Parallel Workshop Session: Workshop 2.2 Territorial Factors for Global Competitiveness and Economic Growth ESPON Internal Seminar 2012 “Territorial Development Opportunities in Europe and its Neighbourhood to Foster Global Competitiveness”

Discussants (5’ per question): Gilles Van Hamme, TIGER Roberto Camagni, KIT Ruben Lois, SIESTA Claude Grasland, M4D Adrian Healy, ICR2 Policy Statements (10’): Didier Michal, FR MC Stella Kyvelou, EUROMED Facilitator (discussion 50’): Peter Schön, DE ECP Reporting and conclusions (10’): Kai Böhme Workshop Territorial Factors for Global Competitiveness and Economic Growth 2

Workshop 2.2 – key questions for ESPON projects 3 1.What are the main observations or conclusions from your project - for Europe, its regions and cities - in relation to “economic development, innovation, technological development, research trade flows, territorial specialisation and profiles”? 2. How do developments in Europe´s neighborhood influence the territorial development in Europe and vice-versa? 3. What opportunities and challenges exists for Europe and its neighbourhood for increasing competitiveness through further cooperation and integration?

Workshop 2.2 – key questions for ESPON projects 4 1.What are the main observations or conclusions from your project - for Europe, its regions and cities - in relation to “economic development, innovation, technological development, research trade flows, territorial specialisation and profiles”?

TIGER 1)Regionalization and globalization are parallel and probably mutually reinforcing processes; 2)The importance of Europe for European regions : two third of trade is internal and the openness rate of the EU is around 20% for the European economy

3)Regions and cities are unequally “globalized”; 4)Openness to globalization is related to competitiveness, notably in products with high technological content 5)However, regional and city performances in the last ten years is not clearly related to their participation to global economy and networks

Territorial evidence on knowledge and innovation shows that the picture is rather impressive (or depressive): in most European regions the knowledge economy is still in its infancy. But there is a hope: there appears a variety of possible “innovation patterns” larger than the simple core/periphery dichotomy, deriving from territorial specificities of the single regions, with good potential for success. Workshop 2.2 – Results from KIT (1) 7

The Knowledge Economy in Europe The Knowledge Economy in Europe gives a very fragmented picture. What is striking from this map is the high number of regions in which the knowledge economy is still in its infancy.

Territorial patterns of innovation 9 The geography of innovation is much more complex than the core-periphery divide. A European science-based area An applied science area A smart technological application area A smart and creative diversification area An imitative innovation area

R&D expenditure needs critical mass but also shows decreasing returns; local formal knowledge intensity does not necessary guarantee higher innovation performance; regions innovating in the absence of a strong local knowledge base can be as successful as more knowledge-intensive regions in turning innovation into a higher growth rate. Innovate in R&D and regional policies:  ‘Smart innovation’ policies:  policies able to increase the innovation capability of an area by boosting effectiveness of accumulated knowledge, fostering new applications and diversification, enlarging and deepening the local knowledge base, starting from local specificities and the established “innovation patterns” in each region. Workshop 2.2 – Results from KIT (2) 10

Impact ranking by patterns

1. What are the main observations or conclusions from your project - for Europe, its regions and cities - in relation to “economic development, innovation, technological development, research trade flows, territorial specialisation and profiles”? In terms of research, there are huge imbalances between regions. Only 37 out of 272 considered regions meet the 3% target of R&D investment. With regard to R&D, the EU is loosing ground in relation to competing economies. 12 Japan (2008)3.45 United States (2008)2.79 EU27 (2010)2.00 SIESTA

For the most innovative regions in terms of R&D, business expenditure is the key driver. The immense majority of patents emerges in a particular area of Europe that basically includes Germany and Switzerland, with extensions to particular regions of Austria, Northern Italy, France, Benelux, Southern England and some Scandinavian regions. Universities are decisive in R&D, thus they are very significant in several medium and small-sized cities. 13 Japan (2008)2.70 United States (2008)2.02 EU27 (2010)1.23

14 Trends in Europe – M4D Hypothesis Activity rate is more important than unemployment rate for the evaluation of territorial trends in Europe. Because it reveals the real potential of territory in terms of labour forces surplus or deficits. Absolute count of active and employed people are more interesting than relative ratio for a sound prediction of structural changes in a mid term perspective ( ) Thanks to HyperAtlas V2 and M4D core databse strategy, it is possible to evaluate the trends and the current situation

15 Trends in Europe

16 Trends in Europe

17 Trends in Europe

18 Trends in Europe

19 Trends in Europe Main discoveries Trends of active population reveals a very strong increase in Spain, Ireland, southern France, Northern Italy and at a less degree Benelux and northern Europe. At the same time, we observe a very strong of available labour force in Romania, Southern Italy, Germany, Baltic countries. As a whole, an important move of active from east to west. Distribution of activity rate in 2009 is characterized by strong imbalances in the use of available labour force. Maximum use of available labour force is observed in northern and central Europe and minimum use in peripheral area of southern and eastern Europe. We can therefore anticipate a baseline scenario of increasing mobility of active from peripheral to core area.

Workshop 2.2 – key questions for ESPON projects How do developments in Europe´s neighborhood influence the territorial development in Europe and vice-versa?

TIGER 1)The importance of Europe for the neighbourhood makes no doubt: in the last decades, the influence of Europe has been more and more restricted to its neighbourhood  Neighbourhoods are functionnally part of Europe: some neighbouring countries are indeed more intensively turned to Europe than some European countries are; 2)In reverse, the neighbourhoods are important for Europe, but behind major economic areas, mainly Northern America; 3)The importance of the neighbourhood is higher for migratory flows and energy than economic and financial flows  neighbourhood policies tend to focus on these matters

The weight of Europe (ESPON) in the trade of countries,

Regions of the world according to the importance they have for Europe and the nature of their links

Recent history proves that enhanced cooperation in trade (most favorable customs tariffs) and investment with neighbor countries means: - increased political stability in these countries, - increase in GDP, employment and welfare, - in the long run, limiting pressure on outmigration. For EU countries this means: - possibility of building diplomatic and political preference partnerships, enlarging the political and diplomatic reach of Europe, - possibility of lowering production costs in manufacturing, with lower distances with respect to BRICs, - building a buffer of export potential in technology, services and hi-tech products, - assure safer and perhaps cheaper availability of energy and other natural resources. - transmit European cultural and political values. KIT 24

Main issue today: is a crisis period the best moment for relaunching and enlarging co-operation? Answer: YES! Because: - It means relaunching investments in an enlarged integration area, - relaunching demand for EU products and services (capital goods, advanced services) thanks to strong feedback effects, -In the medium and long run, relaunching exports and importing at lower costs (P. Krugman: the true advantage of international trade is (cheaper) imports, not exports!) Pillars: -Law of comparative advantage: a role in the international division of labour is always assured to all countries (and is beneficial for all partners) -Multiplicity of “innovation patterns” and strategies. KIT 25

Preconditions for success: Cope technological/economic cooperation with a political and diplomatic strategy (defining alternative diplomatic status for neighboring countries with repect to pure accession), Analyse, interpret and understand neigbors’ culture, attitudes, priorities, Properly define most promising cooperation fields, Concentrate attention and resources in a few targeted fields. KIT 26

2. How do developments in Europe´s neighborhood influence the territorial development in Europe and vice-versa (according to your mind / your ESPON findings)? - SIESTA If the European regions and its neighbourhood want to influence the territorial development in Europe and vice-versa it is necessary to increase the investment in R&D. Based on the scarce available data at the regional scale for those non-EU countries that have been analysed by SIESTA, R&D and economic standards in the majority of EU neighbour countries are lower than the EU average In general, the neighbourhood policy has been focused on economic issues, basically trade and common market, as well as democracy development and other ‘core political’ issues. The smart agenda of the EU2020S, might it be an applicable orientation for a new neighbourhood policy? 27

28 SIESTA

Europe´s neighborhood influence – M4D Methodology for the identification of attractive an repulsive poles

Europe´s neighborhood influence Identification of relative growth pole offers a good vision of the location of main growing metropolitan area in EU and neighborhood. Strong polarisations are observed both inside and outside EU because of global process of metropolisation.

Workshop 2.2 – key questions for ESPON projects What opportunities and challenges exists for Europe and its neighbourhood for increasing competitiveness through further cooperation and integration?

TIGER 1)In the EU 2020 strategy, the following assessment is made: “The Europe 2020 strategy is not only relevant inside the EU, it can also offer considerable potential to candidate countries and our neighbourhood and better help anchor their own reform efforts. Expanding the area where EU rules are applied will create new opportunities for both the EU and its neighbours” 2)This calls for a true cooperation and shared development strategy for the neighbourhood rather than the partenalistic vision and/or the actual focus on migrations, security and energy matters

3. What opportunities and challenges exists for Europe and its neighbourhood for increasing competitiveness through further cooperation and integration? (according to your mind / your ESPON findings)? – SIESTA Investment and diversification in R&D should be promoted by governments, institutions and businesses. In contexts of economic crisis the investment in R&D is strategic to assure the competitiveness of the regions and their economic growth. Thus, collaborative networks should be established between Europe and its neighbourhood. It would be necessary to look for new niche markets, ensuring that the outputs from R&D will be used in Europe and its neighborhood. 33

34 Opportunities for Europe – M4D Hypothesis Young Depency Rate (Pop. 0-14/ Pop 15-64) is the key strategic indicator to evaluate the renewal of labour force in the next 30 years ( ). What are the potential complementarities with neighborhood ? Are opportunities different toward east and south ? What about education of labour force toward east and south ?

35 Opportunities for Europe

36 Opportunities for Europe

37 Opportunities for Europe Key discoveries Theoretical possibilities of complementarities between North and South for labour force renewal BUT Strong deficit of labour force to be expected in eastern neighborhood Competition with gulf coutries for labour force available in Middle East Highest potentialities for EU in Maghreb and Turkey. … IMPLIES STRONG COOPERATION IN HIGHER EDUCATION & RESEARCH !