Some 20 years ago, the southern Swedish region of Skåne (Scania) suffered high unemployment, largely from the breakdown of the shipbuilding industry in Malmö. But now this region is a hotbed for innovative technology. Ideon Science Park near Lund University is home to 237 companies and 3000 employees who focus heavily on IT, telecommunications and life sciences. It is here that Ericsson developed Bluetooth technology and the mobile phone.
“Today more international companies are coming to look for opportunities,” says Hans Möller, Ideon managing director and CEO. Within 10 years the park will have doubled in size.
Scania particularly benefits from its close proximity to Danish capital Copenhagen, an advantage that has become increasingly important to both locations because of two events: the 1999 opening of the
16-kilometre Oresund Bridge that offers highway and rail links between Copenhagen and Malmö; and the 1997 agreement between Copenhagen Capacity and its Swedish counterpart Position Skåne to jointly brand the region as Medicon Valley to reflect the life science strongholds both areas have in common.
Denmark has the third largest drug development community in Europe, and a large portion of this activity takes place in and around Copenhagen. Skåne’s Lund University is a powerhouse of medical and pharma research and development. Consequently, Medicon Valley attracts more FDI within life science than any other region in Europe today.
“Over the years, our joint work has been focused on branding the region and attracting foreign direct investment,” says Ulf Åberg, senior business development manager, food and food technology and life science, the Department of Economic Development and Innovation for the region of Skåne.
Partially funded by Oresund Region stakeholders and the European Commission’s Interreg II programme, an EU scheme that encourages transnational co-operation, Medicon Valley has been successful in attracting both business and research that feeds Denmark’s and Sweden’s economies.
“Interreg has offered good start-up funding for joint projects,” says Mr Åberg. “The funding has led to initiatives starting much faster than before.”
Other regions have benefited from organised cross-border promotion initiatives. Among Europe’s most successful are the Meuse-Rhine Triangle, which represents Aachen (Germany), Liege and Hasselt (Belgium) and Maastricht (the Netherlands); and Euratlantic Partners, led by Ouest Atlantique in western France. Euratlantic Partners encourages investment in 13 coastal provinces in western France, Portugal and Spain. It can be attributed, in part, to helping Paramus, New Jersey-headquartered Metal Improvement Company (MIC), a world leader in metal treatment, decide to invest more than €3m in a plant at Seville’s Aeropolis Technology and Aerospace Park in La Rinconada, Spain. The plant will treat metal surfaces for the aeronautics industry.
Fostering trans-national growth is a priority for the EU. Accordingly, the European Commission extended Interreg funding through Interreg IV. The programme, co-financed by the European Regional Development Fund (ERDF), makes available €321m between 2007 and 2013 for various economic development promotions, including those that are cross-border. Money is available to all countries within the EU plus Norway and Switzerland.
“It’s the sexiest thing going for regional development,” says Russ Froneberger, president, Global Consulting & Affiliates of Columbia, South Carolina.
Eastern European nations, the latest to become fully fledged members of the EU, received hefty cross-border promotion funding under Interreg III to help bring their economies up to speed with western Europe. Expectations are that the trend will continue with Interreg IV.
Leaping over borders
But promotion can extend beyond Europe. Recently Liege, Belgium’s development agency SPI+ and the Memphis Regional Chamber in the US joined forces to promote the benefits of each others’ assets with a shared goal to increase trade.
“This is usually a function left to chamber of commerce groups,” says Mr Froneberger.
Yet, both have similar assets and interests such as logistics. Both are also heavily focused on biotechnology and are now encouraging biotech logistics.
While there has been successful region-to-region collaboration, both groups are excited about this market-to-market promotion.
“SPI+ has served as a direct contact and source of information for the Memphis Regional Chamber with respect to economic development opportunities,” says Mike Demster, the Chamber’s vice-president, life science and technology. “Both organisations exchange information about their respective communities and communicate fairly routinely.”
Both are working on FDI prospects that have been identified because of this relationship. The Chamber is also now tuned into Meuse Rhine Triangle promotions.
“This is helpful because successful economic development is based on relationships,” says Mr Demster. “It has made us more aware of the assets and resources, particularly in Liege, and increased their awareness of Memphis.”
Politically inspired connections
Outside the EU, however, much cross-border promotion occurs for political purposes, with economic development agencies joining forces as a means to work together rather than against each other. Many are inspired by trade agreements.
El Paso, Texas, and Juárez, Mexico, for example, gain greater access to each others’ markets because of the North American Free Trade Agreement (Nafta) and maquilas (duty-free assembly factories) that have set up in Mexican border towns to feed sister businesses on the US side. In fact, Juárez’s shared facilities are responsible for one in every five maquila jobs in Mexico with manufacturing plants that offer a near-shoring option to offshore competition.
Consequently, El Paso and Juárez make up the second largest border city in the US. They benefit by keeping jobs and manufacturing facilities close to the US while taking advantage of cost savings and a high-quality workforce.
Across the Pacific, Hong Kong and China are enjoying heightened cross-border benefits due to bursting world trade and the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). CEPA provides Hong Kong businesses an opportunity to gain greater access to mainland Chisna’s market while Hong Kong serves as a perfect springboard for mainland enterprises to reach global markets and accelerate China’s full integration with the world economy.
In Africa, the Botswana Export Development & Investment Authority (BEDIA) recently opened a trade office in South Africa to encourage cross-border investments.
“Its establishment is to bring the services of the organisation closer to companies that are interested in doing business in Botswana,” says Kgakgamatso Moloi, BEDIA export development manager.
The two countries have already demonstrated their ability to work with each other. Seven years ago, they established Kgalagadi Transfrontier Park, the first cross-border conservation park in southern Africa. It was quickly deemed a major achievement, not only for enhancing environmental and tourism relations between the two countries, but for serving as an example for other transfrontier parks under consideration.
While many regions across the world are waking up to the benefits of cross-border promotion, a trend toward tighter scrutiny of foreign deals can quell such efforts. But by seeking mutual interests by promoting cross-border economic development, nearly every location can win.