This comes a bit late, but I have finally time to share some of my notes from the first day of W.I.R.E. (Week of Innovative Regions in Europe) Spanish EU Presidency conference that took place on 15-17 March in Granada, Spain, with the spectacular backdrop of the shining white peaks of the Sierra Nevada.

The conference brought together key stakeholders and users of the EU’s research and regional policy programmes and was designed to take stock of the most important EU funding streams that provide support to regional research and innovation projects, identify and promote synergies between them and discuss strategies for increasing their impact on the ground. It was thus well in line with the call for more policy coordination as highlighted by Europe 2020, the EU’s post-Lisbon strategy presented by Commissioner Barroso on 3 March. ERRIN was present with a stand, informing about its activities.

At the opening session Commissioners Johannes Hahn (Regional Policy) and Maire Geoghegan-Quinn (Research and Innovation) reiterated their commitment to make the Structural Funds a key delivery mechanism for the EU2020 strategy and for enhancing innovation capacity in the regions.

Commissioner Hahn stressed that “interactions depend on geographic proximity and an ecosystem that allows new ideas to emerge. Innovation does not only mean innovative products but also business climate.” He maintained that research does not necessarily lead to innovation but that other factors such as entrepreneurship are also important, so that support would need to be provided to the regions to enable them to make best use of their comparative advantages and work out their unique selling point that might be the basis for successful cluster activities.

Commissioner Geoghegan-Quinn said she was working closely with all relevant COM services and the MS, to achieve a joint-up approach leading to a European research and innovation union and cleaner, greener, smarter jobs to replace those that have been lost. Apart from that she was reiterating the statements already reported in my earlier blog post about her speech at the Lisbon Council Innovation Summit, such as backing the EU’s 3% R&D target, EU finance ministers reportedly want to ditch. I am personally convinced that her vision, competence and enthusiasm for the job and for tackling the challenges ahead will bring lots of fresh wind. Clearly the person you want to have in the driving seat.

EP REGI Committee Chairwoman Danuta Hübner and Mr. Hahn’s predecessor as the EU’s Regional Policy Commissioner, stressed that innovation clearly requires a regional and local focus and that “in the context of EU2020 we have to look again into regions and encourage them to enhance their strategies”. She also stressed that, in view of innovation, the Single Market was far from complete, which made it difficult for promising start-up companies to rapidly exploit this market. Europe needed to catch up with the US in the financing of high growth knowledge enterprises and achieve a mentality change concerning so called “risk” capital to see this more as (ad)venture capital. According to Ms. Hübner it was important to raise awareness how regional policy can contribute to these challenges. However, she also stressed that the EU’s regional policy while being an important partner in innovation, was just one of the tools available.

Francoise le Bail, Deputy-DG of DG Industry and Enterprise said that Europe needs more innovation partnerships between business, research and education. Public policies at all levels can contribute to better innovation performance. They will have to look at solutions to address identified gaps in funding from knowledge transfer to listing in the markets and take into account the entire programme landscape, which should be simplified, also in terms of access.

The result of any future (regional) policy must be to aim at raising the innovation performance of all regions and capitalise on the wealth of experience in innovation support measures and cluster initiatives and make sure that these very good examples are widely adopted and support the smart specialisation of regions.

She also said that the forthcoming Research and Innovation plan will have a regional perspective, “simply because we believe regions are important for innovation”. Europe2020 and the Innovation Union will only work with active commitment of regional stakeholders. She also suggested to think about a system for opening and connecting regional programmes and to include public procurement, where regions should think of leading in terms of innovation.

Luc Soete of the UN University Maastricht identified underinvestment in education as one of the core failures of Europe. “We still seem to invest our savings in bricks rather than knowledge”. While Europe invested 1.3 % of its GDP, the US invested 2.6 %, when having more or less the same number of educational institutions and students. He advocated a 2% investment target in higher education and a 1% public R&D investment goal, rather tan the present 3% R&D target, which included private investment that governments had no control of and that were subject to market sentiments and decisions. He also underlined public procurement as a massive grand challenge for innovation.

At geographical level the crisis was likely to increase the gap between frontrunners and lagging regions and EU support for excellence would lead to further spikes in research agglomerations across Europe. He said that regional innovation policies were the “long tail” of European opportunities and recommended that the SF should be allocated to improve R&D capacity in the regions and that they should be made conditional to the existence of smart specialisation strategies.

Mario Pezzini, Head of Territorial Reviews and Governance at the OECD, in a comment, stressed that, on the contrary, data showed very well that peripheral countries have demonstrated better performance than the traditional core. He also stressed that policy has to change in quality not only in quantitative terms. Research would have to be tackled at European level moving towards a common research policy (“Why do we have to have 27 research councils and a European research council?”) and innovation at regional level. He underlined the importance of cluster instruments for regional innovation and, in this respect, pointed to the major cluster offensive of the Obama administration in the U.S. With regard to regional specialisation and how to go about to develop the USP for a region, he pointed to the recommendations in “knowledge for growth” report by Dominique Foray, presumably having in mind the following (quote from this report):

“The European Research Area will only benefit those countries and regions that have clear visions and strategies as to how they can develop distinctive, original, modern areas of specialisation for the future. The economic importance and science and technological development of the region will dictate how broad or narrow this specialisation should be. Regions targeting the same kind of specialization need to cooperate and coordinate their investment plans to allow for the emergence of a critical cluster able to attract further R&D capacities from foreign countries.”

Katharina Maternova, Vice-DG of DG REGIO, spoke about a “sea change” for cohesion policy in its support for innovation. She stressed that the earmarking of Structural Funds for innovation-related measures, was an instrument that has proven to be efficient, having improved the quality of programming and having set aside significant funds for innovation. Relating to some earlier comments and discussion that day she commented on the difference between the EU and the US in terms of innovation elaborating on (1) The different attitude towards failure, (2) The different university system with the ability of research to connect to entrepreneurship, the (3) System’s DNA, i.e. the EU trust in government vs. a certain distrust in private funds, vice-versa in the US, (4) the access to finance landscape, which in Europe was harmstrung by regulatory barriers and a difference in perception (venture vs. risk capital), (5) Red tape in general. She was upbeat about Europe 2020 saying it will lead to a stronger strategic alignment of the EU instruments to its strategic goals providing a strong policy umbrella. In that respect cohesion policy had a lot to offer, thanks to multi-level-governance, strong stakeholder mobilisation and multi-annual financing. It was key both for the green and for the smart (and social inclusive) growth. Two forthcoming communications, one on Cohesion Policy and sustainable development and one on CP and its contribution to regional innovation will outline the path for the future of the Structural Funds.

Mikel Landabaso, HoU for Innovation at DG Regio made a strong plea for the place-based approach and for making Structural Funds a key deliver instrument for innvoation in the regions. Among others he stressed that:

Innovation is not R&D, and just R&D is not Innovation: promoting innovation-led regional development is not primarily about increasing R&D excellence and R&TD infrastructures (supply push) but first and foremost about a change of culture where efficient innovation systems (demand pull) mobilize the intellectual and entrepreneurial capacities to create an innovation friendly business environments, for SMEs in particular, in all regions and in all sectors (not just high-tech).

Thus, the linear model (from R&D to the market) is much less relevant for policy design than the systemic or interactive model: not just patents but economic exploitation of talent and new ideas – not just industry and big firms with R&D but also services, competitive research and open innovation.

Because, regional innovation capacities are much more about personal engagements, institutions, networks, cooperation (social capital) than it is about narrowly focused science and technology efforts: reinforcing triple helix – knowledge triangle, clusters and university-enterprise is key.

Regional innovation for most regions in the EU is basically about knowledge absorption (education and training, advanced business services) and diffusion (technology transfer, ICT, entrepreneurship) rather than about knowledge generation (science efforts).

Innovation has a strong territorial dimension (tacit knowledge-networked economy) and there is no “one size fits all” innovation policy: regional diversity is an asset that advocates for different routes to growth through innovation and smart specialization.

Opening minds is more difficult than opening roads – there was a need for strengthening strategic planning capacities of regional/national governments (from design to ongoing learning evaluation) and facilitate a culture of risk taking.

R&D excellence and Regional innovation are complementary and we need both: exploiting agglomeration and economies of scale is important (ERA) but also diffusion and absorption mechanisms based on regional potential.

Beyond R&D expenditure and patents: we still do not have the required indicators for properly characterizing regional innovation potential or measure policy impact. Note of the author: ERRIN, in cooperation with CPMR and the Committee of the Regions will organize a seminar at the Open Days on this issue, as will DG Enterprise, who have just started their Regional Innovation Monitor.

Microeconomic competitiveness problems can not be efficiently tackled by overdoses of macroeconomic or sector based policies but by integrated, place-based regional policies.

The public sector should provide leadership and vision, rather than control, and catalyze economic development by promoting new ideas and partnerships with the private sector. Note by the author: Indeed, public leadership, for instance as regards the quality and innovativeness of public services is important, we are looking at a whole ecosystem that needs to be stimulated, more often than not the public sector does not lead by example.

Place-based regional innovation strategies and action plans integrating multilevel governance (national-regional) and horizontal (inter-ministerial) cooperation are a necessary first step while grassroots ownership of innovation strategies are required.

We should attentively listen to Regional Development Agencies, Technology Centres, Technology Parks and Incubator managers, Technology Transfer Offices…they are soldiers in the front line.
Venture capital, business angels, soft loans, guarantees…financial engineering are better than grants and tax incentives although there is a need for combination and a wide menu. Note of the author: Indeed, Europe needs an internal market for VC and, coming back to Ms. Hübner’s and Ms. Mathernova’s theme, a perception of venture rather than risk.

Public procurement (green and innovation driven) is an important tool to consider. Note of the author: Indeed, DG INFSO has long been stressing we need a scheme like the SBIR (Small Business Innovation Research) programme in the US characterised as the “world’s largest seed capital fund” (I wrote about it earlier in this blog. Innovation policies require risk taking, trial and error and sound evaluation on top of deep pockets and long lead times (political consensus a plus).

He terminated his presentation with a quote from the Barca-report:

“…A particular case is made for selecting Innovation as a core priority. Place-based interventions, building on the strengths and taking account of the weaknesses of previous experience as regards cohesion policy in this area, could complement policies aimed at developing a European Research Area, by selecting in each region a limited number of sectors in which innovation can most readily occur and a knowledge base built up. Through such an approach – defined in the current policy debate as “smart specialization” – the most could be made of the present diversity of industrial agglomerations and networks, while their “openness” beyond regional or national boundaries would be promoted…”

Mr. Landabaso’s slides are available on the ERRIN knowledge base

I am sure we will see much of this argumentation in the forthcoming communication on smart growth. ERRIN has been championing smart growth and intelligent support schemes ever since we came out as a self-standing association from the first generation of Regions of Knowledge projects. ERRIN thinks that SF should be one of the key delivery tools for the implementation of the EU2020 agenda, and thus pleads for a strong EU regional policy after 2013, a regional policy that covers all EU regions. ERRIN regions trust that in doing so this would considerably increase the impact of these programmes. See our ERRIN statement on EU 2020.

After the high profile for regional research and innovation under the Spanish EU Presidency, we are certainly looking forward to the Belgian EU Presidency, which has kindly granted us the Presidency label for some key ERRIN events on regional innovation, such as seminar on the “Role of Regions in ICT” (27 September), the “Science and the City” event on 12 October 2010, the “Green Knowledge Triangle” event in the European Parliament on 27 October and the EUBIO2020 event (December date tbc).

Let me also take this opportunity to invite everybody to join our Linked-in group on European Innovation Policy!

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