Innovation and Competitiveness clusters Policy in France

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Innovation and Competitiveness clusters Policyin
France

• Thierry VAUTRIN
• Mexico, March 6th 2009

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French industrial situation
Too small number of SMEs Too large proportion of
very small enterprises (more than 85 of
companies have less than 10 people) low
specialization of industry small and medium
enterprises (less than 500 staff) are
representing only 16 (2004) of industrial
research expenses Strategic positioning To
fight against low wages countries, the solution
is to increase competitiveness of the economy by
promoting breakdown technologies, therefore to
encourage innovation.
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French industrial situation
The aim increase research and development
expenses in companies in order to reach the
Lisbon agenda objectives 3 GDP for RD in
2010. But French SMEs are underperforming
regarding their European competitors 19,7
of French SMEs are investing in RD in house (32
in Germany and 30 in Sweden) 35,9 of
French SMEs are investing in non technologic
innovation (53,9 in Germany and 44 in
Sweden). To increase the industrial RD expenses
is mandatory Lisbon objective 3 of GDP in
2010 , French situation 2,11 (European
Innovation Scoreboard 2007) French Private
expenses in RD are too small ( 1,32 of GDP,
vs1,76 in Germany, 1,87 in the States et 2,40
in Japan) 0,1 increase in RD intensity leads
to the creation of 0,3 to 0,4 growth points
regarding the GDP per capita   (European
commission, 2005)
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The tools for a performing innovation policy

• The innovation policy is a mix of
• tax relieve measures for innovative enterprises
  and investors
• direct financing for projects
• involvement of all level of public authorities
  the central government, the regional
  authorities,

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Tax measures a main reform the research tax
credit (CIR)

• CIR is a tax rebate for companies investing in
  RD, with the objective to increase the private
  RD expenses
• Benefit of reduction of 30 of their expenses up
  to 100 millions euro, 5 after this threshold
• For companies investing for the first time in
  RD, the level of rebate is upgraded to 50 the
  first year of application, 40 the second year.
• The reimbursement can be immediate (and non
  during the year following the expenses) if
  companies are considered as young innovative
  enterprises or growing companies (more than 15
  growth/year)
• In 2005, 5400 companies, investing 13.5 billion
  euro in RD were benefiting of the scheme, for a
  public cost of 981 million euro.
• 40 of this amount was dedicated to companies of
  less than 50 staff
• For the coming years the estimate cost of the
  scheme is 3 billion euro/year.

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Performing measures for SMEs the young
innovative enterprise and the young university
enterprise status

• The young innovative enterprise status
• 5 criteria of which less than 8 years old,
  more than 15 of total expenses dedicated to RD
• Advantages Tax rebates
• Exemptions of social contributions for the
  employees taking part in research
• A significant result (2006) 1700 companies,
  staff concerned 9600
• budgetary cost for the State 110 million euro
• The Young university enterprise status
• own for more than 10 by a student or a searcher,
  
• for the valorization of research works of high
  grade education bodies (universities, high
  schools)
• the JEU is benefiting the same advantages than
  the JEI
• The scheme started in January 2008

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Direct financing the new OSEO Agency

• January 2008 merging between two agencies AII
  and OSEO
• to give a new impulse to RD in high potential
  SMEs and allow the creation of more intermediate
  enterprises (staff between 250 and 5000) in
  breakdown technologies sectors,
• To promote the partnership in innovation projects
• To simplify the innovation financing frame, with
  a single financing point
• To offer companies an unique interlocutor all
  along their life
• A new unit has been created within OSEO
  Innovation
• Dedicated to cooperative projects
• For aid amount of up to 10 million Euros
• This unit is in charge of managing, since the
  beginning of 2009, the financing of poles de
  compétitivité projects
• The industrial strategic innovation (ISI) scheme
  allows to focus on collaborative projects
  concerning the more risky innovation

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The National Research Agency
Under the responsibility of the ministry in
charge of research from a structural to a
project based research financing The scope to
finance research projects from the scientific
community, on the basis of call for tenders and
with a peer evaluation of the projects A
particular focus is put on private-public
partnership and involvement of enterprises in the
projects, with an objective of technology
transfer and valorization of public research by
the companies. Some figures 2005 2006 2007 Num
ber of projects 1 400 1 622 1
430 selectivity 27 25 25 Financing
amounts (ME) 539 621 607 of SMEs 8,2 7,8
7,4 of large companies 9,2 9,9 7,7
Number of poles projects 330 242 282 Amount
for poles projects 199 175 191
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• THE COMPETITIVENESS CLUSTER POLICY

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Policy basis

• The premises of a new industrial policy the
  Aglietta-Boyer report (1982)
• Networking and transactional capacity is
  replacing isolated actors and informational
  capacity
• Competitiveness clusters are at the crossroad of
  scale economies, experience effects, diffusion of
  information on all the value chain, and new
  products creation
• The Christian Blanc Report and DATA report (2004)
• Horizontal cooperation can improve innovation
  ecosystem
• Local level of development is essantial
• University should be an essential player in RD,
  not only national public labs
• RD support should be given on the basis of
  competition calls
• Private financing should play a role in the
  development of innovation
• Networks of companies and public research bodies
  are the key conditions for success

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Policy basis

• The benchmark
• theoretical analysis Porter, but also
  Becattini
• models in the US (Silicon Valley and others),
  but also in Scandinavia, Canada, Italy
• the value of a cluster is due to networking
  effects and has to be greater than the sum of
  members value
• 4 elements are favorising clusters
  competitiveness
• complete ecosystem
• competition to stimulate members
• good quality resources (skills and competences)
• good quality local market
• the need and type of public policy depends on
  national situation

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Policy aims

• Identifying high-potential clusters and focus
  public aids on them
• avoiding scattering of public subsidies
• Strengthening the link between research
  industry
• promoting industry-driven research programs
• developing the triple helix relationship
  between firms, research centres and higher
  education institutions
• Developing a full ecosystem
• Education, private financing (business angels,
  VC,) IP management, entrepreneurship,
  international development

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What are they
A competitiveness cluster is a gathering of
firms, research centres higher education
institutions, working on joint projects (mainly
RD projects) with a dedicated governance body
(non-profit organization), and with dedicated
public oversight bodies All  clusters  are
different different strategies - different
priorities (outside RD) different organisations
(1 to 10 dedicated staff) ...but they all have
to define an innovation and development
strategy, and implement a road-map to
achieve it favour SMEs development Other
priorities, depending on the cluster education-
Recruitment - international partnerships -service
delivery toward SMEs...growth financing,
Priorities must depend on the strategy !
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Key factors of success

• Involvement of firms (as opposed to involvement
  of public authorities or to involvement of public
  research centres)
• Public authorities have to help and support, but
  not decide
• e.g. the cluster strategy must be decided by the
  cluster governance (i.e. firms)
• Each cluster needs a specific support policy (at
  local level)
• i.e. no  one size fits all  !
• All local innovation services must be
  cluster-oriented
• i.e. it may request changing pre-existing
  organizations approach
• The cluster policy must be enforced in the
  long-term
• e.g. time-to-market in RD projects is a least 2
  to 3 years
• cluster policy needs 5-10 years to get a strong
  impact

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The launch of the policy

• Criteria used
• Industrial concentration
• Presence of technological industrial leaders
• Existence of a value chain ecosystem
• Strength of the RD in the cluster ecosystem
  number of searchers (both private and public) is
  a key criteria for classification as global
  clusters
• Numbers of key technologies targeted
• Need of global strategy
• Real networking effect is mandatory

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The launch of the policy

• 2. Ongoing observation (1)
• An annual scoreboard
• Managed by public statisticians in dialogue with
  policy makers and clusters representatives
• The choice of indicators is driven by the nature
  of the policy, i.e. focused on labeled innovation
  projects.
• Clusters are required to fulfill every year
• - the list of their members (establishments of
  companies, research centers and educational
  institutions)
• - some indicators

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The launch of the policy

• 2. Ongoing observation (2) The scoreboard is
  published on the Web
• It characterizes
• - each cluster and its members
• - the aggregate set of these clusters
• IT is still limited to one year of observation,
  but data on first evolutions will be added soon
• At end of 2006 (for 66 clusters)
• - 5000 locations of companies, of which 4000
  SMEs
• - 640.000 employees (3 of French employment)
• - Over representation of industry (11 of French
  industrial employment) and of technology
  intensive industries

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Competitiveness cluster funding (2006-2008)

• Financed by
• French government (Single Interministerial Fund)
  830 million
• Agencies (ANR, OSEO-AII) and Caisse des depots
  520 million
• Tax breaks 160 million
• Local authorities 500 million
• Total 1,500 million

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Pôles 2.0 the second stage of the policy
End of 2007 and early 2008 national evaluation
conducted by Boston Consulting Group and CM
International. Evaluation of both the global
policy and each cluster individually Methodology
of evaluation of public policy Dedicated
means Consistency with other public policies (RD
and innovation) Clusters selection
process Financing support processes Policy
management at national and local levels Synergy
between actors First effects on local actors
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Pôles 2.0 the second stage of the policy
Evaluation of each competitiveness cluster - 7
points of scope Economic and international
strategy Cluster government and animation,
evolution of the cluster population RD projects
and firms-public research-training
synergy Territorial settlement and network
strengthening, structural projects SMEs
integration and new enterprises creation Human
resources training Green development approach
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Pôles 2.0 the second stage of the policy
The main conclusions of the evaluation At the
global policy level Policy aims are validated The
competitiveness clusters policy is recognized as
successful Number of competitiveness clusters
have created, during the first phase a dynamics
of cooperation between actors of innovation
(Enterprises, Research Centers, University) At
the clusters level 39 clusters are fully in line
with the aim of the policy 19 clusters have to
improve some aspects of their operations to
fulfill the objectives of the policy 13 clusters
need a large reconfiguration of their action in
order to fulfill the objectives of the policy.
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Pôles 2.0 the second stage of the policy
Launched by president Sarkozy on 26th June 2008
(the Limoges Speech) A new 3 years period
(2009-2011) for growth of the clusters and to
achieve world class clusters Financing by the
state for innovation projects 1.5 billion Euros
for the 3 years period A stress on private
financing involvement in the innovation process
managed by the clusters A stress put on SMEs
involvement in clusters A strengthening of
contract based relationship between clusters and
public authorities Strategic roadmaps Developmen
t of a competitive ecosystem Contract of
objectives (to be negotiated before end of march
2009 and signed before the end of June 2009)
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Where are they
The 71 Competitiveness Clusters in France. 17 are
global 54 are national
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Competitiveness clusters by economic sector

• 16 economic sectors
• biotechnology 7
• health and nutrition 2
• cars and railways 4
• energy propulsion 5
• aerospace and aviation 3
• chemistry and platics 2
• agriculture food processing horse industry
  14
• household and personal good 4
• electronics telecom 5
• financial industry 1
• textiles materials 7
• marine technology 2
• industrial processes risk management networks
  4
• multimedia 3D imaging 4
• logistics mobility 4
• mechanics microtechnology 3

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Fore more information on french Competitiveness
clusters


www.competitivite.gouv.fr Thierry.vautrin_at_fina
nces.gouv.fr Thank you for your attention