Design and Evaluation of Innovation Policy
in Latin America
Argentina, December 2006
Challenges for the Design
of Innovation Policies:
Lessons from Europe
Claire Nauwelaers
UNU-MERIT
Plan
1
Changing framework for innovation and
innovation policy
2. State-of-the-art in innovation policy in EU
3. Examples of innovation policy instruments
4. Lessons from European Structural Funds
5. Policy challenges: the way forward
The changing framework for innovation
1. Increased awareness of the role of innovation as
crucial ingredient for economic development
2. Interactive view of innovation - innovation differs
from R&D
3. System-based approach to innovation, emphasis on
learning and diffusion / absorption of knowledge
4. Mobility of tacit knowledge embedded in humans
becomes a key performance factor
5. Glocalisation : localised nature of (tacit) knowledge
spillovers - importance of global connections
Science and Innovation Systems
Framework conditions Rules &
Science Innovation
policy
policy
Public R&D
Intermediaries
Education
& Training
Human capita
l
Firms
R&D
Firms
system
Large, small,
MNCs, NTBFs, …
Venture
Capital
Regulations
Incubators,
Mentoring…
MARKETS
Business
support
Policies for innovation systems
From “stocks” to “flows” as main focus of policy attention
Flows in the system need to be addressed in priority
From “raising resources” towards “promoting change”
Performance is affected by learning abilities of firms and others
From “best practice” towards “context-specific” solutions
Policies should be fine-tuned to specific system failures
From “standard” policy-making towards policy “learning process”
There is a need for more strategic intelligence in policy-making
Policies for “activating knowledge”
Traditional innovation policy
 Innovation policy scene : dominated by linear
tools, addressing inputs in the innovation process
rather than the functionning of the system,
providing support to firms in isolation rather than
to networks of actors
 Policy instruments that address changes in
behaviour for innovation, dealing with strategic,
informational, or organisational or needs : rare
and immature
 Lack of strategic approach to policy system
Traditional innovation policy instruments
in EU regions
FORM AND FOCUS OF SUPPORT
Target
of support
firmoriented
(regional)
systemoriented
Input resources
Behavioural
additionality
A
B
C
D
Behavioural additionality in firms
Moving towards a learning organisation implies :
• Internal changes : flat hierarchies, devolution of responsibilities,
multi-functional teams, new competencies (flexibility,
responsibility…), « second loop » and « on line » learning,
quality management, human resource development, …
• External changes : inter-firms relationships, external networks
Empirical analysis of 2000 Danish firms (2001 survey) :
 firms combining several of the organizational traits of the
learning organization are more innovative
 (incremental) innovation and learning are two sides of the
same coin
Nielsen and Lundvall, DRUID Working Paper N°03-07
Policy instruments
targeting innovation in SMEs
• Focus of policy instruments
 Finance - risk sharing
 Technology - technical know-how
 Qualifications - personnel
 Market access - information
 Time constraints - Organisation Strategic capabilities
• Lack of "market orientation" of policy tools
• Accent primarily on innovation hardware
Policy instruments
targeting innovation in SMEs
• Value of “umbrella” instruments
• Appropriate policy portfolio : based on
combination of regional and firm’s deficits
• There is no one-size-fits-all policy system
• Policy designers and implementers need : high
degree of understanding of the innovative
firm's behaviour, self-reflexive capacity and
openness to evaluation
• Division of labour within government causes
policy fragmentation
RITTS Success and failure factors
RTDI
Capacity
Institutional
Capacity
Economic
Experience
in
strategy
Region
Capacity
RITTS
driving
force
RITTS
Management
Openness
Inclusiveness
conditions
Political backing
throughout
RITTS
Management
of
consultants
Legitimacy
Political
backing
Legitimacy
of project
leader
Inclusiveness
of
process
RITTS outputs : examples
(with a policy learning dimension)
 Voucher scheme in Uusimaa (Finland)
Evolution towards more demand-led scheme
 Spiegel (= Mirror) project in Limburg (NL)
Improving strategic thinking in SMEs
 Clusters in Overijssel (Netherlands)
Interactive policy – making
 Competence centres in Berlin (Germany)
Global approach to innovation
Common features of successful instruments
 Background : interactive innovation
 Coordination and synergy of support
 Target = SMEs needs, bottom-up defined
 Behavioural additionality
 Focus networks of actors (system oriented)
 Learning in policy making
Innovation policy trends in Europe
• Similar mix of policy instruments : « copy-paste »
rather than « intelligent benchmarking » ?
• Variation in modes of implementation and in
relative effectiveness (… often unknown !)
• Major accent on Bridging initiatives between Public
and Private Creators of Knowledge (heritage from
linear thinking)
• Crucial need : Reinforcement Policies for Private
Knowledge Users (absorption)
• « Systemic policies » in the core : growing new
trend
Need for bridging initiatives between
ALL actors
• Clusters programmes
• Regional growth initiatives
• …
« Systemic » innovation policies
 Challenge for Innovation policy : organise
complementarity and synergy between policy
areas
Implications for Science Parks
The BRIDGE
The CLUSTER of
COMPETENCE
 Technology transfer
 Dialogue creation
 From source to recipient
 Multilateral exchanges
 A specific place
 A node in a system
 Focused support
 Multiple support
 Material support
 “Learning support”
 In-house support
 Clearing house
 Technology gap
 …and managerial gap
S&T intermediary system in Wallonia
Firms’ needs
A: Innovative
and R&Dintensive cies
B: Innovative
adaptive
companies
C: Potentially
innovative cies,
not well
structured for
innovation
A
B
C
Raise their number
Research commercialisation,
spin-offs…
Move to A
technology diffusion ,
find new opportunities…
Move to B
Raise innovation
awareness
mentoring…
S&T intermediary system in Wallonia
Organisation of support
University interfaces, IP management,
science parks, venture capital,
RDT aids, access to EU R&D, …
A: Innovative
and R&Dintensive cies
A
B: Innovative
adaptive
companies
C: Potentially
innovative cies,
not well
structured for
innovation
Collective research centres,
Technology centres,
technology audits,
SMEs aids…
B
C
Scattered support, unprofessional
Small cies networks…
Structural Funds for the knowledge economy
2000-2006: 5.5% of total EDRF resources devoted to RDTI
Objective 1 zones: 5% - Objective 2 zones: 10%
Above average weight of SF
EF FORT = RTDI SF/POP
Above average RTDI effort (Ūper person)
PT
ES
IE
GR
FI
DE
AT
BE SE
UK
LU
FR
DK
NL
WEIGHT = SF/GDP
EU25
IT
EE
HU
SI
MT
CZ
SK
PL
LT
LV
CY
Above average weight of SF
Below average RTDI effort (Ūper person)
Source: Technopolis, UNU-MERIT, Lacave, Ismeri, Logotech (2006)
Structural Funds for the knowledge economy
Main bottlenecks to efficient absorption of funds and effective
outcomes of RTDI measures:
Administrative rather than strategic management of RTDI measures
Lack of expertise at national and regional levels in managing RTDI
measures
Continuing dominance of supply-side measures with poor linkages
to regional innovation systems
Limited interest for many ‘softer’ ‘demand-side’ measures aimed
directly at enterprises
There is path dependency: share of SF devoted to RTDI higher where
national innovation policy is more intense, and lower where national
policy is weaker. Difficulties for the SF to modify national strategies.
Source: Technopolis, UNU-MERIT,Lacave, Ismeri, Logotech (2006)
The diversity of European regions
-5,00
-4,00
-3,00
-2,00
-1,00
0,00
1,00
2,00
3,00
4,00
5,00
Manufacturing Platforms
Tertiairy oriented Cohesion
Science&Service
Central Techno
Employability
Experienced and Qualified
Accession
Peripheral & Rural
Government Services
German High-tech
Hubbing Dynamics
Public know ledge
Urban services
Private Technology
Employability
Source:
Wintjes
(2006)
Key challenges for ERDF
Need for differentiated policies
move towards supporting more demand than
supply side of innovation (ex ante analysis !)
balance technology focus with other forms of
innovation
consider ‘downstream’ research developed for
the needs of markets
give preference for competitiveness when
developing strategies
focus on social capital
Innovative and more complex projects should
be favoured over focus on funds absorption
Source: Technopolis, UNU-MERIT,Lacave, Ismeri, Logotech (2006)
Inside the black box of policy-making
Stakeholders
pressure
Other policy
considerations
International
benchmarking
Innovation
policy
design
Policy
implementation
Policy
evaluation
NIS
analysis
Strategy
making
How to reinforce this loop ?
Tensions in policy-making
• Competing rationalities across policy fields and
different schools of thoughts
• Short-termism in resources allocations
• Innovation as a “homeless” policy
• New Public Management and need for coherence
• Individual ambitions versus grand visions
Source: OECD
MONIT study (2004)
National Reform Programmes:
towards improved policy governance ?
“The Open Method of Coordination is a powerful
instrument to assist Member States in their efforts
to adopt a more strategic and integrated
approach and to deliver more efficient polices”
(European Commission 2005).
• Aim of NRPs: to identify coherent and integrated
mix of policies which together would bring the
leverage effects towards the Lisbon objectives
• Gaps in the strategic loop: diagnosis – broad routes
- instruments
• Prioritisation and effectiveness of policy mix ??
• Continuum science – technology – innovation
(despite Commission guidelines !)
Source: Lisbon expert
group (2006)
National Reform Programmes:
towards improved policy governance ?
• Positive correlation between RDTI performance and
priority on knowledge policies
• Administrative versus strategic policy implementation
• New coordination structures but few “policy mix”
considerations
• Ex post appropriation process of NRPs
• A current limited role of indicators to monitor policy
success
• Policy evaluation does not appear prominently
• Weak visible impacts of OMC so far
• Marginal internationalisation trends
Source: Lisbon expert
group (2006)
Innovation Policy :
The way forward (1)
• Effectiveness of innovation systems depends on
balanced combination of 3 capacities :
– creation of knowledge
– diffusion of knowledge
– absorption of knowledge
• Growing importance of framework conditions
– entrepreneurship
– competition rules
– labour market conditions
– financial market
– social capital, ...
Innovation Policy :
The way forward (2)
• Government’s role shifts from investor to facilitator
- promotion of public/private partnerships and
interface management
• Improving knowledge governance in firms and
clusters of firms becomes a key issue
•



Policies need to "open borders" : between :
traditional fields of policy intervention
industries traditionally defined
various forms of knowledge production and
diffusion
Innovation Policy :
The way forward (3)
• More efficiency through “Policy packages” rather
than isolated instruments – Consider Policy Mix
• Demand oriented innovation policies: a “set of
public measures to induce innovations and / or speed
up diffusion of innovations through increasing the
demand for innovations, defining new functional
requirement for products and services or better
articulating demand.” (Edler 2007)
– Public procurement.
– “Soft steering" concepts geared to the willingness and
ability to accept, demand and apply innovations
– Measures stimulating the articulation of needs,
preferences, ideas and fears of potential users
– Shaping of regulations and norms
Innovation Policy :
The way forward (4)
• Need for more strategic policy intelligence
– monitoring and evaluation of policies
– sound analyses of innovation systems
– « intelligent » benchmarking practices
– long term views
– inclusive policy design processes