Peter Kaiser Luxembourg, Dec. 8th 2005

1. Benchmarking European High-Tech RegionsMethodical approach and data restrictionsEurostat 2005 Conference: Knowledge Economy –Challenges for Measurement Peter Kaiser Luxembourg, Dec. 8th 2005

2. The „Report on Germany 2002-2020“ A consistent Scenario on Germany‘s future – economic growth, labour market, qualifications and social policy, future trends in industry, demographic trends The „Prognos Atlas of Technolgy 2002“ Technological potentials and performance of the German Regions The „Prognos Zukunftsatlas 2004-2005-2006“ Benchmarking future prospects of the German Regions focussing on special topics, e.g. regional development (2004), family (2005) economic clusters (2006) The World Reports Short, middle and long term scenarios on economies and markets for 90 per cent of the world‘s economy The European Transport Report Data for analysis and scenarios on trends in logistics and transport in 22 european countries The Sectoral Report „Entsorgungswirtschaft“ with options and policy proposals „Nomen est Omen“: Medium- and long term forecasts Die Prognos AG

3. Contents • Introduction: Technological Innovation and Economic Growth • How can regions profit from rankings? • Benchmarking German High-Tech Regions – The Prognos approach & results • Transfer of our approach: Benchmarking the EU-15‘s High-Tech Regions • Difficulties & restrictions

4. On the Relationship between Technological Innovation and Economic Growth • The elements that make a regional economy vibrant and prosperous today are fundamentally different from those of the past. • The new economics of place are driven by their ability to attract and expand science and technology assets and leverage them for economic development. • Regional economic performance is determined by how effectively its comparative advantages are used to create and expand knowledge assets and convert them into economic value. • A study by the Council of Economic Advisers in the United States recently concluded that 50% of the growth in the American economy over the last 40 years had been due to investments in research and development. Introduction

5. Challenges to be met by high wage economies • Generation and/or absorption of new knowledge, • Keeping and/or creation of adequate framework conditionsand • to maintain/create efficient innovation processes • in order to come up with commercially viable new products, attractive and enough new jobs Introduction • Regional perspective: Final translation of knowledge into economic relevant activities takes place at the regional level Not all regions are equal • Metropolitan and technology regions are the major producers and appliers of frontier knowledge • Other regions must have a chance to be able to apply new knowledge generated in the above mentioned regions as fast as possible.

6. Challenges for research in order to establish a set of key indicators in order to… • Measure the performance and understand the underlying structures of innovation-based, growth-orientated economies. • Define and understand the term innovation/knowledge-based and its dynamics and implications for regional and local economic development. • Assess the implications for public intervention and determine the linkage between knowledge-based and more traditional business models. • Provide a sub-regional analysis of national´s innovation-based economy. • Generate comparative benchmarks with leading regional economies.

7. Technological Potential/Input • Highly qualified employees in technology-orientated industries • Patent application per mill. Labour force • Employees in knowledge intensive services • Population with tertiary education • Development of these parameters • Percentage of R&D employees • Percentage of engineers • Development of this parameter • Business start-ups in technology-orientated industries • Economic Performance/Output • Gross value added • Development of Gross value added • Level of employment • Dynamics in employment Benchmarking regions by creating an index that encapsulates a comprehensive inventory of technology and economic development. Parameters Annotation:Bold type: German AND EU-15 analysisBold type in italics: EU15 analysis onlyStandard: German analysis only

8. The technology map 2002 identifies successful and future-oriented regions. • North-South and East-West-Deviding: South Germany surpasses West, North and East Germany by a substancial margin • Technology axis and Technology islands: There are coherent regions with high technological efficiency. • Regions with low innovation level (Screwdriver regions): Peripheral North and East German regions with structural problems

9. The technology map 2002 identifies successful and future-oriented regions. • Strong regional concentration of technological capacities: Metropolitan regions do have the best prerequisites for technological competitiveness. • Technological capacities of today are an early indicator for economic success of tomorrow: Technological capacities are converted largely in economic success.

10. Interrelation between technological capacity and future prospects technological capacity Technologieatlas 2002 Regression future prospects Zukunftsatlas 2004

11. Similar regional pattern of technological success and socio-economic prospects of one´s future Prognos Technologieatlas 2002 Prognos Zukunftsatlas 2004 Comparison

12. „European Technology Map 2005“ – Overall Index

13. „European Technology Map 2005“ – Dynamics Index (2000-2004)

14. „European Technology Map 2005“ – Strength Index (2004)

15. What determines the regional technological capacity and competitiveness? • Balanced industry and/or technology-mix, which also represents a risk-mix (specialization with simultaneous diversification) • Integration into the international exchange of knowledge, innovations and goods with leading regions in the world • Basis on technologically active and experienced industries/firms • Application orientated production of knowledge in R&D instituions Key Findings

16. What determines the regional technological capacity and competitiveness? • Existence of competence centres, cluster structures, and an effective networking of the main regional stakeholders • A high absolute and relative level of R&D employees in economy and science • An economic friendly climate and a conspicuous image of a high tech region, which work as self amplifiers during the development process. • Strategic focusing of the economic and technology policy on growth and competence fields and the requirements of the economy. Key Findings

17. Indicators on Research & Development, Innovation and Economic Success – Difficulties & restrictions • Verfügbare Input/Output-Indikatoren bilden den Innovationsprozess noch nicht hinreichend ab • Emphasis lies on input indicators • Only a few output indicators are available, more are needed • Process indicators are also needed, to give a broader view of innovation and economic success • Time-lag of data-availibility inhibits interrelationship to policy-action • Incompletion by regional means • Comparability - Different political and administrative importance of NUTS-Level 1, 2 and 3 in the member-states Difficulties & restrictions

18. What is the use of it for regional economic development? • Identification of regional strength and weaknesses finding out the future challenges. • Observation and analysis of positive regional spill-over-effects. • Absorption capacity for structural policy and structural aid. • Starting point for measuring the effectiveness of regional cluster policy. • Decision guidance for governance under the condition of efficient spending of public money (“strengthen the strengths”). Possibilities

19. What is the use of it for regional economic development? • Decision guidance for governance under the condition of efficient spending of public money (“strengthen the strengths”). • Decision guidance for the changes of EU-structural funds to be under way. • Enabling regions setting up a benchmarking process in order to learn from the best (as a kind of regional “Lissabon-process”). • Indicator-based analysis as a basis for regional governance (interrelationship between technology policy and economic performance). • Assessment of effects of structural and innovation policy and its regional impacts.

20. Bremen • Berlin • Düsseldorf • Prag • Wien • Basel Thank you very much for your attention! Prognos AG Division „Regions & Innovations“ Peter Kaiser ConsultantPeter.Kaiser@prognos.com Wilhelm-Herbst-Straße 5 D-28359 BremenTel. +49 421 20 115 782Fax +49 211 887 97 8582 Contact

21. Vision • In order to provide a benchmark for states and monitor progress, we have created an • index that encapsulates a comprehensive inventory of technology and science assets that • can be leveraged to promote economic development. The State Technology and Science • Index is composed of five equally-weighted major composites – Research & • Development Inputs, Risk Capital and Infrastructure, Human Capital Investment, • Technology and Science Workforce, and Technology Concentration and Dynamism – • each weighted equally. These five composites are comprised of 73 individual • components. Each of the components is measured on a relative basis to a relevant • indicator (population, Gross State Product, number of establishments, etc.) The data was

22. Our questions • What is the Commissions/EUROSTATS point of view towards these kind of rankings? • How would you appraise our approach? • What could be the interest of the Commission in building up an EU-wide study like the “Technologieatlas” and the “Zukunftsatlas”? • Could these questions be answered by studies like this? • Could one create a suitable set of indicators for EU-wide regional rankings such as the “Technologieatlas” or the “Zukunftsatlas”? • Do the necessary parameters exist on NUTS-3 or at least NUTS-2-level? • Has EUROSTAT these indicators in stock for all member-countries? Questions