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About 150 participants followed our invitation to the Committee of the Regions on 11 December for an ERRIN panel debate on “European Cluster Policy – What’s in it for the regions?”. The event was designed to launch a debate within the ERRIN network but also with the wider policy community on issues and questions surrounding EU Cluster Policy such as:

– How local or regional, how European or global are clusters?
– How can successful clusters be engineered?
– Can every region have a world-class cluster?
– How does EU cluster policy reflect issues of excellence vs. equity?
– How can regions benefit from EU cluster?
– Is there a role for bottom-up cluster development?
– What do practitioners in the regions expect from this initiative?

Although some of the questions, but definitely all taken together, were clearly too ambitious for an event of three and half hours, the presentations and debate offered many stimulating insights, which all highlighted the need to look much deeper into these issues.

I have to admit that I find it challenging to condense the richness of the debate we had into a short blog entry. I will cheat a bit by simply listing some of the most stimulating points discussed. I haven’t really structured them. You may attribute this to my still confused mind, where all the facts and arguments thrown up still have to settle and form a more comprehensive picture, but also on the fact that a lot of these things are interconnected:

OECD data proves that leading regions often show a correlation of lots of positive factors. But what to do with regions that don’t have the same level of endowment with innovation resources? Obviously one can try to change the endowment, for instance through investing EU funds, but that is often not the most efficient use of resources in terms of impact, given that research also shows that impact tends to be highest in the most advanced regions.

Another important point for policymakers is to understand that it is not always the most efficient to invest in knowledge generation as opposed to technology transfer. Often the focus is on the supply side and less on what firms really need (“it has to be new for the firms”).

Innovation is often equated with scientific results. However, innovation does not end in the research lab but is much more entrepreneurial. There are no low-tech clusters but only low-tech companies.

We are producing first-rate science, but the translation into products and services is weak. The weak link here is business. We lack a more dynamic business sector. As long as Europe considers an SME a pathological state to be taken care of, we are on the wrong way.

The tendency of people to create firms has something to do with creativity, but also with taking risks. Whereas European societies have put a premium on risk aversion and security, the US is a society that encourages risk taking and creativity.

Changing this reality needs change in deep-rooted attitudes. It requires a long-term approach, involving all levels of government and actors in the regions.

The service economy has different needs in terms of innovation. Issues like business skills become ever more important. But if we make manufacturing disappear, we make services disappear as well, since a lot of services cater to manufacturer’s needs.

European clusters suffer from fragmentation and proliferation. They are often too small to be globally competitive. Therefore, the European Commission wants to motivate existing clusters to integrate more companies and SMEs and link up transnationally.

Cluster organisations, providing customized services to SMEs, become more and more important in this context. The Commission aims to raise the quality of their services and create a quality label for cluster managers. It also thinks that we need better policies. A European Cluster Policy Group will look into related options.

We should not confuse the cluster methodology with real world problems. Clusters are a methodology and exceedingly useful to improve communication between government and businesses but they are not an end in itself. Clusters are eco-systems, their members are human beings. We should be careful not to suffocate this with a blanket of bureaucracy.

It is not enough anymore for regions to excel in stimulating technology transfer between research and companies. The future lies in combining the best elements of clustering based on the tech transfer model with new user driven open innovation models. The Concept of Living Labs, as employed in Helsinki, should help to deliver this vision.

Innovation also means that regions and cities should invest in improving delivery as regards their own responsibilities in fields such as Health, Transport and Social Services and to develop and test new solutions with companies in open innovation platforms.

In many successful regions a European focus is more and more complemented or even replaced by a global focus. The shifts caused by a globalizing economy make traditional space-based models (e.g. blue banana) less relevant to predict growth patterns. The good news here is that due to globalisation every region has a chance, no matter where on the map it is located.

While there is a tremendous potential for stimulating innovation through public procurement, the natural tendency of civil servants to minimize risk, goes against this. This is also a barrier to public sector funded R&D. Helsinki introduced an Innovation Fund to help address this problem.

Given that we are now facing a recession, the lessons learned in Finnland during its deep recession at the beginning of the 1990s are worth to be highlighted. During these years the government had to make budget cuts but continued to invest in education and R&D. This policy laid the foundations for the spectacular growth period that followed.

Our approach to counter the current crisis must be market based. We have to find ways to support the knowledge triangles. Right now we are mostly increasing spending on everything except R&D. Attention should not only go to the innovation process but also to the market uptake.

We need to focus more on the Single Market, which is not reflected a lot in the Recovery Plan discussed by EU Heads of State. We also need to deliver on the promise of better integration of the disparate activities and funding instruments at EU level to avoid overlap, improve synergies and get more impact on the ground.

Innovation does not happen in the Berlaymont, nor in our national ministries. It happens in our regional spaces, where the triple helix actors come together. It is important to start a dialogue about how to make best use of the triple helix to create more of a pull out from research institutions for the delivery of public goods as well as for businesses. Public procurement can play an important role here since the public sector accounts for 20% of demand. However given the tendency for risk aversion in the public sector more information and training is important. Alternatively Innovation Funds, such as piloted by Helsinki, could be a good alternative.

Innovation can be the tool to square the circle, i.e. to solve economic, environmental and demographic challenges while preserving our lifestyle. In order to boost confidence in the economy, there is need for a smart economic stimulus on the demand side, which is what the Commission is now proposing. Investments in ICT and broadband and energy, can be seen as an immediate reaction to the crisis fully in line with the EU’s long-term strategy.

The present financial crisis should not lead to a scaling down of EU ambitions and investments in R&D, climate change and energy efficiency. This cannot wait until the crisis is over. We have an obligation towards the next generation.

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