to global challenges Marcos Bonturi Conference on Regional - - PowerPoint PPT Presentation

Marcos Bonturi Conference on Regional Governance in a Global Context May 11, 2009 - Brussels

Regional responses to global 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 governance systems: what challenges?

• 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 and 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).

Regional systems into multi-level governance structures

• 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 results of adopting an 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 are the main problems and issues with the RIS approach?

• 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

What strategies can be used to resolve these issues?

Types of innovation require different policy action

Type Description Product Process Org. Radical Totally new product, creates new market Computer Pasteur- isation On-line insurance Disruptive New product makes

• thers obsolete

Personal computer Radiation Budget airline Recombinant New packaging of a technology, application to a new market Smart card Special purpose vehicle Lean mgmt Sustaining Technology developed to support productivity HD TV CAD-CAM design Customi- sation Incremental Step-by-step process of innovation, often SMEs 3G cell phone Wind turbine energy Call centres

Source: Philip Cooke

R&D investment trends

Countries with high R&D intensity display larger regional disparities Research carried out by the business sector more frequently generates a patentable result

Correlation coefficient for government R&D is 0.67

Patenting patterns

45% of PCT patents applications are recorded in only 10% of OECD regions Countries that are best performing in terms of patent applications seem to co- invent mostly within their borders

0% 20% 40% 60% 80% 100% 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

In a region within the country Foreign country

Concentration of skills

Concentration index of students in tertiary education and employment in high-tech sectors 2005 (TL2) Concentration index of the labour force with tertiary education, 1999 and 2005 (TL2)

Employment in knowledge-oriented sectors Student enrolment in tertiary education

56 52 47 46 45 45 43 43 41 38 37 35 33 33 32 31 30 28 28 27 27 26 26 25 24 22 20 10 20 30 40 50 60 Sweden Australia United States Finland Mexico Portugal Spain Greece Norway Hungary Denmark OECD (26) average France Korea United Kingdom New Zealand Canada Czech Republic Austria Netherlands Belgium Ireland Germany Switzerland Italy Poland Slovak Republic 1999 2005

Different national policy streams support clusters and regional innovation systems

Policy family Old Paradigm New Paradigm Regional Redistribution from leading to lagging regions Building competitive regions by bringing together actors and targeting key local assets Science and Technology/ Innovation Financing of individual, single sector projects in basic research Financing of collaborative and multi-sectoral research involving industry and commercialisation Enterprise Subsidies to firms; national champions Supporting common needs of firm groups and technology absorption (especially SMEs); Promoting spillovers from MNEs Higher Education Focus on teaching role of HEI and on basic research Promoting closer links with industry and joint research; more specialisation among HEIs

The scope for regional intervention is becoming clearer

Category National policy Regional policies Area of specialisation “anonymous” framework of regulations and institutions collaboration among identifiable actors; importance

• f proximity relationships

Types of innovation support basic research, applied research close to the market, assisting firms to translate knowledge into marketed products and services Strategic approach

• verall policy focus for

national innovation system building regional consensus; addressing specific gaps (e.g., alternative institutions) Rationale for intervention market failure System failure, market “opportunities”

Support for regional innovation systems across levels of government

Federal, decentralised Centralised Small country 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.