Northern Ireland: Towards a RIS3 strategy

1. Northern Ireland:Towards a RIS3 strategy 2012 Michael Lilley Smart Specialisation Coordinator Michael.lilley@detini.gov.uk

2. Presentation Structure • Expectations • Regional Context • Place Based dimension of the RIS3 • Looking beyond Regional boundaries • Entrepreneurial dynamics • Governance • Critical Mass and Priorities • Implementation and budgets • Measuring the Process • Future Innovation Policy

3. 2. Regional Context • 1.8 million inhabitants • Smallest of UK regions • Devolved Government • Large public sector • Large service sector • SME dominated • 480 companies out of 80,000 involved in R&D • Low in EU Innovation Scoreboard

4. Regional Strengths • Historical Global Specialisations in; • Shipbuilding • Linen/ Textiles • Light Engineering • Agriculture • Aeronautics

5. 2. Regional Context Parliament buildings, Stormont Northern Ireland Science Park (NISP) Titanic Signature Building

6. 2. Regional Context • Devolved Administration 2007 • 108 members in N.I. assembly • All main parties represented in Government • Mandatory Coalition • Innovation, Research, Development and Creativity high on the political agenda

7. 2. Regional Context • Programme For Government • Economic Strategy- • Strategic Framework • Innovation Strategy • (In preparation)

8. 2. Regional Context

9. 2. Regional Context Economic Strategy for Northern Ireland 2012 • Focus on; • Innovation • Export Led Growth • Regional Strengths “An economy characterised by a sustainable and growing private sector, where a greater number of firms compete in global markets and there is growing employment and prosperity” 9

10. 2. Regional Context Public Sector dominated Economy - Public sector expenditure 63% of GDP

11. 2. Regional Context Jobs by Sector Northern Ireland Economy Structure (GVA)

12. 2. Regional Context Manufacturing exports by sector Gross Domestic Expenditure on R&D- 2009

13. 2. Regional Context % of BERD financed by Government BERD as % of GDP

14. Northern Ireland in Europe 2. Regional Context

15. Northern Ireland In-House R&D expenditure 2010 2. Regional Context Northern Ireland Research and Development Statistics 2010

16. 2. Regional Context- Challenges in NI Public Sector • Public Sector dominated economy (63% GDP) • High reliance on Government support for B.E.R.D. • Service Sector Dominated (Lower value) • High number not in employment (High Economic inactivity) Labour Market Brain Drain • One-third of students leave to study elsewhere • Less than half of these (44%) return when degree is complete • 80% of NI private sector employment is in SMEs (under 60% for UK) • Only 22% of turnover is in large firms compared with 51% in UK SME Dominated Innovation and R&D • Lagging behind top EU performers in R&D spend • 480 out of 80,000 involved in R&D • Low in Innovation Scoreboard

17. 3. Place- Based Dimension of the RIS3

18. Cluster Analysis • FDI analysis 3. Place- Based Dimension of the RIS3 Analysis

19. 3. Place- Based Dimension of the RIS3 Porter’s Diamond- Strengths Firm Structure/ Rivalry • SME Dominated Economy • SME make largest contribution in the UK • Companies beginning to be export orientated • Large increase in BERD in 2010 Factor Conditions Demand Conditions • Proximity to Europe, North America & India • Small region with devolved Government • Younger population that UK & EU average • Skills system founded on industry needs • Outperforms UK & EU in secondary education • Literacy levels similar to OECD average • Good Region for pilot projects • World class Telecommunication infrastructure • Demand traditionally linked to UK & Republic of Ireland • Access to Global Markets • A resilient Agri-food sector • Competitive Science & Technology sector • Good recent record in FDI • Clusters in Aerospace, Science & Technology, business services, Financial Services, Tourism • Collaborative Networks • Competence Centres • Innovation Centres • MATRIX (Science & Technology Panel) • NISP clustering across technology sectors Supporting Industries (Clusters)

20. 3. Place- Based Dimension of the RIS3 Porter’s Diamond- Weaknesses Firm Structure/ Rivalry • Over-reliance on public sector – Fiscal “Subvention” • Small private sector • Low levels of entrepreneurship • Low Innovation, Patients and absorptive capacity • Brain Drain’ and workforce migration • ‘BMW’ Syndrome • Reliance on a few large firms FactorConditions Demand Conditions • Weak Skill profile compared to world leading economies • High proportion of workforce with no qualifications • Low living standards, productivity & wages compared to leading economies • Reliance on UK and Republic of Ireland Market • Fiscal subvention affects demand conditions • Over reliance on a small number of firms for R&D • Large amount of FDI in low value sectors • Small private sector with over reliance on public sector • Very few cluster organisations Supporting Industries (Clusters)

21. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations Led by Industry Inspired by Academia Facilitated by Government “Cross sectoral market opportunities”

22. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations • 13 members (9 from industry) • Focus on strategic markets not sectors • ‘Now sight’ then Foresight • Involving 100 companies • R&D and science and technology issues • Emerging relevant technology priorities • Promotion of innovation, R&D, and creativity • Promotion of Collaboration • Overcome the perceived disadvantage of SME dominated economy • Reports build on regional strengths and skills capabilities

23. 3. Place- Based Dimension of the RIS3 Advanced Manufacturing Advanced Materials Sustainable Production & Consumption ICT “First Identified Strategic Markets (Cross Sectoral)” by MATRIX Electronics & Photonics

24. Based on Key Enabling Technologies (KETS) 3. Place- Based Dimension of the RIS3 Northern Ireland Strategic Markets MATRIX Foresight Key Enabling Technologies

25. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations Technology Capability Study – 2006- Business Identified Priorities • Strategic Markets (Cross Sectoral) • Key trends • Higher education numbers, Private Sector Capability analysis, Public sector capability analysis, Academic sector analysis • Benchmarking • Regional, Technological Scoring, environment, Technology Readiness levels, Technological Infrastructure • Framework Conditions • Degree of Clustering, Business environment, markets, collaborations, skills & training, Funding, Government support, FDI sectors, Technology transfer • Conclusions • Northern Ireland Technology Capability, Technology Capacity, Priorities for Northern Ireland

26. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations “Then focused on more specific cross-sectoral markets” Advanced Manufacturing Advanced Materials • Priorities • Collaboration • Timescales Life Sciences ICT Agri-food “Exploiting capabilities and market opportunities”

27. 3. Place- Based Dimension of the RIS3 Advanced Manufacturing Advanced Materials Life & Health Sciences Telecoms & ICT Agri-food

28. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations Overview of Strategic Markets

29. 3. Place- Based Dimension of the RIS3

30. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations

31. 3.Place- Based Dimension of the RIS3 Analysis of Technology Specialisations 90% 93% 12%

32. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations Market Technology

33. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations Market Technology

34. 3. Place- Based Dimension of the RIS3 Foresight • System Scanning • Creates shared understanding of issues • Scenario Planning • Conceptual modelling of market opportunity scenarios • Analysis & Selection • Prioritisation through negotiations among stakeholders • Transformation • Establish relationship between future and present for a change programme • Action Plan • Create structural and behavioural transformations to exploit markets

35. Foresight Reports–2 – 5 – 10 year; 3. Place- Based Dimension of the RIS3 Foresight • Sustainable market opportunities • Exploitation priorities • Relevant wider global science and technology innovations • Early wins and longer term gains • Synergistic actions required • Enabling networks required • Investments required • Further analytical or horizon scanning work to be undertaken

36. 3.Place- Based Dimension of the RIS3 Next Horizon Studies for MATRIX: 2012-15 • Clean Technology / Sustainable Energy • IP & Knowledge Transfer in Northern Ireland • Aerospace • Construction • Open Data Opportunities

37. Cluster Analysis • FDI analysis 3. Place- Based Dimension of the RIS3 Analysis

38. Northern Ireland star clusters* are: 3. Place- Based Dimension of the RIS3 Cluster Analysis- EU perspective Business services Construction Financial services Power generation and transmission Aerospace Stone quarries - Representing 79,700 employees (11% of total NI) • *Stars awarded for industries based on: • Size (within top 10% of employees in EU27) • Specialisation (focus is more than twice EU27 average) • Focus (within top 10% of clusters in the economy)

39. 3. Place- Based Dimension of the RIS3 Cluster Analysis- top 10 sectors in N.I. within EU context Data extracted from cluster observatory Star clusters represent 11% of total NI employment

40. d) NI Industry Focus 3. Place- Based Dimension of the RIS3 Cluster Analysis-N.I. Industry Focus Three largest sectors are ‘star clusters’ Remaining largest sectors are not ‘star clusters’ but NI may have strengths in these areas

41. 3. Place- Based Dimension of the RIS3 Cluster Analysis- Key groupings NI below UK average although above EU27 NI below both UK and EU27 averages NI below both UK and EU27 averages

42. 3. Place- Based Dimension of the RIS3 EU Star Clusters in N.I. within EU employment context Business Services Aerospace Stone Quarrying Financial Services Construction Power Generation & Transmission Data extracted from cluster observatory Star clusters represent 11% of total NI employment

43. 3. Place- Based Dimension of the RIS3 FDI Analysis Research Capabilities Analysis • Identified R&D intensive sectors • Identified Research Capability (R.A.E. , R.E.F. etc) • Alignment of research capability with FDI sectors • Prioritisation of FDI sectors using Northern Ireland Research Capability i.e. CRITICAL MASS

44. 3. Place- Based Dimension of the RIS3 FDI Analysis- Exploiting N.I. research base Software &IT Telecoms Aerospace Renewable energy Electronic components High Correlation with Matrix Market Opportunities Biotechnology

45. 4. Looking beyond regions boundaries

46. 4. Looking beyond regions boundaries Major research studies on Economic and innovation policy in EU and worldwide using expert advice • Small peripheral EU States- Finland, Ireland, Sweden, Estonia • Productivity, Innovation & Competiveness in Small open economies- New Zealand, Singapore, Rep. of Ireland • Policy approaches analysis in comparing regions of similar economic, industrial and institutional structure as Northern Ireland

47. Looking beyond Regions boundaries

48. Looking beyond Regions boundaries “Continual international benchmarking scanning a top priority”

49. 5. Entrepreneurial Dynamics

50. Smart Specialisation Process Society Government Eco-System Eco-System Smart Specialisations Academia Feedback Industry Coordination Coordination Monitoring/ Evaluation Feedback Discoveries Strategic Vision Collaboration/ Open Innovation Extending Emerging Equipping Rebuilding and Rebalancing the economy