Huge challenge for small economies in global race

RESEARCH reports from two different sources have recommended the State Government adopt a more targeted approach to industry development if there is to be continued innovation and development within the WA economy.

The WA Technology and Industry Advisory Council (TIAC), whose members include Dr Brian Hewitt of Clough Engineering Ltd and Professor Lance Twomey, the vice-chancellor of Curtin University of Technology, this month released Directions for Industry Policy in Western Australia within the Global Knowledge Economy: Sustainable Prosperity through Global Integration. (Neither Dr Hewitt nor Professor Twomey participated in the writing of the report.)

The report focused on what a small, peripheral economy like WA’s faces from the process of globalisation.

The other report, The Social Pro-cesses of Venture Capital in Western Australia: An Investigation, which is still in draft form, was compiled by Russell Barnett, an MBA student at the University of WA.

Mr Barnett’s study concentrated purely on the venture capital in-dustry, but some of his conclusions support those proposed in the TIAC report.

Mr Barnett interviewed 35 people involved in the venture capital industry, including venture capitalists themselves, the entrepreneurs who seek venture capital for their projects, government agencies, venture capital funds and advisory firms (lawyers and accountants, for example).

He found there was evidence in WA of a considerable gap between entrepreneurs and the investment community, leading him to conclude that the gap could be closed only by a concerted effort to improve the socialisation process between these groups. Encouragement by the State Government of neutral bodies like universities to facilitate such a process was critical to the future success of the venture capital industry.

TIAC’s report said WA had continuing strengths in a range of industries and in the services that underpinned these industries.

This was particularly the case in the mining and resources sector, but also in manufacturing, where employment has continued to grow against the national trend and where exports were growing strongly in specific niche areas.

But, the TIAC report said, there were several signs of a ‘hollowing out’ of domestic capabilities that were typical of a peripheral economy in a globalising world.

These signs included: falling full-time employment in recent years in certain service areas (finance, cultural services and personal services); slower than national employment growth in communi-cations; and a low share of national and international Information and Communications Technology industry activity.

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