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ICT and the “ new ” regional economy

Explore the influence of ICT on local growth patterns in Europe, knowledge creation and diffusion, and the emergence of the digital/knowledge economy. Discover the impact on traditional growth models and factors markets.

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ICT and the “ new ” regional economy

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  1. ICT and the “new” regional economy Luc SoeteMERIT-Infonomics University of Maastricht http://www.infonomics.nl Think-In on “Dublin in the Knowledge/Digital Age-Creating the Worlds Most Intelligent City”, Department of Taoiseach, June 21st, Dublin.

  2. Outline • The Digital/Knowledge Economy • The Systemic Features of Knowledge Creation and Diffusion • The Local/Regional Growth patterns in Europe • The Impact of ICT on regional/local development Luc Soete Taoiseach Think In

  3. 1.The emerging digital/knowledge economy • As the industrial society came about when machines started to produce machines (Marx) so the knowledge society emerges when knowledge is used to produce knowledge. • From IT to ICT also a communication revolution: contrary to electricity the sending of information does not involve significant energy loss. Hence distance becomes irrelevant (death of distance). • Mobile digital communication removes effectively the last physical geographical barrier. New Marshall “any place, any where, information and communication is in the air”. Luc Soete Taoiseach Think In

  4. A. Output Growth Impact of ICT • Traditional/standard growth impacts: • Growth in geographical tradability of goods and in particular services • Growth in possibilities of versioning of goods and services • Increase in time “valuation” (e.G. Contingency pricing/ contracts, importance time zones) • Underestimation of: • Substitution-effects (“sailing-ship effect”) • Appropriation problems (security) • Dependence on market volatility Luc Soete Taoiseach Think In

  5. B. Digital Transparency • Traditional/standard effects: • ICT a logistic/distribution-revolution, reduction in transaction costs • Renewed importance of open versus closed standards • Impact inversely correlated with product homogeneity • Underestimation of: • Search costs (information asymmetry) • Need for standard specifications • Importance of physical trust relationships in distribution Luc Soete Taoiseach Think In

  6. C. Digitalisation of Factor Markets • Capital: • Globalization, speed, arbitrage should all lead to stronger growth convergence, but also… • Lemmings-attitudes, volatility, increased financial risks • Labour: • Lower frictional unemployment, improved connectivity with labour market, but also… • Reduced incentives for investments in human capital and training, too high mobility, global migration pressures Luc Soete Taoiseach Think In

  7. D. Impact of ICT on Knowledge Production • Increase in productivity of R&D? • Thanks to the increase in the codification of knowledge and of digital transparency/communication between researchers • Increase in diffusion of knowledge • Thanks to digital access/transparency • Increase in rate of return to “learning” thanks to digital education forms, distant learning, versioning Luc Soete Taoiseach Think In

  8. 2. On the Systemic Features of Knowledge and Innovation • National systems of innovation: • Need for a systemic view on innovation • Illustrates the intrinsic limits of focusing on one or two specific technology targets such as R&D (Barcelona summit) • Systemic or intelligent benchmarking, but how? • Applicable at regional level taking into account external relationships Luc Soete Taoiseach Think In

  9. R&D Intensity and Labour Productivity Growth R&D intensity and labour productivity growth 3,00 SU 2,50 JP 2,00 US BERD / GDP, 1995 % 1,50 GE FL FR UK NL 1,00 BE EU AT DK IR IT 0,50 ES GR PT 0,00 -0,50 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 Annual growth of labour productivity, 1995-2000 Luc Soete Taoiseach Think In

  10. Systemic Benchmarking: an Example • 4 concepts emerge as particularly relevant for a country’s competitiveness and sustainable employment: • social and human capital • research capacity • technological and power to innovate performance • absorptive capacity Luc Soete Taoiseach Think In

  11. SOCIAL & HUMAN CAPITAL SUPPLY USERS ABSORTION CAPACITY RESEARCH CAPACITY DEMAND CREATORS TECH. & INNOVAT. PERFORMANCE Luc Soete Taoiseach Think In

  12. SOCIAL & HUMAN CAPITAL ABSORTION CAPACITY RESEARCH CAPACITY TECH. & INNOVAT. PERFORMANCE Luc Soete Taoiseach Think In

  13. SOCIAL & HUMAN CAPITAL RESEARCH CAPACITY ABSORPTIONCAPACITY TECH. & INNOVAT. PERFORMANCE Luc Soete Taoiseach Think In

  14. Construction of the BIAS 1 BIAS A(1 - 2) A+B A B 2 B(4 - 3) 3 4 Luc Soete Taoiseach Think In

  15. "BIASES" in N.S.I. Luc Soete Taoiseach Think In

  16. "BIASES" in N.S.I. Luc Soete Taoiseach Think In

  17. 3. About Regional Clusters • A geographical concentration of interlinked firms and institutions in a particular technological area; membership within the group seems to be significant for each member firm’s individual competitiveness • Overwhelming emphasis in regional science and economic geography onthe “new” (rather old) agglomeration effects, strong doubts as to the decentralisation impacts of ICT… Luc Soete Taoiseach Think In

  18. Source: M. Porter Luc Soete Taoiseach Think In

  19. The Regional Knowledge Landscape in Europe • existence of research/knowledge/innovation policies at regional level in Europe: diversified or fragmented as one prefers to take a positive or negative view with universities, businesses, local authorities generally involved • strong concentration particularly in small countries: Europe effectively a mosaic of regional growth poles with a network of the so-called motor-regions: Baden-Württemberg (D), Rhône-Alpes (F), Lombardia (I) and Catalonia (E) • are there “new” developments beyond this rather old knowledge European “archipelagio”? Regional growth centres in Finland, Sweden, Ireland… Implications of ERA.. Luc Soete Taoiseach Think In

  20. RTD Regional Expenditure in the EU Source EUROSTAT 13/03/02 Luc Soete Taoiseach Think In

  21. High-tech patent applications per million of active population (y 2000) Source EUROSTAT 13/03/02 Luc Soete Taoiseach Think In

  22. Regional R/D Intensity as a share of national expenditure (the 2 champion regions per country) • GER - Oberbayern (14%) + Stuttgart (12%) = 26% • GR - Attiki (49%) + Kentriki Makedonia (18%) = 67% • ESP - Madrid (32%) + Catalonia (23%) = 55% • FR - Ile de France (45%) + Rhône-Alpes (10%) = 55% • IT - Lombardia (24%) + Lazio (19%) = 43% • NL - Zuid-Holland (25%) + Noord-Brabant (18%) = 43% • AU - Wien (52%) + Steiermark (14%) = 66% • P - Lisboa (54%) + Norte (21%) = 75% • FIN - Uusimaa(47%) + Etelä-Suomi (30%) = 77% • UK - South East (24%) + Eastern (18%) = 42% • (source : Eurostat - March 2002) Luc Soete Taoiseach Think In

  23. 4. ICT impact on regional/local development • As a complementary cluster of technologies or rather as substitution • Focus on distribution and consumption rather than just production • Shift from typical post-war space and time extensive development towards space and time saving thanks to use of ICT? • Case of Dublin (MUTEIS project on the FINS) Luc Soete Taoiseach Think In

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