IRE CONFERENCE

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• IRE CONFERENCE
• Impact Assessment for better governance of
  regional innovation policies
• New regional innovation policy and the
  challenges for EU territorial cohesion
• Mikel Landabaso
• EU Commission Directorate General for Regional
  Policy
• DG Regio G1
• 30 Enero 2008

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• New regional innovation policy and the challenges
  for EU territorial cohesion
• Regional disparities in Innovation capacities in
  the EU
• An emerging conceptual framework for regional
  innovation policies
• New policy developments since mid-90s in European
  Regional Policy
• The importance of Social Capital in
  innovation-driven regional development
• A new opportunity the EU regional policy menu
  for the promotion of innovation 2007-13

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Situation and trends the innovation deficit

• Regions in Scandinavia, Germany, the UK, and the
  Netherlands emerge as the best performers while
  in 86 regions home to a third of the EU
  population, performance is below average

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Lisbon performance of regions
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High-Tech employment and EPO patents applications
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Knowledge infrastructures
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An emerging conceptual framework for regional
innovation policies

• A non-linear, systemic vision of innovation
• Regional systems of innovation, learning regions
• Beyond the standard cluster approach à la
  Porter Clusters are too complex to be generated
  by policy yet policy cannot be hands-off
• An explicit recognition of the public sector role
  in innovation-driven regional development

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New policy developments since mid-90s in European
Regional Policy (1)

• RTP, RIS, RISI, RITTS as experiments in social
  engineering a participative learning-for-policy
  approach
• Innovative Actions (2001, ERDF) from the
  regions response a European policy model
• strengthening regional RTD infrastructures in
  line with innovation business demand
• connecting SMEs to the regional knowledge
  infrastructure
• publicly strenghtened clusters and industrial
  districtis
• 2007-13 Mainstreaming of Innovation Policy
  (Technology Fund)

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New policy developments since the mid 90s in
European Regional Policy (2)

• Innovation Policy in the Political agenda the
  Lisbon Mantra general agreement on the need and
  the diagnosis but how? Who? And where?
• Innovation Policy comes of age on top of
  infrastructures (technology centers, technology
  parks, RD equipment, etc.) venture\risk capital
  and training, a new State Aid Regime (December
  2006)
• Aid for RD projects
• Aid for technical feasibility studies
• Aid for industrial property rights
• Aid for young innovative enterprises
• and also for the revised OSLO Manual
  revolution
• Aid for process and organisational innovation in
  services
• Aid for innovation advisory services and for
  innovation support services
• Aid for innovation clusters
• Aid for the loan of highly qualified personnel

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A territorially-based, systemic approach versus a
narrow high-tech and sectoral approach

• The "Sapir" proposal more money for Research-
  help the best compete globallythe others will
  follow
• The "regional systems approach" more money for
  innovation help tap underutilised potential,
  SMEs in particular, wherever it exists.
• OECD (Conclusions of the Chair, High level
  Meeting, Martigny, Switzerland, July 2003) Both
  global economic growth and social cohesion
  require increasing the competitiveness of
  regions, especially where potential is highest.
  The comparative advantages that drive innovation
  and investment are as much a regional
  characteristic as a national one. For regions to
  succeed, they must harness their own mix of
  assets, skills and ideas to compete in a global
  market and develop unused potential.

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• RD excellence v.s. Regional Innovation
• 219 European regions 8 European regions alone
  accounted for 25 GERD, 31 regions accounted for
  50 of this expenditure, half of all patent
  applications for high technology concentrated in
  just 13 core regions.
• CIS Half of the enterprises in the EUs
  manufacturing sector were innovators, with
  north-south disparities ranging from over 67 in
  Ireland, Denmark, Germany and Austria to less
  than 30 in Spain and Portugal.
• Firms and organisations from Objective 1 regions
  participate in only 14 of all EU RD Framework
  Programme with SMEs receiving less than 15 of
  the total budget
• Finland, Austria, Belgium, France, Denmark and
  Germany give between 2 and 3 times more state aid
  to RD per person employed in manufacturing than
  Spain, and nearly 10 times more than Portugal and
  Greece

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Is the Regional Dimension Important for
Innovation Policy?
to the extent that product and process
innovation is based upon new ideas and that the
creation of new ideas is a social process
involving discussion, then geographical proximity
is important in innovation (Best,
1990). Economic action is embedded in the local
socio-cultural and institutional context
(Lagendijk, 1996). The capacity for developing
human capital and interactions between firms,
is increasingly localised, networks of both
formal and, mainly informal contactstake place
more easily at the regional level synergies, or
an innovative surplus can arise from shared
cultural, psychological or political perspectives
arising from occupancy of a shared space or
region (Lundvall Borras, 1997). it is able to
act on local knowledge, part of which is tacit,
concerning the calibre of firms, the formal and
informal linkages between firms, the quality of
the labour force and the capacity of the
institutions the most appropriate level at which
to build social capital (Morgan Nauwelaers,
1997).  La Commission a donc décidé de mettre
fortement l'accent sur l'innovation régionale
dans les nouveaux programmes de cohésion. Parce
que le niveau régional est le plus adapté pour
prendre des mesures qui favorisent l'innovation.
Il a un atout majeur la proximité des acteurs
chefs d'entreprise, chercheurs, autorités
locales, institutions financières  (J.M.Barroso,
2006).
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• New planning implementation systems
• The public sector as facilitator, broker,
  catalyst.
• provide leadership, rather than control
• promoter and catalyst for economic development
• not to be planned by a enlightened elite using
  a linear procedure (with expensive consultants)
• be amended on a permanent basis (learning by
  doing) pilot experimentation and evaluation,
  taking risks and learning from mistakes.
• have a very wide and multidisciplinary focus and
  permanently improving human capital through
  education and training.
• Such policies cannot be effectively developed
  without building social capital and good regional
  governance
• without the direct participation of the private
  sector in planning and in implementation
• without understanding and approaching the agendas
  of others active RTDI in the region, semi-public
  regional development agencies, technology
  centers, public and private Labs, universities,
  training centers and trade unions.

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The importance of Social Capital in
innovation-driven regional development

• What is social capital?
•  networks together with shared norms, values and
  understandings that facilitate cooperation within
  or among groups  (OCDE 2001)
• the institutions, relationships and norms that
  shape the quality and quantity of a societys
  social interactions  (World Bank 2002)
• Gluing together the triple helix within an
  efficient regional innovation system the
  collective capacity of key socio-economic players
  in a region (business, government, RTDI
  community) to form and effectively use networks
  or other forms of cooperation on the basis of
  shared interest, trust and reciprocity in order
  to enable and accelerate the process of regional
  learning and knowledge-based development
• Why social capital?
• The quality and quantity of social capital have
  become major determinants of innovation
  performance and explain why location matters in
  the global economy since it determines the
  intensity of knowledge spillovers and information
  flows
• Knowledge spillovers arise when actors involved
  in the innovation process, such as universities,
  business and government tie close links leading
  to cross-fertilization and feedback relations
• Social capital is the material of knowledge
  spillovers
• (L. Greunz, 2003)

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• How to build social capital?
• steering committees of regional innovation
  planning exercises might be participated by
  several regional and national ministries
  concerned together with private actors,
• b) there is intensive use of working groups and
  sectoral platforms to identify research and
  technological development needs, capacities and
  priority actions,
• c) regional technology foresight-type exercises
  involving a large number of regional players are
  implemented,
• d) awareness raising and consensus building about
  innovation opportunities and challenges among a
  broad base of regional stakeholders are
  systematically carried out,
• e) a participative evaluation culture which
  allows for continuous policy improvement ensuring
  long term commitment to a common regional agenda
  and vision is developed, etc.

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An opportunity the EU regional policy menu for
the promotion of innovation 2007-13 with a new
economic rationale

• Good regional governance and strengthened
  public-private partnerships at the heart of the
  reform of Cohesion Policy
• A regional approach as a matter of economic
  efficiency in the field of innovation the need
  for territorial proximity in SMEs promotion
• Understand and build upon the potential of every
  region diversity as an asset
• True subsidiarity helping regions help
  themselves

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• Proposed Menu by ERDF Regulation
• Support to the design and implementation of
  regional innovation strategies conducive to
  efficient regional innovation systems
• Enhancing regional RTD and innovation capacities
  directly linked to regional economic development
  objectives by supporting industry or
  technology-specific competence centres by
  promoting technology transfer and by developing
  technology forecasting and international
  benchmarking of innovation promotion policies
• Stimulating innovation in SMEs by promoting
  university-enterprise cooperation networks by
  supporting business networks and clusters of
  SMEs, and by facilitating SMEs access to
  advanced business support services
• Promoting entrepreneurship by facilitating the
  economic exploitation of new ideas, and by
  fostering the creation of new firms from
  universities and existing firms
• Creating new financial instruments and incubation
  facilities conducive to the creation or expansion
  of technology-based firms.

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Cohesion policy helps shifting the policy mix of
public investment towards innovation

• The share of cohesion spending on RD, innovation
  and ICTs has more than doubled between 2000-2006
  and 2007-2013

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• Lessons to be learnt from failures in the design
  of regional innovation strategies within the EU
  1993-2000.
• Regional governments might feel threatened
• by a transparent and inclusive process
  originating from the demand side,
• 2) by analysis showing that regional offer on
  RDi does not correspond to business demand
• 3) by new ideas, which cut across traditional
  power boundaries between Ministries
• 4) by project ideas which are not already in the
  "drawer" of a given Ministry
• Problems of "mainstreaming" good ideas are not
  taken by ERDF managers
• No commitment of regional opinion leaders as well
  as leading entrepreneurs in promoting RDI
• Excessive dependence from external consultants
  appropriation problem for regional players
• Excessive focus on "technological" supply
• A lack of understanding of the regional
  innovation system as an interaction of
  interdependent players, policies and
  institutions
• "Study-oriented" approach vs. "applied-oriented"
  approach credibility for entrepreneurship.

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• Criteria for elaborating successful regional
  innovation strategies
• Promoting regional innovation requires a solid
  political commitment and consensus maintained
  over time and requires substantial long term
  investments (deep pockets).
• The public sector should provide leadership
  rather than control and catalyze economic
  development by promoting new ideas and
  partnerships
• A regional approach which gives priority to the
  "process" and "policy delivery" mechanisms over
  and above short-term results through solid
  public-private partnerships.
• Regional RDI policy should be based on demand
  through understanding of the real business needs
  and regional RDI capacities, in particular
  SMEs.
• Regional RDi policy should try to put theory
  into practice through flagship projects and
  evaluations, taking risks and learning from past
  errors.