+ INNOVATION & ENTREPRENEURship 47486 Public Disclosure Authorized INTERNAT INTERNATIONAL I ONAL G GOOD PRACTICE FOR ESTABLISHMENT OO Review of experiences in select countries, including D P OF SUSTAINABLE RA three country case studies: Public Disclosure Authorized C Vietnam, Russia and Jordan T IT PARKS IC E F OR E S TA AN infoDev PUBLICATION PREPARED BY: B L ISHM PriceWaterHouseCoopers, India ENT JUNE 2008 O F SUS Public Disclosure Authorized TA I NA B LE I T P AR KS Public Disclosure Authorized Information for Development Program www.infoDev.org THE WORLD BANK www.infoDev.org INTERNATIONAL GOOD PRACTICE FOR ESTABLISHMENT Review of experiences in OF SUSTAINABLE select countries, including three country case studies: IT PARKS Vietnam, Russia and Jordan AN infoDev PUBLICATION PREPARED BY: PriceWaterHouseCoopers, India June 2008 Information for Development Program www.infoDev.org ©2008 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved The findings, interpretations and conclusions expressed herein are entirely those of the author(s) and do not necessarily reflect the view of infoDev, the Donors of info Dev, the International Bank for Reconstruction and Development/The World Bank and its affiliated organizations, the Board of Executive Directors of the World Bank or the governments they represent. 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Washington, DC: info Dev/World Bank 2008. Available at http://www.infodev.org/publications Table of Contents Chapter 1. Executive Summary 1 Chapter 2. IT Sector: Alternate Development Models 19 Chapter 3. IT Parks: What Has Worked and What Has Not 25 Chapter 4. IT Sector: Policies and Their Impact 55 Chapter 5 Country Case Studies 73 Appendix 1. Indicative Internal Rate of Return for Select IT Parks 129 Appendix 2. Indicative Internal Rate of Return for Select IT Parks 131 Appendix 3. Discussion Participants 133 References 139 LIST OF FIGURES Figure 1. Key Players – IT Goods Trade, 2004 20 Figure 2. Key ICT Indicators for Different Countries, 2004 21 Figure 3. The CLIP Framework 26 Figure 4. Space Rental (USD/sq. ft) 33 Figure 5. Electricity Tariff (cents/unit) 34 Figure 6. Road Connectivity, SSP 41 Figure 7. Distribution of Infocomm Manpower 42 Figure 8. Space Rental/Cost 44 Figure 9. Foreign Citizens in CFZ 44 Figure 10. Capital 45 Figure 11. Linkages 45 Figure 12. Infrastructure 46 Figure 13. People 46 Figure 14. Business Models for IT Parks 47 Figure 15. Types of Government Policy Instruments 54 Figure 16. Fiscal Policy Highlights for Different Countries 56 Table of Contents iii Figure 17. Innovation Policy Highlights for Different Countries 58 Figure 18. Human Capital Policy Highlights for Different Countries 60 Figure 19. Investment Climate Policy Highlights for Different Countries 64 Figure 20. IT Sector Share of GDP 64 Figure 21. Vietnam IT Sector Composition 72 Figure 22. Top 5 Vietnamese IT Companies (2005) 72 Figure 23. Key ICT Indicators for Vietnam 73 Figure 24. SHTP Master Plan 79 Figure 25. Comparative Salaries in IT Sector 83 Figure 26. Government Policy Instruments 86 Figure 27. IT Sector Growth Segments & Strategies 87 Figure 28. IT Parks – Segment-Specific Drivers 88 Figure 29. Policy Good Practice for IT Sector Development 90 Figure 30. Policy Good Practice for IT Park Development 91 Figure 31. GDP and IT sector 91 Figure 32. Composition of the Russian IT Sector 92 Figure 33. Top 10 Russian IT Companies (2005) 92 Figure 34. Location of IT Companies (2005) 93 Figure 35. IT Services Exports 93 Figure 36. Exports by Different Players 93 Figure 37. Manpower Deployment in Captive Development Centers in Russia 94 Figure 38. Key ICT Indicators for Russia 95 Figure 39. Location Map of MSU Science Park 97 Figure 40. Throughput 99 Figure 41. Comparative IT Salaries 99 Figure 42. Existing Government Policy Instruments 101 Figure 43. IT Sector Growth Segments & Strategies 103 Figure 44. IT Parks – Segment Specific Drivers 104 Figure 45. Policy Good Practice for IT Sector Development 107 Figure 46. Policy Good Practice for IT Park Development 108 Figure 47. GDP and IT Sector 110 Figure 48. Composition of the Jordanian IT Sector 110 Figure 49. Composition of Revenues (2004) 110 iv International Good Practice for Establishment of Sustainable IT Parks Figure 50. Revenues by Industry Sectors (2004) 111 Figure 51. IT Exports 111 Figure 52. Exports by Destination (2004) 111 Figure 53. Key ICT Indicators for Jordan 112 Figure 54. Average IT Salaries 2004 117 Figure 55. Comparative IT Salaries 117 Figure 56. Government Policy Instruments 119 Figure 57. IT Sector Growth Segments & Strategies 120 Figure 58. IT Parks – Segment Specific Drivers 121 Figure 59. Policy Good Practice for IT Sector Development 122 Figure 60. Policy Good Practice for IT Park Development 122 Table of Contents v vi International Good Practice for Establishment of Sustainable IT Parks Executive Summary 1.1. Background 1.2. IT Parks: What Has Worked and What Has Not Historically, Science and Technology Parks have typically evolved around tertiary educational The first step in this assessment was to identify five institutions or other research organizations. The role countries for analysis, from which a total of six IT of science and technology parks has been to: Parks were selected to get a representative sample covering both (i) successful and not-so-successful ■ Recruit and co-locate new and established IT Parks , and (ii) IT goods as well as IT and BPO knowledge-based companies; (Business Process Outsourcing) services. Our ■ Promote innovation based on “smart” technolo- analysis has been based on the CLIP framework, gies; the individual components of which have been ■ Provide an interface or shared research environ- detailed below: ment for research organizations and private industry; and ■ Capital attempts to assess i) Investment, ■ Leverage local knowledge resources to enhance a ownership, and management issues of the IT region’s economic base. Park in terms of how it has been funded, role of the government and the private sector; ii) Mix of The United States and select countries in Europe anchor occupants and early stage companies in were the first to set up dedicated science parks the park and iii) Provision of business incubation during the sixties. Many of these parks were set up services by the park management and availability to cater to knowledge or technology-intensive of private equity/venture capital and other sectors like engineering, chemicals, and electronics. means of financing; In Asia, the phenomena of setting up dedicated ■ Linkages include i) Nature of products and parks to enable knowledge sharing started in the services offered by key occupants and their fit early seventies in several countries. Japan and Korea with the target markets; ii) Assessment of forward took the lead, focusing on basic research and and backward linkages of key occupants of the development activities conducted by government park; iii) Relationships between key occupants research and development institutes, and universi- and resource organizations such as academic ties. It was only in the late seventies and early institutions and R&D centers, given the nature eighties that the non-government sector started of products and services offered by key occu- setting up operations in such parks to avail the pants; and iv) Value-added services offered such benefits of government supported R&D. In the late as market access, business planning and opera- nineties, developing countries increasingly started to tional support, and developing appropriate establish similar parks as a preferred tool for promot- linkages within and outside the park; ing their information technology (IT) industry. ■ Infrastructure addresses i) Availability and relative Given that