The quantitive impact of policies on regional innovation and development

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The quantitive impact of policies on regional
innovation and development

• MLP Workshop
• Benchmarking for better regional innovation
  policies
• Brussels, 25 November 2005

Christoph Koellreuter, Managing Director and
Chief Economist, BAK Basel Economics Marc Bros de
Puechredon, Head of Marketing Communication,
BAK Basel Economics
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Contents of the presentation

• Facing globalisationinnovation friendly
  framework conditions at the regional level a must
• Political success factors of regional innovation
  and growth
• BAK research program Policies and Regional
  Economic Growth
• BAK regional performance and policy variables
  databases
• BAK services

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1. Facing globalisation innovation friendly
framework conditions at the regional level a must

• Continuous product and process innovation the
  only successful way of high wage economies to
  meet the challenge of low cost competitors
• Innovation activity takes place where there
  is a spatial concentration of companies
• of the same and related industries (clusters)
• High private productivity i.e.
  internalisation of cluster specific externalities
  
• only if dividuals and companies are based in
  the region
• Conclusion policies have to focus on
  maintaining and / or improving
• innovation friendly framework conditions at the
  regional level
• Region economic region in the sense of an
  innovation, labour market
• or functional urban region

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2. Political success factors of regional
innovation and growth

• Innovation resources
• - Expenditures on education, research and
  development
• - Incentives for researchers, professors,
  teachers and students to excel in research,
  teaching, learning and know-how transfer
• Incentives for entrepreneurs, managers and
  employees
• - Regulation of product and labour markets
• - Taxation of companies and highly qualified
  manpower
• Accessibility of regions
• Optimal decentralisation and spatial congruence
  of political and economic regions

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3. BAK research program Policies and Regional
Economic Growth

• Objective Quantitative assessment of the
  impact of policies on economic growth,
• productivity, employment and population growth
  at the regional level as an input
• into regional and national policy making
• Start fall 2003
• Major focus until fall 2005 modelling of
  productivity
• Research plan for 2006 modelling growth of
  employment, GDP and resident population
• Research guidance by BAKs Scientific Advisory
  Board
• - Prof. Dr. Paul Cheshire, London School of
  Economics
• - Prof. Dr. Juan Cuadrado-Roura, Universidad
  de Alcalá, Madrid
• - Prof. Dr. Bart van Ark, Groningen
  University, The Netherlands
• - Prof. Dr. Regina Riphahn, Universität
  Nürnberg-Erlangen, Germany
• - Prof. emeritus Dr. René Frey, University of
  Basel, Switzerland

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The quantitive impact of policy variables on
regional economic growth The BAK analytical
concept
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BAK Research Program Work done up to Fall 2005

• Modelling of productivity growth as determined
  by
• - innovation resources secondary and tertiary
  education, RD
• - regulation of product and labour markets
• - taxation of companies and highly qualified
  manpower
• - global and continental (European)
  accessibility
• - industry structures, country effects
• Dataset used Annual data 1980 up to 2003 for
  around 130 regions (NUTS 1/NUTS 2
• levels) from the following countries D, UK, A,
  CH, B, NL, LUX, S, DK, Finnland, N, Ireland,
  Northern Italy, Eastern/South Eastern France,
  Ile-de-France, Cataluña, Madrid
• Econometrics
• - panel data methods
• - statistical and economic testing
• - Granger causality
• - lag structures

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Preliminary research results Fall 2005 Impact
of policy variables on productivity
growth1990-2003, cummulative, best vs. worst
region
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BAK research programme 2005/2006

• Model extension
• Integration of the labour market
  (participation, population)
• Geographical extension
• Additional regions, particularly US-American
  (all 50 federal states)
• Data extension
• - Further innovation indicators
• - Quality of life indicators
• - Structure of government indicators of
  political fragmentation and the degree
• of centralization / decentralization
• Industry specific analyses
• Life sciences, financial centres, capital goods
  and tourism

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4. BAK regional performance and policy variables
databases

• Exclusive databases
• - Performance more differentiated with
  respect to regions and regional industries
• as well as more up-to-date than official
  statistics
• (Switzerland BAK Basel Economics is the only
  supplier of these data,
• no official source available)
• - Policy variables generally in cooperation
  with renowned institutions in Europe
• - Very specific performance and policy
  variables databases for a limited set of
• technology and life sciences locations,
  financial centres
• and tourism destinations

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BAK Performance Database
Regions Industries Variables of economic
performance of national/ regional economies as
well as the 60 industries Variables of the
performance of the environment and society
400 regions in 18 EU-countries, Switzerland,
Norway, United States and Japan at the NUTS 1
and 2 level for the Extended European Alpine
space (Southeast and Eastern France,
Baden-Württemberg, Bavaria, Austria, Northern
Italy and Switzerland) generally also at the NUTS
3 level 2006 inclusion of the 50 States of the
USA 60 industries in the above mentioned 400
regions Gross value added at current, constant
prices as well as industry specific purchasing
power parities, employment, hours worked, output
per man hour, labour cost and unit labour
cost for regions in the Extended Alpine Space
as a part of project MARS Monitoring the Alpine
Regions Sustainability led by the Lead Partner
BAK Basel Economics in the framework of the
Interreg IIIB programme Alpine Space of the
European Commission
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BAK Policy Variables Database
Policy area INNOVATION Education, science and
technology policy Indicators Innovation
resources - Expenditure on research and
development as percent of regional GDP - Sum
of scores of Shanghai Index of the research
quality of the 500 best universities in the
world - Part of employment with tertiary
education (total and by industry) - Part of
employment with secondary education (total and by
industry) Innovation processes - Patents
(total and by industry) - Bibliometric
indicators (total and by research field) -
Company start-ups (total and by
industry) Coverage (fall 2005) 140 regions in
21 countries Partner institute ISI Fraunhofer
Institut, Karlsruhe
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BAK Policy Variables Database
Policy area TAXATION Fiscal and social
policy Indicators Tax burden of companies and
highly qualified manpower Coverage (fall
2005) 65 regions in 21 countries Partner
institute ZEW Center for European Economic
Research, Mannheim Policy area
REGULATIONS Regulatory policies Indicators OE
CD Regulation Indices for product and labour
markets backward and forward extrapolation
with the CATO Indices for Economic
Freedom Coverage (fall 2005) 21
countries Policy area ACCESSIBILITY Transport
and infrastructure policy Indicators Indicators
of global and continental (European)
accessibility Coverage (fall 2005) 250 regions
in 21 countries Partner Institute IVT Institute
for Transport Planning and Systems of ETH
Federal Polytechnical Institute, Zürich
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5. BAK Services

• Access to the exclusive performance and policy
  variables databases
• of BAK Basel Economics
• Annual Forum in June Presentation of seminal
  papers relating to issues
• of regional competitiveness based on the most
  recent research
• of BAK Basel Economics in depth discussion in
  workshops with representatives of national
  governments and businesses
• Elaboration and presentation of focused reports
  ordered by interested regions

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5. BAK Services

• Used by whom?
• - Representatives of public bodies at the
  national, regional, sub regional level
• as well as industry associations, companies
  and other parties interested in influencing
  policy decisions at the regional and national
  level
• - Last but not least citizens of regions and
  countries
• Used for what?
• - SWOT analyses
• - Elaboration and evaluation of regional
  visions and strategies
• - Introduction of more objectivity into the
  discussion of location and
• competitiveness related issues
• - As an input into lobbying of the region at
  the upper level government
• WHAT GETS MEASURED GETS DONE !