Dealing with Unbalanced Regional Innovation Systems: The Science and Technology Parks.

1. Dealing with Unbalanced Regional Innovation Systems: The Science and Technology Parks. Gustavo Crespi Competitiveness and Innovation Division

2. Problem: Low and falling productivity in LAC LAC has drifted away from the productivity frontier……

3. Features of LAC Innovation Systems R&D/GDP by Sector of financing Private Sector Public Sector LAC invests very little in innovation both in the public and, specially, in the private sectors…

4. Features of LAC Innovation Systems Concentration of I+D Relative to Population in the Largest City Different sources LAC RIS are very weak. Innovation investments are heavily concentrated in the largest cities.

5. Main Obstacles for Innovation: The Firm‘s Views Low collaboration and underdeveloped STI institutes are relevant constraints …..

6. Features of LAC innovation systems • It is imperative to deploy instruments allowing LAC innovation systems to: • Increase private sector investment. • Achieve regional innovation. • Foster university – industry collaboration. • Could SCT Parks be vehicles for regional innovation? Could they deliver? Are there critical factors for effectiveness?

7. Science and Technology Parks. • Mission: To cultivate innovation in defined space by providing an optimal environment for their tenants firms to thrive (IDB, 2013). • But sectors and regions are heterogeneous, so there is a variety of park-based approaches. • Parks can be differentiated according to target industry, technological intensity, the size and scale of the project, origin of founders, the level of support offered by managers and the capacities of technology-based firms and skilled workers.

8. Science and Technology Parks. • Using technology intensity and the degree of management support, it is possible to present a taxonomy of Parks.

9. Science and Technology Parks. VS Science and Technology Park Amusement Park

10. Science and Technology Parks • Firms located on a park are expected to outperform their off park counterparts due to advantages, synergies and supported environment offered by park location. • But…properly assessing impacts is difficult. Simply comparing on and off park firms is not enough as park managers choose firms with desirable attributes to join the park…there is a problem a priori selection bias. • When correcting for selection bias the results regarding the performance of firms become very ambiguous (Albahari et.al. 2010).

11. Science and Technology Parks. • Key central characteristics of a STP Model: Successful cases in OECD and Asian Tigers suggests: • Linkages with a major research centre (to provide knowledge). • Presence knowledge-intensive firms (with minimum capabilities to absorb knowledge). • Management team that supports firm growth through tech. transfer (to reduce transaction costs, internalizing spillovers, foster U-I research collaboration). • Incubation of new technology based firms (as vehicle of innovation and local development) • It seems that the four characteristics must be in place to have a proper impact on local economic development STP are instruments of a broader regional development policy.

12. Science and Technology Parks. • Two types of STP Policy Models: • The evolutionary approach: Location specific policies that fine tune local environment and build on existing capabilities. Focused on developing indigenous capabilities, upgrading local resources (BoschmaFrenken – 2006)  lower additionality in terms of change but lower risk of failures. • The revolutionary approach: The big-bang view or growth pole model. To create a new RIS despite local capabilities  higher additionality in terms of change but higher risk of failure (as sustainability and trickle down effects are less likely). But sometimes is the only option!!!

13. STP as tools of a broader regional development policies: The case of Korea. ROH’s Administration (2003-2008)

14. Strategic Industries of 16 regions (2004-2008) Seoul Gangwon • Digital Contents • IT • Bio • Finance Incheon • Medical equip. • Bid • New Material • Tourism • Transportation • Automobile • Mechanic • IT ChungBuk Gyeonggi Gyeongbuk • Semiconductor • New Ge. Battery • Telecom. • Bio • IT • Bid • Cultural Content • Intern’llTrans. • Electro./Info. • New Material /Parts • Bio • Culture/Tourism ChungNam Daegu • Electronics/Info. • Auto Parts • Culture • Agro/Bio Daejeon • Fiber • Mechatronics • Electro/Info • Bid • IT • Bio • Mechatronics • Parts & Materials Gyeongnam Jeonbuk • Mechanics • Robot • Intelligent Home • Bio Ulsan • Bio • RFT • Car/Mechanics • Cultural Indu. • Automobile • Chemical • Shipbuilding • Environment Jeonnam Kwangju • Bid • Material/Shipbui • Transfortation • Culture/Tourism Busan • Opticla • Info/Ellectronics • Auto Parts • Design • Ocean • Part • Movie/IT • Tourism/Convention Jeju • Bio • Digital Content • Tourism • Eco-agro

15. Do Science and Technology Parks Deliver in emerging regions? • In emerging regions there are successful and failed cases….. • Success cases are mostly: • Collocated with a leading university and research centre (or MNEs). • With university, industry and government in their governance. • Sustained and consistent government support (at least 10 years). • Operate in well connected cities and urban centres. • Targeting specific high-tech industries. • High quality infrastructure to attract MNEs research centres and GRIs. • Provision of grants, training incentives and tax credits. • A managing team balancing private returns with the generation of spillovers and technology transfer (financial independence). • Clear and highly regulated criteria for tenants admission (minimum investment in R&D, workers with college education, etc). • Entrepreneurship and NTBF formation.

16. The Role of the IDB • Established in 1959 the Inter-American Development Bank (IDB) is the first and most important regional development bank and main source of multilateral financing for socio-economic development in Latin America and the Caribbean. • Over the period 1961-2015 the IDB has approved loans for a total amount of $240 billion and mobilized additional resources for $450 billion. • Since its foundation the IDB has recognized the importance of STI for development (S+T&I) and it has played a key role in building institutional capacities by member countries in this area. Over last ten years the IDB has lent $10 billion only for S+T&I projects.

17. The Role of the IDB • Awareness raising and networks, through: • Policy Dialogue (support for the STI regional policy network). • Regional collaboration (Regional Public Goods Programs). • The Bank does not have dedicated line for STP but innovation is a pillar of the institutional strategy. That means… • We can provide technical cooperation funding for feasibility studies and capacity building. • We can use finance for innovation programs in order to support key components of STPs (e.g. incubators, infrastructure, etc). • For privately owned STPs or similar the private sector window of the Bank can provide funding for infrastructure development. • And we can also fund full deployments of STP in the extent that are included among government priorities.

18. The case “City of Knowledge”

19. The case “City of Knowledge” • The idea was to used the infrastructure of Fort Clayton to develop an STP Park. Several feasibility studies were carried out by the end of the 90s and a private foundation was established to manage the project. • First through a TC project the Bank funded the preparation of a Business Plan and Strategy and then supported implementation through a lending program (PN-0134) ($ 3M, approved in 2000). • The general objective was to create the minimum conditions for the sustainability of the project. The project had 3 components: • Component 1: Organizational strengthening and monitoring. • Component 2: Marketing Plan and Promotion. • Component 3: ICT Infrastructure Upgrading. • In parallel MIF supported a business incubator and SENACYT (beneficiary of an IDB loan located several programs in CDS).

20. Conclusions • STP could be important instruments for the development of regional innovation systems. • However, they are also complex tools so implementation is not an easy task. • Successful cases are also expected cases: they operate better in regions with existing technological capabilities, a critical mass of firms and skilled employees….however these places are few. • So before moving forward is important identifying pre-existing local conditions and design organizations appropriate for a given context. • STPs work better when they are conceived as an integral part of a regional development model and strategy as complementary inputs and incentives will be needed for the park to thrive.

21. Conclusions

22. Thank you!!!