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Science, Technology and Society November 2000. Technological Change and the challenges for Regional Development: building social capital in LFR’s Pedro Conceição, Manuel Heitor and Robert Wilson. CENTER FOR INNOVATION, TECHNOLOGY AND POLICY RESEARCH, IN+

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science technology and society november 2000
Science, Technology and SocietyNovember 2000

Technological Change

and

the challenges for Regional Development:

building social capitalin LFR’s

Pedro Conceição, Manuel Heitor and Robert Wilson

CENTER FOR INNOVATION, TECHNOLOGY AND POLICY RESEARCH, IN+

Instituto Superior Técnico, Technical University of Lisbon

http://in3.dem.ist.utl.pt

a fragmented regional innovation system an institutionally blocked regional economy
A fragmented regional innovation system: an institutionally blocked regional economy

Large

firms

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

Large

firms

Sectoral

Associations

Regional

Government

Universities

SMEs

SMEs

SMEs

Regional economy

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

Chamber of

Commerce

SMEs

Technology

Centers

SMEs

SMEs

Business

Services

SMEs

Large

firms

SMEs

SMEs

SMEs

SMEs

Technology

Consultants

SMEs

SMEs

SMEs

SMEs

a learning region an efficient regional innovation system
A learning region: An efficient regional innovation system

Open gate: International R&D/academic excellence networks

SMEs

Cluster

SMEs

SMEs

SMEs

SMEs

SMEs

Valorisation

of R&D

and Tech.

Transfer Office

SMEs

Large firms;

Tech. Centers;

Sect. Associa-

tions

SMEs

Science base:

Universities;

Public R&D;

Laboratories

Open gate: International technology transfer networks

Regional

economy

Large

firms

SMEs

SMEs

Open gate: International value chains

SMEs

Regional

government

SMEs

Global economy

SMEs

SMEs

SMEs

Technology

Centers

SMEs

Business

intermediaries:

Cham. of Comm.;

Local Agencies

BICs

Business

services &

tech. con-

sultants

SMEs

SMEs

SMEs

Sectoral

Associations

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

SMEs

Open gate: International business consultants & specialized business services

slide4

QUESTION

Which trends for technology-based development and cooperation,

in a way to contribute for regional policies that stimulate localised learning, innovation and endogeneous development within LFR’s?

slide5

Knowledge InstitutionsLearning Organisations

Intellectual PropertyLearning Networks

The need for institutional renewal,

…promoting diversity with institutional integrity at the supply side of technology,

(Conceicão & Heitor, 1999)

The need for public investment

Our Argument...

  • The scope:...the globalized “learning society”!

BUT, understanding the role of social capital(Conceicão, Gibson, Heitor & Sirilli, 2000), to stimulate the inclusive development !

slide6

The CONTEXT

  • 1. Technological change: accelerating
  • 2. The “new” economy: “the big boom”
  • 3. Social Dynamics: complexity and diversity
  • 4. “Governance”: a new model!

OCDE: “FUTURES”, Hannover 2000

EC: “IPTS - Futures Report”, 2000

technological change materials ipts 1999
Technological Change:materials, IPTS(1999)

1800

1960

10 000 BC

5000 BC

0

1000

1500

1900

1940

1980

1990

2000

2010

2020

GOLD

COOPER

METALS

METALS

BRONZE

GLASSY METALS

AL-LITHIUM ALLOYS

DUAL PHASE STEELS

MICROALLOYED STEELS

IRON

NEW SUPER ALLOYS

DEVELOPMENT SLOW

MOSTLY QUALITY

CONTROL AND

PROCESSING

POLYMERS

CAST IRON

SKIN

FIBRE

GUMS

STEELS

ALLOY

IVORY

STEELS

COMPOSITES

RELATIVE IMPORTANCE

SURFACE

ENGINEERING

LIGHT

ALLOYS

POLYMERS

BRICKS (with STRAW)

RUBBER

WOOD

SUPER ALLOYS

CONDUCTING

POLYMERS

PAPER

HIGH TEMPERATURE

POLYMERS

TITANIUM

ZINCONIUM

ETC

STONE

ALLOYS

COMPOSITES

FLINT

HIGH MODULUS

POLYMERS

BAKELITE

POTTERT

CERAMIC COMPOSITES

GLASS

EPOXIES

METAL-MATRIX

NYLON

CEMENT

COMPOSITES

POLYESTERS

CERAMICS

CERAMICS

KEVLAR

REFRACTORIES

SUPERCONDUCTORS

PORTLAND

CEMENT

TOUGH ENGINEERING

CERAMICS

FUSED

SILICA

CERMETS

10000 BC

0

1000

1500

1800

1900

1940

1960

1980

1990

2000

2010

2020

5000 BC

slide8

Technological Change:

telecommunications

slide9

Technological Change:

perspectives

TECHNOLOGIES

  • more technologies to produce each product

PROCESSES

TECHNOLOGY

  • more products produced from a given technology

PROCESSES

The Convergence: telecommunications and computers ...

The QUESTION: scope and scale

PRODUCT

Source: von Tunzelmann (1999))

PRODUCTS

emerging interactions source bipe

information technologies

materials

biotechnologies

energy

information technologies

Telematics

Automation

Computers

Semiconductors

Superconductors

Biosensors

Biochips

Photovoltaic applications

materials

Computer based design of new materials

New alloys

Ceramics and composits

Bio-leaching

Biological ore processing

Power lasers

biotechnologies

Instrumental analysis of dna sequences

Membranes

Biocompatible materials

Recombin. DNA

New drugs

Enzymatic Synthesis

Batteries

Pacemakers

Artificial Heart

energy

Supervision of energy processes

Robotics

Security systems

Photovoltaic materials

Fuel cells

Superconductors

New energy biomass

New reactors

Nuclear fusion

Emerging interactions...Source: BIPE

to

from

the knowledge gap scope european regions

Edudation / training

for last 10 years

New technologies

Education / training

acquired for more than 10 years

Existing

technologies

2000

2010

2000

2010

The knowledge gap(Scope: EUROPEAN REGIONS)

2010: 80% of technologies with less than 10 years,

while 80% of working force has acquired training with more than 10 years

slide12

The importance of Technology in corporate development

  • Case study: Innovation in Italy (Evangelista & Sirilli, 1997)

The convergence of sectors is emerging, with the growing importance of technology in corporate development

slide13

Technology replaces employment

Industrial

era

I- Recession

Economy without employment

Services

Demand Deficit

Services

Value creation

Indústry

Entrepreneurial economy

Indústry

Technology creates

new industries and opportunities

Agriculture

Agriculture

II- Growth

The structure of the “new” economy

Knowledge

era

the issue 1
THE ISSUE …1

The evidence:

  • “The major source of economic growth in developed countries has been science-based technology”, Kuznets (1966)
  • “The explosion in knowledge creation is concentrated in a few regions, and led to similarly concentrated distribution of income”,
  • World Bank (1999)
  • “The most daunting problem is that ofspiritual inequality”, Fogel (1999)
slide15

Regional diversity in Western Europe

Source:Sixth Periodic Report DG XVI, 1998

case studies portugal
Case studies - Portugal
  • North & Galiza
    • Alexandra Campino, Danilo Rubini and Jorge Monteiro
  • Algarve
    • Paulo Silva and Pedro B. Almeida
  • Lisbon
    • Angela Canas, Rita Marreiros, Paulo Ribeiro and Ana Galvão

The context:M.Sc. Engineering Policy & Management of Technology

slide17
Case 1: North, Galiza

North region (NUTII):

Area: 21 278 Km2 = 23,2% Portugal

Divided in 8 subregions (NUTIII);

Economic heterogeneity

Grande Porto weights 34% of North’s population

  • 3,6 Million inhab. = 36% of portuguese population;
slide18
Case 1: North, Galiza

Galicia region (NUTII):

Area: 29 575 Km2 = 5.8% of Spain

Divided in 4 sub regions

2,7 Million inhab. = 7% of spanish population;

Cultural and social links with North region

slide19
Case 1: North, Galiza

Employment – Share Analysis (I)

North

Portugal

- Relative large economic importance of Industry in the North;

  • Textiles and Leather represents almost half of North’s economic structure;

- Increasing importance of Services for Portugal

slide20
Case 1: North, Galiza

Employment – Share Analysis (II)

North

Galicia

- Agriculture’s share includes fishery, which is a major asset to Galicia’s economy;

- Industry’s share in Economic Structure of Galicia is almost half of North’s one;

  • Services became the major employment sector for Galicia in 1994;
slide21
Case 1: North, Galiza

Productivity (I) (GVA/employee)

North

Portugal

1000ECU/employee

  • North presents a lower productivity ratio for industry  Labour Intensive consequence?
  • No difference in Services  Similar services firms?
slide22
Case 1: North, Galiza

Productivity (II) (GVA/employee)

North

Galicia

1000ECU/employee

  • North: LOW productivity!!
  • The difference in Services is lower than that observed in Industry;
r d regional expenses 1997

Case 2: Algarve in PT

R&D – Regional Expenses, 1997

R&D - Regional expenses, 1997

25.000

20.000

15.000

Million pte 1995 (c.p.)

10.000

5.000

0

Norte

Centro

Lisboa e

Alentejo

Algarve

Açores

Madeira

Universities

Vale do

Tejo

State

Região

Private

Source: INE; Ministry of Science and Technology

shift share analysis gav

Case 2: Algarve vs Madeira

Shift-Share Analysis – GAV

Source: “The Algarve: Fate and Will” by Paulo Silva & Pedro Borges de Almeida

sample conclusions

Case 2: Algarve

Sample Conclusions
  • The R&D regional effort of the Algarve is modest, but it is also not related with the main economic activities of the region.
  • Shift Share Analysis shows that Algarve was virtually unable, between 90 and 95, to grow due to inclusive factors, but it was not even capable of absorbing the growth induced by National development.

Sample Recommendations

  • To develop a regional development strategy based on a culture of excelence in all elements that are connected with Tourism & Leisure value chain:
    • - Natural and urban environment;
    • - critical infrastructures;
  • This requires the development of new competencies in the areas above, but also of the learning capabilities necessary to create new value from the Tourism & Leisure cluster.
case study 3 lisbon and tagus valley region

*

*

* Highest growth in GVA

Services

Technology based Industry

Formal Knowledge

Case Study 3: Lisbon and Tagus Valley Region
  • Specialization in:
case study 3 within lisbon metropolitan area

Specialisation in industry

Specialisation in services

Case Study 3: Within Lisbon Metropolitan Area

* Except the city of Lisbon

Lisbon

Surroundings

Concentration

Telec. and producer services - highly qualified workers

case study 3 lisbon and tagus valley region1
Services (especially to firms and public services) as decisive to the region’s economy

High Knowledge concentration (high technology firms and formal knowledge: education and R&D)

Case Study 3: Lisbon and Tagus Valley Region

Sample characteristics

Policy issues

Promote social capital, taking advantage of the already existing characteristics - services and high knowledge concentration - in order to promote value creation

Internet clustering ?

the issue 2
THE ISSUE …2
  • “With some notable exceptions, the regional developmment debate in Europe has been dominated by exogeneous models to such an extent that development tends to be conceived as something that is introduced to, or visited upon, less favoured regions, LFRs, from external doors…
  • …this kind of regional policy did little or nothing to stimulate localised learning, innovation and indigeneous development within LFRs”,
  • Henderson & Morgan (1999)

A specific issue: Regional DIVERSITY

slide30

Innovation in EU

source: Community Innovation Survey, OCT-PT

slide31

Innovation in EU

Expenditure by Manufacturing Firms on Innovation

slide33

The ISSUE...concluding

  • The need to considertechnology-based development and cooperationin a broader context, leading toinnovation:
    • Promoting value, by exploiting change
    • Understanding institutional development
    • Integrating systems of competence building and social cohesion
  • OUR GOAL:to discuss the emergence of an agenda on regional policy
slide34

Regional Innovation Strategies...

Which specific driving forces?

  • Productivity
  • The knowledge-based industries
  • Resouces: Scale vs intensity
  • Industrial structure
  • Institutional development:
  • market regulation; employment protection
  • 6. The Sustainable development

BUT, the regional dimension:

...Social capital for the inclusive development

the regional dimension technology and innovation gap
The regional dimension:technology and innovation gap
  • 1. Input:HUMAN AND MATERIAL RESOURCES
  • 2.output:SCIENTIFIC AND TECHNOLOGICAL CAPACITIES
  • 3. determining factors :
  • international cooperation
  • sme`s:support services
  • networks
  • FDI: integration in local economies
  • transports, communications, energy infrastructures

… BUT, ALSO, INSTITUTIONAL FACTORS

slide36

The regional dimension:technology and innovation gap…cont.

Most development programmes stand on their ability to build “social capital”: a relational infrastructure for collective action

  • This requires a shift in development studies:
  • fromstate-ledor market-drivenprocesses, regardless time, space or milieu
  • to institutional perspective, lookingat the quality of institutional networks
slide37

The regional dimension:technology and innovation gap…cont.

  • INSTITUTIONAL NETWORKS to mediate:
  • mediate information exchange
  • knowledge creation
  • capacity for collective action
  • potential for interactive learning
  • efficacy of voice mechanisms
  • Henderson & Morgan (1999)
policy issues regional innovation strategies landabaso et al 1999
Internal coherence of the regional innovation system by connecting its different key elements: R&TDI supply with well identified Demand and business needs, from SMEs in particular.

Increase the amount and, more importantly the quality of innovation public spending through innovation projects (bigger and better spending in this field through regional policy).

Rationalise the regional innovation support system by raising awareness, eliminating duplications, filling gaps and promoting synergies.

Policy Issues: Regional Innovation StrategiesLandabaso et al. (1999)

Successful stories: The Regional Technology Plans

Wales (UK), Limburg (Netherlands), Lorraine (France) and Leipzig-Halle-Dessau (Germany), Central Macedonia (Greece), Castilla Y Leon (Spain) and Abruzzo (Italy).

ris generated ideas and practical results galicia examples
Compilation and diffusion of strategic information on the innovation field to Galician SMEs through a Technological Observatory

Campaign of visits by innovation management experts to local SMEs and publication of an ‘Innovation Guide’ for businesses

Galician Innovation award for successful business introduction of new products, processes, management techniques, etc.

Creation of a new fund to support high risk innovative projects

Sponsor training programmes in new professions linked to innovation support services (financial analysts, technological auditors, technology rating…)

Creation of the Galician network of R&TDI interface organisations

Pilot design of an integral mechanism for supporting the process of innovation in 12 companies (9 SMEs).

RIS generated ideas and practical results:Galicia examples
discussion eu policy challenges soete 2000
Discussion: EU policy challengesSoete (2000)
  • The current new growth regime associated with a knowledge driven society raises major institutional challenges to EU and individual member countries
  • Proposal of European “new deal” version: “cognitive Keynesianism” based on:
  • a) recognition of the importance of public and private investment in education, learning and knowledge more generally for growth and equality (OECD target figures)
  • b) “activating” education and developing incentives for such investments
  • c) adherence to “open” features of the science and knowledge system
  • enhancing transmission and knowledge diffusion aspects, reducing the blocking aspects of IPRs
  • d) give political priority to importance of large social change: so far the knowledge driven society has been strong on economy and poor on society
slide42

Perspectives for “change”

Building the conceptual framework

Systems of Innovation and Competence Building!

Conceicão, Heitor and Lundvall (2000)

  • The notion of localised technological change:
  • a joint process of production, learning and communication
  • a fully endogenous, with strong interdependence between specialisation and diversification
  • important, but limited role of demand: learning capability is critical!
  • based on mix of generic and tacit knowledge
  • The science base:

” …the aim of policy should be to create a broad and productive science base, closely linked to higher education…”, Pavitt (1998)

  • The role ofSocial Capital…
slide43

… debate

…the challenges for Regional Development:

building social capitalin LFR’s

opportunities for anAgenda on Regional Policy!

slide46

2. Knowledge-based industries

OECD(2000)

Average annual real value added growth of knowledge based industries (1985 share year)

Share in business sector value added in knowledge business industries (share year 1996)

slide47

0,1

France

Netherlands

0,075

Germany

Denmark

Finland

Poland

Norway

US

Japan

Public R&D Expenditures per capita

Korea

Canada

UK

0,05

France

UK

US

Netherlands

Canada

Germany

Czech Rep

Finland

Denmark

Ireland

0,025

Japan

Norway

Sweden

Spain

Portugal

Ireland

Sweden

Belgium

New Zealand

Hungary

Spain

Portugal

Mexico

Turkey

0

0

0,125

0,25

0,375

0,5

Private R&D Expenditures per capita

3. Resources: Scale vs Intensity

Public vs private R&D expenditures

FR

D

JP

USA

UK

P97

P95

ES

SE

IR

P81

slide48

3. Resources: Scale vs Intensity

R&D Expenditure (OECD)

4 the industrial structure

Portugal

35

30

25

40

35

30

20

25

20

15

15

10

10

5

0

1983

1987

1991

1995

5

0

1983

1987

1991

1995

YEAR

YEAR

Food, beverages & tobacco

Textiles, apparel & leather

Wood products & furniture

Paper, paper products & printing

Chemical products

Non-metallic mineral products

Basic metal industries

Fabricated metal products

Other manufacturing, nec

4. THE INDUSTRIAL STRUCTURE

EU-13

slide51

6. Institutional Development

Market Regulation and Employment Protection

Nicoletti, Scarpetta & Boylaud; OECD (2000)