Transcript The triple helix model: sustaining regional innovation in

Long-term Research and
Innovation Policies for
Sustainable Growth
Luc Soete
UNU-MERIT
Regions for Economic Change – Building Sustainable Growth, 20-21 May 2010,
Brussels
Outline
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Cohesion Policy Contribution to Smart Growth from the perspective
of a Knowledge and Innovation based economy.
Three focal entry points into EU2020 discussion but with the crisi(e)s
as background:
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Smart growth and the issue of long-term funding of research and
innovation – the rate of technical change – and the respective roles of
private and regional, national and European public funds;
 Sustainable growth and the (re-)discovery of the importance of the
direction of technical change – at different levels, local/regional,
national/European, global level our societies are confronted with major
societal challenges;
 Inclusive growth limited here to the issue of the regional impact of
knowledge accumulation and innovation opportunities: a spiky versus
flat world? .
1. Conditions for long term smart
growth
Investing in R&D and innovation: from Barcelona to EU 2020 and back…
 Asking for more private investment in R&D without offering a credible plan
for integrating, or at least harmonizing, the final Single Market, was missing
the point. Some basic economics:
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Companies invest private resources in R&D only if they consider the final market
large enough to recover the investment;
 Having national markets fragmented by regulation, language, and entry
processes, implies an increase in marginal costs of the overall “time-to-market”
decision, leading to a reduction of the rate of return to research investment;
 The institutional separation between European research, leading to proof-ofconcept or prototype stage, European innovation policy and European
competition policy, is a source of uncertainty;
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It made little sense for the Lisbon strategy to ask for more R&D from the
private sector without offering any means to leverage such an effort. There
should have been a milestone strategy for the integration of European final
product and services markets. The services directive is now finally in
operation, we need to exploit it to strive towards a single innovation market.
Proposal for a new 3% knowledge
investment target
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Given the likely long term fiscal pressures on Member States’ budgets in the years to
come, it is crucial to stress today the particular responsibility of public sector in
Europe to support research and innovation. The intervention of nation states in
preventing the collapse of their financial system might be described as a
“socialisation of debt”. In the coming years of fiscal austerity, it will be important to
stress the need for a process of “socialisation of knowledge”. The core responsibility
of the public sector in providing support for knowledge level and investment in close
interaction with the private sector.
Hence the proposal for a new 3% knowledge investment target: with clear policy
advantages over the Barcelona 3% target. It focuses on what governments are
directly responsible for: whether in terms of funding or setting funding rules such as in
the case of tuition fees with respect to higher education. Target thus offers credibility.
All MS are being challenged to either find own public resources to increase such
knowledge investments, alternatively to call upon private resources to invest in
individual’s future human capital..
Private R&D investments, innovations however measured, are outcome variables:
they need to be monitored as performance variables but have limited meaning as
policy targets. In the worst case they lead to beggar-thy-neighbour policies attempting
to attract such investments in one country/region at the expense of another.
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A target for all Member States
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Government-financed R&D
Tertiary education - publicly funded
Tertiary education - privatly funded
2. Achieving sustainable smart
growth
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The focus in knowledge and innovation policy, certainly since Lisbon has been on
increasing the “rate” of technical change… More research, more innovation is good
for you. On what should be left open to markets and to the interest of researchers.
Policy makers seem to have forgotten about the direction of technical change.
Again some basis economics: remember the first, seminal NBER book on research
and innovation published in 1962 on The Rate and Direction of inventive Activity.
Societal Challenges represent major social problems that cannot be solved in a
reasonable time and/or with acceptable social conditions, without a strong
coordinated input requiring both technological and non-technological innovation, and
at times, advances in scientific understanding. A good example was the STEP
initiative.
The central issue is at the opposite end of the previous one. Can resources, not just
research but also procurement and other investments, be shifted across different
national/European stakeholders to more productive “societal use” to influence not
only the rate but also the direction of technical change and innovation?
Societal Challenges are not grand rather they raise grand policy challenges: how to
achieve compatibility between top-down initiatives and a more bottom-up, marketdriven resource allocation logic that allows for multiple decentralized experiments.
The sustainability smart research
challenge:
Case of climate change
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There is in fact substantial agreement on the most efficient and effective policies for
mitigating climate change. The policy menu involves:
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A unified global price for CO2 emissions including CO2 equivalents for other principal greenhouse gases
(GHGs)
Elimination of explicit and implicit subsidization of fossil fuel consumption
Expanded funding for research and development into green energy technologies
Programs of technology transfer such that new technologies diffuse rapidly
Standards and mandates for key sectors such as power production, transport, and buildings
Public infrastructure investments that encourage greener technologies and modes of living
There are other important issues particularly those relating to land use change,
including deforestation and reforestation/carbon sinks, where the way forward is less
clear but: if the policy menu mentioned above were implemented, the world would be
a long way down the path to mitigating climate change in an efficient and effective
manner
Yet, topic presents today all signs of grand policy failures: failure of European FP
research programmes; lack of diversified research and innovation experimentation,
ignorance of opportunties for local, regional research and innovation specialisation;
frictions between national and global policy convergence (failure of Clean
Development Mechanism within Kyoto protocol), etc.
3. On inclusive social cohesion
smart growth
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At the geographical level, the crisis is likely to increase the gap between front runners
and laggards in knowledge investments by exacerbating the different existing
capacities of countries and regions to respond. The crisis challenges directly both the
limited degrees of freedom offered to laggard countries being part of the Eurozone
(Greece, Portugal, Spain, Ireland) and regional cohesion policies, and in particular
the role of research and innovation in those policies.
At the same time, the search for excellence in research and innovation is challenging
directly social cohesion policies in Europe. The European Research Area is likely to
become more spiky and less flat. At the same time, income inequality in Europe is
already higher than in the US and other large countries in the world.
At organizational level,the crisis leads to a further increase in the off-shoring and
outsourcing of private R&D form European firms: a more rapid relocation of certain
parts of R&D, in particular development, to cheaper locations with good access to
S&E within and particularly also outside the EU.
Yet. the open innovation paradigm offers also new opportunities for local publicprivate collaboration and for young innovative SMEs. Due to their flexibility and ability
to operate in new areas of business that are uncertain but potentially highly
promising, such firms are important for pursuing radical innovations and constitute an
important avenue of local knowledge specialization.
Income spread across regions
The need for new regional smart
knowledge policies
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Specific recommendation proposal: allocate a greater proportion of structural funds to
the development of research and innovation capacity. In particular, make the
provision of structural funds conditional upon the development of local, smart and
open specialisation strategies.
The prevailing institutional conditions in partly fragmented European markets raise
still formidable barriers which have limited the overall success of this process so far.
There is an urgent need for an EU-wide scheme that can strengthen links between
high regional performers in research, innovation and entrepreneurship, and promote
at the same time the evolution of regional specialization based on the growth of
young innovative firms.
Smart knowledge specialisation is in need of smart research and innovation polciy
governance. Research quality assessment is heavily dependent on scale: the
European scale is the logical scale for most publicly funded research activities, for
reducing costs in selecting and evaluating research proposals and for enabling high
quality research specialization; Europe’s regional scope represents the long tail of
European opportunities for growth specialisation based on diversity.
A formidable challenge for Europe, given the wide diversity in income levels across
regions but the growing converging aspirations of European youngsters.