1. Regional Innovation Paradoxes Regions for Economic Change: fostering competitiveness through innovative technologies, products and healthy communities. Brussels, 7- 8 March 2007 Michael Kitson Director, Programme on Regional Innovation, Cambridge-MIT Institute

2. The Cambridge-MIT Institute (CMI) Strategic alliance between the University of Cambridge and the Massachusetts Institute of Technology Mission: to enhance the competitiveness, productivity and entrepreneurship of the UK economy –By improving the effectiveness of knowledge exchange between university and industry CMIs Programme on Regional Innovation –Addressing the issues facing regional economies in influencing and sustaining knowledge-based growth. www.regionalinnovation.org.uk

3. Two Economic Paradoxes The Innovation Paradox The Location Paradox

4. IDEASINNOVATION Investors Team Entrepreneurs & Inventors

6. The Innovation (Solow) Paradox Economic growth is not apparently correlated with innovation You can see the computer age everywhere these days, except in the productivity statistics". Robert Solow, 1987, (MIT, Nobel Laureate)

7. The Innovation (Solow) Paradox Answer? –Innovation takes time to have a major impact on economic growth. Why? –It is the use of technology not the generation of technology that has the biggest impact on growth

8. The Innovation (Solow) Paradox US Productivity growth 1995-2000: the three largest contributors to the productivity surge were, in order: – wholesale trade – retail trade – security and commodity brokers ( Solow, CMI Summit 2001)

9. IDEASINNOVATION Investors Team Entrepreneurs & Inventors DIFFUSIONDIFFUSION

10. Bentonville AR.

12. Four pathways of regional innovation-led growth A.KNOWLEDGE GENERATING LOCATIONS Indigenous creation of new technologies B.KNOWLEDGE USING LOCATIONS II.Transplantation of new economic activity into region III.Diversification of existing industry into new activities IV.Upgrading of mature industries Source: Based on Richard Lester, MIT

13. Developing New Technologies: the tale of two cities Strong biotechnology clusters in the Cambridges (USA and UK) But the development of the industry in the two cities reflects different trajectories and different challenges Indicates the importance of understanding the geography and history of place

14. 1 mile Source: MIT Entrepreneurship Centre

15. 8 miles

16. The Location Paradox Innovating business do not engage in extensive collaboration with other local businesses or institutions

17. Collaboration and Clusters According to Porter (1998) clusters aregeographic concentrations of interconnected companies, specialised suppliers, service providers, firms in related industries, and associated institutions (for example universities, standards agencies, and trade associations) in particular fields that compete but also co-operate

18. Collaboration and Clusters The stress on geographic concentrations of collaborators is misleading The Porter analysis is based on where firms are, not what firms do Local collaborative behaviour is not an important driver of innovation National and international collaborations are often more important than local collaborations Important to distinguish between bridging and bonding networks – bridging networks that are outward looking may be more important for knowledge based activity