KIT territorial evidence and ERDF Roberta Capello Politecnico di Milano

1. KIT territorial evidence and ERDF Roberta Capello Politecnico di Milano ESPON 2013 Programme European Territorial Evidence for EU Cohesion Policy and Programming 13-14 June 2012 Aalborg, Denmark

2. 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 State of the art in innovation policy debate The KIT project is at the heart of an important policy debate.

3. Aim of the presentation • To underline the importance of the territorial evidence found by KIT for re-orienting regional innovation policies, by: • highlighting some generalbeliefs in the fieldofknowledge and innnovation; • providingterritorialevidencefrom KIT thatgoesagainst the generalbeliefs, generating some unconventional policy warnings on how ERSF shouldbespenttoboostinnovation.

4. The Existence of a Knowledge Economy • knowledgeis the moststrategicasset on which comparative advantagesofnations, regions and firmsrest; • the knowledge economy is the presenteconomicparadigmthatpervadesalleconomies.

5. The Existence of a Knowledge Economy: KIT evidence 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.

6. Knowledge and theFlagship Initiative ‘Innovation Union’ A knowledge economy is the key driver to an ‘Innovation Europe’ Flagship Initiative. General policy recommendationof the Agenda 2020: increaseR&D / GDP to more than 3%.

7. Knowledge and the Flagship Initiative ‘Innovation Union’: KIT evidence • The KIT project showsthat: • the invention-innovation short circuitisnot in placeeverywhere; • an immediate interactionbetweenR&D/high educationfacilities on onehand and innovative firms on the otherdoesnot take placeeverywhere.

8. Knowledge and the Flagship Initiative ‘Innovation Union’: KIT evidence R&D expenditure / GDP Share of firms introducing product and/or process innovation

9. Knowledge and the Flagship Initiative ‘Innovation Union’: KIT evidence

10. Smart specialization and the Flagship Initiative ‘Innovation Union’ Regional Policy Contributingto Smart Growth in Europefullysubscribesto the smartspecializationstrategythatclaimsthatEuropeanpoliciesshouldbetargettedaccordingto a core - peripherymodel: - Coreareas: whereR&Dactivitiesshouldbeconcentrated. - Peripheralareas: whereco-applicationeffortsshouldbeconcentrated.

11. Smart specialization and theFlagship Initiative ‘Innovation Union’ : KIT evidence The geography of innovation is much more complex that a core-periphery model. The preconditions for knowledge creation, for turning knowledge into innovation, and for turning innovation into growth are all embedded in the territorial culture of each region. This means that each region follows its own path in performing the different abstract phases of the innovation process, depending on the context conditions: its own ‘pattern of innovation’, in our terminology.

12. Territorial patterns of innovation 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

13. Knowledge production Knowledgeis the moststrategicassetfor a modern economy tobe competitive.  An increase in R&Dexpenditureincreasesknowledge output.

14. Knowledge production: KIT evidence The return of R&D expenditure to knowledge production increases by increasing R&D expenditure up to a certain level, then it starts decreasing.  R&Dexpendituresuffersfromdecreasingretuns

15. Knowledge production: KIT evidence Map: Impact or R&D investments on knowledge production The return of R&D investments to knowledge production increases by increasing R&D investments up to a certain level, then it starts decreasing. Pattern 5 Pattern 1 Pattern 2 Pattern 4 Pattern 3

16. Knowledge and Smart Growth • Knowledgeis the moststrategicassetfor a modern economy togrow, therefore: • Knowledge (and in particularR&D) explainsfactorproductivity; • knowledgegenerates GDP growth.

17. Knowledge and Smart Growth: KIT evidence

18. Knowledge and Smart Growth: KIT evidence Map: Elasticity of GDP to R&D by patterns A critical mass is required in order to achieve increasing returns (U-shaped form). Pattern 4 Pattern 3 Pattern 5 Pattern 2 Pattern 1

19. Knowledge and Smart Growth: KIT evidence

20. Key policy messages from KIT (1) • Unconventional policy warnings with regard to: • R&D expenditures as the right policy tools to develop new knowledge, innovation and growth; • a knowledge economy as the driver of growth opportunities everywhere; • external knowledge as an efficient knowledge input for all regions; • an innovation-driven economy as an outcome of a knowledge economy; • formal knowledge as the main and most strategic knowledge asset on which a knowledge economy rests.

21. Key policy messages from KIT (2) • If innovation policies have to support modernization in all European regions, they have: • to diversify their approach in order to comply with the specificities and potentials of the single regions, and; • to avoid the opposite risks of dispersion of public resources in un-differentiated ways, or • to concentrate all resources in a few regions where the traditional policy action, namely R&D support, is due to grant the highest returns.

22. Key policy messages from KIT (3) • The five differentiated patterns of innovation can be the way towards a renewed, spatially sound inclusion of the smartspecializationstrategy in R&Dpoliciesintoan appropriate regionalinnovation policy framework.

23. Smart innovation policies: definition • 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.

24. Smart innovation policies: tools • Embeddedness: policieshavetobeembedded in the local reality, in localassets and strategic design capabilities. • Connectedness: policieshavetoguarantee the achievementofexternalknowledgethrough strong and virtuouslinkageswith the external world. • Differentiatedfor the differentterritorialpatternsofinnovation.

25. Smart innovation policies

26. Smart innovation policy styles (1) • Justificationof the spatialallocationoffunds and ofdifferentiationof policy tools; • tripartite co-operationbetweenuniversities, researchcentres and firms in mainR&Dprojects; • peerassessmentofR&Dprogrammes and projects, • continuity in public supportsubjectto intermediate and ex-post assessmentofoutcomes; • tappingcreativity and entrepreneurialspirit; • definitionofinformalbutalsolightlystructuredlocalprocessesof ‘strategic industrial planning’.

27. Smart innovation policy styles (2)

28. Evolutionary smart innovation policies • Some regions could be able to ‘jump’ over different and more advanced Innovation Patterns; • ‘evolutionary’ policies could support these paths, with extreme attention and careful assessments, provided that context conditions and reliability of actors and strategies/projects could reduce risks of failure.

29. Thank you very muchfor your attention!