Local innovation eco-

systems in England:

strengths and challenges

Professor Richard Evans

European Institute for Urban Affairs

Liverpool John Moores University

Innovation and Local Growth Workshop

Warwick Business School, The Shard, London

28th May 2015

1

Scope of talk

• Rationale for research

• Methodological approach

• Caveats

• Findings

• So what for future research and

policy

2

Rationale for research

• Importance of place

• Contribution to national

performance, challenges

• Agglomeration effects & spillovers

• Smart Specialisation agenda

• Need for consistent local data

• Building on Witty Review etc.

3

Real Labour Productivity per hour

worked, 2010-14, 2010=100

4 Source: Eurostat

Real Labour Productivity –

Euros per hour worked, 2013

5

Source: Eurostat

Economic Output per person –

GDP per capita in PPS, 2013

6 Source: Eurostat

Method

• Source material: Research for BIS

on ‘Mapping Local Comparative

Advantages in Innovation’

• Joint report with Impact Science, big

data capability

• LEP-based geography

• 6 innovation elements (Allas)

• 23 constituent indicators

7

The Indicators (1)

8

Money

R & D

Expenditure

Innovate UK -

Investment in

Innovation

Investments by

British private

equity &

venture capital

association

members

R & D Tax

Credits

Innovation

Talent

Residents

employed as

science,

research,

engineering

& technology

professionals

& associate

professionals

Participation

in Higher

Education – STEM and

Non-STEM:

Undergrad &

Doctorate;

Non-UK FT

postgraduates

NVQ

4+/3/2/1/Other

Qualifications

/ No

qualifications

Graduate

retention

rates

Science &

Technology

intermediary

institutions

Knowledge assets

Intellectual

Property

Protection -

Patents

Output &

quality of

scientific

research – publications

& h-index

impact

measure

Knowledge

exchange/

collaboration

– interactions

between HE

Institutions &

business &

wider

community

The Indicators (2)

9

Innovation

Structures & Incentives

Industrial

structure &

cluster

development –

Industrial

strategy

sectors

Key sectors –

ONS Science &

Technology

definitions

LEP innovation

approach and

governance

Quality of place/ life

Broadband infrastructure

Earnings

Average travel to work

times

Broader environment

Business demography –

births & deaths

Employment rates

Innovation outputs

Productivity – GVA per capita /

GVA per hour worked

UK Community Innovation

Survey - % of firms engaged

in product or process

innovation

Caveats

• Reliance on accessible secondary

data

• Data limitations: coverage, scale,

reliability

• Partial coverage innovation, its

drivers

• Shortage data: process innovation,

low/medium technology, ecosystem

• LEP boundaries somewhat artificial

• Snapshot not trajectories

• Research should NOT therefore be

used to rank LEPs

10

Research findings

• Big picture – relative strength of

ecosystems

• Six innovation elements – spatial

variations in key indicators

• Performance selective LEPs relative

to national average

• Soft mapping: assets and

governance

11

LEP areas: comparatively strong

ecosystems

LEP Region Classification Average score

Oxfordshire SE 3rd Tier 7.5

Greater Cambridge & Greater

Peterborough EoE (part EM) 3rd Tier 8.3

Thames Valley Berkshire SE Lon CR 10.5

Enterprise M3 SE Lon CR 10.6

West of England SW 2nd Tier 11.2

London London London 11.4

Solent SE 3rd Tier 12.4

Coventry and Warwickshire WM 3rd Tier 13.1

South East Midlands EM (part SE &

EoE) 3rd Tier 14.1

Hertfordshire EoE Lon CR 14.1

Coast to Capital SE (part London) 3rd Tier 16.4

Derby, Derbyshire, Nottingham

and Nottinghamshire EM 2nd Tier 16.7

Cheshire and Warrington NW 3rd Tier 17.5

12

LEP areas: middling ecosystems

LEP Region Classification Average score

Leicester and Leicestershire EM 2nd Tier 17.6

Buckinghamshire Thames

Valley SE Lon CR 18.1

Leeds City Region YH 2nd Tier 18.2

Greater Manchester NW 2nd Tier 18.3

Greater Birmingham and

Solihull WM 2nd Tier 19.0

South East SE (part EoE) Lon CR 19.4

North Eastern NE 2nd Tier 19.7

Liverpool City Region NW 2nd Tier 20.3

Gloucestershire SW Rural 21.0

Swindon and Wiltshire SW 3rd Tier 21.0

York, North Yorkshire and

East Riding YH Rural 22.2

Tees Valley NE 3rd Tier 22.3

Sheffield City Region YH (part EM) 2nd Tier 22.7

13

LEP areas: less strong

ecosystems

LEP Region Classification Average score

Dorset SW 3rd Tier 23.6

Heart of the South West SW 3rd Tier 23.6

New Anglia EoE 3rd Tier 24.4

Lancashire NW 3rd Tier 25.0

Northamptonshire EM 3rd Tier 25.6

Worcestershire WM Rural 26.5

The Marches WM Rural 27.9

Stoke-on-Trent and

Staffordshire WM 3rd Tier 28.0

Humber YH 3rd Tier 28.1

Black Country WM 2nd Tier 28.8

Cumbria NW Rural 30.2

Greater Lincolnshire EM (part YH) Rural 30.3

Cornwall and Isles of Scilly SW Rural 31.0

14

Money: Business Enterprise

R&D Expenditure per FTE, 2013

15

Money: Total Innovate UK

grants £s per FTE, 2010-15

16

Talent: NVQ 4+ % of working age

population, 2013

17

Knowledge Assets: Patents

aged 5 to 10 years

18

Structures/incentives: IS Sectors LQs 2012

Source: Enterprise Research Centre 19

AEROSPACE

AUTOMOTIVE

LIFE SCIENCES

AGRI-TECH

EDUCATION

INFORMATION ECONOMY

PROF. & BUS. SERVICES

NUCLEAR

OIL & GAS

CONSTRUCTION

Broader Environment:

Employment Rates 2013-14

20

Innovation outputs: GVA per

hour worked, 2013

21

Strong LEP vs national

22

0

100

200

300

400

500

600

700

BERD per FTE

Innovate UK grantsper FTE

NVQ 4+, 16-64s

Patents aged 5-10years, per capita

8 IndustrialStrategy Sectors -

Average LQs

Employment rate,16-64s

GVA per hourworked

LEP England

Middling LEP vs national

23

0

50

100

150

200

250

BERD per FTE

Innovate UK grantsper FTE

NVQ 4+, 16-64s

Patents aged 5-10years, per capita

8 Industrial StrategySectors - Average LQs

Employment rate, 16-64s

GVA per hour worked

LEP England

Less strong LEP vs national

24

0

20

40

60

80

100

120

BERD per FTE

Innovate UKgrants per FTE

NVQ 4+, 16-64s

Patents aged 5-10years, per capita

8 IndustrialStrategy Sectors -

Average LQs

Employment rate,16-64s

GVA per hourworked

LEP England

Soft mapping

• Knowledge assets and institutions

(HEIs; Science and Technology

intermediary organisations)

• LEP approach to innovation &

governance (innovation strategy;

ERDF allocation for innovation;

dedicated LEP innovation grouping)

25

Soft mapping

• London, Oxfordshire, Greater

Cambridge & Peterborough contain

most knowledge assets &

institutions

• Northern, Midland, South West city

regions also strong representation

• Rural LEPs have some specialist

strengths

26

Soft mapping

• Governance and networking

information patchy

• South East/East and northern LEPs

feature: Enterprise M3,

Hertfordshire, Greater Cambridge

and Peterborough, Leeds, North

East, Tees Valley

27

Conclusions - good news

• All LEPs have innovation strengths,

specialisms

• London/South East: good range of

innovation assets, highest ERDF

allocations (>30% EUSIF total)

• Important outliers: SW, Midlands, NW

• Midlands & North: high value manuf.

• Some categories investment &

expenditure relatively evenly spread

• Some interventions support

rebalancing efforts: Catalysts

28

Conclusions

• Research should help LEPs and

partners:

- strategy verification

- identify complementarities,

synergies

- identify partners who compensate

for their weaknesses

29

Conclusions - challenges

• Some LEPs more strings to bow than

others

• All face challenges, some more than

others

• Strongest, most balanced

ecosystems tend to be in London

and South East

• Some key drivers skewed in that

direction – skills, wealth, venture

capital

30

Conclusions - challenges

• Could this reinforce wider economic

realities - N-S divide?

• Sustainability of counterweights?

31

Where next - research

priorities?

•More data sharing/pooling

• Verification of LEP strategies,

investment decisions

• Addressing gaps in understanding –

strength ecosystem; non-private

sector innovation; measuring

demand-side innovation; social

media; entrepreneurialism; ‘buzz’

factor

32

Where next - policy?

• Greater awareness, sensitivity to

local strengths

• Eco-system approach

• Sustainability of investment

• Reality testing LEP/partner policies

• Use data for monitoring & evaluation

• Local levers powerful enough – LEPs,

combined authorities?

• Incentivising collaboration LEPs,

other regional/national stakeholders

33