1. Borderless Innovation… Maintaining Competitiveness in the 21 st Century

2. Introduction Kenn Morris  Founder & Director of Crossborder Business Associates California-based crossborder market research and strategic consulting firm specializing in border business and policy  Former Director of UCSD San Diego Dialogue’s Crossborder Innovation & Competitiveness Initiative  Lead researcher and lead author of Dialogue’s Borderless Innovation report

3. Overview of Comments Context of Challenge: Why Worry? Border & NAFTA: Outdated Paradigm Vision for Borderless Innovation in San Diego-Baja California Region Application of vision to Arizona-Mexico, border states, and North America

4. 21 st Century Competitiveness: Why Worry? “World is Flat”: More than just China & India  China: long term challenge  Regional tech clusters: Large number of existing – and emerging – regions of technology & innovation across globe Many regional economic development strategies not prepared  An issue for US, Mexico…and North America

5. Why Worry? Despite existing economic & social linkages, US-Mexico relationship stuck at “border” Few cases of open, public dialogue about weakening North American competitiveness Fewer examples of policy leaders working to foster new paradigm for North America New vision beyond NAFTA needed

6. A Regional Approach to Borderless Innovation San Diego & Baja California: region of innovation, R&D, technology manufacturing Given economic & social linkages, felt that a latent opportunity to catalyze regional synergies was possible…  … But no comparable data existed Crossborder Innovation & Competitiveness Initiative: identify “clusters of opportunity” in high value-added sectors in the binational region Focus on selected technology intensive clusters: biomedical devices, aerospace & defense, software, and others

7. Cluster Findings Biomedical Devices  Over 30,000 employed in Cluster (2003) San Diego: 6,800 Baja California: 23,700  BC: highest number of FDA-certified BD companies in Mexico (65+) Many: Class 10,000 & 100,000 clean rooms 13 had HQ or operations in SD County  Range of products – heart pumps & stents, lenses, pacemakers, more…

8. Cluster Findings Aerospace & Defense  Over 23,000 employed in Cluster (2003) San Diego: 18,300 Baja California: 4,800  BC has highest concentration of aerospace companies in Mexico  Mexico: 9 th largest aerospace supplier to US  US-MX BASA agreement pending

9. Binational S&T Workforce …Larger than expected, and growing  Surveyed large regional universities  Issuance of engineering and software of note: More engineering degrees issued by major BC universities than in SD (…industrial) UABC graduated more individuals with software degrees than UCSD

10. A New Regional Model for SD-BC Recommendations for San Diego-Baja California  Crossborder Innovation & Competitiveness Centers (leverage existing organizations and institutions)  Research and comparable S&T data (foster understanding)  Private investor networks (foster investing)  Increased educational linkages (physical & online) and regional workforce training programs  Promote shared infrastructure investments (energy, water, digital)  Increased security integration & enforcement

11. …Realized: Broader Implications Implications for all of California  Biomedical devices: Over 53,000 employed in CA  Aerospace (Southern California)  Automotive  Software  Semiconductors …As well as the US- Mexico border states

12. Implications: Aerospace & Defense AZ: Large concentation of aerospace companies (Raytheon, Honeywell, Boeing, etc.) Aerospace education: Embry- Riddle, U of A, Maricopa Community College…and the ASU/ITESM crossborder Masters degree in Aerospace Logistics 35% of US aerospace employment in 4 US border states Within 1100 miles of Phoenix, most of aerospace employment in the US and Mexico Sept. 26 th : Mexican Aerospace Conference…in Scottsdale

13. …Implications: Silicon Border Technology park in Mexicali, goal of 1-2 Fab facilities If successful…potential synergy with CA and AZ semiconductor clusters (esp. Intel, Motorola, TI, Freescale, etc.) … Not to mention concentration of semiconductor related employment (160k+) in 4 US border states

14. A Model – for the 21 st Century North American Crossborder Innovation & Competitiveness Initiative?  Take concept beyond San Diego-Baja California  Requires regional assessments in border states, and analysis of city-city and region-region “clusters of innovation & opportunity” Some hope:  North American Council on Competitiveness  Emerging understanding of regional opportunities and economic development agreements (AZ-Sonora, maquiladora supplier promotion of TREO) Opportunity for “Third Nation” to catalyze technology manufacturing and competitiveness for 21 st Century – if we choose path of Borderless Innovation

15. Borderless Innovation… Maintaining Competitiveness in the 21 st Century Thank You – Gracias Kenn Morris kenn@crossborderbusiness.com CrossborderBusiness.com Copies of Borderless Innovation report: www.sandiegodialogue.org kenn@crossborderbusiness.comCrossborderBusiness.com www.sandiegodialogue.org