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Wood
furniture and jewellery
Many
pilot studies have been conducted across Europe which, according to
preliminary findings, indicate that these assumptions are false. When
the findings are completed next year, it could lead to a shift in EU
policy thinking.
Speaking at a gathering of PILOT academics organised by Frederick
Institute of Technology last Thursday, Jacobson noted that certain
'low-tech' sectors in Cyprus "bear further analysis."
As a whole, manufacturing has been in decline for several years. Revised
Gross Domestic Product (GDP) and Gross Value Added (GVA) data released
by the Statistical Service in November showed that GVA in manufacturing
fell by an averaged 0.2% per year in 1996-2003, compared with a rise of
3.4% for total GVA.
The manufacturing figure will look even worse in 2004 because of the
closure of the oil refinery in April.
However, within each subsector, the story is rather different.
In the case of wood furniture and fixtures, for example, Jacobson showed
that value-added in the sector has risen at a time when employment has
remain stable. In other words, productivity has risen.
Indeed, 2004 data seems to bear his analysis out: output of wood and
wood products rose by an average 25.2% in January-July, according to
Statistical Service data.
Another Cypriot sector which he believes has good potential according to
initial analysis is jewellery. This has been a traditional sector in
Cyprus.
Jacobsen also mentioned food products and beverages, printed matter,
machinery and equipment and the construction-related non-metallic
minerals as sectors with potential.
Even the troubled textiles and clothing sector should not be considered
hopeless, says Jacobson.
Noting that a successful company such as Benetton sources the majority
of its raw material from one region in Italy, Jacobson said that Cyprus
had a "very strong design tradition", and could therefore
compete in the area of design and model production.
'Low-tech'
is a big employer
So-called
'low-tech' sectors are also strong employers.
Speaking at the seminar, PILOT's leader, Professor Hartmut
Hirsch-Kreinsen of Dortmund University, said "Low-tech shows
a strange life in hi-tech countries."
In Europe, low-tech sectors employed more than 35% of the labour force
between 1980 and 2000, and mid-tech around 25-30% compared with a steady
level of less than 10% for the hi-tech sectors, such as automotive,
pharmaceuticals and new materials.
Within 'hi-tech' Germany, an even higher proportion--63% of
employment--is based on low- and medium-to-low tech industries, compared
with 23% for hi-tech.
Innovation
is much more than R&D
One
of the problems in using R&D as a measure for industries, noted
Hirsch-Kreinsen, is that it fails to take into account different types
of knowledge, such as the practical and implicit knowledge of workers.
It also misses the fact that low-tech sectors can quickly absorb R&D
from elsewhere in order to innovate and raise productivity.
Case studies carried out among a range of Irish firms by Kevin Heanue,
of City University Dublin showed that there was widespread product
innovation. Moreover, many of these companies were suppliers to the
hi-tech sector.
Dr Andrea Bardi, who did cases studies of the interaction between
low-tech and hi-tech industries in Italy, found that hi-tech sectors
actually depend heavily on low-tech industries.
"The successful operation of low-tech products is a crucial
precondition for innovation in whole value chains and for the design,
manufacture and application of hi-tech products," he said.
Cyprus
could be missing the point
One
of the key findings of the PILOT project is likely to be that the
'low-tech' label to describe sectors which do not spend a great deal on
traditional R&D is not only misleading, it risks diverting policy
attention away from really innovative firms which are also creating
employment.
"We believe that fundamentally, in the way policy is formulated
there is a bias in favour of R&D-intensive or hi-tech firms,"
said Jacobson.
Dr Bernard Musyck of Frederick Institute noted that Cyprus is dashing to
create a hi-tech sector from scratch, and has pledged to the EU that it
will raise R&D spending to 3% from 0.3% today.
However, the conclusions of the PILOT project suggest that Cyprus could
be missing the point, and that an emphasis on innovation in general,
rather than hi-tech R&D in particular, could be a more efficient and
effective way of raising Cyprus' productivity and doing its part to make
Europe the most competitive economy by 2010.
By
Fiona Mullen, Financial Mirror, November 2004
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