International Best Practices: COMPETE IN

The report employs a comparative analysis to examine international best practices in regional economic development and business internationalization. This approach allows for a systematic comparison of diverse initiatives across different countries and contexts. The rationale for this comparative methodology stems from the understanding that geographically and culturally distant regions often share the same global marketplace. By comparing various approaches, the research aims to identify successful strategies and offer recommendations for improvement. The study draws on existing project practices, international case studies, and relevant academic literature to form comprehensive conclusions. The goal is to understand both the 'what' and the 'how' of business internationalization and its impact on regional economic growth, considering diverse initiatives focused on attracting foreign investments and/or encouraging exports. The analysis specifically considers the COMPETE IN project parameters such as investment attraction, territorial penetration, and the formation of international partnerships.

The research selects ten international cases for in-depth analysis, showcasing a variety of approaches to regional development. These include initiatives from Canada (Ottawa and Quebec), China (Chengdu), Brazil (a national-level initiative), the USA (Boston, California Silicon Valley, and Florida), Australia (Queensland), Mexico (ProMexico), and the UAE (Smart Dubai). The selection represents a deliberate effort to capture the range of strategies used to promote inward investment, support exporting activities, or a combination of both. Beyond these specific geographic examples, the report also examines practices from COMPETE IN partners including initiatives from Italy (Consortia, ERGO, Innovation Park, South Africa partnership), Poland (Silesia Voivodeship, Katowice special economic zone, Silesian Investor and Exporters Assistance Centre), Spain (REDIT, VIT Emprende), Sweden (ICT Meta Cluster, TRIP), and the UK (trade mission to China, First Bondholder Scheme). This broad selection aims to provide a rich comparative dataset for understanding best practices in internationalization and regional growth.

The study integrates relevant theoretical frameworks to inform its analysis of internationalization and regional development. While the Uppsala model is a significant framework explaining the incremental internationalization process of firms, the report acknowledges its limitations in explaining the emergence of born-global firms. To address this, a network perspective is incorporated, recognizing that firms internationalize not only due to internal factors but also because of their connections within international networks. This network perspective is linked to the Knowledge-Based View (KBV) model, which emphasizes the role of knowledge and experience in the internationalization process. The updated Uppsala model's emphasis on gradual learning and market knowledge development through network interaction is particularly relevant, suggesting that firms' positions within networks are crucial, involving both cooperation and competition. This understanding helps contextualize the various strategies observed in international case studies and the COMPETE IN project partners' approaches.

The report delves into the concepts of regionalization and territorialization, highlighting their importance in shaping economic development policies. The increased relevance of regions within a globalized world is discussed, emphasizing the role of local authorities in driving regional innovation and economic growth. The Territorial Innovation Model (TIM) is examined, focusing on the critical role of institutions and their influence on regional competitiveness and restructuring. The TIM model shows that institutions shape regional development, culture, and relationships with the environment, reflecting an evolutionist interpretation of the regional learning economy. It also highlights the importance of ‘spatial clusters of innovation’. The report further connects regionalization and territorialization to network society theory, acknowledging the evolving relationship between national and global forces, and the growing influence of regions and territories as catalysts for development. This theoretical context underpins the analysis of how different regions and countries approach economic development strategies.

The case of California Silicon Valley stands out as a remarkable example of regional economic transformation. Initially lacking significant industrial development, the region's investment in higher education and advanced research facilities attracted corporations and highly skilled workers, driving exceptional economic growth. The region's success is further amplified by positive media coverage, contributing to its global reputation and attracting foreign direct investment (FDI) and foreign talent. The Silicon Valley's success is not attributed to a strong service sector, but rather to its robust higher education system and advanced research infrastructure, creating a synergy between universities and corporations. Key figures illustrate the region's success: a population of 3.07 million, 1,638,698 jobs, average annual earnings of USD 130,879, and a net foreign immigration of +22,232. This model is being replicated by other countries, particularly China, which is investing heavily in universities and research facilities to mimic this success.

The APEX Brazil program provides a contrasting example of national-level intervention focusing on export promotion. Brazil, while a large and growing economy (GDP of 2.08 trillion USD in 2017), faces challenges in trade and economic consistency. APEX-Brasil's Sector Projects (SP) work with various business sectors to organize trade promotion initiatives such as business missions, fairs, and visits from foreign buyers. The program aims to develop and support companies' exporting capabilities, boosting the presence of Brazilian industries internationally. In addition to trade promotion, APEX-Brasil offers executive training programs, such as the InterCom course (40 hours) focused on internationalization and the International Marketing course (32 hours) focused on developing international marketing plans, helping experienced Brazilian companies to expand globally. Thematic lectures address specific topics for companies seeking international expansion, including expatriation of executives and internationalization business models, delivered via webinars to maximize accessibility.

The analysis reveals diverse approaches to regional economic development, with initiatives varying in scope and focus. Some countries, such as Mexico with ProMexico, aim to attract foreign direct investment (FDI) at the national level, while others, like Canada (with initiatives in Ottawa and Quebec), concentrate on attracting investment to specific regions. Florida's initiative aims to boost the state's economy, leveraging its federal status. These differences reflect varying political and economic systems and development strategies. In contrast to the mostly public sector approaches, some international initiatives also involve significant private sector collaboration. The report contrasts these diverse strategies highlighting the different ways that regions attract investment, support exporters, and foster international partnerships. It emphasizes that understanding the specific political, economic, and cultural context is crucial in analyzing regional development initiatives' effectiveness and suitability.

The report examines the diverse roles of enablers in internationalization initiatives. While some initiatives receive support from regional and national authorities and non-governmental organizations, the COMPETE IN partners rely primarily on regional authorities and funding from local, national, and EU sources. This difference reflects the varied political and economic contexts in which these initiatives operate. A strong presence of regional or city authorities is, however, consistent with internationalization trends. The enabling factors identified across the international case studies include strong regional infrastructure (transport and broadband), clusters of SMEs specializing in medium-to-high-tech sectors, strong research bases, skilled workforces, high-quality universities and research centers, and supportive public systems. These are essential elements that contribute to a region's ability to attract investment, support businesses in international expansion, and promote economic growth.

The report analyzes the practices of COMPETE IN project partners, comparing them to international best practices and academic literature on SME internationalization. All partners employ strategies aligned with the Uppsala model, emphasizing gradual learning and market knowledge development through network interactions. This approach involves both micro (firm-to-firm) and macro (firm-to-network) perspectives, providing SMEs with direct support while simultaneously fostering networking opportunities through initiatives created by local authorities. SMEs engage in collaborative projects and are encouraged to compete, reflecting the importance of both cooperation and competition in learning and boosting economic activity. The COMPETE IN partners demonstrate a stronger focus on networking and international expansion programs compared to their international counterparts, actively assisting SMEs in these areas. This contrasts with the international cases, where networking is less prevalent. The enabling factors for COMPETE IN initiatives are exclusively regional authorities, with support from national and external funders, aligning with recommendations in the academic literature.

The report examines individual COMPETE IN partner initiatives, highlighting their diverse approaches and underlying cultural contexts. The Italian partner, for example, focuses on supporting exporting activities (consistent with the I-model of internationalization) and attracting talent, using historical ties with South Africa for cultural exchange and economic cooperation. The Italian partner's activities also include an Innovation Park initiative focused on research and development, aligning with current academic recommendations. In Poland, initiatives include establishing special economic zones, a culturally specific approach offering financial incentives to businesses in less-developed regions. This aligns with broader European unemployment policies using similar incentives. The UK's approach, exemplified by the Wakefield Council's First Bondholder scheme, emphasizes networking through membership fees, contrasting with practices in other European countries that rely on publicly funded initiatives. The UK also uses a cultural diplomacy approach, focusing on building trade relations with countries such as China through cultural exchange and agreements, a less commonly recognized but culturally fitting strategy.

The report directly compares COMPETE IN partners' practices with those of the international case studies. While the partners' approaches demonstrate similarities to international counterparts—offering support such as training, mentorship, and market intelligence—the COMPETE IN project shows stronger emphasis on networking and international expansion programs. For instance, while only three out of ten international initiatives engaged in networking activities, four out of five COMPETE IN partners offered such assistance. The UK partner fosters fewer initiatives compared to others. However, overall, the COMPETE IN partners’ practices are similar to international best practices. The report notes that the initiatives common to post-communist countries within the COMPETE IN project align with the trends of increasing internationalization and a drive to increase their presence on the global economic map. The analysis highlights that the approaches of the COMPETE IN partners are well-aligned with established recommendations in the academic literature, particularly concerning the role of regional authorities and the importance of networking and learning.

The concluding section summarizes key findings regarding international best practices in regional economic development and assesses the COMPETE IN project's performance in relation to those benchmarks. International best practices encompass diverse initiatives ranging from regional to national levels, typically offering incentives to investors and providing support such as business mentorship and collaboration with universities to foster innovation. The actors driving internationalization vary, depending on the political and economic systems of each country, as seen with contrasting national-level programs (e.g., Mexico) versus more localized efforts (e.g., Canada's Ottawa initiative). The COMPETE IN project, with its focus on specific regions within a unified political system (the EU), aims to encourage investment in those areas, aligning with the EU's 'Europe of Regions' policy. The report finds that while international practices are varied, effective strategies often include a combination of attracting foreign direct investment and promoting exports, achieved through a multitude of approaches.

The concluding section emphasizes the alignment of the findings with existing academic literature on regional development and business internationalization. The COMPETE IN partners largely follow policies recommended by the Uppsala model, emphasizing gradual learning and market knowledge development through network interactions. Their stronger engagement in networking and international expansion programs, compared to some international counterparts, is noted as a key strength. The report also highlights the significant role of regional authorities, supported in some cases by national and external funders, as enablers of regional development, supporting the recommendations found within the academic literature. The importance of companies engaging in both cooperation and competition is emphasized, aligning with findings that emphasize the importance of learning from each other to increase economic activities. The integration of research and development initiatives, particularly in collaboration with universities, is also seen as a significant factor in attracting investment and driving innovation.

The concluding section offers recommendations for policymakers and stakeholders involved in regional development initiatives. Effective strategies must encompass a variety of initiatives, ranging from regional to national levels, and must leverage both public and private resources. Support for SMEs, including mentorship, training materials, and market intelligence, is highlighted as crucial, alongside collaboration with research centers and universities to encourage innovation. Recognizing the influence of each country's political and economic systems and unique development strategies is key. For example, the strategies of a country like Mexico, which aims for broad national investment attraction, differ from those of regions within a single political system like the COMPETE IN project partners, which focus on encouraging localized growth. Adapting strategies to specific regional contexts, considering cultural norms and economic priorities, emerges as a crucial factor for success in regional development.