Northern Ireland: Towards a RIS3 strategy

1. Northern Ireland:Towards a RIS3 strategy Cardiff 28th June 2012 Michael Lilley Smart Specialisation Coordinator

2. Presentation Structure • Introduction • 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 Policies • Summary and next steps

3. 1. Introduction • 2003 Northern Ireland Regional Innovation Strategy “Think Create Innovate” • 2004-2006 Regional Innovation Strategy Action Plan • 2006-2008 Regional Innovation Strategy Action Plan • Feb 2012 Appointment of Smart Specialisation Coordinator • March 2012 Northern Ireland joined the Smart Specialisation Platform • May 2012 Northern Ireland “Peer Reviewed” in S3 Platform Workshop • June 2012 Feedback from Peer Review • Winter 2012 Draft of Northern Ireland RIS3?

4. 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

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

6. 2. Regional Context “Non” Smart Specialisation- 1970’s & 1980’s

7. 2. Regional Context • Civil Conflict • Good Friday Peace Agreement 1998 • 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

8. 2. Regional Context • Programme For Government • Economic Strategy- • Strategic Framework • RIS3 • (In preparation)

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. 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

15. 3. Place- Based Dimension of the RIS3

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

17. 3. Place- Based Dimension of the RIS3 Porter’s Diamond Firm rivalry • SME dominated • Small number of large firms dominate • Brain drain Demand Conditions Factor Conditions • Historically UK and Ireland reliant • Limited local demand • World class telecommunications • Global central locality • Good location for pilot projects • Science & Technology • Aerospace • Stone Quarrying • Health Service • Business Services Supporting Industries (Clusters)

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

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

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

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

22. 3. Place- Based Dimension of the RIS3 Analysis of Technology Specialisations Advanced Manufacturing Advanced Materials • Priorities • Collaboration • Timescales Life Sciences ICT Agri-food “Exploiting capabilities and market opportunities”

23. 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

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

25. 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

26. 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

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

28. 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

29. 4. Looking beyond regions boundaries

30. 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

31. 5. Entrepreneurial Dynamics

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

33. Example of S3 Process Collaborative Networks “working together to achieve a common goal” Collaborative Networks “ Government provides Industry Experts as Honest Brokers”

34. S3 process in action Recommendations Consultation Feedback Short listing Innovation ecosystem Collaborative Networks Competitive Call Expression of interest • Route to Market • Industrial Innovation Communities • Limited Liability Partnership • Competence Centres • Innovation Ecosystem • Open Innovation Scoping Facilitation (by Industry experts)

35. Phase 1- Proof of ConceptPhase 2- Prototyping 5. Entrepreneurial dynamics Innovative Procurement (SBRI) – endorsed by N.I. Government • N.I. - 3% of UK Applications N.I. - 11% of UK contracts N.I. - 12% of total UK funding Source: Technology strategy Board; SBRI

36. 6. Governance

37. 6. Governance • Programme For Government- Executive Committee • Economic Strategy-Sub Committee • RIS • (In preparation)

38. Process Northern Ireland Economic Strategy March 2012 • Consultation with the Regional Knowledge ecology Start Draft Economic Strategy Independent Review of Economic Policy 2009 Northern Ireland Government Sub-Committee on the Economy Northern Ireland Government Sub-Committee on the Economy • Consultation with the Regional Knowledge ecology • Public Authorities & Agencies • Civil society • International experts • Actors of knowledge • Investors • Private Enterprises Consultation Response Document Economic Strategy Steering Group Consultation Paper Economic Strategy Working Group • Consultation with the Regional Knowledge ecology

39. Process Northern Ireland Economic Strategy March 2012 • Consultation with the Regional Knowledge ecology Independent Review of Economic Policy 2009 Start Draft Economic Strategy Analysis with RIS3 Guidance RIS3? Regional Innovation Strategy Northern Ireland Government Sub-Committee on the Economy Northern Ireland Government Sub-Committee on the Economy • Consultation with the Regional Knowledge ecology • Public Authorities & Agencies • Civil society • International experts • Actors of knowledge • Investors • Private Enterprises Consultation Response Document Economic Strategy Steering Group Consultation Paper Economic Strategy Working Group • Consultation with the Regional Knowledge ecology

40. 7. Priorities

41. 7. Priorities • Economic Strategy • Rebalancing & rebuilding themes; • Innovation, R&D & Creativity • Skills & Employability • Competing Globally • Business Growth • Economic Infrastructure

42. 7. Priorities Clusters Business Services Financial Services Agri-food Telecommunication & ICT Life & Health Sciences Advanced Materials Creative Industries Sustainable Energy Tourism Advanced Engineering Financing R&D and Innovation Rebalancing themes Economic Infrastructure Education & Skills Global Economy Business Growth

43. 7. Priorities Sustainable Energy SmartGrids Packaging & Application Software Strategic Markets Financial Services Engineering Smart Specialisations Telecommunication High Performance Computing Niche Areas Home-Based Care Stratified Medicine Cloud Computing ICT Life & Health Sciences Social & Digital Media Advanced Materials Agri-food Composites Nano-Structured Materials Advanced Engineering Biomaterials Processing & Packaging Differentiated Food

44. 8. Implementation and Budget • Programme For Government- • Economic Strategy- • Strategic Framework & SMART Targets • Innovation Strategy- • Action Plan & metrics • (in preparation)

45. 9. Measuring the Process

46. Basic Requirements* • Institutions (15) • Infrastructure (8) • Macroeconomy (5) • Health and Primary Education (11) Key for factor-driven Economies • Efficiency Enhancers • Higher education and training (8) • Goods market efficiency (15) • Labour market efficiency (9) • Financial market sophistication (9) • Technological readiness (8) • Market Size (2) Key for efficiency-driven Economies • Innovation & Sophistication Factors • Business Sophistication (9) • Innovation (7) Key for innovation-driven Economies 9. Measuring the Process The Global Competitive Index

47. 9. Measuring the Process Examples of Key Innovation metrics

48. 9. Measuring the Process Examples of Key Innovation metrics

49. Future Innovation Policy

50. Summary and Next Steps • Continue with Innovation Strategy (RIS3) • Provide an “Evidence Base” document for RIS3 • Focus on; • “Quadruple Helix” • SME and High Growth SME support • Measuring Intangible assets in Innovation