Norwegian Innovation Policy in a Regional Perspective

Transcription

1 Norwegian Innovation Policy in a Regional Perspective NORSI course on Innovation Systems, Clusters and Innovation Policy Stavanger, September 25, 2015 Olav R. Spilling

2 Norwegian Innovation Policy in a Regional Perspective Structure of lecture 1. Theoretical perspectives on regionally differentiated innovation policy 2. Cases - SkatteFUNN (tax deduction scheme) - Norwegian Innovation Clusters (cluster program) - Start-up grants - The Regional Research Funds Scheme - Siva (national agency for organising infrastructure of innovation companies) 3. Summary: Norwegian (regional) innovation policy and path evolution If we have time 4. Do we have RIS in Norway? Reflections on the regional organisation of R&D-networks

3 1. Theoretical perspectives on regionally differentiated innovation policy Innovation policy The rationale for regional differentiation of innovation policy Key challenges in different types of regions Framework for analysing innovation policy instruments

4 Innovation policy Public interventions which influence innovation activities in society First generation innovation policy: Based on the idea of a linear process for the development of innovations (technology push) Second generation innovation policy: Recognises the complexity of the innovation system; based on the understanding of innovation as a systemic (interactive) process; different types of system (national, regional, sectoral) Third generation innovation policy: Interaction across different policy areas coherence of policy across ministerial boundaries (horizontal innovation policy) Broad based innovation policy: Provides a balance between the supply and demand sides of innovative activity, includes nontechnical innovations, as well as besides direct economic impact emphasizes wider societal considerations. Edquist, Luukkonen and Sotarauta (2009?) The Evaluation of the Finnish National Innovation System

5 The rationale of innovation policy System failure or systemic problems Edquist and Hommen 2006: researchers following a systemic approach often speak of systemic problems. In contrast to the conventional approach outlined above, the main focus of the systemic approach is the complex interactions that take place among the different organisations and institutions that constitute the system of innovation. From this perspective, policy makers need to intervene in those areas where the system is not functioning well. The rationale for innovation policy should therefore be based on 'systemic' failures or problems rather than on 'market' failures. Edquist, C. and L. Hommen (2006). Comparing National Systems of Innovation in Asia and Europe: Growth, Globalisation, Change and Policy.

6 Tödtling and Trippl (2005) One size fits all? Tödtling and Trippl focus on regional innovation policy. Their point of departure: there is a tendency of thinking in terms of best practice regional innovation policy the best performing regions tend to be high tech regions However, their success rest on specific preconditions, and strategies pursued in these regions will not work in other regions with other preconditions. There is no ideal model for innovation policy as innovation activities differ strongly between central, peripheral and old industrial areas. Tödtling, F. and Trippl, M One size fits all? Towards a differentiated regional innovation policy approach. Research Policy 34:

7 Tödtling and Trippl (2005) One size fits all? The concept of regional innovation system (RIS)

8 Tödtling and Trippl (2005) One size fits all? Tödtling, F. and Trippl, M One size fits all? Towards a differentiated regional innovation policy approach. Research Policy 34:

9 Tödtling and Trippl (2005) One size fits all? Type of region Peripheral regions Old industrial regions Key challenges and policy approach Key challenge: To strengthen and upgrade the regional economy by fostering catching up learning Policy approach: Attract external companies, embed them into the region Link firms to external clusters and knowledge providers Link to higher spatial innovation systems (national, EU) Key challenge: Renewal of old sectors, support innovation in those and related industries, upgrading the knowledge base Policy approach: Industrial and technological diversification Reorganisation of existing firms, networks and institutions A differentiated innovation policy approach is needed: Metropolitan regions Policy approach: Encourage growth of internationally linked knowledge intensive clusters Fostering science based and radical innovations Enhance communication and interactive learning within the system (in fragmented RIS) The proposals outlined above should be considered as basic guidelines for the design of more differentiated innovation policy approaches. To be sure, each region must further develop and adapt these strategies to its own circumstances. In order to formulate and implement inverventionist actions successfully, policy makers must possess detailed knowledge about the RIS specificities and the factors undermining its dynamics.

10 Jakobsen and Onsager 2008: Innovation policy for regional industrial development Main categories of innovation policy instruments (p ) 1. National, general programs - main focus on individual firms 2. National programs targeting regional clusters and regional systems - clusters of firms - networks between firms and knowledge institutions - infrastructure supporting start-ups, collaboration, knowledge exchange etc. (incubators, technology centres, research parks etc.) 3. Broad-based programs for stimulating regional development - main focus on regional restructuring and mobilisation Challenges (p 287): A strong regionalization could lead to a reinforcement of local and regional lock-in problems (too much focus on established constellations of actors) Important to balance national coordination with regionally based strategies Jakobsen, S.E. og Onsager, K Innovasjonspolitikk for regional næringsutvikling. I Isaksen, A., Karlsen, A. og Sæther, B. (red.) Innovasjoner i norske næringer et geografisk perspektiv. Bergen: Fagbokforlaget,

11 Isaksen 2010: Innovation policy in a regional perspective The rationale for a regionally differentiated innovation policy: Regions are different in terms of Industrial structure Regional resources (educational level, knowledge institutions etc) Innovation activity and modes of innovation Use of public policy instruments Framework for analysing innovation policy Reference: Isaksen, A Innovasjonspolitikk i et regionalt perspektiv. I Spilling, O.R. (red.) Innovasjonspolitikk. Problemstillinger og utfordringer. Bergen: Fagbokforlaget,

12 Isaksen 2010: Innovation policy in a regional perspective Reflections regarding current innovation policy: General policy instruments may contribute to maintain and strengthen regional disparities (like innovation capability) Regional innovation policy: Regional innovation policy with focus on clusters and innovation systems may be less feasible for peripheral areas with weak industries and less developed institutional structure Policy instrument addressing individual firms may have most impact in rural areas Is the regionally differentiated innovation policy too focused on clusters, innovation systems and local firm networks? Need for more tailor-made policy instruments to support radical innovations in rural areas The Oslo Region: Lower performance in terms of innovation activity due to a fragmentation of RIS? More emphasis on supporting clusters and RIS in the central areas

13 Jakobsen & Normann 2013: Regional innovation policy Approaches to regional innovation policy Top-down Hybrid Bottom-up Responsible for policy National level National and regional Regional level Regional autonomy Little Moderate High Regional differentiation None Moderate High Comments regarding lock-in: Regional policy and the regional part of innovation policy tend to focus on areas in which the regions have a strength; i.e. focus on dominating industries and strengthening regional specialisations Important to go beyond this; i.e. develop different types of knowledge and perspectives, promote interaction across different sectors Reference: Jakobsen, S.E. og Normann R.H. (2013): Regional innovasjonspolitikk i spenningen mellom nasjonale føringer og regionale strategier. I Abelsen, B., Isaksen, A og Jakobsen, S.E. (red.) Innovasjon organisasjon, region, politikk. Cappelen Damm Akademisk,

14 Isaksen, Abelsen and Jakobsen (2013): On the Norwegian mode of innovation Challenges related to programmes like VRI, Arena and NCE: - Aiming at strengthening existing regional industries (path extension) may result in lock-in - Tendency of regarding clusters as a universal solution - risk that actors may try to form clusters in cases where the area is below critical mass Peripheral areas: - Not able to take advantage of cluster programmes - General schemes like SkatteFUNN tend to favour the stronger regions - Need for more differentiated policy instruments Isaksen, A., Abelsen, B. og Jakobsen, S.E. (2013): Lærdom: Om den norske innovasjonsmåten. I Abelsen, B., Isaksen, A og Jakobsen, S.E. (red.) Innovasjon organisasjon, region, politikk. Cappelen Damm Akademisk.

15 2. Cases - innovation policy instrument SkatteFUNN - Supporting R&D-projects organised by firms through tax deduction - No regional differentiation Norwegian Innovation Clusters (cluster program) - Supporting emerging and well established cluster - No regional differentiation Start-up Grants Three programs: - National program (no regional differentiation) - Program targeting the districts (regional differentiation) - Program targeting agricultural areas (regional differentiation) Regional Research Funds - Funding regionally organised R&D (regional differentiation) - The country is divided in 7 regions, which organise their separate funds SIVA the national innovation network agency - Organizes innovation companies all over the country (regional differentiation)

16 Cases Target group of policy measure Firm Production/ Innovation system Geographic level for policy design and implementation National, general policy Norwegian Innovation Clusters National, regionally differentiated policy SkatteFUNN Start-up grants National scheme District scheme SIVA infrastructure for innovation Regionally developed policy Regional Research Funds

17 What do we mean by regional differentiation? Two approaches: 1) Based on counties 2) Based on centre-periphery

18 The regional response to the SkatteFUNN-scheme SkatteFUNN: The SkatteFUNN R&D tax incentive scheme is a government program designed to stimulate research and development (R&D) in Norwegian trade and industry. Businesses and enterprises that are subject to taxation in Norway, are eligible to apply for tax relief. All branches of industry and all types of companies can apply. Approved project may receive a tax deduction of up to 20% of eligible costs (20% for smaller firms, 18% for larger firms) The scheme has been in operation since 2002 More than approved projects ( active projects every year) About 1/3 of all projects are organised in collaboration with an R&Dorganisation Total planned activity in 2014: 4900 projects, 16,6 billion NOK Eligible costs: 8 million NOK internal R&D and 22 million NOK in an approved R&D-institution (from 2015 increased to 15 and 33 million NOK)

19 SkatteFUNN projects

20 SkatteFUNN projects started The absorptive capacity of the regions depends on the industrial structure and the number of relevant firms Relevant industrial sectors Manufacturing (10-30) Media and broadcasting (58-60) Telecom and ICT (61-63) R&D and professional services (71-75)

21 SkatteFUNN projects related to the number of firms in relevant industries Fairly stable rankings over the period Observations: Sør-Trøndelag continuously at the top Møre og Romsdal has moved up from medium+ to top position Oslo has moved up from low to medium Østfold and Hedmark continuously at the bottom Agder has dropped down from high to medium position

22 SkatteFUNN-projects related to type of region Started projects per 100 establishements Type of region Total Oslo 23,8 14,6 19,9 58,3 Other larger urban areas 44,6 20,9 28,0 93,5 Medisized cities 34,4 18,1 21,8 74,3 Smaller cities 30,8 15,4 17,5 63,7 Peripheral areas 31,3 13,9 17,9 63,0 Total 32,2 16,8 21,4 70,4 Conclusion: At this level fairly good regional distribution; however, some variations: Highest activities in other larger urban areas Significant differences between central and peripheral areas

23 Significant variation within the same type of region The differences probably reflect variation in industrial structure (data should probably be controlled for intramural R&Dactivity): The scheme probably favours the most R&D-intensive areas, and may contribute to increased regional variation But is this a problem?

24 Does SkatteFUNN contribute to lock-in? Significant growth in petrorelated R&D In Rogaland petro-related R&D account for 50% of all projects The most dynamic and R&D-oriented firms and clusters are most capable of taking advantage of SkatteFUNN (as well as other schemes) In cases of positive lock-in (path extention and path renewal), this is a good thing In cases of negative lock-in, like Rogaland, this may be a significant problem

25 Norwegian Innovation Clusters Program Annual support Years Projects Arena Networks of firms with potential for developing to a national (and international) competitive cluster 1,5-3,0 million NOK 3 (+1-2) 22 NCE (Norwegian Centers of Expertise) Established clusters of firms, leading nationally, potential for developing global competitive advantage 4-6 million NOK 5 (+5) 14 GCE (Global Centers of Expertise) Established clusters with a strong, global competitive advantage, with potential for further strengthening its competitive advantage 8-10 million NOK 5 (+5) 3

26 NCE and GCE Global Centres of Expertise: 1. GCE Maritime, Møre og Romsdal 2. GCE NODE, Agder 3. GCE Subsea, Hordaland National Centres of Expertise: 1 2 3

27 Arena The Arena Clusters The Arena program addresses clusters in an early stage of development, and support projects aiming at increasing collaboration between the firms and with knowledge institutions to build long term innovation capacity. Currently 22 projects are funded by the program.

28 Norwegian Innovation Clusters - summary Basic principles: No regional differentiation i.e. no region is favoured Candidates have to compete to be included in the programme - national competitions organised every year Projects are invited to submit sketches which are given feed-back, and feed-back is also given to all applicants Impacts Setting the agenda: strong focus on cluster strategies and the importance of local networks Trigger mobilisation in the various parts of the country It is regarded as very prestigious to be included in the program Question for discussion Would it be feasible with any form of regional differentiation of the programme?

29 Comments: The Labour Union representative has not understood the basic principle for approving projects The implication of the criticism is a demand for regionally differentiated cluster policy in which the different regions should be allocated projects although they are not the most competitive projects

30 Start-up Grants 2014 (Innovation Norway) Scheme Ministry of Agriculture Rural Development (BU-midler) Reg. diff? No of grants Support (Mill NOK) Yes ,8 Ministry of Local Government Yes ,4 Ministry of Trade and Industry No ,6 Total ,9

31 Start-up Grants 2014 (Innovation Norway) Level of innovation Firm Region National Internation. Not relev. Total Ministry of Agriculture Ministry of Local Government Ministry of Trade and Industry Number of grants Total support (mill NOK) 10,6 14,9 41,9 207,3 8,2 282,9 Summary The regionally differentiated grants contributes with smaller shares of innovative projects: - Ministry of Agriculture: 76% innovation at the firm and region level - Ministry of Local Government: 44% innovation at the international level The non-differentiated grants support the most innovative projects - Ministry of Industry: 77% innovation at the international level

32 Innovation Norway all policy instruments Number of approved projects 2014 Grants approved projects 2014 (bill. NOK) Level of innovation Innovation Ministry Firm Region National International Not relev. Total nat./internat. level (%) Agriculture ,1 Local Government ,6 Trade and Industry ,8 Total ,3 Level of innovation Innovation Ministry Firm Region National International Not relev. Total nat./internat. level (%) Agriculture ,0 Local Government ,0 Trade and Industry ,2 Total ,0

33 Innovation Norway all policy instruments

34 Regional Research Funds Economy: Ca 220 mill NOK per year mill NOK per region Additional allocations from The 15%-pot 7 regions

35 Regional Research Funds goals and organisation The initiative was launched in the White Paper on Regional Development in 2007 (St.meld. No ) Implemented in 2010 Goals Strengthen research for regional innovation and development Mobilise for increased R&D-activity in the regions Contribute to increased quality in research, and to the development of good and competitive R&D-activities ( FoU-miljøer ) in the regions Establish learning arenas for exchange of regional experiences and discussing these in relation to national and international knowledge and activities Stimulate to close interaction between regional activities and relevant national and international programs and activities Organisation Separate systems for allocating money for R&D have been organised in each region Coordinated by the National Research Council Based on the same routines for announcements, review and quality criteria as practiced by the Research Council

36 Regional Research Funds - Experiences Summary of evaluation: Established a well functioning system for managing research (Regional infrastructure for research management) Decentralisation and regional mobilisation: All regions have developed their own R&D-strategies More focus on regional issues Mobilisation of more R&D-activity among regional actors Some regions have played an important role in mobilising for national programs Impacts: High additionality in terms of mobilising new groups (industries, HEIs) in research Important for stimulating research in new fields (e.g. innovation in public sector) Important for stimulating collaboration between firms and knowledge institutions virtually all projects are organised in collaboration

37 Regional Research Funds Experiences cont. The scheme met significant scepticism when it was launched: Opposition in the Parliament (Høyre/Fr.P.) From the central universities Main arguments fear of: Fragmentation of R&D Problems related to quality Potentially regional loch-in The evaluation shows that these problems have been avoided The are still issues for further development of the scheme, but I do not have time for discussing this here General conclusion: Very successful case of bottom-up approach in regional innovation policy Reference: Spilling, O.R., Langfeldt, L. og Moen, S.E Regionale forskningsfond ny infrastruktur for regional forskningsforvaltning. Sluttrapport fra følgeevalueringen av regionale forskningsfond. NIFU rapport 45/2013

38 Siva National infrastructure for innovation Siva: Public enterprise owned by the Ministry of Trade and Fisheries Facilitate innovation by building, owning and developing infrastructure for industry, startups and research environments Different types of innovation companies: Science parks (co-located with universities and university colleges) Incubators Business gardens (næringshager)

39 Siva infrastructure for innovation Very decentralised system of innovation companies: More than 170 in total 5-10 in every county Companies co-located with universities/university colleges on all campuses Companies located in more many peripheral areas Business gardens Regionally differentiated system: Innovation companies in all parts of the country Incubators Seed capital/venture Industry parks Map from 2011, not updated

40 3. Summary Issues regarding innovation policy and regionalisation Innovation policy and path evolution the case of the Arena programme Final reflections

41 Regionally differentiated innovation policy? There seems to exist a general agreement on the need for a regionally differentiated innovation policy However regionalisation may reinforce regional lock-in Arguments regarding national policy instruments May contribute to maintain and strengthen regional disparities The strong focus on cluster policies may stimulate attempts of cluster formation in areas which are below critical mass Peripheral areas: Not able to take advantage of cluster programmes Not able to take fully advantage of other national schemes Need for more regionally differentiated policy instruments

42 Summary cases Target group of policy measure Firm Production/ Innovation system Geographic level for policy design and implementation National, general policy Norwegian Innovation Clusters National, regionally differentiated policy SkatteFUNN Start-up grants National scheme District scheme Siva infrastructure for innovation Regionally developed policy Regional Research Funds SkatteFUNN: Low barrier instrument good regional distribution, not reasonable with any form of regional differentiation Norwegian Innovation Clusters: Important role of setting the agenda for clusters of high standard not reasonable with regional differentiation Start-up grants: illustrates differences in innovation activity Siva too decentralised? Regional Research Funds important function of forming larger regions; play an important role in decentralizing R&D policy and mobilizing regional actors However, important to address the issue of (regional) lock-in?

43 To what extent contribute policy instruments to new path creation? The case of the Arena Programme Four forms of path evolution 1. Path exhaustion: Declining industrial development 2. Path extension: Further development of existing industries and clusters based on existing technologies and knowledge bases. 3. Path renewal: Development based on existing industries and cluster, but in related areas (branching). 4. Path creation: Development based on new technologies and new organisations in new industries. (Based on Tödtling and Trippl 2011; Asheim et al. 2012; Trippl, Asheim and Miörner 2014 )

44 The path evolution framework: Categories Path extension: - Upgrading or revitalisation of the businesses - Limited elements of novelty as a strategy for maintaining competitiveness - Building on well-known technologies and knowledge in mature or established sectors in the national system. Path renewal - New development of business activities in areas related to the existing industries and clusters, - The knowledge base does not change radically, but is developed towards areas of relevance to the new development - In the long run, changes of path renewal may become substantial for the national innovation system. Path creation - The project represent a potentially new industrial path - New industries based on new technologies and new organisations are emerging - A new knowledge base is gradually developing.

45 Classification of Arena projects ( ) Classification of 70 projects: Based on the intentions and objectives for the projects (not based on evaluation of obtained results): Path extension: 35 Path renewal: 32 Path creation: 3 The programme to a little extent stimulates radical innovations and the development of new industries. How can this be explained?

46 Arena s objectives Main objective: focus on value creation, not innovation per se: Originally (2002): Contribute to more value creation in regionally based businesses/industries by strengthening the interaction between industrial actors, knowledge institutions and public actors Later (from 2006): Contribute to develop regionally based industrial milieus towards more innovation and value creation by strengthening... Targets: Increased internal interaction between the project participant Increased external interaction with external actors (at the national and international level) More innovative and cooperative firms Stimulate R&D-institutions and educational institutions to have more focus on businesses and industrial development

47 Selection criteria The resource base of the project (i.e. the resources of the participating actors) The network/relations between the actors Project quality - Objectives - Strategies - Plans - Embeddedness Other criteria (specific for the individual calls) Most important: Project quality; in particular project management

48 The selection processes of Arena Path extension projects: Face the lowest barriers for developing and organising the projects Most factors are well-known, there is an established practice for organising innovation activities Networks among the relevant actors are fairly well developed. Path renewal projects The degree of novelty is somewhat higher But the projects will be organised in the context of elements that are fairly well known Path creation projects: Call for more radical changes Barriers for organising may be very high Challenging to involve a critical mass of committed actors

49 Concluding remarks Arena Low level of path creation seems reasonable Given the main objective of stimulating more value creation Given the lower barriers of organising path extension and path renewal projects Given the current situation in Norway of positive lock-in in resource based sectors Higher risks of failure for path creation projects Little potential for stimulate path creation projects given the short time periods and very limited resources New path creation requires much more resources and have a much longer time horizon than projects that may be organised by support from Arena Need for broader programs combining R&D and cluster evolution

50 Concluding remarks on innovation policy and regionalisation Some tentative conclusions: Good balance between national and regionally differentiated policy instruments? Current policy instruments favour the most dynamic areas; but is that a problem? Regional differentiation may lead to less innovative activity what should be the balance between national and regionally differentiated policy instruments? Cases of too much decentralisation (Siva innovation companies)? Missing strategies for how to cope with lock-in The regional organisation: The counties are too small units a restructuring would facilitate a better regional organisation (cf. Regional Research Funds) Need for broader studies on the regional implications of all the R&D and innovation policy instruments