Modifying the economic behaviour of a national region is never easy. To have any long-lasting effect, changes in direction must be fundamental rather than cosmetic, reaching the industrial sub-culture of the area rather than simply implanting pockets of new business to create the impression that all is well. The approach is critical to the viability of regions like the Midlands of the United Kingdom, where an economic pattern based on generations of heavy engineering has undergone radical changes in the past twenty years, and deep-rooted changes have been required to chart the industrial course of the Midlands far into the next Century.
The European Union is instrumental in promoting regional development in key areas like the UK Midlands through its Structural Funds. Of these, the European Regional Development Fund (ERDF) is the largest and the longest established, being created in 1975.
This is complemented by a Cohesion Fund which is designed to provide support for the poorest states of the European Union - those with a GDP per capita of less than 90% of the average for the Union as a whole. Approaching £2 billion in value annually, payments from the Fund are targeted at infrastructure and transport development.
By 1997, the much more substantial ERDF was committed to spending a total of some £9.5 billion that year, covering projects to improve infrastructure, increase productive investment (assistance to businesses) and promote local development (essentially through assistance to small and medium-sized enterprises).
The areas which qualify for assistance are determined by their meeting the criteria of one or more 'Objective' programmes. Each objective is defined in terms of a particular characteristic of the regions which fall within its scope. The 'Objective 2' scheme under which the Midlands receives financial support is directed at relieving unemployment created primarily by long-term changes in the industrial infrastructure of regions. In addition, several urban districts qualify simply on the grounds of their inherent state of decay.
The European Commission has a policy of providing greater assistance to the less favoured regions for the use of information and communications technology, in order to prevent their falling further behind.
In its new guidelines for the second programming period for Objective 2 areas, the Commission explicitly calls on the regions to use the potential of modem information and communications technology to promote structural change and industrial growth. The Second Programme Document of July 1996, produced by the ERDF in respect of the West Midlands Objective 2 Area of the UK saw the area becoming an advanced industrial region where enterprise is encouraged.
The region has traditionally been regarded as a manufacturing 'hub' which develops and employs advanced technology, so there is a logical point for further development. There is also a dynamic national and international services sector focused on the centre of Birmingham.
With labour relations having improved over the past decade in the West Midlands, a skilled and trained work-force is available to harness new techniques and refine business practices in the region. The Document also confirms that a strategy has to be pursued to secure "A prosperous area helping to diversify and internationalise the economic structure through continued encouragement to commercial, national and international business expansion."
Serving a worldwide marketplace
West Midlands centre will showcase electronic commerce applications
Pious rhetoric apart, an opportunity has emerged for Birmingham to spearhead a development initiative. If implemented constructively, this could have as much effect on the IT 'revolution' worldwide as the city had on the Industrial Revolution in Britain during the last century.
Computing and telecommunications are converging to an extent never before experienced. The best illustration of this process is the Information Superhighway, where personal computers are being linked to the Internet at an unprecedented rate. The Internet is accessed every day by some 10 million people globally: every 24 hours, another 90,000 subscribers connect to the Internet for the first time.
Powerful stimuli to this new communication channel are the rapid advances in Digital Television and the provision of interactive services over global satellite communication networks. Interest in an Information Superhighway would probably not be so great if it were not for the acceptance of new technologies by children and teenagers who are taking them on board for education, entertainment and inter-personal communication. The Internet is now an important component of the learning experience in schools across the developed world.
On the commercial front, businesses are now recognising the potential of the Internet as a sales vehicle for goods and services on a global scale. Traditional stores are considerably more expensive to establish and support than the 'virtual' counterparts, while many forms of printed media can be distributed cost-effectively (though perhaps not as attractively) over the Internet. With these new channels to market, vendors have to determine their future strategy - whether to sell their commodities over the Internet and by traditional methods, or simply switch to the Internet if the opportunities appear to be sufficiently great.
The new channel to market gives manufacturers and suppliers the chance of a more direct relationship with their customer base. This impacts upon every other aspect of the trading relationship, including the development of advertising techniques and the acceptance of electronic payment. Being able to relate on a one-to-one basis with a manufacturer allows a customer to specify a commodity to an extent that is quite impossible in conventional distribution, where goods are delivered to the retailer and the customer has the choice only of what is available. An expression often used in this context is that the Internet 'turns one market into a market of one'.
To help achieve this objective, the UK Government has, through the Department of Trade and Industry (DTI) and the Office of Science & Technology, launched a priority programme promoting Global Electronic Retailing as part of its Foresight initiative. Strong interest in the concept has been shown by The Centre for Exploration of Science and Technology (CEST).
The DTI and the Foresight Programme have supported the establishment of the National eCommerce Centre in Birmingham and will link the Foresight Programme's activities in Global Electronic Commerce to the activities of the Centre. The objective is to create a practising observatory for Global Electronic Commerce, while feeding through into a live commercial on-line shopping centre serving a worldwide marketplace as part of the Birmingham Millennium Point project. The project, operated by the eCommerce development house Retail Futures, should promote instant access to the world's leading authorities on current trends in electronic commerce. It will provide a hands-on environment for large and small enterprises to experience the new technologies. Independent or collaborative projects (or a combination of the two) will be implemented, with a strong emphasis on the commercial implications of electronic trade.
Objectives that can be achieved
Establishing a National eCommerce Centre at Birmingham will make a major contribution to targets for implementing electronic commerce
As a resource for electronic commerce on a global basis, the Centre will pursue a number of definable goals. These will assess . . . .
- The impact of eCommerce upon the demand chain, including personalisation of services and personalisation of the design, manufacturing and production of goods and services (mass customisation)
- Its impact upon the distribution chain, where some products which can be digitised (music CDs, for example) can be selected, sampled and downloaded for purchase by the end consumer, without the need for physical movement or the distribution of physical raw material or finished product
- The implications of global cross-border trading, such as distribution agreements, territorial pricing, product specifications, taxation and legal issues, as well as multi-currency and multi-lingual issues
- The integration of leading edge technologies such as virtual reality, intelligent agents, digital cash, and 'server push' techniques
- Security and personal privacy issues
- Human Factors
- The impact on employment
- Its impact upon the property market, and the move towards the retailing of virtual retail space rather than physical space
- How eCommerce impacts upon the advertising and marketing sectors as manufacturers, brands and retailers have direct two-way electronic access to consumers
The physical and electronic establishment of a global on-line shopping centre in Birmingham has a number of specific objectives to achieve if the investment now being made is to have maximum impact.
- Engage the business, industrial and academic communities of Birmingham.
- Develop an advanced on-line Shopping Mall for consumers world-wide
- Provide a platform for businesses associated with Birmingham to address issues of global trading over the Internet
- Develop strong links with the region's manufacturing industry, and provide an important opportunity to assess the implications for raw materials suppliers, manufacturers and retailers
- Provide an important test-bed and world showcase for Birmingham's academic institutions and other related organisations (the world of design, for example) to develop their work in a high profile, real world environment
- Provide a conduit for the yield from R&D to enter the commercial world rapidly through the live World Shopping Centre
Interest in the National eCommerce Centre has been extensive, reflecting the broad spectrum of commercial, financial and governmental bodies involved in its implementation. Birmingham-based institutions are inevitably high on that list, but the project has attracted UK Government support at Ministerial level, software vendors with an interest in eCommerce (Microsoft), the broadcasting sector (BSkyB) and research houses (Forrester Research
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