Promoting knowledge transfer: networks and exchanges The regional innovation challenge Luc Soete UNU-MERIT, University of Maastricht EU Conference Innovating through the structural funds, Brussels June 2006

Outline Some personal macro observations about Lisbon and the knowledge based economy The emerging regional policy challenge of Lisbon Regional knowledge diversity in Europe A framework for regional innovation policy Conclusions

Some personal broad macro-economic observations with respect to EMU National competitiveness policies have in a monetary union potential beggar-thy-neighbour implications: –Impact of national wage settling policies on (un)employment in other member countries –Danger of a European race to the bottom with respect to social, welfare and tax policies Lisbon and the knowledge society challenge should be seen as a race to the top: –Up to now a top down approach: European targets translated in national targets/benchmarks –How to formulate a bottom up approach: regional diversity as factor for knowledge activation policies

The EU is more than an EMU: role of social cohesion and structural funds Europe was/is a unique laboratory of regional development policies, but social cohesion aims becoming questioned: Effectiveness: national growth convergence within the EU, but regional growth divergence (national failure in first instance) Physical borders of European solidarity being questioned with enlargement Intrinsic limits of regional policy: success implies discontinuation; vulnerability of created European goodwill Diversity of regional development is mixture of factors: Geographical ones: peripheral location Physical endowments: agriculture, mining, logistics Agglomeration effects: snowball size effect; population density closely linked to knowledge activities New endowments: sustainability (pollution, congestion, urban development); ageing (health and care, mobility, housing)

The regional dimensions of Lisbon and the knowledge based economy Social cohesion implications of Lisbon and the KBE under- researched: –Likely internal EU migration effects of highly skilled –Regional/local implications of so-called Matthews effect of research excellence –Local knowledge cluster effects could lead to further regional (and national) growth diversity Crucial role of cross-border or neighbouring spill-over effects –E.g. recent research highlights the effects of the level of education in neighbouring countries on GDP –Behind this particular forms of knowledge transfers

On regional knowledge diversity Regions with strong domestic so-called Anchor tenants –Focus on local knowledge transfers, regional crowding in of private R&D –Matching and building strong linkages between private R&D activities and public research –Local spin-offs from both public and private side Regions with strong foreign MNCs presence –Focus on local anchorage through suppliers –Improve interactions/contacts between foreign and local knowledge –Focus on provision of skilled manpower from local technical schools and universities Regions with strong public knowledge centres (universities, polytechnics, technical schools) presence: –Focus on local quality and dynamism of technical and higher education –Strong cooperation with local authorities, chambers of commerce, create local innovation platforms. Support techno starters –Attract firms as bringing the global clout to make things work

General framework for regional innovation policy From regional system of innovation perspective 4 elements appear particularly relevant for regional growth and development: –Quality of human capital formation –International openness and connectivity of research capacity –Local strength of innovative performance –Absorptive capacity Let me focus briefly on each one of those

Regional quality of human capital formation Focus on quality/upgrading of local education institutions: from primary schools to universities and professional training schools, including life long learning Broad emphasis on quality, including reduction in failure rates, drop outs, early schooling, increasing participation of underrepresented groups Increase attractiveness to foreign students Regional policy interest in quality enhancing measures in local education

International openness of research capacity Attempt at creating global hotspots of research excellence with openness to foreign research(ers), and international (rather than EU) networking Strengthening of local research presence in regional economic, industrial and political tissue (seminars, (in)formal networks, local media, cooperation) Joint public-private regional initiatives to develop further knowledge hotspots Assist in national and European competition to attract best researchers, pay particular attention to research environment conditions

Local innovative performance Recognition of importance of local scientific spin-off – prize for scientific entrepreneurs, etc. Strengthening of links between public research institutes/researchers/teachers and local SMEs (local knowledge or innovation vouchers) Embedment of the dominant local or foreign MNCs in public research infrastructure (anchorage, increasing costs of foot looseness) Regional/local PR of innovative identity

Absorptive regional capacity Focus on regional bèta users and those in neighbouring regions/countries Exploit to the maximum the role of regional public authorities in terms of procurement Enhance regional presence abroad (fairs, etc.) Focus on regional diffusion and knowledge distribution policies based on local specialisation Develop appropriate innovation strategies to underrepresented groups, local conditions, network with similar other foreign regions, European or global

INNOVAT. PERFORMANCE ABSORTION CAPACITY HUMAN CAPITAL RESEARCH CAPACITY

Conclusion: a new regional policy challenge National Lisbon (Barcelona) knowledge targets were ultimately primarily inspired by national statistics and national policy makers But the knowledge economy is an economy without borders: pieces of knowledge acquired, reshuffled from all over the world New geography and agglomeration effects: regions are the natural environment for local anchorage of knowledge related activities Need for a bottom-up approach highlighted by the limited success on implementation of cross-border cooperation: dominance of nationalism in RTD and innovation policies In search of European regional clusters towards an ERRA… only way to achieve Lisbon.