Living in a globalized world

Georgia's participation in a network of global leaders could open the door to a whole new world of economic development and trade

Bobby L. Hickman

August 1, 2008

Editor's note: B2B Correspondent Bobby Hickman was the only American journalist attending NEWSWEEK, a May meeting that brought journalists from the Regional Leaders Summits regions together in Austria.

L INZ, Austria - Georgia's pending entry to a select global network of regional leaders could open new doors for economic development and overseas trade. Last month, Georgia became the seventh "power region" to join the Regional Leaders Summit when the group held its biannual governors' meeting in Shandong, China.

The six-year-old coalition includes the states and provinces of Bavaria, Germany; Quebec, Canada; Sao Paulo, Brazil; Cape Town, South Africa; Upper Austria, Austria; and Shandong. The existing members are home to 157 million citizens and produce $1.25 billion in gross domestic product each year.

Georgia already has strong economic ties to some of these countries. Canada is Georgia's top export destination, accounting for almost $4.4 billion in 2007 exports. Ken Stewart, commissioner of Georgia's Economic Development Department, says China is the state's second largest trading partner, with exports to China rising 47 percent last year. Brazil ranks 11th among Georgia's export destinations with almost $495 million in 2007, according to state figures.


While trade is not a central focus of the Regional Leaders Summit, leaders say, improved cooperation between different governments on common problems often leads to expanded economic opportunities. The group focuses on sustainable development, cultural exchange and quality of life issues.

Dr. Erich Haager with the Upper Austrian government's Praesidium section and organizer of several Regional Leaders Summit events says the group provides opportunities to share ideas and technology among its members. "The focus is on how we respond to the challenges of the globalized world," he says. The group could help Georgia leaders expand on initiatives already underway.

For example, Lt. Gov. Casey Cagle has made several trips to Brazil to expand the state's role in biofuels. Renewable energy is a major focus for the summit, which provides a forum to share knowledge with Brazil and other member states. Christine Egger of the Upper Austrian Energy Agency, says that state is working toward generating all its heating and electricity through renewable energy sources, including biomass and solar power.

"This is the best environmental and economic policy," she says, "and our government is leading by example."

Opportunities in Austria

Austria offers other opportunities for Georgia beyond renewable fuels and educational exchange, where Georgia State University and Emory University already have programs in place. Austria does not rank high among Georgia's trading partners, leaving room to expand imports and exports. There also are only 16 Austrian companies with locations in Georgia with a total employment of 790, according to the most recent state statistics.

Stefan Schoefl, manager of the Upper Austria Export Center and a former economics minister, says Austria's exports are growing 10 percent annually, reaching 5.8 billion Euros in 2007. He says the United States ranks No. 3 among Austria's trading partners, behind neighboring countries Germany and Italy, adding that exports from Austria to Georgia totaled 220 million Euros in 2007.

For the province of Upper Austria, all exports totaled 140 billion Euros last year.

Schoefl says Austria's imports and exports have mainly been with countries in Central and Eastern Europe. However, like many nations. Austria now is paying more attention to expanding from a reliance on Western countries to the growing economies in China, India and other parts of Asia.

Karin Schachinger, head of marketing for the Upper Austrian government's TMG unit, says the major goods produced in Upper Austria include automotive vehicles and components, chemicals, steel goods and paper products.

Two-thirds of the engines for BMW vehicles come from Austria, while Fischer supplies parts for Airbus and Boeing aircraft, she says, adding that Upper Austria has full employment and the fastest job growth in that country.

Innovative clusters

One innovation in Upper Austria that's drawing attention from other countries around the world is the use of industrial clusters. Upper Austria frequently hosts other members of the European Union who want to duplicate the practice in their economic development systems, says Werner Pamminger, general director of Clusterland Oberoesterreich, the state agency that coordinates the cluster program.

The state has received interest from as far away as Korea, he says, although he is not aware of any inquiries from the United States.

"Clusters" are basically networks of interconnected companies, suppliers and related institutions within the same industry and geographic area. Members of the cluster cooperate with each other in sharing knowledge and technology, as well as launch common projects to support innovation. The clusters' goal is to provide members a competitive advantage by boosting the innovative efficiency of the participating companies.

Upper Austria's cluster program began in 1998 and is widely recognized as a successful model for others to emulate, Pamminger says. The clusters are mainly geared toward small and medium-sized companies, which make up about 85 percent of Upper Austria's businesses. "Those companies don't have the resources for marketing and public relations, for example, in the automotive supply sector," he says. "They can team up and then go after prospective clients such as BMW, Volkswagen and Mercedes-Benz."

Smaller firms also can work together to form a common purchasing department or undertake research projects more efficiently than they could on their own, he adds. 

Upper Austria has more than 1,350 companies participating in seven clusters and four networks. In 2006, the member companies accounted for 41.8 billion Euros in sales and employed 217,600 persons.

The clusters are organized around such industries as automotive supply, plastics, furniture and timber construction, health technology, food and mechatronics. Networks are similar to clusters but are not industry-specific, allowing the exchange of knowledge between a larger number of companies. The networks are in such areas as environmental technology, design and media, and human resources.

"We've been quite successful with the cluster program," Pamminger says.

"We're recognized as one of the most advanced areas in the world in this area. Studies show that companies in cluster groups grow faster than those in non-cluster industries. And 89 percent of our partners say they could not have achieved the kind of growth they had without their clusters."

Better access to innovative programs such as the cluster group is one of the benefits state leaders can gain when Georgia officially joins the Regional Summit Leaders organization this month in China. Economic development officials say every opportunity they get to increase their exposure to overseas markets ultimately helps increase international trade, so joining the summit program can be expected to pay more dividends in the future.