and training to develop skills and expertise. In essence, acquiring skills improves our “know-what, know-why, know-how and know-who”. Acquiring skills improves the depth and breadth of human capital.

Second, human capital is used to grow innovation. Consider the four ways a busines can innovate: in its processes, its positioning, its paradigm and/or in its products. Growing innovation is the return from investment in human capital.

Third, human capital is used to create connections. We can understand this phenomenon using social network analysis. We can also support the creation of connections by understanding the value of knowledge spillovers. This third aspect, creating connections, facilitates the expansion of human capital

Acquiring skills, growing innovation and creating connections. Three perspectives of human capital.

But the question is this - how can we coherently think about each of these aspects of human capital? How can we organise this complexity into a framework? A framework upon which success in rebounding, rebuilding and recovering can be built?

Slide 7

The Knowledge Economy is such a framework. It is a way to frame the complexity of human capital in a coherent manner. It is an approach that can be used to leverage the latent human capacity in our communities to strengthen our local economies over the long term.

As you can see, the Knowledge Economy is comprised of three parts: the production of knowledge, the distribution of knowledge and the application of knowledge.

The production of knowledge has to do with research. It is where new knowledge comes from. It is from this well that the health of the community and economy are improved over the long term. The distribution of knowledge has to do with teaching, with mentoring and networking. It is where we teach and are taught new things, or refreshed on that which we have forgotten. Where the new knowledge produced is distributed. Finally, the application of knowledge. This is where innovation occurs. It is where people bring knowledge and insights to market. It is the result of distributing knowledge.

As many economists have observed, economic development flows from improvements in the stock of knowledge. In the jargon, a functioning knowledge economy is the path to improving the stock of knowledge

In essence: as you know more, you grow more. As you know more, you grow more.

Let’s build on this concept and start to make it practical.

Slide 8

The knowledge economy functions best when academia, business and government are working together. Academia plays their part primarily in producing knowledge, but also in its distribution and application. Business plays their part primarily in applying knowledge, but also in its distribution and production. Finally, government supports the smooth functioning of the three components separately and together as a whole. These three sets of institutions make up the Knowledge Economy Ecosystem.

Here are some observations from my research with respect to each of the components of the knowledge economy. Generally we are good at the distribution of knowledge. We support networking events, promote workshops and even develop mentoring and coaching programs. We might strike agreements with formal education providers and industry bodies to deliver qualifications and certifications. We, the economic development community, are well practiced at distributing knowledge.

Turning to the application of knowledge. What seems to be happening across the world is a growing realisation that cities, communities and locale’s need to develop their ability to innovate. From what I’ve observed this component is harder to get right. It requires several things including leadership, a critical mass of innovators in a geographical location and long term support to see success. We, the economic development community, are improving our “application of knowledge” skills.

Finally, the production of knowledge. This component of the knowledge economy often gets overlooked. While primarily located in universities, it is where new ideas and understandings are birthed. Importantly, there are two ways that university research can be used. One is where business approaches the university and asks them to help with an idea or to analyse some problem. The other way is where university approaches business and asks them to help develop an idea or support a research project.

In recent times I have had a few conversations about the knowledge economy with members of the economic development community here in Australia. For at least one person the second way that universities can be involved, that is to be the source of ideas for business, was a lightbulb moment. Up until the conversation they only thought that business would approach a university researcher to check out an idea. They hadn’t realised that a university researcher or research team could be the source of ideas that could be developed by business.

How does this relate to Canada? With reference to the production of knowledge, I’ve read of some success stories from across your nation. One such story is of the research project backed by the Canola Council. A research project that led to the significant heart-healthy oilseed industry. Another, which is currently topical, is of the critical research that was conducted into the Ebola vaccine.

And then there was also a 2013 report on the state of industrial R&D that I read. It mentioned that your nation accounts for a relatively large share of world patents in pharmaceuticals and medicines as well as communications technologies.

And so, looking at the third part of the knowledge economy, the production of knowledge, I believe that whilst there are success stories it is an area of economic development activity that is largely untapped.

Slide 9

And here is a call to action that may resonate. Producing knowledge is inherently a long term process. It may take several years from research idea to commercial product. So, with reference to this pandemic it seems that if we increase research activity now, then we’ll see increasing benefits over the medium to long term. An important point when you consider that returns from standard forms of economic responses to this pandemic have a short to medium term time-frame.

If economic responses can be seen as waves, standard forms are the short and medium term waves with outcomes from research being realised as the necessary long term waves.

To put it succinctly, invest now in research activities to maintain ongoing economic momentum in the years ahead.

Slide 10

Now. We’ve looked at the Knowledge Economy and reviewed its components. The production, distribution and application of knowledge. And we’ve looked at three different groups that are involved, and how much they are and could be involved. These groups, academia, business and government, are the significant stakeholders in ensuring a functioning Knowledge Economy.

But is the effort going to be worth your time? Are you going to see any returns on investment? I say yes.

Firstly, to economic benefits. Let’s look at growth. For a 1% increase in each of patents, education quality, journal articles, and royalty payments about a 0.2% growth is realised. And for employment growth, lets look at some employment multipliers:

1 job in tradable sector = 1.6 jobs in non-tradable sector
1 skilled job in tradable sector = 2.5 jobs in non-tradable sector
1 high-skilled job in hi-tech manufacturing = 4.9 jobs in non-tradable sector

With respect to investment attraction, consider two things. One is this: a research idea that has commercial potential has increasing needs of funding to ensure success. That is, investment finance is flowing into your locale in support of a home-grown research project. The second thing to consider, is that just like in the field of sports, cuisine, and music so it is in the field of research. In each of these fields there are the stars and champions. For each of these fields there are people who want to be with these stars, and there organisations that want to support them. What this means for the production of knowledge is this: good quality researchers attract other researchers, and also attract finance to support their efforts.

And then there are the exports. As we know, producing things for the tradable sectors brings benefits to the place of origin for those exports. And its not just international trade that I am referring to.

Secondly, to the social benefits. A community can be seen as a complex system. A network of people, of businesses, of institutions, and so on. As we know, diverse economies, interlinked with a supportive and diverse community, improves resilience.

Another social benefit can be found in connections. By intentionally supporting the distribution of knowledge the result is that more people get to know more people. More connections are made.

And finally, those home grown stories. Local breakthroughs based on research activity located in your community can lead to those stories of inspiration. Those moments of community pride.

So now, I know want to turn to some specific actions that you can take to improve the effectiveness of your local Knowledge Economy.

Building on our understanding of the knowledge economy, its components and its benefits let’s take look at some practical actions that you can start

with.

Slide 11

There are four sets of actions: those related to collaboration, to human capital, to governance and to planning. Each of the actions listed here plays its part in one or more of the knowledge economy components. That is, in the production knowledge, the distribution of knowledge and/or in the application of knowledge.

With respect to collaboration you can set up meetings and events that bring people together. By talking with people, and by getting people to talk together you can discover resources that can be used in each of the three parts of the knowledge economy. Don’t forget to involve people from academia or education institutions and business as well as the government organisation you belong to.

With respect to human capital, you need to see what is available. You need to understand where the possibilities for research and for bringing research outcomes to market are. The way that you do this is to understand how many post-graduates there are in your community and what fields of study they are, or were, interested in.

In recent times this is what I have been working on. In working with the economic development team here in my local government area we discovered what the potential was. We have over 14,000 post=graduates in several fields: including education, IT, science and engineering. Whereas for another council I am working with, the fields of post-graduate study are slightly different. There are 4,000 post-graduates in this second locale. And the fields of study in this case include health as well as the natural and physical sciences. Its important to note this: it is in these fields of study where the potential lies.

Lastly, with respect to human capital, is the quality of place. What is at your locale that will help attract and develop human capital.

The third set of actions have to do with governance. You need to consider formal partnerships between say the local government and the local education institution. This may start out as a “memorandum of understanding”. There are also licensing matters to reflect on when it comes to realising commercial outcomes from locally-developed intellectual property. And, of course, there is the ever present discussion about funding. Where sources and types of funding can range from government grants to local internships and everything in between.

Finally, there must be a set of plans. Obviously, there are the tried and true SMART-based strategic objectives. Where these objectives are aligned with the vision for your Knowledge Economy to which you would aspire.

And then there is this: how are you going to measure success? Perhaps you could measure the number of joint research projects, the number of licensing deals, even attendance at research-focused networking events, or the number of post-graduates that live in your locale.

By attending to these four sets of actions: relating to collaboration, human capital, governance and planning. By attending to these four sets of actions you will be well on the way to developing a vibrant knowledge economy. These actions will bring together the major players – business, education institutions and government – to bring about economic benefits that persist into the future. Delivering economic momentum that lasts long after this pandemic has passed.

The Knowledge Economy is a way to frame the complexity of human capital in a coherent manner. It is an approach that can be used to leverage the latent human capacity in our communities to strengthen our local economies over the long term.

What I have presented is a way to rethink economic development activities. I’ve shown you one way that you can “Turn Economic Recovery into Opportunity.

Slide 12

Thankyou for your attendance. I trust that through this presentation I have made you aware of some ideas that can be of benefit to you and your community.

I do want to point out that I am available for any follow-up. My contact details are listed here on the screen.

Again, if there is anything that I can help you with please do not hesitate to contact me.

For truly, an invigorated local knowledge economy can play a part in your efforts to rebound, rebuild and recover.

Thankyou.