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Innovating through internationalisation; Engaging with the global economy is crucial for competitiveness,but there is a danger devolution could lead to greater isolation,writes Prof Robert Huggins of the UWIC School of Management.

Akey factor hindering economic competitiveness in Wales is the lack of businesses involved in international trade. Compared with many other regions,Wales barely engages in the global economy.

The percentage of Welsh companies engaged in exporting is only 2.1%, the lowest of any UK region, and well below the UK average of 3.4%.

Our propensity to import is also brelow average, suggesting that we are not to any great extent specialising in those activities where we possess some form of competitive advantage.

Internationalisation is crucial toWales' future wellbeing, but the risk is that devolution will result in further economic isolation.

Greater internationalisation would not only provide access to bigger markets, but also the global base of knowledge, technology, R&Dand innovation.

Wales is far too small to possess a knowledge base of its own that is strong enough to catalyse the levels of innovation required to improve competitiveness.

'Wales' from Therefore, the need to access knowledge from sources outside its borders will become increasingly paramount. The recent Innovation Nation White Paper published by the UK Government acknowledged that innovation is increasingly an international endeavour, whereby businesses are internationalising their R&D, supply chains and customer bases and become adopting open innovation practices.

As result, a number of regions are developing policies aimed at the internationalisation of the innovation process.

The North West of England and East of England are examples of two regions that have developed a bespoke international strategy with a capacity to stimulate international knowledge sourcing.

For instance, as well as the usual focus on exports, the North West's international strategy identifies the scope to internationalise supply chains as a whole.

The strategy also highlights a specific need to facilitate the internationalisation of knowledge intensive firms through targeted advice and support.

In the East of England, the regional development agency is developing a cohesive international strategy to support the region's businesses in developing international alliances for R&D and open innovation.

The objectives of the strategy include: developing the global impact of science/innovation parks and international skills capacity; making the most of international knowledge transfer between industry, research institutes and higher education; and a network of nternationally significant ICT clusters and programmes of global collaboration and international partnering.

The strategy also places a particular emphasis on the formation of global alliances with other regions, consisting of prioritised partnerships with strategically selected regions abroad.

Among the devolved regions, Scotland is considerably further down the policy road than Wales.

Innovation plays a crucial role in its international strategy, combining support for new exporters with an increasing focus on assisting existing exporters to deepen their degree of internationalisation, along with the fostering of innovative international company relationships including partnerships, alliances and outsourcing.

There is clearly a need to ensure Wales is a globally-facing country, with the SME community more focused on international trade and being at the forefront of the world's fastest developing markets.

Although there is a strategic intent inWales to focus international trade and investment on projects with a heightened element of innovation, more could be done to develop initiatives such as those introduced in other regions.

These may not necessarily have to be built from scratch but developed around existing projects.

For instance, the requirement to internationalise knowledge networks inWales has been recognised by the University of Wales, through the introduction of the Prince of Wales Innovation Scholarship Programme, which aims to 'attract the world's most talented graduates to work with Welsh businesses'.

The programme is seeking to recruit 1,000 of the world's best graduates between 2009 and 2012 to help improve research and development capability and cutting-edge thinking in Wales.

A more radical approach to overseas missions could also be introduced. Trade missions such as those operated through the Assembly often provide SMEs with an unrivalled opportunity to gain international know-how.

However, the short-term nature of these missions often limit the extent to which know-how and other useful knowledge is transferred.WAG could undertake different forms of mission that are not necessarily focused on exports, but more on allowing firms to establish long-term and strategic relationships across their supply and value-chain.

As part of this process, financial assistance could be made available to fund international customers, suppliers, collaborators and associates to undertake reciprocal visits to the UK. The Assembly and other stakeholders in Wales, such as business representative groups, must take better account of the need for business networks to be set not only within regional or national contexts, but also the increasingly global environment.

SMEs are not always aware of how or where they can source the knowledge they require to innovate. In these circumstances there is need for intermediary organisations that can link small firms with the businesses and organisations in possession of this knowledge.

WAG is currently consulting on how to make the business support framework in Wales more effective.

This should look at how it can best support companies in Wales access the state-of-the art knowledge they require, regardless of whether it is sourced from within Wales or elsewhere.
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Geographic Code:4EUUK
Date:Feb 24, 2010
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