Regional responses to global challenges Marcos Bonturi Conference on Regional Governance in a Global Context May 11, 2009 - Brussels
Regional governance systems: what challenges? Regions are key actors for sustainable development. The main challenge is designing and implementing relevant regional strategies (prioritising pertinent investment for the region; going beyond usual efficiency/equity tradeoff). This requires: – Managing effective relationships with above partners (central and supra national levels) and below (municipal authorities and counties) – Benefitting from local knowledge for unlocking regional potential – Benefitting from non public stakeholders participation into the strategy design and implementation (firms, citizens) as well as with research centers and universities. – Collaborating with peer regions for broader scale policy (because of externalities, for co-funding programmes, etc.) – Acknowledged leadership (playing both the role of a gatekeeper in relationships with other levels and « unificator » of individual preferences into a collective ownership of regional development strategies)
Regional systems and multi-level governance structures • Mind the gaps (whatever the federal or unitary character of the country): – Information gap (Regions are well placed to identify opportunities for regional investment and development and specificities of national policy implementation) – Capacity gap (regions might not have the capacity to design and implement “coherent” strategies, in particular for what concerns strategic planning – Funding gap (SNG spending responsibilities might exceed their resources. Unstable revenues might discourage relevant investments) – Administrative gap (administrative boundaries seldom correspond to economic challenges and functional borders) – Policy gap (purely vertical approaches by line ministries do not allow for effective regional policy as it is a cross-sectoral domain)
Regional systems into multi-level governance structures • Bridge the gaps: – Performance indicators (basis for dialogue, learning and accountability) Ex: EU; UK (benchmarking); Italy (capacity building at the local level); Norway (bench-learning) – Grants, co-funding agreements and multi-annual budgets (earmarked transfers are relevant for risky and heavy projects which requires co- funding arrangements) – Inter-municipal coordination (beyond increasing efficiency in public services delivery, this should support strategic planning at the relevant scale (Ex: cooperation in France, Switzerland; mergers in Denmark, Japan) – Inter -sectoral collaboration (creation of a specific ministry, inter- ministerial bodies,…complex challenge) – Contracts (between central and regional levels, flexibility of use, diversity of application, avoiding constitutional rigidities, solving all gaps in just one instrument) (ex: EU, France, Italy, Canada, Spain,…) – Laws and legislation (the most binding instrument…when laws are implemented).
What are the results of adopting an RIS approach? • The changing nature of innovation reinforces the need for strong RIS dynamics in all regions – Research-intensive innovation remains highly concentrated – Some regions are catching up (Shanghai 2.3% R&D/GDP), but many will not • The systems focus serves to identify different kinds of gaps and “failures” for policy intervention – Weaknesses in one part of system limit economic growth – Market failure is not the only problem • National policymakers are struggling with how to incorporate the RIS concept into policy – What is the most efficient spatial allocation of resources? – How are different RIS served by a uniform policy?
What are the main problems and issues with the RIS approach? • Many regional strategies are not adapted to their context – Not all regions can be Silicon Valley (knowledge-generation leader) – But capacity to absorb knowledge to innovate is needed everywhere • Entrepreneurship is the crucial but often missing link – RIS is frequently a recast science- and research-based approach – Most innovation “principles” are not recognised in supply -driven RIS plans • Respective roles of national, regional and local level unclear – Programme proliferation & duplication creates confusion & waste – Administrative boundaries don’t usually map to an RIS
What strategies can be used to resolve these issues? • Broader innovation approach but tailored regional response – Service sector and public sector have great innovation potential – Clear diagnosis and realistic goals for regional strategies – New indictors are needed to track progress • Using the crisis as an opportunity for RIS – Investments in innovation assets (people, firms, knowledge- generators) and the linkages among them support needed growth – High-skilled unemployed can fuel entrepreneurship and dynamism • Clearer multi-level governance arrangements – Growing number of initiatives for national-regional dialogue – Increasing recognition of regional specificities and their role in supporting national goals
Types of innovation require different policy action Type Description Product Process Org. Radical Totally new product, Computer Pasteur- On-line creates new market isation insurance Disruptive New product makes Personal Radiation Budget others obsolete computer airline Recombinant New packaging of a Smart Special Lean technology, application card purpose mgmt to a new market vehicle Sustaining Technology developed HD TV CAD-CAM Customi- to support productivity design sation Incremental Step-by-step process of 3G cell Wind Call innovation, often SMEs phone turbine centres energy Source: Philip Cooke
R&D investment trends Countries with high R&D intensity Research carried out by the business sector display larger regional disparities more frequently generates a patentable result Correlation coefficient for government R&D is 0.67
Patenting patterns 45% of PCT patents applications are Countries that are best performing in recorded in only 10% of OECD regions terms of patent applications seem to co- invent mostly within their borders Korea Japan United States Germany Italy Hungary Norway Finland Switzerland United Kingdom Australia Sweden Netherlands Austria Poland France Czech Republic Greece Belgium Spain Mexico Ireland Portugal Canada Slovak Republic Turkey 0% 20% 40% 60% 80% 100% In a region within the country Foreign country
Concentration of skills Concentration index of students in Concentration index of the labour force tertiary education and employment in with tertiary education, 1999 and 2005 high-tech sectors 2005 (TL2) (TL2 ) Sweden 56 Australia 52 United States 47 Finland 46 Mexico 45 Portugal 45 Spain 43 Greece 43 Norway 41 Hungary 38 Denmark 37 OECD (26) average 35 France 33 Korea 33 United Kingdom 32 New Zealand 31 Canada 30 Czech Republic 28 Austria 28 Netherlands 27 Belgium 27 Ireland 26 Germany 26 Switzerland 25 Italy 24 Poland 22 Slovak Republic 20 0 10 20 30 40 50 60 1999 2005 Employment in knowledge-oriented sectors Student enrolment in tertiary education
Different national policy streams support clusters and regional innovation systems Policy family Old Paradigm New Paradigm Regional Redistribution from Building competitive regions by leading to lagging bringing together actors and regions targeting key local assets Science and Financing of individual, Financing of collaborative and Technology/ multi-sectoral research involving single sector projects Innovation industry and commercialisation in basic research Enterprise Subsidies to firms; Supporting common needs of firm national champions groups and technology absorption (especially SMEs); Promoting spillovers from MNEs Focus on teaching Promoting closer links with Higher industry and joint research; more Education role of HEI and on specialisation among HEIs basic research
The scope for regional intervention is becoming clearer Category National policy Regional policies Area of “anonymous” framework of collaboration among specialisation regulations and institutions identifiable actors; importance of proximity relationships Types of basic research, applied close to the market, assisting innovation research firms to translate knowledge support into marketed products and services Strategic overall policy focus for building regional consensus; approach national innovation system addressing specific gaps (e.g., alternative institutions) Rationale for market failure System failure, market intervention “opportunities”
Support for regional innovation systems across levels of government Federal, Centralised Small country decentralised Innovation ↔ ↑ ↑ environment Innovation poles, ↓ ↔ ↔ clusters and science parks ↔ ↑ ↑ R&D, basic research/applied ↓ ↔ ↔ Enterprise support for innovative firms ↔ = both central and regional levels involved ↑ = essentially a national responsibility ↓ = essentially a regional responsibility Source: Based on Technopolis et al. (2006) Strategic Evaluation on Innovation and the knowledge based economy in relation to the Structural and Cohesion Funds, for the programming period 2007-2013: Synthesis Report. A report to the European Commission, Directorate General Regional Policy, Evaluation and addtionality, 23 October 2006.
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