University of Athens, GREECE Innovation and regional development : Prof. Lena J. Tsipouri

Innovation and regional development: the European Union experience 1.Progress of academic theory: European policy rapidly incorporates and tests new theoretical findings. 2.The EU Regional Innovation Policy: there is a lot of progress; however it is still a policy with limited authority and even more limited resources. 3.Lessons from incorporating innovation into European Regional Development Policy: some significant general findings can be used for future policies within and beyond Europe

The key lessons from the theory (neoclassical, institutional, evolutionary) Spatial development is uneven: the EU has introduced integrated regional development policies since the 80s. Physical and human capital as well as institutions matter for regional growth: DG Regio has persistently increased emphasis on intangible investments and good governance. The challenge of globalisation: face economies of scale with economies of agglomeration (increasing returns to scale internal to the firm and/or knowledge externalities): Clusters, networks, PPPs, transborder cooperation are increasingly tested and favoured.

The EU institutional set up A very diverse set of regions Limited degrees of freedom for intervention at the EU level (the subsidiarity principle) Limited budget for regional intervention Despite the limitations: The contribution to regional innovation may be considerable, even catalytic

Experiences from the EU regional innovation policies It took three programming periods to make RTDI a mandatory element of the utilisation of regional funds The Commission guided eligible regions with instruments available (RITTS/RIS, Community Initiatives, Partnership in Programming) towards supporting innovation (and the Information Society) with limited but mounting success. Some regions responded much better than others in designing RTDI initiatives. The positive response in design presented different degrees of success when implemented in the regions.

The EU regional innovation policies: the current situation in Obj. 1 regions Variable share of Structural Funds devoted to RTDI On an annual basis, SFs resources devoted to RTDI account for between 5% to over 18% of gross expenditure on R&D (plus leverage effect). Highest absorption in investments in R&D infrastructure in universities as well as direct subsidies to enterprises (29%), the second most important type of action includes a mix of investment in technology centres, etc. and support for integrating new technologies in enterprises, etc. Limited focus on support to clusters and poles (2%), innovation governance (8%) and support to innovative enterprises (17%) The share of SF devoted to RTDI is related to the existing national intensity of RTDI A paradoxal? difficulty to mobilise enterprises to become involved in more innovative measures The SF programmes have boosted the regional role in previously strongly centralised countries (France, Ireland, Portugal) and contributed to reinforcing a decentralisation trend elsewhere (e.g. Poland, Spain United Kingdom).

Source: Report to the European Commission (2006), Strategic Evaluation on Innovation and the knowledge based economy in relation to the Structural and Cohesion Funds, for the programming period One indicator: Percentage of Structural Funds devoted to RTDI in Objective 1 Regions ( )

Experiences from the EU regional innovation policies (2) Top-down policies are extremely difficult Supporting research is easier than supporting innovation Supporting supply is easier than supporting demand Competitiveness and cohesion can be compatible and even mutually reinforcing Governance is crucial

Lessons from two decades European Regional Development Policy: the basic findings Fund transfer is important but good policy design is even better. Policies have to be tailor-made; there is no one-size-fit-all policy. Is arms-length (subsidiarity principle) or hands-on a better policy??? There are arguments in favour of both!

Lessons from two decades European Regional Development Policy: some crucial, low cost contribution of the EU Promote evidence-based policy (Assessment of monitoring, Performance Indicators, Regional indicators CIS, EIS, Key Figures and beyond Erawatch and Trend Chart) Evolution from R&D, to diffusion to non- technological innovation Linking RTDI to education, skills, the Information Society, Industrial Policy, the service sector The Open Method of Coordination and Benchmarking

Lessons from two decades European Regional Development Policy: further increasing ambitions in the future There is considerable difficulty in translating EU priorities into effective regional implementation. Eventually, the challenge is to change mindsets.

Thank you for yor attention ! Questions?