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The Tijuana-San Diego cross-border region as an engine of entrepreneurship and innovation

 

Remarks by Angel Gurría,

Secretary-General, OECD

Tijuana, Mexico, 10 November 2016

(As prepared for delivery)

 

 

Dear José Galicot, Organisers of the Tijuana Innovadora, Distinguished Guests, Ladies and Gentlemen:

 

It is an honour to be back in Tijuana for the wrap-up of this edition of Tijuana Innovadora. From its founding, this has been an initiative based on creativity and the exchange of ideas between the two sides of the border on how to promote shared prosperity. These are values ingrained within the spirit of co-operation that gave birth to the OECD.

 

Regions and cities as drivers of growth and inclusion

 

In September 2015, during the United Nations General Assembly, the world adopted the Sustainable Development Goals and committed itself to achieving them by 2030. Regions and cities are going to be crucial for bringing to fruition this global agenda, focused on environmental sustainability, social inclusion, and economic development. It is essential, then, to change our perspective and to look beyond national concerns to see in greater detail what is happening at the local level.

 

The OECD is committed to this new focus, for there is no doubt about the economic clout of regions and large metropolitan areas. Within the OECD, regional and local governments are responsible for 40% of total public spending, and 60% of public investment. The major metropolitan areas account for nearly half of the population of OECD countries, and between 2000 and 2013 they contributed around 62% of GDP growth in the OECD.

 

Yet levels of inequality can be more pronounced within our regions and cities than in countries as a whole, and this applies not only to questions of income. A recent OECD study, Regions at a Glance 2016, demonstrated the great differences that exist within countries, and that in some cases are concealed behind national averages.

 

Life expectancy in Mississippi is six years shorter than in Hawaii, while in London there can be up to 20 years' difference in life expectancy from one neighbourhood to the next. The differences in employment rates between regions of the OECD can be as great as 30 percentage points, while the gap between countries does not exceed 10 percentage points. In Mexico, a person living in the worst-performing state may be four times poorer or die four years sooner than one who lives in the state with the best performance under each of these categories.

 

That is why it is essential to focus on territories, on regions and on cities, for it is there that the dynamics of productivity and inclusion manifest themselves most clearly, and where the greatest potential for innovation may be hiding.

 

The Tijuana-San Diego cross-border region: dynamism and potential

 

Tijuana and San Diego are already a shared and interdependent cross-border reality. Their geographic proximity and their complementary characteristics offer a series of unique advantages for international business in the area of high-level research and industrial specialisation. An example of this is San Diego's leading position in life sciences research, and the medical equipment manufacturing capacity to be found in Tijuana.

 

In San Diego, there are some 1,100 companies specialised in life sciences, and they employ 34,000 persons. In Tijuana, firms specialised in making medical equipment employ some 42,000 people and they have made the city the main centre for medical equipment manufacture in the whole country. This development has evoked great interest on both sides of the border, and has sparked ever-closer collaboration between the authorities of the two cities.

 

The complementary nature of this development has found a positive reflection in productivity. The productivity performance of Tijuana and San Diego is above the average for their respective countries. The wage premium for workers in Tijuana is 30% above the average for workers in other Mexican cities. In the case of San Diego, these benefits are practically equal to those to be found in Los Angeles, a metropolitan area six times as big as San Diego.

 

The opportunity is within our grasp. The life sciences sector is just one example, and co-operation in the Tijuana-San Diego cross-border region could be extended to other sectors such as clean energies, information and communication technologies, and aerospace, as a way of generating greater shared well-being based on innovation.

 

Looking to the future: making Tijuana-San Diego an engine of inclusive growth

 

The Tijuana-San Diego corridor could become an engine of shared prosperity for Mexico and the United States. While the two cities already present some of the fundamental features for driving successful cross-border development initiatives – for example, economic specialisation and geographic proximity – there are a number of measures that could consolidate and strengthen this co-operation even further.

 

First, a solid innovation ecosystem is needed, one that allows innovation to percolate through firms and through society on both sides of the border. For this to happen will require efforts to promote entrepreneurship and the spirit of innovation among firms and individuals, as Tijuana Innovadora has been doing so successfully.

 

These initiatives must also be backed by strategies that link firms with research institutes and that allow for the effective transfer of technology, as well as helping businesses to translate their research into commercial innovations. A successful example here is the Holst Centre located on the High-Tech Campus Eindhoven, in the Netherlands. This R&D centre uses a model of partnership between industry and academia that draws cross-border support from research centres in the Netherlands and Belgium.

 

Secondly, a comprehensive strategy needs to be developed for seizing the innovation-inducing benefits of digitisation. The increasingly digital nature of many products, activities and ways of interaction offers an unprecedented opportunity to promote efficiency and improve services. The challenge for policymakers is to create the conditions whereby citizens, firms and governments can adapt and put to use the full potential of digital technologies. With better connectivity and more reliable databases and statistics, firms will be able create more innovative services, and government authorities can target their policies more effectively in support of entrepreneurship and innovation.

 

Thirdly, useful tools can be found in the development of clusters, business incubators, and cross-border study and training programmes. As useful benchmarks for promoting closer co-operation between Tijuana and San Diego, I might cite the Halo Business Angel Network between Ireland and Northern Ireland, aimed at financing new enterprises, or the Medicon Valley framework that the cities of Copenhagen, Denmark and Malmö, Sweden have developed for internationalising their advantages in the life sciences area.

 

Fourthly, it is essential to make cross-border mobility more efficient. The time spent in border-crossing formalities costs billions of dollars a year, and has a heavy impact on the environment.

 

It is crucial, then, to encourage better co-ordination of transportation and urban planning policies and to develop mechanisms that will apply technology to making border crossings more efficient and secure. The Cross-Border Xpress footbridge is an example of sound logistics co-ordination that can avoid congestion at various border crossing points and make better use of airport and ground transport infrastructure on both sides of the border.

 

Lastly, it is essential to guarantee conditions of competition that will allow the entry of new firms. Government policies must ensure that the system is not tilted in favour of existing firms, they must reduce barriers to the entry and exit of firms, and they must permit businesses to grow through ready access to financing, sound bankruptcy regulations, and certainty as to the enforcement of contracts.

 

The interaction between San Diego and Tijuana is an example of the enormous potential of cross-border regions for promoting productivity, innovation, employment and inclusion. Let us press further in our quest for shared prosperity. The world needs successful examples of integration that will put an end to fear and prejudice. Borders should be channels of communication and not of exclusion.

 

Let us continue to build bridges and not walls. As the Chilean artist Alfredo Jaar showed in his performance project The Cloud, the sound of music and poetry can travel unrestricted across the Mexico-United States border.

 

Thank you very much.