Promoting knowledge transfer: networks and exchanges The regional innovation challenge

1. Promoting knowledge transfer: networks and exchangesThe regional innovation challenge Luc Soete UNU-MERIT, University of Maastricht http://www.merit.unu.edu EU Conference “Innovating through the structural funds”, Brussels 12-13 June 2006

2. Outline • Some personal macro observations about Lisbon and the knowledge based economy • The emerging regional policy challenge of Lisbon • Regional knowledge diversity in Europe • A framework for regional innovation policy • Conclusions

3. Some personal broad macro-economic observations with respect to EMU • “National” competitiveness policies have in a monetary union potential beggar-thy-neighbour implications: • Impact of national “wage settling” policies on (un)employment in other member countries • Danger of a European “race to the bottom” with respect to social, welfare and tax policies • Lisbon and the knowledge society challenge should be seen as a “race to the top”: • Up to now a top down approach: European targets translated in national targets/benchmarks • How to formulate a bottom up approach: regional diversity as factor for knowledge activation policies

4. The EU is more than an EMU: role of social cohesion and structural funds • Europe was/is a unique laboratory of regional development policies, but social cohesion aims becoming questioned: • Effectiveness: national growth convergence within the EU, but regional growth divergence (national failure in first instance) • Physical borders of European solidarity being questioned with enlargement • Intrinsic limits of regional policy: success implies discontinuation; vulnerability of created European goodwill • Diversity of regional development is mixture of factors: • Geographical ones: peripheral location • Physical endowments: agriculture, mining, logistics • Agglomeration effects: snowball size effect; population density closely linked to knowledge activities • New endowments: sustainability (pollution, congestion, urban development); ageing (health and care, mobility, housing)

5. The regional dimensions of Lisbon and the knowledge based economy • Social cohesion implications of Lisbon and the KBE under-researched: • Likely internal EU migration effects of highly skilled • Regional/local implications of so-called “Matthews effect” of research excellence • Local knowledge cluster effects could lead to further regional (and national) growth diversity • Crucial role of cross-border or neighbouring spill-over effects • E.g. recent research highlights the effects of the level of education in neighbouring countries on GDP • Behind this particular forms of knowledge transfers

6. On regional knowledge diversity • Regions with strong domestic so-called “Anchor tenants” • Focus on local knowledge transfers, regional “crowding in” of private R&D • Matching and building strong linkages between private R&D activities and public research • Local spin-offs from both public and private side • Regions with strong foreign MNCs presence • Focus on local anchorage through suppliers • Improve interactions/contacts between foreign and local knowledge • Focus on provision of skilled manpower from local technical schools and universities • Regions with strong public knowledge centres (universities, polytechnics, technical schools) presence: • Focus on local quality and dynamism of technical and higher education • Strong cooperation with local authorities, chambers of commerce, create local innovation platforms. Support techno starters • Attract firms as bringing the “global clout to make things work”

7. General framework for regional innovation policy • From regional system of innovation perspective 4 elements appear particularly relevant for regional growth and development: • Quality of human capital formation • International openness and connectivity of research capacity • Local strength of innovative performance • Absorptive capacity • Let me focus briefly on each one of those

8. Regional quality of human capital formation • Focus on quality/upgrading of local education institutions: from primary schools to universities and professional training schools, including life long learning • Broad emphasis on quality, including reduction in failure rates, drop outs, early schooling, increasing participation of underrepresented groups • Increase attractiveness to “foreign” students • Regional policy interest in quality enhancing measures in local education

9. International openness of research capacity • Attempt at creating global “hotspots” of research excellence with openness to “foreign” research(ers), and international (rather than EU) networking • Strengthening of local research presence in regional economic, industrial and political tissue (seminars, (in)formal networks, local media, cooperation) • Joint public-private regional initiatives to develop further knowledge hotspots • Assist in national and European competition to attract best researchers, pay particular attention to research environment conditions

10. Local innovative performance • Recognition of importance of local scientific spin-off – prize for scientific entrepreneurs, etc. • Strengthening of links between public research institutes/researchers/teachers and local SMEs (local knowledge or innovation “vouchers”) • Embedment of the dominant local or foreign MNCs in public research infrastructure (anchorage, increasing costs of foot looseness) • Regional/local PR of innovative identity

11. Absorptive regional capacity • Focus on regional bèta users and those in neighbouring regions/countries • Exploit to the maximum the role of regional public authorities in terms of procurement • Enhance regional presence “abroad” (fairs, etc.) • Focus on regional diffusion and knowledge distribution policies based on local specialisation • Develop appropriate innovation strategies to underrepresented groups, local conditions, network with similar other “foreign” regions, European or global

12. HUMAN CAPITAL SUPPLY: - crucial role of coverage and quality from primary school to higher education - attracting from outside region USERS - Presence of sophisticated users - Regional characteristics - Local dynamism ABSORTION CAPACITY RESEARCH CAPACITY CREATORS Universities, "hot spots" research labs: - Excellence of research expertise - Openness to global research networks DEMAND: - Local SME spinn-offs - Local anchorage of large MNCs dominant and foreign INNOVAT. PERFORMANCE

13. Conclusion: a new regional policy challenge • National Lisbon (Barcelona) knowledge targets were ultimately primarily inspired by national statistics and national policy makers • But the knowledge economy is an economy without borders: pieces of knowledge acquired, reshuffled from all over the world • New geography and agglomeration effects: regions are the natural environment for local “anchorage” of knowledge related activities • Need for a bottom-up approach highlighted by the limited success on implementation of cross-border cooperation: dominance of nationalism in RTD and innovation policies • In search of European regional clusters towards an ERRA… only way to achieve Lisbon.