Transcript regional innovation policies: challenges and

Regional innovation policies:
opportunities and pitfalls
Elvira Uyarra
Research Fellow, NESTA and Institute
of Innovation research (Manchester
Business School)
regional innovation policies:
challenges and pitfalls
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Introduction
What shapes policy? Explaining rationales
Key pitfalls of regional innovation policies
What can be done? (I): improving
coordination of policy mix
• What can be done? (II): demand-side
measures
• summary
Introduction
• Innovation is becoming more complex
– Globalisation
– Complexity of knowledge basis
– Open innovation
• Innovation policy is also becoming more
complex and also distributed
– Wide range of tools and policies
– Multi-level governance of science and
innovation policies
– Multi-actor participation in science and
innovation policies
What shapes policy?
• Policy as an explicit or implicit theory or basis for action –
“rationale”
• What are rationales?
– theoretical rationales
– Meta (governance) rationales
– policy rationales
• In real policy making, we will find specific blends of
justifications and policy rationales, often in tension with
each other
• Why is this important?
– dominant narrative
– evaluation
– identify contradictions
– Learn from experience
From rationales to policy mixes
Scholarly theory
and concepts
Derived theoretical rationales
Choice of meta rationales
Scholarly research
Derived theoretical rationales
Institutions
Networks
Actors
Resources
Choice of policy rationales
Policy learning
and evaluation
Choice of instruments
Previous
Previous
previous
policy
mixmix
policy
policy
mix
A
B
C
Policy transfer
D
Key
new “policy mix”
Steady influence
on policy design
Intermittent
influence
Learning
Source: Laranja, Uyarra, Flanagan (2007)
Evolution of policy rationales
• Neoclassical rationale (70s-80s)
– Technology treated as information that can be instantly and
evenly diffused
– Policy needs to overcome communication barriers hindering
investment in less favoured regions
– …through investing in communications infrastructure,
providing relocation incentives, etc.
• Endogenous model (80s-90s) technology push
– Knowledge no longer freely available, appropriable and
endogenously generated (R&D investment)
– Policy needs to address disincentives to invest in technology,
leading to a sub-optimal level of technological innovations
(market failure)
– Regions need large R&D infrastructure investment to be able
to innovate and absorb knowledge spillovers
– Policy directed at R&D infrastructure and incentives (grants,
etc.)
Evolution of policy rationales (cont.)
• Systemic rationale (90s onwards)
– Innovation about R&D but also about
institutional and social aspects
– Knowledge distributed across actors (open
innovation)
– Ability to innovate depends not only on internal
(R&D) efforts but on the ability to identify,
assess, absorb and effectively utilise external
knowledge
– Policies about addressing systemic failures
(linkages do not exist or are malfunctioning)
– Regions need to improve their connectivity in
order to improve their innovation capacity
(regional innovation systems)
Example of evolving rationales:
Structural Funds and innovation
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Before the 1990s
– Innovation not an objective of SFs at first. Mainly dedicated to the provision of
large infrastructure projects
– After 1988 reform, RTD incorporated into SF objectives.
– 1993 EC communication: synergies between cohesion and RTD policy
1989-1993
– Aimed at shortening "technology gap" between advanced and less-advanced
regions of the EU.
– Actions to increase financial, infrastructure and human resources to RTD,
through building and equipping research laboratories, and raising number of
researchers in regions lagging behind. STRIDE programme
1994-99
– Promotion of enterprise involvement in RTD,
– emphasis on building human capital, networking, brokerage and demand
stimulation. RTP/RITTS/RIS programmes
2000–2006,
– New context: Lisbon (2000) EU to become “most competitive and dynamic
knowledge-based economy in the world”. 2002 Barcelona targets
– clear guidelines for SFs “explicitly encourage the promotion of innovation as a
priority”. Growing Orientation of SF programmes towards Lisbon objectives
Regional innovation systems as
policy framework
• The innovation system of a specific territory
consists of a geographically defined,
administratively supported arrangement of
innovative networks and institutions that interact
regularly and strongly to enhance the innovative
outputs of firms in the region (Cooke and
Schienstock, 2000: 273)
• Comprises
– A set of components (such as research institutes,
universities, technology transfer agencies, chambers of
commerce, banks, investors, government departments,
individual firms )
– A set of functions they undertake (such as supply of
technical services, knowledge diffusion, testing, advice,
scientific knowledge creation, etc.)
– A set of knowledge sharing linkages among them
Regional innovation policies:
common pitfalls
• Focus on components rather than the functions they
undertake and the linkages between them
• Consensus building but conservative approach to policies
• ‘Inward looking’ : regions as ‘islands’. But most linkages
necessarily extra regional
• Capacity gap of policy makers to manage regional
innovation policies
• Tendency to copy success cases: ‘do all regions need a
biotech cluster?’
• Lack of coordination of the policy mix
• Supply-side bias. Lack of adaptation to private sector
needs
What can be done? (I):
improving coordination of
policy mix
Coordination of the ‘policy mix’
• The policy mixes at the regional level are
becoming more complex in terms of the
combination of policy instruments and objectives,
which need to be coordinated and aligned
• Need to coordinate actions across a wide range
of policy domains, such as education and
research policy
• the mix of policy instruments interact to influence
the extent to which the goals of innovation policy
are achieved (innovation outcomes). Need to be
seen as a ‘system’
Coordination of the ‘policy mix’
• Policy is about trade-offs :
– Variety of policy objectives: increase R&D capacity,
foster university-industry links, promotion of clusters,
raising public awareness, education & training, etc
– Basic vs. soft infrastructure
– Internal vs external connectivity
– Sectoral priorities/targets: a particular sector, SMEs,...
– Choice of instruments: eg cluster policies, Incentives
and grants, tax breaks, financing of infrastructure for
innovation, etc
– … etc
Policy mix interactions
• Instrument mix
– First layer: Policies can impact directly on the R&D
policy domain: Some policies intentionally aim to
affect behaviour of R&D performers, e.g. IPR,
human capital and finance for R&D;
– Second layer: Policies can impact indirectly (or
unintentionally) on the R&D and related policy
domains. e.g. education, competitiveness,
competition, defence, etc.
– Framework conditions: affect the success of policies
of the various types. (regulatory environment,
taxation, culture, etc)
External
R&D
Policy
influence
Generic
External
Sectoral
influence
Education
Policy
Financial and
Fiscal policy
R&D
Domain
Human
Capital
Domain
External
influence
IPR
Policy
Employment
Policy
Linkage
Policy
Finance
Domain
Macroeconomic
Policy
Innovation
Domain
Industry
Policy
Competition
Policy
Trade
Policy
Regional
Development
Policy
Innovation
Policy
Defence
Policy
Direct policy impacts on R&D domain
Environment
Policy
Consumer
Protection
Policy
Health and
Safety Policy
External
influence
Direct policy impacts on other domains
Indirect policy impacts on R&D and other domains
External influences on all domains
Source: Policy mix project, European Commission.
http://rid.intrasoft-intl.com/PolicyMix/index.cfm
R&D
Domain
Other
Key
Domains
R&D domain: public and private R&D performers, e.g. universities, research
institutes, government labs, high tech SMEs, large firms etc.
Other key domains: e.g. private sector firms (Innovation domain); financial
institutions (Finance domain); educational establishments (Human Capital
domain)
Policy mix interactions (cont.)
• Policy coordination
– How can we conceptualise possible interaction
effects?
• Positive: complementary or multiplier effects
• Negative: substitution or ‘crowding out’
• Dependency of certain measures on framework
conditions
– Challenges for governance
• Coordination of the policy mix
• Multi-actor coordination
• Multi-level coordination
What can be done? (II):
demand-side measures
supply side-bias
despite demand-side rhetoric
– policies
• Not well suited to provide incentives for
innovation
• tend to focus on the supply side: funding of
science, fiscal incentives for R&D, etc
• Only one third of Structural funds objective 1
expenditure (35% in obj.2) on innovation
focused on establishing innovation networks,
technology transfer, etc in 2006. Rest is
infrastructure
Demand-side measures (Cont.)
• But stimulating demand is important….
– The UK Lambert review of Business-University Collaboration
identified the demand side as key challenge for businessuniversity collaboration.
– The Aho Group report (2006) Creating an Innovative Europe
recognised that the principal barrier to investment in Europe is
the lack of an innovation friendly market
– The DTI’s 2003 Innovation Report noted that the UK’s
innovation performance was perceived as being constrained
by lack of demand for innovative products and services.
– A recent study on innovation in services (Howells and Tether,
2004) concluded that the lack of demanding and noveltyseeking customers is a major barrier in service sector
Demand-side measures (Cont.)
Source: Georghiou, L. et. al. (2003): Raising R&D intensity. Improving the Effectivenss of Public Support
Meachanismss for Private Sector Research and Development: Direct Measures; Brussels.
Demand-side measures
(Cont.)
Renewed interest of procurement as leverage for innovation
• Barcelona/Lisbon-Strategy
• EU-Expert group on „Public Procurement - Private R&D and
Innovation“,
• International Benchmark of innovative procurement (Edquist et. al.
late 1990s)
• Procurement as part of 3% action plan
• Kok-Report (2004) on progress of Lisbon Strategy, recognised the
importance of procurement
• Aho Report (2006) Creating an innovative Europe
• Introduction of new EU procurement directives that allow the
possibility for innovation
• Policy developments in UK, Germany, etc
Demand-side measures
(Cont.)
• Porter (1990) argued that procurement can act as a
positive force for upgrading national competitive advantage
in the following circumstances:
– If government procurement can provide early demand for
advanced new products and services.
– If the government act as demanding and sophisticated buyer.
– If procurement reflects international needs in the setting up of
specifications
– Through facilitating innovation
– Through encouraging competition
• Short-term, long-term impacts
• Different effects in different markets
Demand-side measures
(Cont.)
• how realistic is this?
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Public sector expenditure heterogeneous and fragmented
Does not allow capacity planning
Idiosyncratic demand
Risk averse, prefer to procure on the shelf goods and
services
Emphasis on cost rather than value for money
Protectionist practices, not promoting competition
Lack of knowledge of markets of procurers
Lack of technical skills, management of large, complex
contracts
IP management
Demand-side measures (cont.)
• What can be done?
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Public sector as a large customer (aggregation)
Public sector as a reliable customer (better planning)
Public sector as a sophisticated customer (adaptation)
Public sector as a demanding customer (competition)
Public sector as a lead user of innovations
Competition
Heterogeneous
demand/
adaptation
Homogeneous
demand/ scale
Niche
procurement
Efficient
procurement
Emphasis on innovation
Transformative
procurement
Technology
procurement
Summary
• Challenges for innovation policies arising from
– Greater complexity of policies
– Dispersion of power and resources across scales
and actors in policy making
– Resource constraints, uncertain economic context
• We need to think outside the box!
– Need to improve existing regional innovation
systems frameworks, open, multi-level, multidimensional and diverse regional systems
– Need to celebrate and exploit diversity
– Need to use all the tools at our disposal but..
– With greater efficiency and coordination of the policy
mix
– Tackle the demand side