Jerry Courvisanos Centre for Regional Innovation and Competitiveness

1. Innovation Policy Framework for Sustainable Development in Regional Economies: An Australian Perspective Jerry Courvisanos Centre for Regional Innovation and Competitiveness 2008 Pacific Northwest Regional Economic Conference “Spirit of Innovation III” Forum Tacoma, Washington, USA 14-16 May 2008

2. Motivation • Need paradigm shift to ecological sustainability (ES) with a low-emission economy: innovation policy • Transition to this new paradigm (traverse) is the question in this paper • Role of regional communities in this transition innovation policy • Examine work of two traverse-based economists – How this can contribute to mapping out a framework for ES

3. The TINA Challenge: What sort of innovation policy? I think to start working backwards from a mathematically precise scenario 94 year from now, or 93 years from now, is a bit unrealistic and I don’t think it’s of any benefit to you or your viewers and I don’t know that it gets us anywhere. I think what does get us somewhere is to say, ‘What can we do now, in a sensible way, that doesn’t hurt us, to reduce carbon emissions?’ (John Howard, 5/2/07,ABC Lateline) Rejection of the Howard Govt. “ad hocism” to ES TINA: Optimality framework used to determine “mathematically precise” scenario supported by # mainstream neoclassical economics # ecological economics No ability to handle uncertainty No ability to account for regional input

4. Eco-sustainable Framework - three elements of innovation policy 1. Agreed ecological sustainable rules (or conventions) – precautionary principle 2. Perspective planning – flexible, local-based democratic motivation and local voluntary conformity towards regional ecologically appropriate goals 3. Cumulative effective demand with strong local niche market share for environmental-based goods & services

5. Investment Planning Criteria • Investment planning and infrastructure underpinning an innovation strategy • Resource-saving on new capital stock – low real depreciation and high utilisation of productive capacity • Iterative planning with “bottom-up” regional monitoring and evaluation (based in social learning)

6. Implementation Strategy Instrumental Analysis (Adolph Lowe) Begin with pre-analytic economia vision: • elicit public motivation and conformity at local level through regional networks • working backwards to develop an investment framework • incorporating an innovation policy along a ecologically sustainable path

7. Implementation Strategy Need for Perspective Planning (Michał Kalecki) • Iterative planning with bounded rationality • Procedural (or designing) rationality in the context of the “precautionary principle” – reject optimal rationality approach • Goal of sustainable development (guarantee future generations at least a set of options as wide as current generation possesses)

9. Regional networks appropriating investment strategies Process of investment strategy planning in public and private sectors Planning framework

10. Regional Implications • Adaptive governance approach by regional authorities towards global environment problems • Recognition of local customs & norms around sustainability to create social cohesion & ecological unity • Butterfly effect: Small niche eco-innovations with local consequences amplified via flow-on diffusion effects

11. Research Implications • Benchmark to monitor and evaluate the various regional programs & initiatives • Investigate program elements that support transition paradigm, identify missing or negative features • Identifying areas not being addressed • Investigate rates of diffusion of eco-innovations in specific regions (butterfly effect) • Improve iteration of programs

12. Policy Implications • Decentralisation of eco-innovation is the adaptive strategic process • Identify barriers to adoption • Strategies to overcome barriers of political power and business short-term costings • Regional actions to subsidise, assist learning & allow development of self-reinforcing diffusion mechanisms