Session summary and conclusions

The role local and regional governments is fundamental in creating favourable business environments in cities and regions that will allow SMEs to increase their performance and attract investments. This is the main outcome of the workshop “Scaling-up SMEs and attracting FDI: what role for local and regional governments?”. The workshop focused on the main findings from recent ESPON studies on SME growth and performance at the regional level and on FDI flows and SME internationalization, where also Lisbon and Ireland are two successful case studies.

During the event, Bernd Schuh, from the Austrian Institute for Regional Studies (ÖIR) focused on the diversification of SMEs in Europe - domination of micro enterprises in the Scandinavian area and the South, more mid-size ones in central Europe, especially Germany and Switzerland. He also made clear that one size does not fit all, but attention must be paid to the cultural factors and the localities, to find the right balance between specialization and stability of the enterprises.

Ana Figueiredo Margarida from the City Council of Lisbon explained how the economic crisis led the Municipality of Lisbon to adopt a new vision for the city - to become one of the most creative & innovative cities in Europe. Ms Figueiredo described how the city offered to start-ups and scale up companies its area as a testing environment creating spaces and facilities for them. This led to more than 2,000 knowledge-based companies becoming established in Lisbon in 2017.

In her presentation on FDI in Europe, Eva Rytter Sunesen from Copenhagen Economics said that European SMEs accounted for 25,700 investments of about 930 billion euros between 2003-2015. At the same time foreign firms have a large footprint in the EU, being responsible for 18% of the employment, 32% of the production value in the EU’s economy. According to Ms Rytter, SMEs located where foreign firms are concentrated tend to be more productive. The smaller the SME the more benefits from the interaction with foreign firms.

Finally, Maria Ginnity from the Irish Department of Business, Enterprise and Innovation (DBEI) spoke about the Irish experience, known for its success in attracting FDI. The country is now focusing on Irish owned entrepreneurship with better survival rates and growing companies to scale and supports their effective collaboration and clustering with foreign ones. For Ms Ginnity cross-government commitment is essential to translate national enterprise policies into regional context as there is a strong interdependence between ‘place’ and enterprise development.

The debate with the participants focused on the supporting mechanisms for SMEs and how they can work at national and regional levels.

take away message

A vision, like the one Lisbon cityhas, backed by a solid strategy for entrepreneurship, as Ireland does, can transform a city or a region to an attractive destination for Foreign Direct Investments and create the environment that SMEs need to scale up and grow. Collaboration between different levels of government, localization when transferring best practices and openness to synergies with the private sector are the main elements for a successful plan that supports economic growth with a territorial perspective.

Quotes from the speakers:

Bernd Schuh: Don’t go for a one size fit all and don’t just copy what you see somewhere else in Europe. Rather find your own strength and position your region.

Ana Figueiredo Margarida: Lisbon was an EER region in 2015 and that gave us credibility to address partners from public and private sector and create projects together with them to support entrepreneurship from presentations to public schools to incubators. We always work with partners.

Eva Rytter Sunesen: Regional policies to attract more FDI need good competition policies to support local and foreign firms, labour market flexibility and selective use of financial incentives. Efficient collaboration between different layers of government is also quite important for foreign investors.

Maria Ginnity: We want to move from this concept of balancing regional development which refers to something that is distributive from the centre to one that is recognising the potential of the region and acknowledges where it can be differentiated in some way.

See also the workshop at the European Week of Regions and Cities website