1. TSI Project Funded by Implemented by Kick-off training seminar Brussels, 4-6 November 2014 Falkland Islands Innovation Potential Jamie Fotheringham, Head of Policy, Falkland Islands Government

2. TSI Project Funded by Implemented by Isolated OCT Falkland Islands

3. TSI Project Funded by Implemented by - Over 700 islands - Land area: c.12,000 km 2 / 4,700 mi 2 - Strong winds averaging 16 knots - Low rainfall 24 inches (North) and 12 inches (South)

4. TSI Project Funded by Implemented by Population

5. TSI Project Funded by Implemented by

6. TSI Project Funded by Implemented by GDP 2012

7. TSI Project Funded by Implemented by Volatile Economy

8. TSI Project Funded by Implemented by Exports Agriculture: – Wool - £5.5m – Meat – £2.2m To Europe & Far East Fisheries: – Squid & Finfish – £90m Worldwide Tourism: – Cruise & Land - £9.5m Worldwide

9. TSI Project Funded by Implemented by Economic Activity Male: 87.5% Female: 78.9% Total: 83.6%

10. TSI Project Funded by Implemented by Employment

11. TSI Project Funded by Implemented by Key Sector: Agriculture Current GDP Contribution: £3.7m Employment: c.189 Historically based on coarse wool production Development focussed on securing greater value added through improved farming practices: Reducing wool micron Increasing yield Better business management EU certification allowing export of meat and other products New emphasis on meat production: Falklands now exports around 440 tons of lamb meat and mutton (and rising) Beef production growing with ambitions to export Reliance on imported horticultural and dairy produce

12. TSI Project Funded by Implemented by Key Sector: Tourism Visitor numbers dominated by cruise passengers (c30,000 and rising) Main selling points are in the unique and unspoiled natural environment, wildlife, and military history. Higher value derived from land-based – spending c£600 per trip in the local economy. Tourism strategy aimed at growing land-based tourism. Key barriers to growth are international airlinks, quality and quantity of accommodation, labour force constraints

13. TSI Project Funded by Implemented by Current GDP Contribution: £67.7m Employment: c. 58 (c. 1,400 on vessels) Historically the largest economic sector in the FI economy following the establishment of a fisheries conservation zone in 1987. Property rights in fishery introduced in 2007 - Individual Transferable Quota (ITQ). One of the best managed fisheries in the world 7% of total FIG operating budget spent on scientific research and fisheries protection (£4.3m) Modest fishery but significant squid production in global terms Limited onshore fisheries activity on the Islands Revenues highly volatile due to: One year life cycle of both squid species, migratory patterns, variable market prices for main squid catches. Key Sector: Fisheries

14. TSI Project Funded by Implemented by Seeking diversification into new industries – exploring potential in knowledge based industries and aquaculture Recently funded a South Atlantic Environmental Research Institute – to harness and develop existing expertise in environmental research and management New Industries

15. TSI Project Funded by Implemented by Emerging Sector – Oil Exploration and Production First Oil Discovery May 2010 – Rockhopper Exploration ‘Sea Lion’ well. Premier Oil progressing Sea Lion development planning – first oil 2019 Other major players now investing in the South – Noble, Edison Last exploration in South Falkland Basin completed at the end of 2012 – new drilling planned in 2015 in both basins. FIG has done or is doing a range of work to prepare the Islands for oil: Legislative reviews Socio-economic impact study Infrastructure development Code of Practice for local content Learning from best practice in other jurisdictions

16. TSI Project Funded by Implemented by Stakeholders in Innovation Strengths Established new science research facility (SAERI) Development agency providing loan and grant facilities (but mainly to established businesses) Some potential for export markets and greater self- sufficiency Weaknesses No further or higher education providers (up to age 16 only) No tertiary education Small size and natural monopolies provides no incentive for private sector to innovate Lack of entrepreneurial culture Only one commercial bank (risk averse) Location and isolation leads to emphasis on local customers only Limited bandwidth and poor quality internet speed/high cost

17. TSI Project Funded by Implemented by PESTLE Lack of agreed policy/strategy for innovation Meaning and importance of innovation not well understood Free trade arrangements with EU Barriers to trade with South America Political Limited economic base (but scope for diversification) Small local market, but some export potential Absence of venture capital funding No incentive to innovate due to monopolistic markets Economic Small population and limited market size No culture of entrepreneurship Aging population requires new approaches to health and social care Increasing urbanisation of population Social Technological Legal Environmental Climate change and waste management emerging as policy priorities Emerging strengths in environmental science and research Restrictive immigration policy (not investor friendly) Favourable tax regime Poor speed and quality of broadband High cost of telecommunications services Economy not driven by technological sectors (future opportunities in oil & gas)

18. TSI Project Funded by Implemented by Opportunities for Innovation Likely to be driven less by science and technology Greater opportunities for innovation in: – Harnessing niche markets – Harnessing ICT to benefit community and business development – Adding value to existing products

19. TSI Project Funded by Implemented by DEMAND Access to markets Customer demand Competition Ambition SUPPLY Skills Finance Technology Management INNOVATIONINNOVATION

20. TSI Project Funded by Implemented by Specific Opportunities for Innovation Demonstration project for aquaculture – potential for wider Proof of Concept Fund ? Improving Quality of Life through ICT - to connect isolated rural communities/facilitate delivery of essential services (education, health etc) Tourism Innovation Toolkit (and funding support package) Creation of rural business centres/infrastructure (underway) Venture Capital Fund to support high-risk projects Entrepreneurship programmes (underway) New approaches to waste management