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Growth in the regions

Three-fourths of British medium-sized organisations are not aware of their regional development agency, or RDA. Who cares, asks Jyoti Banerjee? Well, the RDAs should, and the government should, and - surprisingly - so should mid-sized companies.

We think of the Chinese as growing unbelievably fast. India is no slouch either. Nor is Ireland. But looking at growth stats for a country as a whole is misleading. It's not countries that grow fast - it is individual regions that grow.

All over the world, we see certain regions performing so spectacularly that the entire country seems to be glowing green with growth. But other regions in the same country lag behind. China is a case in point. In China's coastal regions, such as Dalian, Beijing, Shanghai and Zhejiang, per capita income is around $5000 per year, a figure already surpassed by Guangzhou. But in the hinterland, incomes fall away to between $2000 and $1000, and lower. If we treat regions as countries, then nine of the top fifteen Asian countries are actually Chinese regions.

It is the power of the regional economy which is the reason why the World Competitiveness Centre at IMD now includes 8 regional economies, such as Zhejiang, Maharashtra and Sao Paulo, in its benchmarking of 61 countries for competitiveness.

Extracting M from SME

Why are mid-sized businesses so invisible, asks Jyoti Banerjee? Its because they get grouped with small and start-up organisations that they are absolutely different from.

Mid-size enterprises are the powerhouse of the UK economy.

Although only 6% of UK companies are in the £10-£250 million revenue bracket, these businesses employ 30% of the British work force, and generate 20% of all corporate profits. Their annualised growth rate is at 8%, which is well above the national growth rate.

Despite this sterling performance, mid-size enterprises are nearly invisible. They have no profile in the market, government does not pay them any attention, and they are usually lumped together with small and micro enterprises via the SME label, although they are significantly different from those companies in almost all respects.

Mid-size businesses are in a different ballpark from small businesses
Mid-size businesses are categorised in most UK analytics as part of the SME grouping. This is certainly tautological in terms of size as SME seems to cover any companies that are not large, but it does not provide any analytical insight on the behaviour of such companies as they are different from small and micro enterprises in a number of significant ways.

Holding up the spread of the Information Society in Europe

Funding ICT research has positive long-term implications for the future and competitiveness of the European economy but there are current roadblocks that impact the spread of the information economy that the Lisbon agenda is predicated on. Two of the most significant hurdles are the regulatory framework for e-business in the member states and the need for overhauling the public sector which remains in urgent need of modernisation.

According to Fabio Colasanti, director general, DG Information Society, European Commission, “a new regulatory framework based on convergence and technological neutrality has been in force in the member states since July 2004, which should provide certainty to investors, increase competition and consumer choice.” However, substantial evidence exists from within the European Commission indicating that European enterprises face problems in engaging with e-business opportunities. A number of problems relate to how national administrations and judicial systems in the member states have chosen to implement in their own environments the e-directives that have emerged from the legal framework of the European Community. John Watson, an associate of mine and managing director of The Evaluation Partnership, a consultancy specialising in EU affairs, says, "Our studies in the European Commission have indicated that despite harmonisation on e-directives there are still serious challenges in e-business activity across Europe in four main regulatory areas: e-signatures, e-invoicing, contract conclusion and contract implementation."

Do citizens really want to engage with government?

At a time when the British government is under fire for its plans to introduce electronic identification, it is worth asking if citizens really care about the on-line public services that are enabled by the adoption of electronic identification and which are at the heart of so many e-government initiatives.

The Scandinavians seem to be taking a pragmatic view that electronic public services cannot be delivered without electronic IDs and their citizens seem to value top-quality services more than they value privacy. The vocal British, who want privacy more than they want to see the spread of government, represent the opposite camp.

Mark Frequin of the Dutch ministry of economic affairs expresses the government point-of-view rather well: “Today’s citizen wants freedom – till the moment that something happens. At that point they want government to protect them.”

As governments strive to be more citizen-focused, they “need to engage with citizens who are increasingly interested in what they do,” says Colm Butler in the Irish Prime Minister’s Office. “This has huge implications for making public services electronic and open to all citizens.”

Lisbon - A state of mind?

Fabio Colasanti, director general Information Society, European Commission, has identified Europe’s engagement with technology as key to establishing the regional bloc as the most competitive in the world. But does Europe have the means to take advantage of technology, or will it let the opportunities slip by?

The foundation of Colasanti’s concern was the report on European competitiveness by Wim Kok of the Netherlands highlighting the European Union’s slower-than-expected progress towards the goals agreed by the member states in Lisbon in 2000, particularly in terms of regulatory reform as well as development of the internal market across the EU. The European Commission has identified higher economic growth as a basic pre-condition for any of the economic or social advances encapsulated in the so-called Lisbon Agenda. The problem is that the EU today lags behind its international competitors in terms of growth potential.

Lisbon has become the central mantra of the European Commission. In Commission-speak, it’s not about a certain southern European city. It’s more a state of mind. Every document put out by the Commission now references the Lisbon agenda and discusses what it will take to achieve its goals.

In one sense, such centrality of purpose within the Commission is commendable. It is something that private sector organisations pay vast amounts of consultancy dollars to achieve.

But in another sense, Lisbon is simply a mantra – useful to be wheeled out when it is important to show how joined-up the elements of Europe’s government are, but without a strategic plan or programme to actually join the dots together.