Mario Pezzini Trends seen with traditional glasses Growth

Mario Pezzini

Trends seen with traditional glasses

Growth in OECD regions dwarfed by growth in (some) Asian regions Shanghai aims to increase R&D intensity to 3. 3% by 2020…

The Nature of Innovation Concentration of Innovation Patent applications per million inhabitants (2005) Research-intensive innovation remains highly concentrated

330 Etela-Suomi-FIN 381 Stockholm-SWE 537 Ostschweiz-CHE 360 Hovedstadsreg. -DNK 390 Baden-Wuertt. -DEU 527 Zuid-Nederland-NLD 273 Kanto-JPN 438 Massachusetts-USA 269 Vorarlberg-AUT 214 Trøndelag-NOR 170 Chungcheong Reg. -KOR 116 New South Wales-AUS 181 180 Ile De France-FRA Eastern-GBR 105 101 Vlaams Gewest-BEL British Columbia-CAN 69 Bord. , Midl. and W. -IRL 91 Emilia-Romagna-ITA 74 Navarra-ESP 42 30 Central Hungary-HUN Praha-CZE 15 14 20 14 Attiki-GRC Lisboa-PRT Bratislav Kraj-SVK Istanbul-TUR 4 6 Mazowieckie-POL Distrito Federal-MEX 0 Regional value 100 200 300 400 500 Country average Regions with the highest number of patent applications per million population compared to their country average, 2005 Source: OECD Regions at a Glance 2009 600

More than one third of OECD regions have less than 10 patents per million population. These regions tend to invest less in R&D and have lower shares of employment in high Correlation between R&D expenditures and patent applications, 2000 -2005 technology sectors Source: OECD Regions at a Glance 2009

The Nature of Innovation Features related to Innovation Patents per million Average expenditur e on R&D (% of GDP) R&D shares by sector: Public-Private (%) Average employment in high technology sectors (%) Regions that experience higher levels of patenting activity are doing so through: 0 -10 0. 57 60 - 40 23. 3 10 -50 1. 57 50 - 50 28. 5 50 -250 1. 63 40 - 60 37. 5 250 + 2. 41 25 - 75 43. 2 • Greater R&D expenditure • Greater involvement of the private sector in innovation projects • Higher employment shares in high-tech sectors

The Nature of Innovation Collaboration for Innovation Patents with co-inventors (2005) Collaboration for innovation is also concentrated in few places.

Patents with at least one co-inventor by residence of the co-inventor, 2005 Source: OECD Regions at a Glance 2009 Correlation between business and non-business patenting activities (pooled 2000 -2004)

What are the results of the analysis on innovation? • If…. – Research-intensive innovation remains highly concentrated – Some regions are catching up (Shanghai 2. 3% R&D/GDP), but many will not …. the future appear uncertain However, regions vary greatly in how they innovate and indicators capture only part of this. There is a changing nature of innovation that reinforces the opportunities for dynamics in all regions

The policy supply

Why adopting a regional approach? • The systems focus serves to identify different kinds of gaps and “failures” for policy intervention – Weaknesses in one part of system limit economic growth – Market failure is not the only problem • National policymakers are struggling with how to incorporate the RIS concept into policy – – What is the most efficient spatial allocation of resources? How are different RIS served by a uniform policy? How to exploit trans-border effects? How to exploit trans-national externalities?

What are the main problems and issues with the RIS approach? • Many regional strategies are not adapted to their context – Not all regions can be Silicon Valley (knowledge-generation leader) – But capacity to absorb knowledge to innovate is needed everywhere • Be careful in producing fashion trends – RIS is frequently a recast science- and research-based approach – Most innovation “principles” are not recognised in supply-driven RIS plans • Respective roles of national, regional and local level unclear – Programme proliferation & duplication creates confusion & waste – Administrative boundaries don’t usually map to an RIS

Regional Innovation Systems Policy family Traditional approach New approach Regional Compensating temporarily for location disadvantages Building competitive regions by bringing together actors and targeting key local assets Science and Technology/ Innovation Financing of individual, single sector projects in basic research Financing of collaborative and multi-sectoral research involving industry and commercialisation Higher Education Focus on teaching role of HEI and on basic research Promoting closer links with industry and joint research; more specialisation among HEIs

Regional Innovation Systems Policy requirements Traditional approach New approach Unit of analysis and intervention • Administrative units • Individual firms and national champions • Functional Strategies Sectoral approaches “anonymous” framework Integrated development projects collaboration among identifiable actors on common needs (consensus building-the exploded elix) Policy tools Subsidies to firms national champions Investments for the local/regional environment Governance Central government Multi-level governance areas • Groups of firms, universities and laboratories

Eppur si muove!

The New Regional Paradigm • EU funds have been allocated following a convergence logic • However, for a group of the relatively richer regions, funds seem to grow as well. 1. Growth period refers to: 1994 -2006 for Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain and the UK; 1995 -2006 for Austria, Finland Sweden; and 2000 -2006 for the Czech Republic, Hungary, Poland the Slovak Republic. 2. Initial year for per capita GDP in the horizontal axis is determined according to the growth period. Source : Own calculations based on DGRegio.

The New Regional Paradigm • While infrastructure is still an important part of EU funds, competitiveness enhancing objectives comprise now more than half of allocations. 1. 2. Business-environment objectives refers to: assisting large business organisations, assisting SMEs and the craft sector and productive environment. Infrastructure refers to: basic infrastructure, energy infrastructure, environmental infrastructure, planning and rehabilitation, social infrastructure and public health, telecom infrastructure and information society, and transport infrastructure. 3. Labour market refers to: human resources, labour market policy, and positive labour market actions for women. 4. Innovation refers to: research, technological development and innovation; technical assistance and innovation actions; and workforce flexibility, entrepreneurial activity, innovation, information and communication technologies. 5. Social refers to social inclusion. 6. Rural refers to promoting the adaptation and the development of rural areas. 7. Tourism refers to tourism. 8. Primary sector refers to agriculture, fisheries and forestry. 9. Education refers to developing educational and vocational training. Source : Own calculations based on DGRegio.

The New Regional Paradigm • Following a convergence logic, funds for infrastructure allocated according to the degree of regional development. • This remains a valid cohesion objective, but can be related also to compensatory regional policies 1. Infrastructure refers to: basic infrastructure, energy infrastructure, environmental infrastructure, planning and rehabilitation, social infrastructure and public health, telecom infrastructure and information society, and transport infrastructure. Source : Own calculations based on DGRegio.

The New Regional Paradigm • In contrast, Regions regardless of their income levels, are supported with funds to develop innovation. • This is in line with the Lisbon Strategy. 1. Innovation refers to: research, technological development and innovation; technical assistance and innovation actions; and workforce flexibility, entrepreneurial activity, innovation, information and communication technologies. Source : Own calculations based on DGRegio.

The New Regional Paradigm • The same applies in allocation of funds for labour markets. 1. Labour market refers to: human resources, labour market policy, and positive labour market actions for women. Source : Own calculations based on DGRegio.

Risks Policy imitation Mere redistribution on equal standards Administrative rather than strategic management Lack of expertise at national and regional level Lack of a conceptual framework

Action Identify comparative advantages Reveal information Group investments Experiment