Clustering biotechnology industry in Scotland and foreign direct investment

Abstract

The biotechnology industry is one of the representative industries of a knowledge-based economy. Many biotechnology clusters have been growing in the world. The Scottish biotechnology cluster has been rapidly growing. It is likely to endogenously develop based on the utilisation of the local universities' knowledge, and a number of indigenous biotechnology-related companies are established in terms of interaction between local actors, such as government, university and companies. One of the characteristics of the Scottish biotechnology industry cluster is to be created by government initiative rather than by market mechanisms. The Scottish government has aggressively induced foreign direct investment into the biotechnology sector due to limitation of local resources. Consequently, a large number of foreign pharmaceutical companies have invested heavily in local biotechnology firms and universities in Scotland. As described in the two case studies, there are a number of collaborative researches between indigenous institutes and external foreign companies in the Scottish biotechnology sector. In the biotechnology sector, innovation is likely to be generated at the nexus of the local and global networks. Thus, the competitive advantage of the region might not be determined by solely local conditions, but global factors also seem to contribute to the enhancement of the local industry. The result provides some lessons to the Japanese industrial cluster plan which has been strongly promoted by government bodies. In addition, policy makers should reconsider the role of FDI as a learning opportunity.