REPORT - WORLD KNOWLEDGE COMPETITIVENESS INDEX

Ashok Bhatla – MS – Technology Mgt, PMP

ASHOK BHATLA

TECHNOLOGY MANAGEMENT CONSULTANT

BS, MS, PMP, MICROSOFT, CISCO CERTIFIED

ASHOK.BHATLA.WRITER@GMAIL.COM

World Knowledge Competitiveness Index (WKCI)

The WKCI is an integrated and overall benchmark of the knowledge capacity, capability and sustainability of each region.

It shows the extent to which this knowledge is translated into economic value, and transferred into the wealth of the citizens of each region.

The competitiveness of a region will depend on its ability to successfully adapt to internal and external economic and social challenges, by providing new economic opportunities, including higher quality jobs.

There are some other indexes used in the industry – like BCI – Business Competitiveness Index, Innovation Index etc.

Center for International Competitiveness

Center for International Competitiveness is a Research organization which tracks Competitiveness Data for different regions and countries.

The mission of the Centre is to provide a platform for stimulating and disseminating research on competitiveness across the business, policymaking, and academic communities.

They started tracking this data from year 2002.

The 2008 edition of the WKCI compares 145 regions across 19 knowledge economy benchmarks.

Web Site - http://www.cforic.org

Benchmarks used for WKCI

GDP per capita Economic Activity Rate No. of managers / 1000 inhabitant Employment in IT / 1000 inhabitant Employment in Bio Tech and Chemicals / 1000 inhabitant. Employment in Instrumentation and Electrical / 1000 inhabitant Employment in High Tech Services / 1000 inhabitant Per Capita Expenditure on R&D performed by Govt. Per capita Expenditure on R&D performed by Business No. of Patents / Million Inhabitants Private Equity $ Per Capita Labor Productivity. Mean Gross Monthly Earnings Per Capita Public Expenditure on School Education Per Capita Public Expenditure on Higher Education

Cities in Top Rankings ( Year 2008 Data)

AMERICAS

San Jose(1)Los Angeles (11)Boston, Cambridge (2)Bridgeport, Stamford(4)Hartford (3)Providence (8)San Francisco(5)Grand Rapids (13)San Diego (10)Seattle (7)

AMERICAS

San Jose(1)Los Angeles (11)Boston, Cambridge (2)Bridgeport, Stamford(4)Hartford (3)Providence (8)San Francisco(5)Grand Rapids (13)San Diego (10)Seattle (7)

EUROPE

West Netherlands (19) Stockholm (6)Suomi-Finland (23)Iceland (14)Denmark (36)Brussels (47)Ile De France (29)Luxembourg (34)Eastern UK (54)

EUROPE

West Netherlands (19) Stockholm (6)Suomi-Finland (23)Iceland (14)Denmark (36)Brussels (47)Ile De France (29)Luxembourg (34)Eastern UK (54)

ASIA

Tokyo (9)Kanagawa, Japan (24)Shiga, Japan (12)Singapore (27)

Cities Not in Top 100

Shanghai (110)Seoul (107)Beijing (135)Bangalore (145)

ASIA

Tokyo (9)Kanagawa, Japan (24)Shiga, Japan (12)Singapore (27)

Cities Not in Top 100

Shanghai (110)Seoul (107)Beijing (135)Bangalore (145)

Data and Rankings from 2003

Total – 125 Regions

US and Canada- 55

Europe – 45,

APAC -18,

Asia – 7

San Francisco – 1

Shanghai – 121

Bangalore – 125

Stockholm – 15

Seoul – 109

Portland - 16

Tokyo - 15

San Francisco – 1

Shanghai – 121

Bangalore – 125

Stockholm – 15

Seoul – 109

Portland - 16

Tokyo - 15

Data and Rankings from 2008

Total – 145 Regions Analyzed

US and Canada- 63

Europe – 54

APAC -18

Asia – 10

San Jose -1

Shanghai – 110

Bangalore – 125

Stockholm – 6

Seoul – 107

Portland - 22 – Gone down

Tokyo - 9

San Jose -1

Shanghai – 110

Bangalore – 125

Stockholm – 6

Seoul – 107

Portland - 22 – Gone down

Tokyo - 9

Scenario in Americas

North American regions are seeing a overall decline. Rankings of New York, Atlanta and Austin have gone down from year 2002.

Higher Education – mainly Maths and Science is becoming a challenge.

Govt. Funding for Basic Research going down. Innovation pipeline is dried up. R&D Tax credits are not lucrative any more.

US is strong in Software and telecom related services, but manufacturing base eroding especially in Steel and Automobile.

Interaction between Labs, Universities and Industries is the key to future innovations – mainly in industries like Bio Tech and Alternative Energy.

Scenario in Europe

Higher Education is free in most of the countries.

Aging Population, Not enough workers available.

Strong in Pharmaceuticals, Heavy Machinery, Transport Systems

(Roche, Siemens, Novartis, ABB).

Scandinavian nations are at the top, followed by West Europe and then Eastern countries.

Not strong in Software and related services.

Strong interaction between Universities and Industries.

Scenario in Asia

Significant gains have been made by a number of Asian regions, with Singapore (27th), Kyoto (43rd), Taiwan (53rd) all moving rapidly up the rankings, and Shanghai now ranked above cities such as Berlin.

Young population, emerging markets – (More cell Phone subscribers in China than in US)

Lacking in R&D facilities for Basic Research – Govt labs mainly for Defense Research purposes. Lacking Innovation and creativity.

Although India (or China) produces more engineers than US, Education and Infrastructure are still remain a challenge.

Research in Bio Tech and Nano Technologies not yet started.

Innovation Model – Constant Interaction

Universities – Higher

Education and Basic Research

Universities – Higher

Education and Basic Research

Industries – Private Sector Companies,

Venture Capitalists

etc.

Industries – Private Sector Companies,

Venture Capitalists

etc.

Govt Policies – (Economic

and Technology)

and Govt Research

Labs

Govt Policies – (Economic

and Technology)

and Govt Research

Labs

INNOVATION & COMPETITIVEADVANTAGE

INNOVATION & COMPETITIVEADVANTAGE

San Jose – California, US

Top class Labs – PARC from Xerox – Even Samsung is partnering with PARC

Top University System – UC Berkeley, UC Davis

Top Companies – Google, Cisco, Intel, Apple, Ebay, Yahoo

More than 20 Nobel Laureates have ties to Bay Area.

Engine of economic growth for the nation. If treated as a country, California is the 6th largest economy in the World.

A large no. of venture capitalists in the Bay Area

Stockholm - Sweden

Stockholm is the economic centre of Scandinavia.

Stockholm has one of the largest ICT-clusters in the world

Higher Education is also financed by the state

There are 23 universities & university-colleges in Stockholm

More than 40 % of the inhabitants have some kind of higher education.

Stockholm region has been awarded 16 Nobel Prizes in the past.

Outside US region, they are the most competitive.

Seoul – South Korea

Innovation is promoted at the National level

Korean Govt have setup small Technology cities called Technopolis - (Example - Samsung Advanced Institute of Technology).New Technopolis for Nano Technologies and Bio Technology “Osong Bio-Technopolis” has opened in 2008

Internal competition among the Design Teams

The economy is export-driven, with production focusing on electronics, automobiles, ships, machinery, petrochemicals and robotics

Korea ranks particularly high in the Education Index, where it is ranked first in Asia and seventh worldwide

Bangalore - India

Almost 500 MNCs have offices in Bangalore – Google, MS, Intel, GE, Boeing, SAP, Citibank etc. It’s called the Silicon Valley of India

Factory of Programmers and System Engineers

Some top Govt Research Organizations – ISRO and DRDO operate in Bangalore

Indian Institute of Mgt, Indian Institute of Science – top Indian Institutes operate in Bangalore.

Interaction between Universities and Industries is missing

Let’s try to understand this Map ----

Conclusion

Balance of power in the knowledge economy has become more evenly spread across the globe.

Strong cooperation between Industries, Universities and Govt Research is the key to innovation and Knowledge economy.

US needs to spend on Math and Science Education instead of educating Wall Street Executives if it needs to maintain its technological superiority.

Emerging economies like Russia, India and China need to implement cohesive Innovation Policies if they want to take advantage of the huge pool of skilled manpower.

Backup Material

Question 1

Sweden is on the top of the Rankings in Europe. Name some top Corporations from Sweden.

Ericsson - Telecom Volvo - Automobile Electrolux – Appliances, Consumer Goods Skansa - Construction Atlas Copco – Capital Goods H&M – Clothing, Retailing ABB – Engineering , Heavy Machinery IKEA - Furnishings

Question 2

500 MNCs operate in Bangalore. Why this city is on the bottom of the list?

Data Missing for Employment in IT and High Tech Services

Very Low employment in Bio Tech and Automotive sector

Low Per capita expenditure on R&D. Lots of Companies doing R&D in Bangalore, but huge population negates the benefits.

Also, no. of patents applied for is negligible. All R&D effort is in Applied Research and in Software Sector

Low Per capita expenditure on Primary education

Question 3

What do you see as the future of Portland region?

Portland region used to be called Silicon Forest. Slowly lots of manufacturing companies moved to Asia for economic reasons.

Lots of thrust into Solar and Alternative Energy – Solar World, Spectra Watt, Genentech. Skills available.

But then Tax structure seems to discourage small businesses and they can move to Vancouver – Washington state. They still get to use all the facilities of Portland – w/o paying Taxes.

Don’t see a bright future. We will have more of retail companies than high Tech Companies. Retail Companies do not help in Innovation & Technology.

Question 4

Do you think Bay Area can survive on its strength in IT based industries?

I think we have reached a saturation point in IT. Companies cannot keep on spending 8 % on IT related services.

I see lots of Consolidation in IT industry with the success of Cloud Computing. Cloud Computing is supposed to reduce the footprint of IT Infrastructure – meaning fewer IT professionals required.

California’s infrastructure is crumbling.

Not many young people move to California due to high cost of living.

Question 5

Why South Korea is not even in the top 100 although so many MNCs are based in Seoul?

This was a disappointment. South Korea has lots of industry, research facilities and business conglomerates. Still they were not in top 100.

I think they are lacking in basic research and not strong in IT and Telecom.

Low no. of Managers. Lacking in Managerial skills.

Question 6

Which region you see at the top in year 2020?

I see Seattle, Boston, Stockholm and Seoul in the top of the list in 2020.

Seoul is investing a lot in new technologies like Bio Tech and Nano Tech. They already have a very strong industrial base & infrastructure.

Boston region is becoming the hub of all basic research in Nano, Bio Tech and Alternative Energy. IBM is doing lots of work in Boston region.

Seattle already has good IT companies. Young, dynamic population. Govt policies are business friendly. Tax structure is good.

European cities will lose out because of aging population.

Appendix (Backup Material)

Analysis based on Regression Technique

What is Regression

Assume you want to run a regression of WAGE on age, work experience, education, gender, and a dummy for sector of employment (whether employed in the public sector).

Wage = function(age, work experience, education, gender, sector)

Wage = b1 + b2*age + b3*work experience + b4*education + b5*gender + b6*sector

Multiple Regression : How the outcome variable depends on the independent variable / predictor variables

For example, how the Sales Price of a home depends on variables like Sq. Feet, Bo. Of Bedrooms, crime rate, neighborhood etc.

Overview of Multiple Regression

Some of the variables can be quantified Some are subjective – cannot be measured

We need to find out: What is the relationship between independent variables What is the significance of an independent variable. What is the best Predictor variable If two variables are correlated, then knowing the score on

one variable will allow you to predict the score on the other variable. The stronger the correlation, the closer the scores will fall to the regression line and therefore the more accurate the prediction.

What is SPSS

SPSS - Statistical Package for Social Science

Statistical technique used to establish the relationship of a dependent variable, such as the home price, and one or more independent variables, such as Sq. Foot, No. of Bedrooms, Crime Rate etc.

Which of these variables gives the most accurate prediction of the dependent variable.

Variables which have more significant influence are called Predictor variables.

Information about SPSS Software

SPSS (temporarily PASW) is a computer program used for statistical analysis. Between 2009 and 2010 it was called PASW (Predictive Analytics Software). The company announced July 28, 2009 that it was being acquired by IBM for US$1.2 billion. As of January 2010, it became "SPSS: An IBM Company".

SPSS is among the most widely used programs for statistical analysis in social science. It is used by market researchers, health researchers, survey companies, government, education researchers, marketing organizations and others

Key Findings based on Regressions

Govt expenditure on R&D is not impacting Knowledge Competency in a positive way. (Govt. expenditure is highest in Baltimore and DC – but these two cities do not appear in the top 20)

GDP also does not positively impact WKCI.

No. of Patents does not have a direct impact on the WKCI.

Employment in IT and Telecom greatly impacts the Index. In 2008, San Jose had the highest employment in ICT and it retained the Rank of 1 in Competitiveness Index.

No. of Managers/1000 Employees also does not improve the KCI. Eastern UK had the highest no. of managers, but it’s KCI rank was 54

Regression Data

Data from 2008

Independent Variable Coefficients

GDP per capita 0.001057343

Economic Activity Rate -0.083745149

Number of Managers per 1,000 employees 0.022475706

Employment in IT and Computer Manufacturing per 1,000 inhabitants 0.438438231

Employment in Biotech & Chemicals per 1,000 inhabitants 0.109742672

Employment in Automotive and Mechanical Engineering per 1,000 inhabitants 0.00558031

Employment in Instrumentation and Electrical Machinery per 1,000 inhabitants 0.564067439

Employment in High-Tech Services per 1,000 inhabitants 0.021808146

Per Capita Expenditure on R&D performed by Government -0.002010306

Per Capita Expenditures on R&D performed by Business 0.032391787

Number of Patents Registered per one million inhabitants -0.002163819

Private Equity $ Per Capita 0.012786664

Labor Productivity 8.84593E-05

Mean Gross Monthly Earnings 0.002580807