1 Brussels, 10 October 2006, B09 Part III Reconciling convergence and competitiveness – Workshop A Planning for innovation at the regional level Fostering regional innovation in objective 1 regions ANTÓNIO MANUEL FIGUEIREDO Porto School of Economics – University of Porto Quaternaire Portugal

2 OVERVIEW – Topics to be presented New challenges for cohesion regions and a new stage for regional planning activities generated by policies and programmes focused on competitiveness… National versus regional innovation systems: limits and scope of regional innovation strategies… Competitiveness challenges in objective 1 regions (North, Centre, Alentejo, Azores) within a framework of a science-driven national innovation system (Portugal) lacking proximity and active participation of firms Main lessons – implications for regional innovation strategies

3 THE PERSPECTIVE – policy oriented A multi-level framework of thinking: i) research at the University (structural change, innovation and regional science), ii) evidence from evaluation of Structural Funds interventions and public policies and iii) technical advise to territory-focused public policies (TFPP) … But in any case a policy - oriented perspective… Regional planners as catalysers mastering coherence between: demand pull and technology push approaches; innovation-oriented institutions; private and social entrepreneurship Regional planning: the key space of governance of innovation strategies and policies

4 A TALE OF TWO CS – cohesion and competitiveness Twins, two faces of a razor blade, enemies for years? … Better than that: compulsory cooperative approaches… The distributive and the political compromise of cohesion cannot be ignored … but cohesion progresses (convergence) should rely more and more in competitiveness gains IN ORDER TO BE SUSTAINED In any case a territory is not atractive only because it is well placed in competitiveness rankings … social and territorial cohesion matters as well Then a compulsory cooperative relationship is needed …a new C is coming - compromise

5 TERRITORIAL EXTENSIONS OF LISBON AGENDA The renewed Lisbon Agenda is undoubtedly a multi level coordination- intensive EU strategy … but cannot be implemented without focusing specific territories The major challenge of the new impulse of the Lisbon strategy is to prevent that the territorial base of the competitiveness efforts will tend to be limited to a small number of territorial winners … The success of the Lisbon Agenda is on the contrary dependent on the enlargement of the territorial base of competitiveness targets… To enlarge the mass of resources able to be combined in order to produce patterns of attractiveness not easily replicated by others

6 LISBON AGENDA and GOVERNANCE The Lisbon Agenda is NOT AN EXCLUSIVE OF MEMBER STATES or NATIONAL STRATEGIES … The diversity of governance models chosen by member states to implement it is vast and creative … but independently from the model chosen, regional policies and strategies should be seen as key factors in order to enlarge the mass of territories and resources reached by the competitiveness efforts Main issue : the role of regional innovation policies and strategies in fostering the competitiveness side of the Lisbon Agenda cannot be dissociated from the structural trends characterising the national innovation systems…

7 BACKGROUND: regional innovation strategies in Portuguese objective 1 regions A very interesting context for generating policy-oriented organisational learning results … Increasing diversity of patterns of elegibility: competitiveness (Lisbon), phasing-in (Madeira), phasing-out generated for a statistical effect (Algarve), objective 1 (North, Centre, Alentejo, Azores), outermost regions (Azores and Madeira) Two strong leverage factors at national level: a national strategy for implementing the Lisbon strategy associated to the WORKING STRUCTURE charged of conceiving, implementing and monitoring the Technological Plan, which is a major compromise of the new political majority, depending directly from the Prime Minister… No experience at all at regional level

8 A MAJOR CONSTRAINT TO BE TACKLED The organization and the main orientation of the NATIONAL INNOVATION SYSTEM (NIS) are dominated by a paradox… The Portuguese NIS is science-oriented working within an economy in which science-based and radical innovations are WEAK A low level of social capital and trust between firms and R&D centres and laboratories Apart some punctuated experiences of steady cooperation, firms are suspicious of the advantages of maintaining permanent links with public research centres and researchers search for imaginary entrepreneurial organizations able to understand and fund their projects…

9 A MAJOR CONSTRAINT TO BE TACKLED (2) A biased response to the most critical questions regulating the pattern of evolution of the NIS: who funds R&D activities? Who does R&D projects? Public funding is predominant and R&D efforts are mainly done in public institutions – convergence already achieved at public level comparatively to the OECD average patterns of innovation Increasing levels of internationalization and excellence of the scientific outputs of the NIS Innovation systems: elements, interactions, openness and boundaries National Innovation System versus Regional Innovation Systems: how feasible will be the implementation of regional innovation strategies targeted at competitiveness improvements?

10 GUIDELINES FOR ACTION A vast potential in terms of innovation assets (R&D centres and laboratories, inter-faces University-firms, technological infrastructures, incubation experiences) are not located exclusively in the competitiveness region (Lisbon) … The objective 1 regions of North and Centre host a vast potential of scientific and technological knowledge in areas such as nano-materials and technologies, biotechnology, biomedical engineering, computation, neurosciences, polymers, new materials … still lacking a critical mass of firms able to use this knowledge … But these assets are simultaneously key resources of the NIS and actors of national strategies (Technological Plan) …

11 A CRITICAL PATH Two main strategies will be evolving asking for complementary actions and coherence … The Technological Plan will try to reorient the NIS for higher levels of cooperation with firms and regional innovation strategies will enable objective 1 regions to foster competitiveness efforts Risks of detachment of some key institutions from regional strategies … Serious problems in regions with low endowment of innovation assets require stronger cooperation with the most representative institutions of the NIS… Knowledge-based projects extended to low density areas in order to increase the value of money spent in endogenous resources

12 LESSONS Regional innovation strategies targeted at fostering the competitiveness side of cohesion policies cannot ignore the characteristics of the NIS prevailing in the country … In countries in which NIS is a strong asset, one should be aware that the implementation of regional innovation systems is critical in terms of governance … In Portugal, regional innovation strategies in objective 1 regions could be key drivers in order to tackle the major constraint of the NIS – low participation of firms… The extension of knowledge-based strategies to low density areas will be a critical factor in order to enlarge the territorial dimension of competitiveness