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Science, Technology and Society November 2000

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

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  1. 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

  2. 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

  3. 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

  4. 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?

  5. 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 !

  6. 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

  7. 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

  8. Technological Change: telecommunications

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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)

  15. Regional diversity in Western Europe Source:Sixth Periodic Report DG XVI, 1998

  16. 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

  17. 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;

  18. 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

  19. 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

  20. 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;

  21. 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?

  22. 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;

  23. 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

  24. Case 2: Algarve vs Madeira Shift-Share Analysis – GAV Source: “The Algarve: Fate and Will” by Paulo Silva & Pedro Borges de Almeida

  25. 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.

  26. * * * Highest growth in GVA Services Technology based Industry Formal Knowledge Case Study 3: Lisbon and Tagus Valley Region • Specialization in:

  27. 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

  28. 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 ?

  29. 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

  30. Innovation in EU source: Community Innovation Survey, OCT-PT

  31. Innovation in EU Expenditure by Manufacturing Firms on Innovation

  32. Innovation in PortugalProfiles of Hampering Factors

  33. 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

  34. 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

  35. 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

  36. 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

  37. 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)

  38. Social capital for inclusive development OECD(2000)

  39. 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).

  40. 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

  41. 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

  42. 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…

  43. … debate …the challenges for Regional Development: building social capitalin LFR’s opportunities for anAgenda on Regional Policy!

  44. … debate

  45. 1. Productivity

  46. 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)

  47. 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

  48. 3. Resources: Scale vs Intensity R&D Expenditure (OECD)

  49. 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

  50. 5. Industrial structure:Dynamics

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