KIT Knowledge, Innovation and Territory ESPON 2013 Programme European Territorial Evidence for EU...

KITKnowledge, Innovation and Territory

ESPON 2013 Programme European Territorial Evidence for

EU Cohesion Policy and Programming

13-14 June 2012Aalborg, Denmark

The project team

Lead Partner (LP): BEST, Politecnico di Milano, Italy:Project Coordinator: Prof. Roberta Capello (Full Professor in Regional

Economics)Project Manager: Camilla Lenzi (Assistant Professor)Prof. Roberto Camagni (Full Professor in Urban Economics) Dr. Andrea Caragliu (Post-Doc Fellow)

Project Partner 2 (PP2): CRENOs, University of Cagliari, Italy:Prof. Raffaele Paci (Full Professor of Applied Economics)Proff. Emanuela Marrocu and Stefano Usai (Associate Professors of

Econometrics and Economics) Dr. Alessandra Colombelli (Post-Doc Fellow)Dr. Marta Foddi (Research Assistant)

Project Partner 3 (PP3): AQR, University of Barcelona, Spain:Prof. Rosina Moreno (Full Professor in Applied Economics)Prof. Jordi Suriñach (Full Professor in Applied Economics)Prof. Raúl Ramos (Associate Professor in Applied Economics)Dr. Ernest Miguélez (Technical Researcher and PhD student)

The project team

Project Partner 4 (PP4): LSE, Great Britain:Dr. Riccardo Crescenzi (Lecturer in Economic Geography) Prof. Andrés Rodríguez-Pose (Professor in Economic Geography)Prof. Michael Storper (Professor in Economic Geography)

Project Partner 5 (PP5): University of Economics in Bratislava, Slovakia:Prof. Milan Buček (Full Professor in Regional Economics and Policy)Dr. Miroslav Šipikal (Coordinator - Senior Lecturer)Dr. Rudolf Pástor (Lecturer)

Project Partner 6 (PP6): University of Cardiff, Great Britain:Prof. Phil Cooke (Full Research Professor in Regional Economic

Development)Dr. Selyf Morgan (Researcher)Julie Porter (Support Coordinator)

General goal of the KIT project (1)

The KIT project has the general aim to help – on the basis of sound scientific research – the setting up of strategies on innovation that are consistent with the overall reforms of EU Cohesion Policy.

The KIT project provides suggestions for implementing smart specialization policies in the field of innovation - called for by the EU in its official document Regional Policy Contributing to Smart Growth in Europe (EU, 2010) - and to launch a territorial strategy to achieve a “smart growth” in the years to come.


The KIT project is at the heart of an important policy debate.

ERDF Reform 2009 - 2012

DG-Regio and ESPON 2006-2013

DG Research - 2009 Europe 2020 - 2010

Barca Report

2009

KIT Project ‘Regional Patterns of Innovation’

2011-12

‘Smart Specialization’ in R&D policies

Smart Growth pillar ‘Innovation Europe’ Flagship Initiative

Smart Innovation Policies


The achievement of such a goal requires greater understanding of:

- diffusion processes of knowledge and innovation;- the identification of the pathways towards innovation and

modernization; - the socio-economic impacts of innovation and

knowledge in space.

Main result:

the geography of innovation is much more complex than a simple core-periphery model.

The identification of regional specificities in innovation patterns is essential to build targeted normative strategies efficient for a cohesion policy goal.

Main ideas throughtout the project

- R&D (and formal knowledge in general) does not necessarily equate innovation;

- innovation does not necessarily equate regional growth.

these linkages are strongly mediated by local territorial assets.

Specific goals of the KIT project

B) Identification of the regional pathways towards innovation and modernization and their territorial elements

A) Main spatial trends of innovation and knowledge

C) Impact of the different modes of innovation and knowledge on regional performance

D) Case studies

E) Policy implications for the development of a successful knowledge economy

Definition of the Knowledge Economy

Basic idea: knowledge-based economy has not got a unique interpretative paradigm.

Different approaches are necessary:

A1. Sectoral approach (presence in the region of science-based, high-technology sectors).

A2. Functional approach (presence in the region of functions like R&D, patents, human capital).

A3. Relation-based approach (presence in the region of interactive and collective learning processes).

The Knowledge Economy in Europe

The Knowledge Economy in Europe is 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.

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Acores

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MartiniqueGuadeloupe

Valletta

Roma

Riga

Oslo

Bern

Wien

Kyiv

Vaduz

Paris

Praha

Minsk

Tounis

Lisboa

Athina

Skopje

Zagreb

Ankara

MadridTirana

Sofiya

London

Berlin

Dublin

Tallinn

Nicosia

Beograd

Vilnius

Kishinev

Sarajevo

Helsinki

Budapest

Warszawa

Podgorica

El-Jazair

Stockholm

Reykjavik

København

Bucuresti

Amsterdam

Luxembourg

Bruxelles/Brussel

Ljubljana

Bratislava

Regional level: NUTS2Source: Own elaboration, 2011

Origin of data: EUROSTAT and REGPAT, 2007© EuroGeographics Association for administrative boundaries

This map does notnecessarily reflect theopinion of the ESPONMonitoring Committee

The know ledge econom y in Europe

© Politecnico di Milano, ESPON KIT Project, 20120 520260

km

Legend

No data

None (137 regions)

TAR only (8 regions)

Scientific regions only (11 regions)

Networking regions only (43 regions)

TAR and scientific regions (3 regions)

TAR and networking regions (20 regions)

Scientific and networking regions (29 regions)

TAR, scientific and networking regions (31 regions)

Spatial trends of innovation in Europe

Innovation•product innovation;•process innovation;•product and/or process innovation;•marketing and/or organisational innovation•environmental innovation•social innovation

Source: CIS/EUROSTAT

Spatial trends of innovation in EuropeProduct innovation only Process innovation only

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Origin of data: EUROSTAT - Community Innovation Survey, 2002-2004© EuroGeographics Association for administrative boundaries


Share of firm s in troducing product innovation on ly


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< 3.26

3.27 - 5.92

5.93 - 9.12

9.13 -12.80

12.81 - 17.30

17.31 - 23.43

23.44 - 33.45

> 33.45

Switzerland: share of firms introducing product innovationIceland: CIS3 dataLatvia and Slovenija: CIS2006 data

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Zagreb

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Berlin

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Beograd

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Warszawa

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Stockholm

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København

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Ljubljana

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Origin of data: EUROSTAT - Community Innovation Survey, 2002-2004© EuroGeographics Association for administrative boundaries


Share of firm s in troducing process innovation on ly


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< 5.40

5.41 - 8.09

8.10 - 10.09

10.10 - 12.32

12.33 - 14.71

14.72 - 18.01

18.02 - 25.92

25.93 - 55.08

Switzerland: share of firms introducing process innovationIceland: CIS3 dataLatvia and Slovenija: CIS2006 data

Share of innovation by type of knowledge-economy regions

Product innovation

Process innovation

Product and/or process

innovation

Marketing and/or

organizational innovation

Household propensity to adopt

innovation

Environmental innovation

TAR 17,42 13,76 43,66 32,75 57 0,007

Scientific 18,16 13,48 43,71 29,51 62 0,007

Networking 16,19 13,2 44,24 31,95 57 0,007

Other 6,34 9,88 27,4 20,58 41 0,003

R&D expenditures on GDP and innovationR&D expenditure / GDP Share of firms introducing product

and/or process innovation

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0 500250km© Politecnico di Milano, Project KIT, 2011

Regional level: NUTS2Source: Politecnico di Milano, 2011

Origin of data: Community Innovation Survey 2004© EuroGeographics Association for administrative boundaries

KIT estimates

Share of both product and process innovationNA0 - 7.797.80 - 10.2410.25 - 13.1513.16 - 16.6916.70 - 21.3721.38 - 28.3428.35 - 42.6342.64 - 98.82

Iceland: CIS3 data.

Latvia and Slovenija: CIS 2006 data.

Switzerland: share of product and process innovation.

R&D expenditures on GDP (average 2006-07)In 2007 33 regions had achieved 3% of R&D expenditures on GDP (11% of NUTS2, representing 16% of EU GDP) and concentrated in a few countries in the North of Europe. Moreover, a very high number of regions belong to the lowest class, with R&D on GDP lower than 0.5% (representing 5% of GDP).

Do we really take advantage from an innovation policy with a common aim for all countries/regions?

Patenting activity: comparison with China and India

… and USA

The spatial concentration of R&D in order to exploit economies of scale seems to be the model followed by emerging countries, re-launching in a decisive way the debate of the importance of the identification of a European Research Area.

Results and questions from the descriptive analysisResults:Only a few regions have achieved the 3% of R&D/GDP, and most are below 0.5%.

Only a few regions show a pattern of innovation that goes from R&D to innovation.

Questions:How do regions innovate without R&D?

Which are the territorial preconditions in order for regions to move from knowledge to innovation and to growth?

Specific goals




D) Case studies


Territorial patterns of innovation

A territorial pattern of innovation is a combination of context conditions and of specific modes of performing the different phases of the innovation process.

Context conditions:Internal generationExternal attraction

Different phases of the innovation process: - from knowledge to innovation- from innovation to regional performance

of knowledge and innovation

An endogenous innovation pattern

1) A European science-based area: basic general purpose technologies

2) An applied science area: high patent activities in diversified applied technology fields

Phases Territorial preconditions for knowledge creation

Knowledge output Territorial preconditions for innovation

Innovation Economic efficiency

Specific, applied knowledge

Education, human capital, accessibility, urban externalities


Territorial receptivity

Cross-regional cognitive proximity

relational capacity

Basic knowledge

(General Purpose Technologies, GPTs)

Collective learning

Entrepreneurship

Product and process innovation

Economic efficiency

Basic knowledge

(General Purpose Technologies, GPTs)Specific, applied knowledge



Basic knowledge

(General Purpose Technologies, GPTs)Specific, applied knowledge

Region j

Region i

Territorial receptivity

A creative application pattern

3) A smart technological application area External specific technologies enhancing the upgrading of local innovation

4) Smart and creative diversification area External tacit knowledge enhacing local innovation





Economic efficiency

Collective learning

Entrepreneurship

Specific and

applied knowledge

Capabilities

Territorial creativity

Basic knowledge (General Purpose Technologies, GPTs)

Specific and applied knowledge

Region j


Region i

An imitative innovation pattern

5) An imitative innovation area Innovation imitation through territorial attractiveness






Economic efficiency

Specific and applied knowledge

Territorial attractiveness:

FDIs


Collective learning

Entrepreneurship

Region i

Basic knowledge (General Purpose Technologies, GPTs)

Region j


Pattern 1= A European science-based area

Pattern 2 = An applied science area

Pattern 3 = A smart technological application area

Pattern 4 = A smart and creative diversification area

Pattern 5 = An imitative innovation area

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London

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Origin of data: EUROSTAT, 2012© EuroGeographics Association for administrative boundaries


Territoria l patterns o f innovation in Europe


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No data

Imitative innovation area

Smart and creative diversification area

Smart technological application area

Applied science area

European science-based area

Territorial conditions associated to each pattern

Regional preconditions for knowledge and innovation creation

Regional preconditions for external knowledge and innovation acquisition

Results and questions from the patterns identification

1. Differentiated patterns of innovation and modernization, much more complex than a core-periphery model;

2. our impression is that none of these patterns is by definition superior to another and, on the contrary, each territorial pattern may provide an efficient use of research and innovation activities generating growth.

But this last statement calls for empirical analysis.

Specific goals




D) Case studies


Selected questions to be answered

Knowledge input (R&D)

Knowledge output Innovation

Productivity growth

GDP growth

Employment growth

3.1

3.3

3.2

4.1

4.3

4.4

4.2

Migration of inventorsResearch collaborations

What is the return of knowledge production to R&D expenditure?

Map: Elasticity of knowledge production to R&D

The return of R&D expenditure to knowledge production increases by increasing R&D expenditure up to a certain level, then it starts decreasing.

Pattern 5

Pattern 1

Pattern 2

Pattern 4

Pattern 3

Elasticity of knowledge production to R&D: an international comparison

Elasticity of knowledge production to R&D:

EUROPE

USA

CHINA

INDIA

0.430

0.041

1.303

0.995

(all coefficients are statistically significant)

Knowledge Production

What is the return of knowledge production to human capital?

Increasing returns up to a certain threshold, then decreasing returns.

Elasticity is higher than for R&D.

Pattern 5

Pattern 4

Pattern 1

Pattern 2

Pattern 3

What is the return of knowledge production to external knowledge ?

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Regional level: NUTS 2Source: EUROSTAT, own calculation, 2011

Origin of data: AQR - University of Barcelona© EuroGeographics Association for administrative boundaries


© Project KIT, 20120 560280

km

Elasticity of knowledge production to cross-regional mobility by patterns of innovation

Imitative innovation area = -0,10

Smart and creative diversification area = No impact

Smart technological application area = 0,02

Applied science area = 0,06

European science-based area = 0,05

No data

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© Project KIT, 20120 560280

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Elasticity of knowledge production to cross-regional co-patenting by patterns of innovation

Imitative innovation area = No impact





No data

Pattern 5

Pattern 4

Pattern 3

Pattern 2

Pattern 1

Pattern 5

Pattern 4

Pattern 3

Pattern 2

Pattern 1

Do knowledge spillovers play a role in producing internal knowledge?

Intra-regional inventors’ mobility Inter regional inventors’ mobility

Mobility


* Significant at conventional level

Knowledge creation

(patenting)

0.01*





Knowledge creation

(patenting)

Mobility in:

0.09*

0.08*

0.05*

0.03*

No impact

Mobility


* Significant at conventional level

Knowledge creation

(patenting)

0.01*





Knowledge creation

(patenting)

Mobility in:

0.09*

0.08*

0.05*

0.03*

No impact

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© Project KIT, 20120 560280

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Elasticity of knowledge production to cross-regional mobility by patterns of innovation

Imitative innovation area = -1,78





No data

Does innovation impact on employment growth rates?

Map: Elasticity of employment growth to product innovation

On average, product innovation is a labour saving activity but:

- it creates jobs in regions where production functions are present

(new products need to be produced)

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0 500250km

© BEST - Politecnico di Milano, Project KIT, 2012

Regional level: NUTS2Source: EUROSTAT, own calculation, 2011Origin of data: BEST - Politecnico di Milano

© EuroGeographics Association for administrative boundariesLegend

No data

< -0,250000

-0,24 - -0,05

-0,04 - 0

0,01 - 0,05

0,06 - 0,25

> 0,25

Elasticity of employment growth to product innovation at different levels of blue collar functions

}

}}

Share of blue collars = 18%



Does R&D expenditure generate innovation?

Elasticies of GDP Growth to Knowledge and Innovation

GDP growth (2005-2007)

R&D on GDP

Share of innovative firms

Elasticity of GDP growth to R&D

Elasticity of GDP growth to innovation

EU average 3.64 1.37 35.54 0.12 0.38

European science-based area (ESBA)

3.29 2.56 63.16 0.24 0.41

Applied science area (ASA) 3.65 1.84 46.92 0.15 0.49

Smart technological application area (STAA)

3.17 1.71 38.43 0.16 0.26

Smart and creative diversification area (SCDA)

3.85 0.97 27.69 0.10 0.22

Imitative innovation area (IIA)

4.2 0.41 18.14 Not significant Not significant

Note: elasticity values to knowledge and innovation are computed according to the estimated coefficients reported in table 4. Elasticity values of GDP growth to knowledge are computed according to model 2 (EU average value) and model 4 (elasticity values by patterns of innovation). Elasticity values of GDP growth to innovation are computed according to model 6 (EU average value) and model 10 (elasticity values by patterns of innovation).

Does R&D expenditure generate GDP growth?

Map: Elasticity of GDP to R&D by patterns

A critical mass is required in order to achieve increasing returns (U-shaped form).

Pattern 2

Pattern 1

Pattern 5

Pattern 3

Pattern 4

Do knowledge and capabilities increase TFP?

Does innovation generate increases in GDP growth rates?

Yes, but if innovation achieves a critical mass!

Imitative innovation generates lower GDP growth rates than new innovation

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Bratislava


Origin of data: EUROSTAT, 2012© EuroGeographics Association for administrative boundaries


Elastic ity o f G D P grow th to innovation by patterns of innovation


km

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No data

Imitative innovation area = no impact

Smart and creative diversification area = 0,425




Pattern 5Pattern 4

Pattern 3Pattern 2

Pattern 1

Case studies

B) Territorial elements explaining spatial trends.

Different modes of innovation and knowledge creation and diffusion.

A comparison with other regional knowledge economies in more advanced and emerging countries

Output: typologies of territorial patterns of innovation

WP 2 3.1 and 2.5

A) Main spatial trends of innovation and knowledge.

(both endogenous knowledge creation and flows from outside)

Output: typologies of innovative regions

WP 2.1 and 2.2

C) Impact of the different modes of innovation and knowledge on regional performance.

Output: typologies of regional performance based on innovation and knowledge

WP 2.3.2

D) Case studies

WP 2.4.1 and 2.4.2


WP 2.6

12 case studies

6 case case on best practice of knowledge creation:- Electronics (Pisa, Tuscany)- Automotive in Piedmont- Biotech in Oxford- ICT in Cambridge- ICT in Kosice- ICT in Bratislava

6 case studies on best practice of knowledge acquisition:- Wine in Tuscany area;- Wood processing in Banska Bystrica region - Digital media in Cardiff (Wales)- Food sector in West Wales- ICT Milan (Lombardy)- Automotive in Bratislava region

Value added of the case studies Territorial elements explain innovation patterns more than the sectoral elements.

Case studies have provided an in-depth analysis of the territorial elements behind patterns of innovation.

Case studies demonstrated the dynamics of regions from one pattern of innovation to another.

Inductive analysis witnesses that the territorial elements supporting the different innovation patterns are those conceptually identified.

Specific goals of the KIT project

B) Territorial elements explaining the spatial trends



D) Case studies


Key policy messages (1)

Unconventional policy warnings with regard to some general beliefs, namely:

- an innovation-driven economy is not necessary linked to a knowledge economy;

- formal knowledge is not the only knowledge asset on which a modern economy rests;

-R&D expenditures are not the only policy tools to develop innovation and growth;

Key policy messages (2)- if a knowledge economy is developed, this does not give rise to the same growth opportunity everywhere;

- external knowledge cannot easily and automatically be used in an efficient way by all regions.

There is a clear need for thematically-regionally focused innovation policies.

Smart innovation policies

Smart innovation policies may be defined as those policies able to increase the innovation capability of an area by boosting effectiveness of accumulated knowledge and fostering territorial applications and diversification, on the basis of local specificities and the characteristics of already established innovation patterns in each region.

Smart innovation policies


Policy aspectsEuropean science-based

area(Pattern 1a)

Applied science area(Pattern 1b)


(Pattern 2a)


(Pattern 2b)


(Pattern 3)

Policy goals Maximum return to R&D investmentsMaximum return to applications and co-operation in

applicationsMaximum return to

imitation

Policy actions for local knowledge generation

(Embeddedness)

Support to R&D in: Support to creative application, shifting capacity from old to new uses, improving productivity in existing

uses, through:

Fast diffusion of existing innovation

Enhancing receptivity of existing innovation

New basic fields

General Purpose Technologies

Specialized technological fields

Incentives to technological

development and upgrading

Identification of international best practices

Support to search in product/market diversification

Support to entrepreneurial creativity

Support to local firms for complementary projects with MNCs

Support to local firms for specialized subcontracting

Smart innovation policiesPolicy actions for

exploitation of knowledge spillovers

(Connectedness)

Incentives to inventors attraction.

Support of research cooperation in:

Incentives for creative applications through: Incentives for MNCs attraction

GPT and trans-territorial projects (ERA)

specific technologies and trans-territorial projects

(ERA), in related sectors/domains

Encourage labour mobility among related

sectors/domains

Co-operative research activities among related

sectors

Co-operative search for new technological solutions

participation of local actors to specialized

international fairs

attraction of “star” researchers even for short

periods

work experience in best practice knowledge creation firms of the same domains

Bargaining on innovative ‘local content’

procurement by MNCs

Policy style Provide a critical mass of funds

Support triangular projects by Universities-Research Centres-Enterprises

Stimulate knowledge and technological transfer mechanisms in related sectors

Thematical/ regional orientation of R&D funding:

Stimulate a bottom up identification of industrial vocations, by raising awareness on local capabilities and

potentials, in order to:

Stimulate cooperation projects

between MNCs and local firms

Towards researchers and laboratories in general purpose

technologies

in specific fields of technological specialization of

the area

targeted choice of joint research activities with partners

external to the area

Stimulate co-operation with strong external

partners in the specialization sectors of the

area

Support local actors’ participation to international

fairs in specialization sectors

Support targeted work experiences in best practice knowledge creation firms

Beneficiaries University, research centers, large local firms Local firms Local entrepreneurs Local firms

Evolutionary smart innovation policies

Creation of new local competences adding local value to external competences

3

2

1

5

Reinforcement of local applied science

Diversification of technological fields in which to innovate

New applications in new industries

Reinforcement of local science-based knowledge

4

Elasticity

of GDP to R&D

R&D / GDP

Thank you very muchfor your attention!

KIT Knowledge, Innovation and Territory ESPON 2013 Programme European Territorial Evidence for EU...

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