Challenges for Regions in the European Research Area Tibor Dory Support to the European Research Are

1
Challenges for Regions in the European Research
Area Tibor DorySupport to the European
Research Area (SERA) UnitDG JRC - Institute of
Prospective Technological Studies (IPTS) 2nd
PRIME PhD Summer School Budapest, 2-9 July 2005
2
Contents

• Why regional innovation system? - Some
  theoretical foundations
• Key aspects of European regional innovation
  policies
• Main results of a pilot analysis on the regional
  dimensions of the 3 Action Plan

3
PART 1 Why regional innovation system? - Some
theoretical foundations
4
A historical perspective search for a new
model of regional development

• Early foundations
• Location theory (Thünen, Weber, late 19th and
  early 20th century)
• Growth pole models (Perroux, 1955)
• Traditional regional policy in the 1980s
• Reassert the value of local and regional
  development potential
• Alternative to national/state led regional
  economic policy
• Regional endogenous development approach (GREMI)
• Regional version of the endogenous growth model
• Growth and development factors of territorial
  innovation dynamics
• Human capital, institutional structure and social
  capital (e.g. F2F contacts), local business
  culture and schooling system, infrastructure, and
  learning from the regional experience for a new
  direction of regional development

5
Key traditions of the territorial innovation
models

• Territorial innovation model (TIM) is used as a
  generic name for models of regional innovation in
  which local institutional dynamics play a
  significant role.
• Main models
• Innovative milieu model
• Industrial district model
• New industrial spaces
• Clusters of innovation
• Regional innovation system

6
Territorial innovation models
Source Moulaert-Sekia, 2003
7
Main features of the Innovative milieu model

• The co-operative organisation based on
  interaction constitute the core of innovative
  milieu the firm is not an isolated innovative
  agent, but part of a milieu with an innovative
  capacity
• Strong emphasis on the relationships between
  firms and their environment
• Three functional spaces of the firm
  production, market and support space It is the
  support space that empowers firms to face
  uncertainty
• The innovative capacity of the different members
  of the milieu depends on their capacity of
  learning

8
Main features of the Industrial district model

• An industrial district is a geographically
  localised productive system, based on a strong
  local division of labour among agents specialised
  in different steps in the production (e.g.
  supplier relations) and distribution cycle of an
  industrial sector
• It refers to Marshalls analysis (1920) of the
  advantages of localised systems
• The innovative capacity of SMEs belonging to the
  same industry and local space
• Multiple relationships between firms/local
  community based on trust and reciprocity
• Traditions, historical and socio-economic factors
  are crucial to the success of a district

9
Main features of New industrial spaces

• It combines insights from the literature on
  industrial districts, flexible production systems
  and local community dynamics (Storper and Scott)
• It links the efficiency of the flexible
  productions systems to local agglomeration of a
  selected set of producers enabling them to reduce
  the spatially-dependent costs of external
  transactions
• It involves more than agglomerated production
  systems, but also a social regulation system
  providing
• The coordination of inter-firm transactions and
  the dynamics of entrepreneurial activity
• The organisation of local labour markets
• The dynamics of community formation

10
Main features of Clusters of innovation

• An industry cluster is a geographical
  concentration of industries that gain performance
  advantages through co-location
• Porter deals with the competitive advantages of
  clustering for industries by distinguishing
  vertical and horizontal clusters. 
• Vertical clusters are made up of industries that
  are linked through buyer-seller relationships 
• Horizontal clusters include industries which
  might share a common market for the end products,
  use a common technology or labour force skills,
  or require similar natural resources

11
Main features of the Regional innovation systems

• Strong role of collective learning, deep
  cooperative relationships between members of the
  system
• Key ideas
• Proximity enables face-to-face interaction (F2F)
• Face to face interaction (F2F) creates
  interactive learning
• Interactive learning leads to innovation
• Innovation enhances competitiveness
• Competitiveness enhances agglomeration
• Linking of the knowledgecreation (i.e.
  universities, public research centres) and
  knowledge utilisation spheres

12
Key elements of a regional Innovation system

• Infrastructure of RD institutions in the region
• Internal and external networks of relationships
  between public RD institutions and private
  actors
• Supply and demand side of the process
• Supply side includes the institutional sources of
  knowledge creation
• Demand side includes the private firms that
  absorb and use scientific and technological
  knowledge
• Innovation support organizations that bridge the
  gap between the two
• Technology brokers and technology transfer
  centres
• Organizations in the PSE sector to facilitate
  knowledge transfer
• Outreach from public research labs
• Venture capital firms

13
From NIS to RIS

• Shift in focus from the national to the regional
  level
• Recognition that spatial proximity facilitates
  the sharing of tacit knowledge and capacity for
  localized learning
• Firms clustered in a region share a common
  regional culture that facilitates learning
• Localized learning is facilitated by a common set
  of regional institutions
• Regional Innovation System
• The set of economic, political and institutional
  relationships occurring in a given geographic
  area which generates a collective rapid diffusion
  of knowledge and best practice.
• (Source Nauwelaers C.-Reid A. Innovative
  regions? A comparative review of methods of
  evaluating regional innovation potential. 1995)

14
Current context of systemic approach of innovation

• Innovation system theory has to do with process
  of knowledge conversion
• Knowledge creation, utilization, diffusion,
  destruction and recombination
• The general concept of innovation systems is
  under fire
• Is there such a thing as an innovation system? Is
  innovation system just a fancy word, with no
  theoretical foundation?
• How can innovation system theory actually guide
  policies?
• Not systems, but firms innovate!

15
PART 2 Key aspects of European regional
innovation policies
16
National convergence and regional divergence in
Europe

• Wide disparities after the enlargement (GDP per
  capita ranging from 189 in the top 10 regions,
  to only 36in the least prosperous ones (2002
  data).
• The fall of disparities has been more rapid
  between countries than between regions with
  internal regional disparities in several Member
  States increasing
• Core super regions in Europe
• Top 10 regions GDP per capita London, Brussels,
  Hamburg, Luxembourg, Paris, Vienna, Upper
  Bavaria, Darmstadt, Utrecht, Bremen
• RD activities are highly concentrated 28
  regions account for more than half of the EU RD
  spending

17
Relation of GDP per capita and public/private RD
expenditures in top performing EU15 regions
Source own calculation
18
Shift of regional GDP and RD intensity in top
performing EU regions, 1995-2001
Source own calculation
19
Top 15 European regions in RD development and
annual growth rates between 1998-2002
Source Statistics in Focus 2005/6, Eurostat
20
The importance of the regional level

• Innovation is a local phenomenon the
  translation of research results into economic
  value happens at regional/local level
• Co-operation and networking is most effective at
  a regional/local level
• Regional policy-makers are best placed to create
  a business environment that is conducive to
  innovation
• Responsibility for RD and infrastructure for
  higher education and research
• Strategic thinking and strategy development

21
Knowledge vs. cost-based competition

• Innovative regions compete on a knowledge-based
  advantage not on a cost-based one
• For high value-added activities, proximity to
  major urban centres still important although
  location within them may be less important
• For lower-value added manufacturing or more
  routine services, some decentralisation is taking
  place, e.g. to rural and peripheral regions, of
  tasks which are
• standardised, clearly structured, modular,
  routine and with a low level of complexity
• easy to coordinate over distance, have little
  need for personal contact and easy to separate in
  organisational terms

Source J. Millard, 2003
22
Objectives of European regional policies

• Promotion of innovation building on intangibles
  versus regional policies focusing on physical
  infrastructures
• Tap under-utilised regional innovation potential
• Consolidate and attract a pool of talents
• Integrated territorial policy versus a narrow
  sectoral approach
• Innovation policy of proximity which targets
  SMEs in particular
• Bring businesses into networks where they can
  co-operate
• Facilitate access to sources of knowledge and
  technology

Source M. Landabaso, 2003
23
Main initiatives at European level

• Over the last decade, Structural Funds and RTD
  Framework Programmes helped regions with
  initiatives that focused on
• Analysis/assessment/monitoring
• Priority setting/strategy development
• STRIDE to strengthen RTD capacity in less
  favoured EU regions
• RTP to promote innovation at regional level
• RITTS projects designed to evaluate, develop and
  optimize regional infrastructure and policies and
  strategies for supporting innovation and
  technology transfer
• RIS projects designed to create partnerships
  among key actors in a region with a view to
  defining an innovation strategy for the region in
  the context of regional development policy

24
Innovating Regions in Europe

• 120 regions have used the RIS/RITTS methodology
• 34 next generation RIS projects launched
  recently
• 177 regions in the EU as a whole
• 11 Trans-Regional Innovation Projects
• 14 IRE Thematic Networks

25
A framework for evaluating policy impact
Source A. Reid, 2005
26
Evaluations of RTP/RIS/RITTS (1)

• Positive impacts at least in four areas
• Encouraged a much-needed move towards strategic
  thinking for innovation-oriented regional
  development
• Offered mechanisms and incentives to create
  regional dialogue in geographically,
  institutionally or culturally fragmented regions
  
• Promoted the development of a concept of
  innovation broader than linear technology
  transfer, and helped to raise this higher on the
  policy agenda
• Assisted many regions to clarify the components
  of their innovation support infrastructures, and
  to develop actions to rationalise them and
  augment their visibility
• (Source European Commission, 2001)

27
Evaluations of RTP/RIS/RITTS (2)

• BUT
• Little has been achieved in supporting
  strategic innovation
• Limited attention has been paid to the
  development of breakthrough innovation

28
Recent policy impulses

• The Lisbon roadmap Europe should become the most
  competitive and dynamic knowledge based economy
  and society in the world by 2010
• Sustainable development, together with
  quantitative and qualitative improvement in
  employment greater social cohesion improvement
  of the labour market better governance
  life-long learning and people mobility
• The Communication Investing in Research an
  Action Plan for Europe adopted 30 April 2003,
  providing a specific and coherent framework for
  action at national, regional and European level
  focusing on the 3 Barcelona objective
• The Communication on the Role of Universities in
  the Europe of knowledge (2003)
• Re-launch of the Lisbon strategy A partnership
  for growth and employment (Spring European
  Council, 22-23 March 2005)

29
Community funds

• Three main sources of funding
• Structural Funds are the main EU funding source
  of the Lisbon process i.e. Priority 2 for
  Innovation and competitiveness
• Research FP7 e.g. Regions of knowledge to
  develop research driven clusters
• A proposed new instrument to support innovation
  policy Competitiveness and Innovation Programme
  (CIP) 2007-2013

30
PART 3 Main results of a pilot analysis on the
regional dimensions of the 3 Action Plan
31
The project

• A pilot study based on a sample of 15 regional
  case studies
• Analysis of the specific role played by regions
  in research policy, and in contributing to the
  Barcelona objective of reaching the 3 target
• Assessment of 5 key issues relevant for RTD
  policy
• Competence of the region in RTD policy and
  linkages/complementarities with national level
• Governance of RTD policy within the region
• Policy intelligence in RTD policy-making at
  regional level
• The policy mix in place in the region
• Role of economic context and research
  capabilities

32
Main conclusions (1)

• Economic context and the specialisation of the
  industrial fabric play the major role to
  contribute to the 3 Objective at EU level
• Private investors are, and probably will remain
  the most important source of RD funding in
  Europe
• The structure of a regions industry and services
  is evolving slowly, and therefore regions with an
  unfavorable sectoral situation have to deal with
  inertia
• Clustering activities, emphasizing regional and
  sectoral specialisation, are found to be a strong
  feature of innovation development

33
Main conclusions (2)

• The Lisbon Objectives have been explicitly taken
  into account only in a few regional RTD policy
  strategies
• Only a limited number of regional governments
  actually play a significant role in RTD policy
  design (e.g. in Wallonia and Trento in our
  sample)
• There is no obvious correlation between the level
  of competences in RTD policy, and overall RTD
  performance at regional level
• In many countries, (especially in the new members
  states) the regional dimension of RTD
  policy-making is an integral part of the overall
  national effort towards the Barcelona objective

34
Main conclusions (3)

• Regional and national RTD policies are highly
  complementary
• National RTD policies are the major public source
  of founding for knowledge creation
• Regional RTD policies mainly focus on creating
  linkages, facilitating diffusion and increasing
  absorptive capacities
• For regional policy-makers the challenge is to
  identify the regional profile, develop
  priorities, and synergies with other levels of
  policy-making

35

• Thank you for your attention!
• Contact
• Dr Tibor Dory
• Support to the European Research Area (SERA) Unit
• DG JRC Institute for Prospective Technological
  Studies (IPTS)
• Edificio EXPO, C/ Inca Garcilaso, s/n
• E - 41092 Seville - Spain
• Tel [phone] Fax [phone]
• email tibor.dory_at_cec.eu.int www.jrc.es