'Global Innovation Challenges: Eastern European Regional Opportunities'

Philip Cooke, Centre for Advanced Studies, Cardiff University

Conference Presentation, Warsaw, 20-21 September 2007

‘CEE: a traditional periphery or a new growth pole?’

A New Global Innovation Challenge

• Climate Change

• Greenhouse Gases

• Global warming

• ‘Peak Oil’

• Sustainable Cities

• Clean Technologies (Cleantech)

• Alternative Energy

• Biofuels

Biofuels Policy in European Union

• In March 2007, the European Council agreed a binding minimum level for biofuels of 10% of vehicle fuel by 2020.

• Biofuels are seen as beneficial in that they are renewable, reducing greenhouse gas emissions and boosting the EU’s energy security.

• The production process of bioethanol relies largely on biotechnology

• Achieved through the use of enzymes or micro-organisms, to make ethanol out of biomass, whether crops, wood or biowastes.

• It is estimated that the development of biofuels could create a significant number of new jobs throughout the EU

• Biofuels also open new markets for agricultural products.

Cleantech %-Share of Total VC Investments in 2006

Future Dongtan Eco City, China

• None of the buildings is more than eight storeys high. • Turf and vegetation cover the roofs - natural insulation that also recycles waste water.• Six times more space for pedestrians than airy Copenhagen• Pollution-free neighbourhood buses powered by fuel cells• An intranet service forecasts travel times and connects car pools•Traditional motorbikes forbidden, replaced by electric scooters and bicycles •Roads are laid out so that walking or cycling to work is quicker than driving.

Some 40% of Freight in UK is Food

UK Food Transport Carbon Footprint

Energy efficiency in CEE

Agro-food producer clusters: Swabia

Thinking about this kind of innovation

• Relevant research and knowledge• Building of research platforms across ICT,

biotechnology, nanotechnology, material science (high tech plus knowledge intensive services)

• Mechanisms for commercialising ‘cleantech’ knowledge

• Large (energy) firms experimenting or producing ‘green energy’

• Judicious government support measures

40.83

0 5 10 15 20 25 30 35 40 45 50

Poludniow y (PL)

Severozápad (CZ)

Moravskoslezsko (CZ)

Yugozapaden (BG)

Východné・Slovensko (SK)

Centralny (PL)

Poludniow o-Zachodni (PL)

Alföld és Észak (HU)

StredníMorava (CZ)

Észak-Alföld (HU)

Slaskie (PL)

Dél-Dunantul (HU)

Dolnoslaskie (PL)

Jihozápad (CZ)

Mazow ieckie (PL)

Pomorskie (PL)

Közép-Dunantul (HU)

Slovenia

Zachodniopomorskie (PL)

Jihovýchod (CZ)

Czech Republic

Bucuresti - Ilfov (RO)

Západné・Slovensko (SK)

Stredn・Cechy (CZ)

Nyugat-Dunantul (HU)

Észak-Magyarország (HU)

Severovýchod (CZ)

Hungary

EU15

Bratislavský kraj (SK)

Közép Magyarország (HU)

Praha (CZ)

KIBS+ High Man. 2006 %

29.94

0 5 10 15 20 25 30 35

Nord-Est (RO)

Nord-Vest (RO)

Sud-Vest Oltenia (RO)

Sud-Est (RO)

Sud - Muntenia (RO)

Sw ietokrzyskie (PL)

Romania

Centru (RO)

Yugoiztochen (BG)

Yuzhen tsentralen (BG)

Vest (RO)

Wschodni (PL)

Podlaskie (PL)

Lubelskie (PL)

Severoiztochen (BG)

Severen tsentralen (BG)

Podkarpackie (PL)

Lubuskie (PL)

Latvia

Kujaw sko-Pomorskie (PL)

Bulgaria

Croatia

Lithuania

Warminsko-Mazurskie (PL)

Opolskie (PL)

Lódzkie (PL)

Malopolskie (PL)

Dél-Alföld (HU)

Pólnocny (PL)

Wielkopolskie (PL)

Poland

Eastern Europe mean

Pólnocno-Zachodni (PL)

Estonia

Stredné Slovensko (SK)

KIBS+ High Man. 2006%

First 10

50.00

52.00

54.00

56.00

58.00

60.00

62.00

(KIBS+HM_Man)04 (KIBS+HM_Man)06

Stockholm

Inner London

Surrey, East and West Sussex

Berkshire, Bucks andOxfordshire

Outer London

Région de Bruxelles-Capitale

Östra Mellansverige

Berlin

Västverige

Sydsverige

Top 10 knowledge economies 2004-6

Top 30 in 1998

45

47

49

51

53

55

57

59

61

63Stockholm 60.31

Inner London 58.58

Surrey, East and West Sussex 55.55

Berkshire, Bucks and Oxfordshire 54.0

Outer London 53.91

Brussels 53.89

Ostra Mellansverige 53.68

Vastsverige 52.82

Sydsverige 52.73

Brabant Wallon 52.62

Vlaams Brabant 52.61

Mellersta Norrland 52.45

Ovre Norrland 52.35

Darmstadt 52.31

Karlsruhe 51.75

Ile de France 51.73

Utrecht 50.65

Gloucestershire, Wiltshire and North Somerset 50.4

Stuttgart 49.83

Denmark 49.59

West Midlands 49.58

Bedfordshire, Hertfordshire 49.41

South Western Scotland 49.01

Essex 48.5

Eastern Scotland 48.44

Norra Mellansverige 48.05

Merseyside 47.72

Wien 47.3

Hampshire and Isle of Wight 46.59

48.00

50.00

52.00

54.00

1998 2006

Form 31 to 61 in 1998

35

37

39

41

43

45

47

49

51

53

55 Berlin 52.89

Hamburg 52.47

Cheshire 51.28

Braunschweig 50.6

Cologne 50.5

Oberbayern 50.46

Greater Manchester 49.53

Kent 48.96

Groningen 48.88

Noord-Holland 48.81

Smaland med oarna 48.27

Herefordshire, Worcestershireand Warks 48.26 East Anglia 47.89

East Wales 47.76

Tubingen 47.34

Dorset and Somerset 47.13

Tees Valley and Durham 46.85

Zuid-Holland 46.79

Rheinhessen-P falz 46.62

M ittelfranken 46.5

Flevoland 46.42

Freiburg 46.22

West Yorkshire 45.7

Leicestershire, Rutland andNorthants 45.58 Northumberland, Tyne and Wear 45.28 West Wales and The Valleys 45.23 P rov. Antwerpen 44.22

South Yorkshire 43.88

Drenthe 43.25

P rov. Hainaut 42.1

Haute-Normandie 41.48

44

46

48

50

1998 2006

38.5

40.5

42.5

44.5

46.5

48.5

Shropshire and Staffordshire 49.59

Bremen 49.5

Alsace 47.15

North Yorkshire 46.25

Gießen 46.01

Unterfranken 45.95

Hannover 45.95

P rov. Limburg (B) 45.2

P rov. Oost-Vlaanderen 44.67

Dϋsseldorf 44.63

P rov. Luxembourg (B) 44.46

Derbyshire and Nottinghamshire 44.33

Lancashire 44.03

Limburg (NL) 43.29

Oost-Nederland 43.11

Noord-Brabant 43.04

P rov. Liège 42.96

Basse-Normandie 42.95

Devon 42.86

Gelderland 42.58

Southern and Eastern 42.46

Friesland 42.29

M idi-P yrénées 42.07

P rovence-Alpes-Côte d'Azur 42.04

Comunidad de Madrid 41.78

Rhône-Alpes 41.26

Lorraine 41.18

Cornwall and Isles of Scilly 40.31

Nord - P as-de-Calais 39.89

Bretagne 39.85

From 62 to 91 in 1998

4041

424344

4546

1998 2006

From 92 to 121 in 1998

30

32

34

36

38

40

42

44

46

Centre 43.87

Sachsen 43.39

Mϋnster 43.3

Overijssel 42.95

Oberpfalz 42.58

Saarland 42.57

Kassel 42.49

P rov. Namur 42.44

Lombardia 42.1

Lazio 42.05

P iemonte 41.95

Schleswig-Holstein 41.83

Schwaben 41.83

Lϋneburg 40.91

Zeeland 40.66

Liguria 40.58

Northern Ireland 40.37

Aquitaine 40.0

P ais Vasco 39.36

P ays de la Loire 39.26

P icardie 39.16

P oitou-Charentes 38.83

Languedoc-Roussillon 38.78

Niederbayern 38.76

Arnsberg 38.37

P rov. West-Vlaanderen 37.52

Bourgogne 37.5

Champagne-Ardenne 36.35

36

38

40

42

1998 2006

From 122 to 151 in 1998

30

32

34

36

38

40

42

44

KIS_MAN_HM_06KIS_MAN_HM_02KIS_MAN_HM_98

Highlands and Islands 43.71

Detmold 41.11

East Riding and North Lincolnshire 41.03

Thϋringen 40.18

Oberfranken 39.91

Friuli-Venezia Giulia 39.39

Cumbria 39.16

Koblenz 39.06

Weser-Ems 38.1

Emilia-Romagna 37.86

Auvergne 37.81

Lincolnshire 37.67

Limousin 37.04

Veneto 36.08

Cataluňa 35.82

Magdeburg 35.82

Niederöterreich 35.71

Brandenburg 35.51

Upper Austria 35.31

Attiki 35.29

Comunidad Foral de Navarra 35.04

Aragón 34.65

Kärnsten 33.99

Campania 33.89

Salzburg 33.56

Molise 33.34

Vorarlberg 33.03

Calabria 32.21

32

34

36

38

1998 2006

From 152 to 189 in 1998

10

15

20

25

30

35

40

KIS_MAN_HM_06KIS_MAN_HM_02KIS_MAN_HM_98

Basilicata 37.36

Abruzzo 36.78

Mecklenburg-Vorpommern 36.43

Umbria 36.35

Marche 35.51

Steiermark 35.34

Border, Midlands and Western 34.81

Sicilia 34.81

Tirol 33.64

Toscana 33.08

Burgenland 32.8

Sardegna 31.22

Provincia Autonoma Bolzano 30.65

Puglia 30.41

Cantabria 28.46

Galicia 28.42

Comunidad Valenciana 28.3

Principado de Asturias 27.66

Castilla y León 27.54

Andalucia 26.68

La Rioja 26.01

Kentriki Makedonia 25.92

Illes Balears 25.56

Castilla-la Mancha 24.88

Regió de Murcia 24.63

Thessalia 23.53

Dytiki Ellada 22.54

Norte 21.78

Sterea Ellada 20.19

Anatoliki Makedonia, Thraki 19.68

Peloponnisos 17.38

24

26

28

30

1998 2006

Top 30 knowledge economies

45

47

49

51

53

55

57

59

61

63Stockholm 60.31

Inner London 58.58

Surrey, East and West Sussex 55.55

Berkshire, Bucks and Oxfordshire 54.0

Outer London 53.91

Brussels 53.89

Ostra Mellansverige 53.68

Vastsverige 52.82

Sydsverige 52.73

Brabant Wallon 52.62

Vlaams Brabant 52.61

Mellersta Norrland 52.45

Ovre Norrland 52.35

Darmstadt 52.31

Karlsruhe 51.75

Ile de France 51.73

Utrecht 50.65

Gloucestershire, Wiltshire and North Somerset 50.4

Stuttgart 49.83

Denmark 49.59

West Midlands 49.58

Bedfordshire, Hertfordshire 49.41

South Western Scotland 49.01

Essex 48.5

Eastern Scotland 48.44

Norra Mellansverige 48.05

Merseyside 47.72

Wien 47.3

Hampshire and Isle of Wight 46.59

48.00

50.00

52.00

54.00

1998 2006

From 56 to 96: Selected

Praha (CZ)

Közép Magyarország (HU)

Bratislavský kraj (SK)

38.00

39.00

40.00

41.00

42.00

43.00

44.00

45.00

46.00

47.00

48.00

(KIBS+HM_Man)04 (KIBS+HM_Man)06

Gießen

Unterfranken

Hannover

Praha (CZ) -60

West Wales and The Valleys

Prov. Limburg (B)

Prov. Oost-Vlaanderen

Dϋsseldorf

Közép Magyarország (HU) - 69

Prov. Antw erpen

Centre

Bratislavský kraj (SK)- 74

Sachsen

Mϋnster

Limburg (NL)

Drenthe

Prov. Liége

Southern and Eastern

Prov. Namur

Friesland

Lombardia

Prov. Hainaut

Midi-Pyrérnées

Lazio

Bottom 30

13.00

15.00

17.00

19.00

21.00

23.00

25.00

27.00

29.00

31.00

33.00

(KIBS+HM_Man)04 (KIBS+HM_Man)06

Andalucia

Bulgaria

Kujaw sko-Pomorskie (PL)

Latvia

La Rioja

Kentriki Makedonia

Lubuskie (PL)

Podkarpackie (PL)

Illes Balears

Severen tsentralen (BG)

Severoiztochen (BG)

Lubelskie (PL)

Podlaskie (PL)

Castilla-la Mancha

Region de Murcia

Wschodni (PL)

Vest (RO)

Thessalia

Yuzhen tsentralen (BG)

Dytiki Ellada

Norte

Yugoiztochen (BG)

Centru (RO)

Romania

Sterea Ellada

Sw ietokrzyskie (PL)

Sud - Muntenia (RO)

Anatoliki Makedonia, Thraki

Sud-Est (RO)

Peloponnisos

Sud-Vest Oltenia (RO)

Nord-Vest (RO)

Nord-Est (RO)

0 5 10 15 20 25 30 35 40 45 50

Nord-Est

Nord-Vest

Sud-Vest Oltenia

Sud-Est

Sud - Muntenia

Swietokrzyskie

Romania

Centru

Yugoiztochen

Yuzhen tsentralen

Vest

Wschodni

Podlaskie

Lubelskie

Severoiztochen

Severen tsentralen

Podkarpackie

Lubuskie

Latvia

Kujawsko-Pomorskie

Bulgaria

Croatia

Lithuania

Warminsko-Mazurskie

Opolskie

Lódzkie

Malopolskie

Dél-Alföld

Pólnocny

Wielkopolskie

Poland

Eastern Europe mean

Pólnocno-Zachodni

Estonia

Stredné Slovensko

Poludniowy

Severozápad

Moravskoslezsko

Yugozapaden

Východné・Slovensko

Centralny

Poludniowo-Zachodni

Alföld és Észak

StredníMorava

Észak-Alföld

Slaskie

Dél-Dunantul

Dolnoslaskie

J ihozápad

Mazowieckie

Pomorskie

Közép-Dunantul

Slovenia

Zachodniopomorskie

J ihovýchod

Czech Republic

Bucuresti - Ilfov

Západné・Slovensko

Stredn・Cechy

Nyugat-Dunantul

Észak-Magyarország

Severovýchod

Hungary

EU15

Bratislavský kraj

Közép Magyarország

Praha

Factor label

N

Cluster

129

267

335

423

Less Accomplished MeanStd. Dev.

3.961.52

***

-1.682.38

***

5.851.88

***

-9.014.63

***

Lower Level Education MeanStd. Dev.

2.941.03

***

-0.561.37

***

-3.721.31

***

-0.311.22

Urban Development MeanStd. Dev.

-1.320.96

***

-0.791.54

***

-3.610.87

***

4.852.91

***

One, two and three stars indicate significant differences (at the 10%, 5% and 1% level, respectively) of the cluster centroids

from the total sample mean in a t-test with Bonferroni adjustment.

Source: From Verspagen, 2007

Regional Innovation Hierarchy: Cluster Centroids

Regional Innovation Hierarchy

Low GDP & Patenting

High Education, High GDP

High Education, Low GDP

High GDP Urban Centres(Highest GDP & Patenting)

Source: From Verspagen, 2007

Case: Bohemia’s Regional Innovation Strategy

• Prague dominates, produces 25% of Czech GDP (80% Services; 75% jobs)

• 8 Universities, 80,000 students, 10,000 PhDs

• 40 AoS institutes; 50 other research inst.

• But a ‘sclerotic milieu,’ Hassink (2005)

• Institutions & policies slow to change

• Lack of institutional connectivity (Blazek,2007); low interactive learning

BRIS Initiative• EU RIS-NAC (DG Enterprise) Technology Centre of

Czech AoS. Hence ‘Product’ not ‘Demand’ driven• Research on 490 SMEs & 60 PROs• BUT TC withdrew from seeking network linkage among

top PROs• PROs sceptical & mistrustful of merit of BRIS• Main recommendation of BRIS – inter-firm links need to

be strengthened, notably SMEs• Big emphasis on building new public intermediaries• No monitoring, budgetary implications, scheduling or

responsibility actions proposed• But at least it connects to Prague SPD & Charles

University KTC initiative

Slovenia RIS Characteristics

• Slovenia RI ‘System’ began as similarly fragmented (Koschatzky, 2004)

• Liberalisation coincided with network building• Especially among firms, not only or mainly on

‘innovation’• Also research institutes and firms, mostly larger ones• Government involved through financing PROs &

Universities• But integration not complete – large firms-large PROs

not SME-smaller PROs• Financing innovation still weak

Conclusions• CEE demonstrates difference from EU ‘Cohesion’ regions• Cohesion regions show medium-to-low GDP and low learning

& knowledge exploitation• CEE displays high knowledge BUT poor exploitation and GDP• There are three obvious ‘poles’ of potential: Bohemia,

Bratislava, Budapest• Other capital cities also have potential BUT…• Even the best are poorly networked in the horizontal, maybe

vertical inter-firm linkages are earliest in developing• Future growth will depend on knowledge generation, capture

and commercialisation• New global challenges arise regarding, for example, Climate

Change and innovative responses to it, which address markets

• But CEE not yet seeing the market potential of this, preferring to emulate the West where possible, with incubators, Science Parks and established high-tech and KIBS

• ‘Pro-growth’ dominates ‘Green Innovation’