Jiří Blažek Dept. of Social Geography and Regional

Development, Faculty of Science,

Charles University in Prague, e-mail: blazek@natur.cuni.cz

Regional innovation strategies - implications of European

experience for new and future member states

Zagreb, June 2008

Structure of presentation

2

1) Analysis of current situation in the sphere of innovation policies: a) on European levelb) on a national level (Czech Republic) c) on a regional level (case of city-region of Prague and its RIS)

2) Possible implications of Constructing Regional Advantage project

3) Conclusions and possible solutions

European context for innovation

3

The failure of Lisbon strategy to catch up with the US in innovation and technology creation is well known – the gap between USA and EU even widened

Five priority objectives were proposed for public action to encourage an effective, pan-European innovation system: (a) coherent innovation policies (b) a regulatory framework conducive to innovation (c) encouragement for the creation and growth of innovative enterprises (d) improvement of key interfaces in the innovation system (e) a society open to innovation

Main activities on the EU level supporting innovations

4

1) linking the EU cohesion policy and Lisbon strategy (allocation of at least 60% of fin. resources in programming period 2007-2013 on Lisbon priorities: compulsory for EU-15, recommended for EU-10)

2) doubling of financial resources on EU S&T in new financial perspective

Main EU activities supporting innovations on regional level

5

Creation of innovation extremely regionally concentrated (share of Czech Rep. on patents in EPO just 0,07%!)

Therefore, EC supports:

1) increase R&D expenditure in less successful regions 2) creation of regional innovation systems

Initiatives: European Research Area, Innovating Regions of Europe , Regions of Knowledge, etc. and cooperation of regions in this sphere

Inspiration for particular projects: http://cordis.europa.eu/era/regions.htm

Regional context for innovation

6

M. Porter (2000): What matters is not the industrial structure, but the position of the firms in the region within the particular industrial branch, i.e. low-road vs high road strategy of competitiveness (e.g. production of shoes and textile in Bavaria)

In current global economy more and more important are local/regional factors of competitiveness as globalisation eliminates advantages gained from mobile sources

2 types of knowledge are distinguished – codified and tacit – difficult to transfer and/or imitate

Tacit knowledge is the key source of competitiveness in current world

Regional context for innovation

7

Local/regional factors of competitiveness: – local know-how, particular relations to suppliers and customers, knowledge of regional market, level of trust, access to local technologies, flexibility given by existence of a key supplier, cultural context and „atmosphere“ within the region

Regional innovation systems

8

Aim: identification and stimulation of cooperation of key relevant actors, reflecting tradition, regional resources, problems, opportunities and designing a regional innovation strategy

Several different types of regional innovation systems(grassroots, dirigiste, ….)

regional innovation strategy – identification of barriers

and of a potential (personalities, research teams), clear commitment to specific tasks and time schedule

National context for innovations in the Czech Republic (1)

9

The overall lagging of NMSs in innovation creation and implementation is well known

The current unsatisfactory situation is a result of several key factors

Fundamental among them was the separation of R&D in communist countries from the democratic world which lasted for 4 decades

But also many other factors like a strict separation of basic research pursued in Institutes of the Czech Academy of Sciences and in Universities which were not expected to come up with the results that would be commercialized

National context for innovations in the Czech Republic (2)

10

The Czech Government has started to deal with innovations only recently, also due to European pressure connected to Lisbon strategy

Therefore, recently, several governmental materials dealing more or less explicitly with innovations were elaborated

Especially „The National Innovation Policy“ was adopted by the Czech Government in July 2005

Consequently, on the basis of preparation of several strategic documents there is a growing agreement among experts and decision-makers on key weaknesses of Czech innovation system

Key weaknesses of the Czech innovation system (1)

11

insufficient links between public research institutes and businesses, poor opportunities for mobility between industry and academia and even insufficient mutual awareness (large R&D foreign investor in Brno: „with whom could we cooperate in the region???“)

overcomplicated and improper general legislative framework (including tax system) plus poor law enforcement

low share of university educated people (only 60% of

EU average), low share of R&D employees (ca. half of EU avg.), low share of GDP allocated to R&D by public and private sector

Key weaknesses of the Czech innovation system (2)

12

insufficient evaluation of results of public R&D institutions with clear implications for their financing

missing financial instruments conductive to innovations (venture capital funds etc.)

unclear competence over innovation policy among governmental bodies (20 bodies involved)

insufficient marketing of both options opened by the existing governmental and EU support programmes for innovative actors and of the results of innovative processes (innovations, patents)

Insufficient evaluation of results of R&D institutions and projects with clear implications for future financing (completely new system of financing of science including universities as of 2010).

Bohemian Regional Innovation Strategy (BRIS) - developed for the City of Prague

13

Profile of the city- 1,2 mil. inhabitants, 156% European avg. of GDP per capita, unemployment rate 2% - The city is relatively attractive for foreign investors (new arrivals: DHL, Accenture, Siemens). - Prague has a highly skilled workforce. The share of the total population holding a university degree is almost 20% (twice the national average) - In Prague, there are about 80,000 university students, 40 Institutes of the Academy of Sciences and 50 other research institutes

Consequently, about a half of the scientific and research potential of the Czech Republic is concentrated in Prague

14

Bohemian RIS

15

The BRIS has been elaborated on the initiative of Technology Centre of Czech Academy of Science which wanted to use the opportunity offered by the EU funding available for elaboration of regional innovation strategies

Therefore, its clearly „product driven“, not „demand driven“

In order to identify the requirements and specific features of Prague, an extensive field-study at 490 enterprises and at 60 research organizations in the field of innovation generation was conducted

Key priorities/problems to be addressed from the city (regional) level

16

Strengthening the links between public research institutions, private firms and other actors relevant for innovations (bottom up approach)

Establishment of links among research branches of MNCs located in Prague with the endogenous firms as up to 60% of R&D private expenditures are provided by foreign firms in the Czech Rep.

Marketing of both BRIS and innovations created in Prague

Key weaknesses of BRIS (1)

17

Not sufficiently developed analytical part, there is no serious attempt to identify the sectors with the largest innovation potential

Missing clear priorities, the strategy is “to improve

everything”

Completely missing link to budget of City of Prague

Excessive focus on SMEs despite the fact that most relevant innovative actors are (research) branches of large foreign firms

Key weaknesses of BRIS (2)

18

Unjustified focus was put on building of a new innovation infrastructure (to establish Prague RDA, centres of excellence, science and technology park, incubators for new enterprises) instead of “forcing” the existing institutions to fulfil their role more effectively

Improper selection of priority areas for support (for example, among the priority projects is support to Prague’s “educational gastronomic cluster” which potential role in innovations is rather dubious)

Missing clear responsibility (and time-schedule) for implementation of actions and for monitoring

Key concepts of Constructing Regional Advantage project (1)

19

Current thinking on approaches towards stimulation of innovative potential of the regions has been recently elaborated by CRA project (DG Research)

Key concepts of CRA project:

1) regional advantage can be actively constructed/designed which implies a new and more dynamic role for public sector (including universities)2) region is a proper platform for mobilising innovation creation as its invention is a highly localised process, but „local buzz“ should be complemented by non-local connections 3) innovation, talent formation & attraction and entrepreneurship are the key components to construct regional advantage (P.Cooke)

Key concepts of CRA project (2)

20

4) the 4 key dimensions for assessing the regions are (P. Laredo):- institutional - governance capabilities, policy path dependency,- economic - infrastructure, activity/sector mix- reg. knowledge base – higher education, research institutes, firms capabilities -connectivity- collaborative patterns, intermediating structures, mobility of LF, spin-offs)

5) away from „one size fits all“ to „provision of methodologies instead of recipes“ (A. Piccaluga), as copying of best practices is impossible when it concerns regional-specific assets that are „soft“ and result of long histories (R. Boschma). Therefore, approaches and tools might and should differ for different regions

Some implications of CRA project for BRIS (Prague) (1)

21

Analytical part of BRIS is rather of traditional nature without focusing on softer issues related to connectivity dimension

i.e. missing analysis of interactions among the key actors, missing identification of potential leaders, no answer why some of existing institutions are not functioning properly, what are the routines that prevent standard support mechanisms to operate effectively, etc.

Summarising in other words: focus "not only on benchmarking but also on better knowing and understanding ourselves“ including the question „where are right people?“

Moreover, issues like development of talents and development of entrepreneurship capabilities and talent retention or even talent attraction were either not elaborated at all or only partially

CRA – implications (2)

22

Using the 4 criteria outlined above (institutional, economic, reg. knowledge base, and connectivity) it seems from the before mentioned facts that Prague’s main weakness is the lack of connectivity among relevant actors

Therefore, from this point of view, perhaps the largest merit of elaboration of BRIS is initiation of a mutual communication among relevant partners and putting the issue of innovations on the agenda

In this context one has to regret, that the main part of the BRIS survey among Prague's innovative firms and research institutes has been outsourced

so a unique opportunity for using this as an instrument for building a consensus and developing a partnership with key players and esp. with the business community was missed

CRA – implications (3)

23

A need to shift the focus of public support from the institutions to the projects aiming at delivering the desirable changes

(as in the Czech Republic, public support is often

oriented to institutions with „correct“ name like „Science and Technology Park“ or “SMEs incubator” instead of on support of desirable activities leading to measurable changes)

In addition, a clear need for instruments that would

help the firms to acquire new routines, and esp. enhancement of their capability to articulate their need for innovation (B. Asheim)

3) Conclusions (1)

24

Relatively modern conception of National Innovation Policy and of BRIS versus real implementation

Many problems of systemic nature (improper legislative framework but also soft factors like inclination towards economic „individualism“ or even „egocentrism“ (P. Cooke) reflecting low level of trust and of mutual respect among key actors and in society in general

Positive development is a plan of Prague authorities to integrate BRIS into the city Strategic Plan which would guarantee that issues related to innovations would be put into the mainstream policy and as such regularly monitored

Another positive feature of BRIS is the fact that this document is coherent with Programming Documents financed by EU SFs

Conclusions (2)

25

For example, with the support from SFs, Charles University established its „Centre for Transfer of Technologies and Knowledge“ which was among the priority projects identified by BRIS

Moreover, there is continuing enthusiasm of key personnel of Technology Centre of Academy of Science which resulted in obtaining the support (within the EU 6. FP) for follow up project “Evaluation of impacts of regional innovation strategy”

This helps to keep the BRIS on the agenda of decision-makers as well as of other relevant actors

Another significant contribution of BRIS is the fact that it helped to stimulate and inspire the debate about innovation policy on a national level

Therefore, BRIS is a learning exercise aiming at enhancement of institutional capacity to cope with change

Possible solutions (1)

26

In principle, there are just 2 basic types of positive solutions for regions lagging in innovation creation: 1) to enhance innovation creation (highly demanding both financially and for human resources, in many spheres unrealistic, requires high concentration of resources within the given state) 2) to enhance the capacity for creation of less demanding innovations and esp. strengthening the capacity for dealing with already developed innovations

In both cases the concept of Triple Helix might be

useful

Government/public administration

UniversitiesFirms

Triple Helix

(B.Asheim, 2006)

Innovation system

Narrow definition of R&D system

Broader definition:Human and social capital, + clients

Possible solutions (2)

28

Each of the actors is having its role

Jointly they should create suitable conditions:- Quality human resources (qualification, motivation)- Legislation- Infrastructure (not only transport but also access to information, databases, libraries). - Financial instruments for innovations - And „atmosphere“ in the region (Cambridge x …..) requires respected leader, personalities