What can Gyumri learn from Brazil’s Recife Digital Harbour

Gyumri is dreaming big. And its dream is tech… the Gyumri Tech Park construction will be complete in 2014 and much more is coming.

But how can a city that many have never heard of and shadowed by richer and booming Yerevan, become a tech center? There are many challenges ahead, especially when trying to orchestrate a balanced, ecosystem encompassing universities, government, private enterprises and entrepreneurs.

For those questioning whether it can be done, there are many examples in the world of cities that made it. Cyberjaya in Malaysia, Northern Ireland Science Park and Dublin Innovation Centre in Ireland, Trivandrum Technopark in India, Hsinchu Science Park in Taiwan, Parque Tecnológico de Andalucia in Spain and many others. One of them in particular, Porto Digital (Digital Harbour) in the city of Recife, Brazil holds many similarities to the Gyumri tech dream.

Streets of Recife (left) and Gyumri (right)

  

It all started with the vision of great men. Among them, Prof. Silvio Meira. He is one of the masterminds behind Porto Digital. First he and his colleagues of the Federal University of Pernambuco (UFPE) aimed at increasing the number of PhD teachers from four to twenty. This was necessary to gain scale to create world-level knowledge and train a highly qualified workforce in the region. But the newly graduated doctors left Recife as no local company saw opportunity to employ them. They joined companies in other Brazilian cities or abroad (sounds familiar?). So Prof. Meira wanted to give them the choice to stay.

In 1996 CESAR (Recife Center for Advanced Studies and Systems) was founded. As its chief-scientist, Prof. Meira aimed to transfer IT knowledge to the business and academic communities through the delivery of interdisciplinary projects in telecommunications, electronics, commercial automation, finance, media, energy, health and agro-business. At CESAR, all projects have to answer to specific problems identified by CESAR clients, among them Motorola, Microsoft, LG and Petrobras.

Second, Porto Digital was launched in 2000 as a regional hub making a concerted effort to create economic impact, having CESAR at its core. In the beginning, there wasn’t much government support, but with the success of the initiative, some partnerships emerged with both city and state. In collaboration with CESAR, Porto Digital provides business development services to the cluster’s start-ups, increasing market opportunities and providing new jobs for home-grown IT and creative professionals.

By 2012, according to the hub website, it has achieved impressive results:

- 230 companies (and growing)
- USD 430 million of total revenues by these companies
- 7000 jobs
- 3 incubators

Third, recognizing the importance and potential of the creative businesses, the Porto Mídia (Media Port) project was launched in 2012. As an 18 months’ hub program for the development of creative businesses, it is Porto Digital’s second sectorial focus according to an article by the British Council. The initiative recognizes the need for interdisciplinary collaboration between the arts, tech and business. The focus is on the wider creative industries: gaming, music, animation, design and photography.

The creative industries (including the digital/technological sector) have a crucial role in providing new economic solutions, as Brazil’s young people (50% of the new middle class are under 30) actively engage with cultural consumption and social media (Brazil was Facebook’s largest global market in 2012). The cultural sector’s recent growth has been spectacular: it’s 500% bigger than a decade ago, it employs over 11 million people (about 2 million are new jobs), and exports have grown from US$2.4 billion in 2002 to US$7.5 billion in 2008.

The Porto Mídia initiative aims to provide creative professionals with business structures and entrepreneurial support through training, incubation/mentoring, and access to state of the art technological facilities. The various Labs and studios provide technical support to companies but also gather information about emerging technologies and digital trends and needs within cultural practice, which they then disseminate to the wider community through active seminar and exhibition programs.

Real Estate development and historical buildings preservation

Porto Digital stands in an area originally controlled by the Dutch, who were expelled from this part of South America in 1654. The harbor’s fortunes ended with the decline of sugar exports. Businesses left and poverty grew in the favelas. Today, its impact in the decaying urban fabric of Recife has been remarkable. I has brought back to life Recife Island through real estate development and restoration of historical buildings. It also deeply transformed the area of Recife it is based in: it is an urban cluster, based in an area where there are also restaurants, shops and other activities. Again this comes to show Gyumri and its people that it can be done! Just imagine the historical buildings of Gyumri filled with cafes, restaurants, shops and start-ups!

Old center of Recife (left) and the Center of Gyumri (right)

  

How migration was reversed

The highly skilled workforce is perhaps Porto Digital’s secret weapon, according to BBC. Since the ’90s, the city has been regarded as one of the hubs for skilled IT professionals, in great part thanks to its computer science program at the Federal University of Pernambuco (UFPE). But until Porto Digital came to life, many would leave the campus for Sao Paulo, or leave Brazil altogether (sounds familiar?).

Recife’s computer science department ranks among the top five in Latin America and is considered the most prolific in Brazil in terms of academic publications, postgraduate dissertations and theses. According to Brazil’s Institute of Geography and Statistics (IBGE), while the average income is amongst the lowest in the country, but the northern region of Pernambuco is showing a steady increase in nominal GDP, beating other states in the past few years.

And some tech workers are finding that growth attractive. There are many examples of people who, left the huge metropolis of São Paulo and came to Recife to work in a more laid back environment. They say Recife we has the same problems as any other big city in Brazil but there you are much better off than the rest of Brazil in terms of coding, software development and games.

Social consciousness and economic impact

It is not only trying to export services and tech (98% CESAR’s turnover doesn’t come from Pernambuco), but social awareness as well. Many children and residents in poorer districts like the city’s favelas are enlisted in programming courses and other training schemes supported with the help of  NGOs. Porto Digital’s immediate priority is to engage local talent - in particular young people from the more disadvantaged communities in Recife - fostering the creation of new jobs in the software and creative industries.

It also has a huge economic impact on the region: in 2001, IT represented 1.6% of the state of Pernambuco’s GDP. It now weighs in at 4% of GDP and it has grown even faster than Brazil’s GDP. The goal is to reach 10% by 2020.

Lessons for Gyumri

It can be done. It requires leadership, and will power and political will. The steady growth of Porto Digital, far away from the wealth of Brazil’s southern cities (in the case of Gyumri, Yerevan is the wealthy neighbor), may be a salutary lesson for other tech centres aiming to take on major players.

It takes time. For Porto Digital, it took longer than expected; the hub’s direction has changed from the original vision, partly because politicians did not believe Porto Digital would make that much of an impression in the global economy. Also, in the beginning, it faced the distrust trying to attract new companies to a city few non-Brazilians could place on a map.

Migration can be reversed. Before the city was exporting brains. Today it exports more than 90% of its software. Other cities have also achieved this goal through Tech parks, such as the Hsinchu Science Park in Taiwan.

No excuses attitude. Armenia even has advantages in regards to Brazil (especially on taxes), but both have still a lot of work to do to improve. Just take a look at these rankings:

Ranking (lower is better)
Armenia
Brazil
doingbusiness.org
37
116
globalinnovationindex.org
59
64
Global Competitiveness
79
56
Total tax rate (1)
38,8%
69,3%
(1) Sum of profit tax, labor tax and social contributions, property taxes, turnover taxes, and other taxes, as a share (%) of commercial profits | 2012 - WEF

 

Porto Digital, Recife’s digital cluster, is an example of how a small city in Brazil is embedding the creative and digital industries into its new economic development plans in order to increase productivity, promote innovation, urban regeneration and social change.