SMEs KEYNOTE SPEECHES THE ROLE OF THE SMEs

SMEs KEYNOTE SPEECHES – THE ROLE OF THE SMEs: OPPORTUNITIES AND CHALLENGES EU COHESION POLICY SUPPORTS THE Prof. Patrizio Bianchi University of Ferrara, 1391 and Regione Emilia – Romagna Government Barcelona, 13 march 2014

Patrizio Bianchi Full professor of Applied Economics Bologna University 1990 -1997 Ferrara University, 1998 – 2004 Dean Faculty of Economics; 2004 – 2010 Rector Region Emilia Romagna, 2010 – 2015 Minister of Eduication and Labour Recenti Publications: -High Technology, Productivity and Networks, (P. Bianchi, M. D. Parrilli, R. Sugden eds. ), Palgrave Pu. , London, pp. 1 -254, 2008 -International Handbook on Industrial Policy (P. Bianchi and S. Labory eds. ), II edition, 2008 -Le nuove politiche industriali dell’Unione Europea, (con S. Labory), Il Mulino, pp. 1 – 243, Bologna, 2009 -Le politiche industriali alla prova del futuro (P. Bianchi and C. Pozzi eds. ), Bologna, Il Mulino, 2010. -Industrial Policies after the Crisis. Seizing the Future, (with S. Labory), E. Elgar, Cheltenham, pp. 1 -150, 2011 -La rincorsa frenata. L’industria italiana dall’unità nazionale alla crisi globale. Nuova edizione. Il Mulino, Bologna, pp. 1 -346, 2013

• Globalization and the reinassance of manufacturing • A taxonomy for SMEs I P E • A new approach to industrial policy T • The policy experience of ER • Final remarks: risks and opportunities for European SMEs

Real GDP Growth (annual % change), 1980 - 2014 10 8 6 4 2 0 1985 1990 1995 2000 2005 2010 2015 -2 -4 -6 Advanced economies Emerging and developing economies World The world crisis is not only the dramatic effect of the financial collapse, but it is the structural readjustment after the end of Bilateral Equilibrium and starting of Globalisation

Adam Smith • “As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market” (WN, I, 3, p. 40)

“The greatest improvement in the productive powers of labour, and the greater part of the skill, dextery, and judgement, …seem to have been the effects of the division of labour” (WN, I, I, p. 13) The Wealth of Nations, today

Changes in the Extent of the market require changes in Organization of production A Reinassance of Manufacturing, because Manufacture still drives innovation, export and growth Manufacture today and in the future is the capacity to networking different, specialized, complementary assets, technologies and competences

Division of labour: the organization of production Mass production capital labour Source s primary intermediate Final transf. distribution Raw materials

Differentiated production K D 1 L S P I 1 F 1 T I 2 F 2 D 2

DIFFERENT MODELS OF PRODUCTION ORGANIZATION Fordist S–P–I–F–D ------------- Flexible S – P – I – F 1 F 2 - D F 3 -------------- District S- P - I - F -D P–I -F/ ++++++++ Closed filiere S-------D P/ I/ F/ Open filiere S /P/I/F/ - D

World-wide industrial reorganization: -Delocalization of specific production from a country to another country -World-wide unbundling of the entire production cycle - De-linking of service and manufacturing steps

the present attention to Manufacturing Reinassance is the evidence that De-linking manufacturing and service steps of production involves the risk of: - loosing the control of production cycle - loosing capabilities to transform innovation into production - loosing the capacity to accumulate knowledge and competences of production

CRISIS: Countries reacted differently to the change in the extent of the market determined by globalization 140 120 100 80 AV/N 60 CL/N 40 140 20 120 0 100 SW 80 UK GE SC FR BNL IT AV/N 60 cl/N 40 20 0 US EU RW RA R&S, Multinationals: financial aggregates, 376 companies, milan 2012

Oecd technology intensity based on % breakdown of net sales EU ITA GE FR HT SC MHT LMT SW LT BNL UK 0 20 40 60 80 100 120 R&S, Multinationals: financial aggregates, 376 companies, milan 2012

And differently invested in Human capital Public expenditure on education 2010 as % total exp. And as %GDP 18 16 16. 4 15. 7 15. 3 13. 2 14 13. 1 13 11. 5 12 11. 3 12. 3 10. 8 10. 5 10. 4 10 9 7. 3 8 8. 9 7. 3 5. 8 6 5. 8 5. 6 5. 5 5. 1 5 5 4. 7 3. 8 4 2 Series 1 Series 2 E N O PP IA A A LI G IT A N SP AG AS U D IA RE CO G ER M AN A AD N SA CA U ER IZ Z AN CI A A K U 21 EU D EC O IA EZ SV FR SV N O RV EG IA 0

And in research GERD OECD, oct 2012 450000 400000 350000 300000 250000 Series 1 200000 150000 100000 50000 0 Usa China Jap Ger Fra UK Ita Gerd oecd in mil. dollar current

Europe can win the present global challenge only involving the human, technological, productive capacities of all European SMEs The Wealth of Nations, skills, dextery and judgements

The word “SME” refers to very different kinds of economic actors, like Rural family activities High tech specialties producers Service providers Component producers inside a local network Subcontractors of multinationals

Industrial efficiency stems from • Specialization of individual activity • Complementarity of collective action

A taxonomy based on Using 2 variables • x = complementarity • y = specialization • We have 4 different groups of companies requiring different policy approaches

A taxonomy based on Using 2 variables • x = complementarity • y = specialization • We have 4 different groups of companies requiring different policy approaches

• A. low spec. , low compl. (surviving companies) • B. low spec. , high compl. (local network) • C. high spec. , low compl. (speciality subcontractor) • D. high spec. , high compl. (dynamic networks)

specialization C. high spec. , low compl. (speciality subcontractor A. low spec. , low compl. (surviving companies D. high spec. , high compl. (dynamic networks) B. low spec. , high compl. (local network complementarity

Different strategies from low spec/low compl. to high spec / high compl.

spec compl From surviving Smes to dynamic networks

spec Investing on subcontractors to move towards dynamic network compl

spec Supporting local networks to become dynamic networks compl

Impact of web on Smes Deepening specialization possibilities Widening complementarity opportunities

A strategy for increasing added value and the efficiency of the production system requires a basic infrastructure for increasing human capital training and mobility To transform possibilities and opportunities in Production organizations adequate to the New extent of the global market

Entrepreneur training goals -Adopting the technologies more relevant for our country in our times - understanding of the complexity of present world and the relation between the needs of our country and the dynamics of world ecoonomy - Consolidation of the social intangible capital

Rethinking industrial policies for SMEs means to create a positive environment for growth In this context it is necessary to combine different set of policies, according to the different SMEs typology and the policy strategy adopted by the government

The recent debate on development and the experiences of European policy making have stressed two basic concepts to analyse economic dynamics and structural change INNOVATION TERRITORY

These two concepts are necessary but not sufficient to define the new idea of development We introduce the two concepts of ENTITLEMENTS and PROVISIONS ENTITLEMENTS PROVISIONS

innovation entitlements provisions territory

Human capital policies Innovation entitlements Social policies Innovation policies provisions territory regional policies

Innovation Human Capital Policies Innovation Policies Provisions Entitlements Territorial Policies Social Policies Territory

Innovation Human Capital Policies Innovation Policies Entitlements Territorial Policies Social Policies Territory

Innovation Human Capital Policies Innovation Policies Entitlements Provisions Social Policies Territory

4) In all cases we need proper Educ. Policies Innovation Human Capital Policies Innovation Policies Entitlements Provisions Social Policies 1 ) In the case A we start from Social policy 3) In case B we can start from Tech. policy Territorial Policies Territory 2) In the cases B and D we can start from Territorial policy

High-tech spin off companies Innovation Policies Entitlements Companies innovating local networks Enterprises responding social needs Human Capital Policies Provisions Social Policies Territory Reinventing traditional jobs

Whole-of-government approach I Human Capital Policies E Innovation Policies P Social Policies Territorial Policies T

• to increase the added value and the efficiency of the entire productive system • we need to provide an intelligent infrastructure devoted • to raise specialization and complementarity among the actors • to strengthen human and social capital • to improve individual and collective entrepreneurship

EMILIA ROMAGNA the policy focus Education and HC policies Integrated policies Social and cohesion policy Spinner, university and research spin off Technopoles and tech. innovation policies Services to industrial districts

3 year courses Education and professional training

Education and professional training V Diploma profes IV III PERCORSI TRIE QUALIFIC II I Licei Istituti Tecnici Istituti Professionali Ie. FP

Rete politecnica HIGH SCHOOL OF TECHNOLOGY NETWORK ITS, 2 years IFTS, 1 year FS, long learning

Rete Politecnica Hst network Università RETE POLITECNICA ITS IFTS FS V Diploma professionale IV III PERCORSI TRIENNALI A QUALIFICA II I Licei Istituti Tecnici Istituti Professionali Ie. FP

La rete politecnica dell’Emilia Romagna

UNIVERSITY AND RESEARCH, SPIN OFF, INTERN. MOBILITY Spinner Grants for TT Doctorate programmes in apprenticeship Intern. Mobility programm

UNIVERSITY AND RESEARCH, SPIN OFF , INTERN. MOBILITY Borse di ricerca Borse di dottorato Assegni formativi per l’alta formazione ALTA FORMAZIONE, RICERCA E MOBILITA’ INTERNAZIONALE Università RETE POLITECNICA ITS IFTS FS V Diploma professionale IV III PERCORSI TRIENNALI A QUALIFICA II I Licei Istituti Tecnici Istituti Professionali Ie. FP

JOBS AND COMPETENCES apprenticeship PIL Enterprises/education Stabilization programmes

Labour and competencies PLACEMENTS Ph. D. thesis Ph. D. in high level apprenticeship Training grants for higher education University High level apprenticeship NETWORK OF POLYTECHNIC S ITS IFTS FS Professional apprenticeship PLACEMENTS Professional diploma Apprenticeship QUALIFYING COURSES Lower education Technical institutes Professional institutes Ie. FP Labour market HIGHER EDUCATION, RESEARCH AND INTERNATIONAL MOBILITY Job centres PLACEMENTS Competencies for productive and organisational innovation Research grants

Labour and competencies innovation PLACEMENTS Ph. D. thesis Ph. D. in high level apprenticeship Training grants for higher education University territory High level apprenticeship Education NETWORK OF POLYTECHNIC S ITS IFTS FS Professional apprenticeship PLACEMENTS Professional diploma Apprenticeship welfare Lower education Technical institutes Professional institutes Ie. FP QUALIFYING COURSES Job centres HIGHER EDUCATION, RESEARCH AND INTERNATIONAL MOBILITY Labour market PLACEMENTS Competencies for productive and organisational innovation Research grants

1. Education reform Education and professional training Polytechnics’ network Higher education, research and international mobility Competencies and labour

Rethinking industrial policies for SMEs means strengthening local community, reinforcing social capital, promoting civic responsability

building a smart, inclusive, sustainable, civil society In other words,