Learning from the Wales experience

THE READER may well question: ``Why should we in India be interested in a 8,000 square mile western extremity of the British Isles with a tiny population of less than 3 million?"

The answer lies in the fact that much of Welsh economic history in the past few decades parallels what has happened and is happening in several Indian States such as West Bengal, Bihar and Maharashtra and the solutions developed and put in practice by Wales could well find application in some form in India as well.

During the second half of the 19th and first half of the 20th Centuries, Wales became a leading international coal vendor and had a flourishing steel industry. At its peak in the 1920s, the Welsh mining and metallurgical sector accounted for over 3.50 lakh employees.

The development of coal mining elsewhere in the world at cheaper rates spelt doom for Welsh coal. From the 1930s onwards, the coal pits started closing down. After the Second World War, the rise of the steel industry in the Far East rendered the British steel industry uncompetitive and the Welsh mills began folding up. With the advent of the Eighties, the number of workers in the mining- metallurgy sector had been reduced to less than 6,000. The final nail in the coffin was a debilitating strike by the coal mine workers in the mid-Eighties, just like the textile workers' strike led by Datta Samant in Bombay decimated the city's textile industry. The unemployment rate in Wales had by then soared to 14 per cent.

Basic objectives of WDA

Twenty five years ago, when the decline in Wales first manifested itself an organisation called the Welsh Development Agency (WDA) was created. The basic objectives of the WDA were to further the economic and social development of Wales and safeguard and increase employment, promote efficiency in business and international competitiveness of Wales and further the improvement of the environment in Wales.

From what one could see and gather on a brief three-day visit to Wales recently, the WDA has been singularly successful in meeting its objectives. In contrast to the previous over-dependence on mining and metallurgy, the economy of Wales has been diversified to include manufacturing (electronics and automobile components), construction, distribution and retailing, financial and business services, information technology, food and beverages, defence equipment, public administration and education and other services. The unemployment rate, which was 14 per cent in the mid-1980s, is now 5 per cent, against a U.K. average of 4 per cent.

According to Sir David Rowe-Beddoe, Chairman of the WDA, "The partial transformation of the economy achieved since 1976 has been greatly assisted by the Welsh success in wining more than our expected share of inward investment projects over the course of the last two decades."

Between April 1983 and March 2000, Wales has attracted inward investment (known as FDI in India) of around 13.2 billion pound sterling from 32 countries, the largest numbers being the EU, the U.S. and Japan. About 505 foreign-owned companies employ 73,000 persons in 532 plants in Wales. These are state-of-the-art factories manufacturing the latest high tech products. The names that have set up base here are a "Who's Who" of international manufacturing such as Toyota, Panasonic, Sony, LG, British Airways, GE, BT, Ford, Bosch, Visteon and many others.

Land development, vital part

A vital part of WDA's work is land development and it has been instrumental in transforming a number of dilapidated properties into excellent business and residential premises. In improving the economic potential of specially backward areas such as West Wales and the valleys of South Wales, the WDA is availing of a special subsidy package from the European Union, called Objective 1.

In its task of transforming degraded properties, the WDA involves both the private and public sectors. An example of such partnership is the Baglan Energy Park near Swansea in South Wales. This location skirting the Baglan Bay was once a major petrochemical-cum-power plant complex owned by British Petroleum . With the discovery of North Sea oil, the complex became uncompetitive and BP was forced to close it down, leading to large scale unemployment in the area.

Now BP Amoco, in partnership with WDA and the local Neath Port Talbot County Borough Council, is redeveloping the area into a spanking new 71.6 hectare industrial park, with the help of funds from Objective 1. According to the project co-ordinator, Ms. Debbie Robson-Brown, a speciality of this park will be ready-to- occupy production units with intelligent energy management systems enabling 30 per cent less energy consumption compared to normal factory buildings.

Now, why cannot we think of such a cooperative public/private effort to rejuvenate the dead textile mill area of Mumbai and create fresh job opportunities?

In 1998, the WDA merged with the Development Board for Rural Wales and the Land Authority for Wales to create an all-Wales economic development organisation with more comprehensive capabilities. In July 1999, under the devolution package, Wales got its own, autonomous National Assembly to which the WDA is now accountable as an assembly sponsored public body.

The WDA differs from government development agencies in India mainly in the following ways:

A board comprising professionals not bureaucrats and headed by a chairman with a long tenure (Sir David has been at the helm since 1992 );

Though the WDA is funded by and reports to the National Assembly of Wales, it functions autonomously and is not the handmaiden of political bosses;

The WDA works in partnership with the private sector in most of its projects; Its projects and programmes are based on long term strategies and not short term objectives;

It works on a lean staffing pattern with most routine functions outsourced.

At present, the Welsh GDP per capita at 10,400 pound sterling is around 80 per cent that of the U.K. as a whole. According to Dr. James Price, senior economist at the WDA, in the last decade, Welsh GDP grew by under one per cent per annum.

Any quantum jump in growth can only be possible by changing the business model for the region. The agency's corporate plan for 2000-03 hopes to transform Wales into a knowledge-based, innovative economy. The strategic priorities will be: Enhance international competitiveness; focus on added-value sectors; remove obstacles to work; and support entrepreneurs and creative people.

At present, 12.2 per cent of the workforce in Wales is employed in "knowledge-based" industries, compared to 18 per cent for the U.K. as a whole. To move up to the U.K. level, the challenge for Wales is to create up to 50,000 jobs in this sector by 2006.

A five-year plan has been drawn up to establish the latest IT and telecommunications infrastructure in Wales. A programme to foster the growth of intellectual property has been initiated whose key ingredient is the Technium initiative. The aim, according to Dr. Steve Davies, Project Manager, Technium, is to build on established centres of excellence in research and teaching in higher education to nurture new fledgeling enterprises and also attract inward investing, knowledge-driven companies.

Around 20 Technium centres across Wales are expected to be established. The first one, centred on advanced engineering, has already come up near Swansea. Plans are being developed for others on biotechnology (at the new National Botanical Garden in southwest Wales), automobile technology (near the Pembrey Motor Circuit in Camarthenshire) and optoelectronics (at St. Asaph in north Wales).

Technium occupants will have the advantage of a unique link across Wales through a broadband fibre optic network. There are plans to set up a Technium Venture Capital Fund and Technium scholarships to promote entrepreneurship among undergraduates. Specialist advice on intellectual property rights and a rapid prototyping service will be available to the occupiers of the centres.

The Advanced Engineering Technium at Swansea in south Wales, which this correspondent visited, has been set up by the WDA with the help of EU funding and in partnership with the University of Wales, Swansea, the City and County of Swansea and the Swansea Institute. A broadband, fibre optic data link is provided to individual departments in the nearby university.

The Indian Institute of Science in Bangalore and the Karnataka Government need to take a close look at the Technium concept.

In this drive to build a high value, knowledge-based economy, Wales is particularly eager for investment from the Indian IT sector. Among the advantages that Wales has to offer are real estate at half the price of London, direct connections by sea and air to the Continent, top class IT infrastructure, excellent research support from universities such as Cardiff and Swansea, plentiful supply of skilled manpower and, of course, an efficient one-stop-shop in the WDA for easing the pains of entry.

"For the Indian expat employee, the added attraction here" says Mr. Sachin Kulkarni, Business Development Manager of Mahindra BT's operations in Cardiff," is the less stressful living conditions. The city is so compact that one needs only 20 minutes at the most , from the periphery to the city centre. Articles of daily consumption are cheaper here and the air pollution is almost negligible . Yes, it is a good life here and one can be far more productive here than in London."

Indian IT companies which plan to make a foray into the European market and intend to base themselves in the U.K. because of the English language facility, need to take a closer look at the Wales alternative.

N. N. Sachitanand

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