Smart specialisation and global competitiveness: multinational enterprises and location-specific assets in Cape Town

Abstract

Multinational enterprises can play an important role in increasing the global competitiveness of cities through knowledge spillovers. The extent of spillovers depends on firm strategies, created assets and other local attributes. The paper focuses on six key sectors that account for a large share of the Cape Town metropolitan economy in South Africa. Forty -four lead firms were interviewed to assesses knowledge flows, capabilities of firms and other actors, and reliance on local assets. Firms had relatively strong absorptive capacities in all sectors, although they had to cope with human capital constraints. Inadequate infrastructure and city governance of the economy posed additional problems. Nonetheless, there was evidence of localised knowledge spillovers which differed across sectors. The combination of opportunities for smart specialisation as focus for an economic strategy, requisite assets, and the in-principle option to leverage political capital and invest the City's capabilities are greater in some sectors than in others. Agro-processing, creative and design activities, retail, and tourism present more opportunities than oil and gas or construction for interventions to grow globally competitive activities in Cape Town.