ICT and the

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ICT and the new regional economy

• Luc SoeteMERIT-Infonomics University of
  Maastricht
• http//www.infonomics.nl
• Think-In on Dublin in the Knowledge/Digital
  Age-Creating the Worlds Most Intelligent City,
  Department of Taoiseach, June 21st, Dublin.

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Outline

• The Digital/Knowledge Economy
• The Systemic Features of Knowledge Creation and
  Diffusion
• The Local/Regional Growth patterns in Europe
• The Impact of ICT on regional/local development

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1.The emerging digital/knowledge economy

• As the industrial society came about when
  machines started to produce machines (Marx) so
  the knowledge society emerges when knowledge is
  used to produce knowledge.
• From IT to ICT also a communication revolution
  contrary to electricity the sending of
  information does not involve significant energy
  loss. Hence distance becomes irrelevant (death of
  distance).
• Mobile digital communication removes effectively
  the last physical geographical barrier. New
  Marshall any place, any where, information and
  communication is in the air.

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A. Output Growth Impact of ICT

• Traditional/standard growth impacts
• Growth in geographical tradability of goods and
  in particular services
• Growth in possibilities of versioning of goods
  and services
• Increase in time valuation (e.G. Contingency
  pricing/ contracts, importance time zones)
• Underestimation of
• Substitution-effects (sailing-ship effect)
• Appropriation problems (security)
• Dependence on market volatility

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B. Digital Transparency

• Traditional/standard effects
• ICT a logistic/distribution-revolution, reduction
  in transaction costs
• Renewed importance of open versus closed
  standards
• Impact inversely correlated with product
  homogeneity
• Underestimation of
• Search costs (information asymmetry)
• Need for standard specifications
• Importance of physical trust relationships in
  distribution

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C. Digitalisation of Factor Markets

• Capital
• Globalization, speed, arbitrage should all lead
  to stronger growth convergence, but also
• Lemmings-attitudes, volatility, increased
  financial risks
• Labour
• Lower frictional unemployment, improved
  connectivity with labour market, but also
• Reduced incentives for investments in human
  capital and training, too high mobility, global
  migration pressures

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D. Impact of ICT on Knowledge Production

• Increase in productivity of RD?
• Thanks to the increase in the codification of
  knowledge and of digital transparency/communicatio
  n between researchers
• Increase in diffusion of knowledge
• Thanks to digital access/transparency
• Increase in rate of return to learning thanks
  to digital education forms, distant learning,
  versioning

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2. On the Systemic Features of Knowledge and
Innovation

• National systems of innovation
• Need for a systemic view on innovation
• Illustrates the intrinsic limits of focusing on
  one or two specific technology targets such as
  RD (Barcelona summit)
• Systemic or intelligent benchmarking, but how?
• Applicable at regional level taking into account
  external relationships

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RD Intensity and Labour Productivity Growth
RD intensity and labour productivity growth
3,00
SU
2,50
JP
2,00
US
BERD / GDP, 1995
GE
1,50
FL
FR
UK
NL
1,00
BE
EU
AT
DK
IR
IT
0,50
ES
GR
PT
0,00
-0,50
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
Annual growth of labour productivity, 1995-2000
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Systemic Benchmarking an Example

• 4 concepts emerge as particularly relevant for a
  countrys competitiveness and sustainable
  employment
• social and human capital
• research capacity
• technological and power to innovate performance
• absorptive capacity

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SOCIAL HUMAN CAPITAL

• SUPPLY

• USERS

ABSORTION CAPACITY
RESEARCH CAPACITY

• DEMAND

• CREATORS

TECH. INNOVAT. PERFORMANCE
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SOCIAL HUMAN CAPITAL
ABSORTION CAPACITY
RESEARCH CAPACITY
TECH. INNOVAT. PERFORMANCE
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SOCIAL HUMAN CAPITAL
RESEARCH CAPACITY
ABSORPTION CAPACITY
TECH. INNOVAT. PERFORMANCE
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Construction of the BIAS
1
BIAS
A(1 - 2)
AB
A
B
2
B(4 - 3)
3
4
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• "BIASES" in N.S.I.

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• "BIASES" in N.S.I.

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3. About Regional Clusters

• A geographical concentration of interlinked firms
  and institutions in a particular technological
  area membership within the group seems to be
  significant for each member firms individual
  competitiveness
• Overwhelming emphasis in regional science and
  economic geography on the new (rather old)
  agglomeration effects, strong doubts as to the
  decentralisation impacts of ICT

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Source M. Porter
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The Regional Knowledge Landscape in Europe

• existence of research/knowledge/innovation
  policies at regional level in Europe
  diversified or fragmented as one prefers to take
  a positive or negative view with universities,
  businesses, local authorities generally involved
• strong concentration particularly in small
  countries Europe effectively a mosaic of
  regional growth poles with a network of the
  so-called motor-regions Baden-Württemberg (D),
  Rhône-Alpes (F), Lombardia (I) and Catalonia (E)
• are there new developments beyond this rather
  old knowledge European archipelagio? Regional
  growth centres in Finland, Sweden, Ireland
  Implications of ERA..

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RTD Regional Expenditure in the EU

• Source EUROSTAT 13/03/02

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High-tech patent applications per million of
active population (y 2000)

• Source EUROSTAT 13/03/02

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Regional R/D Intensity as a share of national
expenditure (the 2 champion regions per country)

• GER - Oberbayern (14) Stuttgart (12) 26
• GR - Attiki (49) Kentriki Makedonia (18)
  67
• ESP - Madrid (32) Catalonia (23) 55
• FR - Ile de France (45) Rhône-Alpes (10)
  55
• IT - Lombardia (24) Lazio (19) 43
• NL - Zuid-Holland (25) Noord-Brabant (18)
  43
• AU - Wien (52) Steiermark (14) 66
• P - Lisboa (54) Norte (21) 75
• FIN - Uusimaa(47) Etelä-Suomi (30) 77
• UK - South East (24) Eastern (18) 42
• (source Eurostat - March 2002)

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4. ICT impact on regional/local development

• As a complementary cluster of technologies or
  rather as substitution
• Focus on distribution and consumption rather than
  just production
• Shift from typical post-war space and time
  extensive development towards space and time
  saving thanks to use of ICT?
• Case of Dublin (MUTEIS project on the FINS)