REGIONS, REGIONAL DEVELOPMENT AND RESEARCH
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1 1. REGIONS, REGIONAL DEVELOPMENT AND RESEARCH THE CONTRIBUTION OF REGIONS AND REGIONAL DEVELOPMENT AGENCIES TO RESEARCH ACTIVITIES Executive summary Differences are significant among EU regions when it comes to research funding and infrastructure. Stimulating regional investment in research must take account of this situation and provide incentives for individual European regions to initiate action notably aiming to: Increase or improve the provision of infrastructure; Develop regional research strategies, Fund research programmes, Obtain innovative or exemplary practices, Join excellence nodes. In order to contribute to delivering the objectives of the Lisbon Strategy and to maximise the benefits of the future 7 th RTD Framework Programme, the regions invite Community authorities to consider the nine recommendations below: Implementing a Regional Research Strategy Support Scheme; Launching an ERA-NET scheme specifically dedicated to regions; Clarifying the involvement of regions in technology platforms; Pursuing knowledge-based regions and the integration of this initiative in the 7 th RTD-FP; Revisiting RTD-FP action in support of SMEs; Strengthening the ties between large research facilities and regional business communities; Developing genuine coordination between regional development and research policies; Promoting and possibly funding a multidisciplinary University-SME liaison office in each European region; Organising tripartite meetings with the European Commission, Member States and regions. The legitimacy of these recommendations rests on growing awareness among regions of the importance of RTD activities in delivering competitiveness for them. Proof of this new awareness is to be found in the increasing efforts and investment of regions in fields including: RTD infrastructure; The funding of research programmes; The provision of advanced services; The networking of key stakeholders; Access to funding sources; as well as practices and thinking towards integrated approaches.
2 1. INTRODUCTION The important role of private and public research in delivering economic growth and competitiveness for the EU is emphasised in many Communications, and including in the Lisbon Strategy. Besides, the European Commission too underscored the need to increase the total amount of Europe s research effort to the equivalent of 3% of EU GDP. Alongside this macroeconomic realisation, some European regions and cities too, have perceived the magnitude of the contribution of research activities to the dynamism of regional economies and in certain cases, to regional attractiveness. This is how a growing number of local and regional authorities (plan to) develop strategies to deliver technological excellence, in some cases by setting up regional Technology Valleys. Conversely, celebrated research institutions established in other regions are completely disengaged from the productive activities of the local economy. Worth noting is that in the last 15 years or so, the European Commission has played an important educational role in terms of disseminating the concept of innovation strategies at regional level (see the RIS-RITTS schemes). There may be a need for the European Commission to launch a similar initiative to promote or mainstream regional research strategies as a concept. Support for pilot action during the period should lay the foundations for mainstreaming this concept into the next generation of Community programmes post 2013 for both the regional and research policies. Finally, regions are the most appropriate geographical level at which to define integrated strategies, i.e. strategies that address the complementary dimensions of different Community and national sectoral policies in fields including cohesion, research, training, education, innovation and enterprise. Worth underscoring is that regional authorities tend to support applied rather than fundamental, research activities. In most Member States, regional authorities act as regional coordinators of national RTD and innovation policies. A trend is in evidence in several Member States (UK, N, FIN, S) whereby national funding earmarked for RTD is being regionalised based on the strengths of individual regions. This requires setting up dedicated organisations both to coordinate regional RTD stakeholders and to prioritise the forms of support which are best suited to the types of RTD action to be undertaken in individual regions (Bretagne, SouthWest of England, Gelderland, etc).
3 2. REMINDER OF SOME HARSH TRUTHS ABOUT THE PRESENT SITUATION IN THE EUROPEAN UNION The share of innovative businesses in Europe is as follows: less than 3% of SMEs can be considered genuine technological pioneers and another 10% are users of cutting-edge technology while 20% apply technology and 70% are grass-root SMEs 1. In proportion of respective total employment, US SMEs take out 40 times more patents than multinationals. 2 In the Cambridge area one of the most innovative European regions only 2% of neighbouring SMEs have organic and structured contacts with Cambridge University. The advantages SMEs draw from closeness to the University relate to the latter s regular supply of skilled manpower rather than to formal ties with academia 3. One of the keys to the success of the Silicon Valley is the simultaneous availability of venture capital (i.e. formal equity) and Business Angels (informal capital). A comparatively small number of regions concentrate the bulk of the EU s RTD effort. Contrary to what Community authorities did in a variety fields, including namely innovation and the information society, they have not fully leveraged the opportunities that exist to gear regional financial and human resources toward strategic action in support of RTD activities. Europe is facing structural difficulties at all levels of its administrative hierarchy (European Commission, Member States, regions, etc.) and problems of coordination between its cohesion, research, innovation, access-to-funding and business policies Source: EURAB Report on SMEs and ERA, Speech of M.P. Vigier, DG Enterprise, delivered on 22 October Ibid.
4 3. 1. INSTRUMENTS DEVELOPED BY REGIONS IN SUPPORT OF RESEARCH ACTIVITIES The following options are available to regional authorities seeking to promote research activities at regional level: supporting RTD infrastructure; funding sectoral research programmes; providing advanced support services for regional SMEs; networking key stakeholders and shareholders; leveraging research outcomes; providing (access to) funding for innovative SMEs and university / research centre spinouts and spin-offs; improving regional attractiveness for prospective new research centres of multinational companies and talented people; raising SME awareness of RTD activities. The different types of intervention listed above are examined in detail below. Generally speaking, public authorities should become aware of the need to think in terms of the supply chain of regional support for and enhancement of research activities and well as in terms of value added, public-private partnerships and addressing market failures and imperfections. The diagram below is a tentative supply chain model aimed at stimulating regional RTD activities. Worth recalling in this respect is that a chain can only be as strong as its weakest link. Furthermore, reasoning in terms of a supply chain makes it possible to identify any gaps in public or private support provision. This approach also helps improve the coordination of individual stakeholders contributions from needs analysis through delivery of regional strategies. There is evidence that a growing number of regions are attempting to demonstrate that the saying research is global, innovation is local is not necessarily a universal truth.
5 4. Preconditions: A critical mass of: research infrastructures researchers and students venture capital funds including seed capital funds and business angels networks programmes to finance research activities A favourable environment: tax, regional appeal for talent, quality of life, infrastructures An entrepreneurial, innovation-driven and scientific culture: A vision for the regional future Intermediation and awareness of the importance of research for economic and enterprise growth Strong partnership between regional stakeholders Providing international platforms Private, Public and Academic RTD infrastructure Research activities Protection of intellectual property and availability of a technology transfer organisation Entrepreneurial training and culture. Proof of concept Spin offs Spin-outs Commercialisation of research outcomes Access to funding sources Market Awareness Tools Awareness and communication RTD/business interface Technology transfer organisation Incubators Science/technological parks Advanced consulting services including networking Formal and informal local, national and international networks Training Integrated strategy (R²S) Increasing the quality of research infrastructures Foresight Attraction of research centre from multinational enterprises.
6 5. fundamental Research applied Business planning validation of project validation of business Commercialisation R T D market analysis and strategic decision to commercialise I N F R A S T R U C T U R E technology testing/prototype development entrepreneurial training and culture Intellectual Property protection business plan development and presentation funding process spin-out process spin-off process buy-out by the investor M A R K E T technology transfer organisations and other supporting institutions (specialised intermediaries)
7 6. Optimal policy delivery level (European, national, regional, local) Measures/tools to be deployed at the regional level Main actors Cases/Success stories Private, public and academic RTD infrastructure Fundamental and applied research activities Intellectual property protection Technology transfer process national, regional national, regional national, European regional, national, European - improving quality of existing research infrastructure - investing in new research infrastructure - attracting research intensive investments - national and regional authorities - regional development agencies - science and technology parks - private investment funds - ensuring well functioning regional research and innovation system (framework conditions) - Universalities - public and private research institutes - science and technological parks - regional authorities - awareness raising - training on IP protection - business advisory services - Universities and research institutes - intermediaries - specialised technology transfer organisations - developing and supporting technology transfer competencies - developing technology transfer networks - specialised technology transfer organisations - Universities - science and technology parks Entrepreneurial training and culture Spin-offs and spin-outs; commercialisation of research outcomes Access to funding (financial engineering) regional regional, European regional, national, European, global - awareness raising - training - business advisory services - specialised intermediaries - regional development agencies - advanced business advisory services - measures for enhancing sciencebusiness relations (e.g. meet the researcher scheme ) - incubators - specialised intermediaries forming business angels networks - ensuring access to venture capital organisations - specialised intermediaries
8 7. 2. SUPPORT FOR RTD INFRASTRUCTURE AND THE QUALITY OF THE REGIONAL ENVIRONMENT. The pre-requirement of any regional policy in favour of research activities is the existence of both appropriate infrastructure and a trained population. Worth recalling is for example that many regions have invested in infrastructure such as: universities and laboratories science and technological parks, e.g. Andalusia (Malaga Technological Park) (pre-)incubators corporate real estate and laboratories with appropriate equipment local technical and technology centres e.g. Emilia-Romagna, Valencia, Castilla y Leon research centre (Scotland) Worth mentioning by way of example is that the City of Marseille, the Department of Bouches du Rhône and the PACA Region have invested nearly 5 million to help CRBM, a research centre, acquire world-class equipment. In some cases, regions invest alongside the private sector in joint laboratories which, while admittedly used primarily by individual companies are also accessible to regional SMEs. Examples of this practice is provided by the joint investment operation put together in Caen by Philips and the French region of Basse-Normandie, as well as the Biopartner facilities in Gelderland (NL), the Hightech Campus of Eindhoven (NL), the Technium Centers in Wales (UK). A number of regions have taken steps to segment the mobile investment market and are implementing strategies to attract research centres. Success stories in this field namely include: Philips Research Centre in Caen (F) Microelectronics Research Centre in Grenoble (F) Canon in Rennes (F) In this field, regions could usefully focus attention on attracting and retaining new and returning talent. A number of European regions should provide scientists and innovative businesspersons with a viable alternative to emigration to the US. Most regions develop accompanying measures to leverage their investment in research infrastructure. Worth mentioning in this respect are the business awareness campaigns conducted by the regions of Charleroi, Madrid and Ile-de-France with expatriated national/regional researchers.
9 8. 3. REGIONAL FUNDING OF RESEARCH PROGRAMMES In order to deliver on their commitment to technological excellence, some regions finance sectoral research programmes. Worth mentioning by way of example is: Pays de la Loire (F): draft automotive industry research programmes in regional tertiary education institutions, including the Université du Maine. This development is undertaken within the framework of a project called Institut de l automobile du Mans (Le Mans Automotive Institute). The French regions of PACA and Rhône-Alpes are respectively investing 2.5 million over three years and 38 million over five years on the back of national government funding to support their respective regional cancer research centres ( canceropoles ). In the case of the Rhône-Alpes canceropole, a total of 20 million is being invested in the development of three thematic technology transfer platforms. Scotland (UK): in , the Scottish Executive spent around 218 million on science, engineering and research. The region s sectoral priorities include (i) biology and bioengineering, (ii) medical and veterinary sciences, (iii) physical sciences, (iv) energy, (v) nanotechnology, (vi) ICT and (viii) environmental sciences. Bretagne (F): the region presently has three centres of competence: (i) telecommunications and multimedia, (ii) agriculture and agro-food / nutrition and health and (iii) marine science et technology. It has strong potential in environmental and health fields. Four to five percent of the region s annual budget (i.e. around 14 million) is earmarked for R&D. Våstra Götaland (S) spends roughly 40 million in support for R&D action by funding clusters and incubators as well as research undertaken by regional hospitals. Brussels (B) will increase its current yearly budget of 25 million to 50 million in Also worth noting is that Community legislation in the field of national regional aid controls seems, rightly or wrongly, to hamper regional and local authorities support for RTD activities.
10 9. 4. PROVISION OF SUPPORT SERVICES 4.1 The majority of EU regions take action to improve SME awareness of RTD activities. Some of these initiatives focus on the importance of RTD activities for SME competitiveness, others on the value for SMEs of participation in transnational RTD programmes. All regions should have programmes and intermediary bodies aimed at promoting mediation on behalf of regional SMEs to ensure that they do launch initiatives in the fields of RTD and technological innovation. 4.2 Some regions are aware of the important contribution of research activities to local business competitiveness and have therefore implemented consulting schemes 4 aimed specifically at building the research capacity of businesses or improving SME access to research activities. Without attempting to be exhaustive and therefore only by way of example, worth mentioning are the following regional schemes: funding of students thesis grants (training through and for research) and supplementary income for researchers; funding of RTD manager positions in SMEs; backing interfaces between universities or research organisations and businesses whose purpose is the detection, support and reception of RTD or IP-related projects; improving regional SME awareness of both RTD in general and of the use of advanced consulting services addressing RTD and issues arising from its exploitation; covering part of the expense incurred by SMEs in taking out patents and securing other forms of IP protection; support for technology watch, intelligence and transfer activities; mentoring new and existing high-tech businesses development. 4.3 Other regions are developing schemes aiming at the leveraging of research outcomes. This objective can be achieved through action aimed at: preserving the intangible assets derived from the outcomes of RTD activities, commercialising the outcomes of research, setting up technology businesses (spin-offs & spin-outs). Indeed, certain regions have implemented schemes to: support patenting and other types of IPR with funds covering a share of the cost, funding the setting up of university / research centre spin-outs, subsidising technology transfer operations. Worth mentioning is for example that a dedicated facility called Intellectual Asset Centre 5 became operational in Scotland in September Its aim is both to improve businesses awareness of the growing need to leverage research outcomes in order to be competitive while helping them handle the issues arising from this realisation. 4 Advanced services are generally understood as being services contributing value added for SMEs during their development. Worth mentioning by way of examples are patenting, protection of intangible assets, designing, prototyping, etc. 5 Visit
11 NETWORKING KEY STAKEHOLDERS AND SHAREHOLDERS In the knowledge-based economy, networking key stakeholders is one of the most important tools available to enhance regional competitiveness. For this reason, some regions contribute in different ways to the networking of academia, research and business. Some of these networks remain informal (clubs) while others are more structured (e.g. clusters and technology valleys). Some regions try to match universities and RTD centres with regional businesses while others have set up advisory bodies to define regional RTD priorities. Worth mentioning by way of examples are: - Scotland: Scottish Executive Framework programme Focus group on Research & Development; - Mecklenburg-Vorpommen (D) : Steering Group for Research & Exploitation; - SouthWest of England (UK): Science & Industry Council and South West Alliance; - Bretagne (F): Union régionale pour le développement de la recherche (Regional Union for the Development of Research). The possibility of having universities and colleges play a role in support of regional economic development is being given careful consideration in several Member States (S, FIN, B, ). Finally, regions have commissioned foresight surveys in order to identify future key technologies. Networking key regional stakeholders is important as such but also needs to infuse the latter with a desire to become international. Indeed, all regions must have as an objective or mission to team up with transnational knowledge and sectoral RTD nodes.
12 ACCESS TO FINANCE To promote the emergence and growth of technological businesses, local and regional authorities increasingly invest in different forms of financial engineering, including notably: support for the establishment and development of business angels networks. Nearly 200 such networks have been set up in Europe between 1999 and 2004; equity participation in specialist seed and venture capital funds investing in the stock of technological companies; business development grants; reimbursable grants. Private companies (e.g. Siemens, Intel, etc.) leverage corporate venturing to supply sizeable amounts of risk equity to technological firms. In nearly all EU regions there is both an equity gap and asymmetric information problem. The equity gap appears to be dynamic and needs to be address properly in terms of size of money required and in respect of industry specificities. Moreover numerous SME s under estimate the costs of research activities and the time to market. This means that a second or even a third round of finance is needed. More and more regions invest in risk capital funds to help innovative SME s to access equity fundings. In France, several have signed partnership agreements with the Caisse des Dépôts to set up regional venture capital funds focusing on equity participation in innovative businesses. In Scotland (UK), the Scottish co-investment fund has been implemented to leverage investment made by Business Angels. In this region, a programme named: Proof of Concept Fund (PoCF) which aim to close the pre-seed funding gap in supporting academic institutions has also been implemented in order to support sart-up SMEs. In UK several organisations have developed investment readiness schemes in order to overcome the asymmetry of information problems.
13 REGIONAL NEEDS UNDER THE 7TH RESEARCH AND TECHNOLOGICAL DEVELOPMENT FRAMEWORK PROGRAMME Obviously, the panorama of regional research policy situations is multifarious and variegated. There is no uniform or standard status. From this realisation stem differentiated regional expectations and needs with respect to the 7 th RTD-FP. The main needs include: 1 ) Deploying a Regional Research Strategy Support Scheme Along the same lines as the successful initiative implemented in the field of innovation (RIS), such a new initiative would enable many regional authorities to play an organising and coordinating role for research efforts undertaken at regional level. Not only would this bring all regional and national research stakeholders to work together and optimise their action, resulting in maximum leveraging of public intervention, but it would also improve many political leaders awareness of the importance of RTD for regional development. As with the RIS schemes initiated from the late 80s, it would also have great educational value while requiring only relatively modest funding. Such initiative would fill the market gap due to the fact that DG Regio will no longer provide support for innovative actions. 2 ) Launching an ERA-NET scheme specifically dedicated to regions The current ERA-NET scheme is underused by regions for a variety of reasons including complicated administrative procedures and financial regulations, issues with the very eligibility of regional players, etc. However, there is no doubt whatsoever anymore that an ERA-Net-type initiative would be amply justified and would present value added at regional level in terms of (i) exchanging experiences and good practices leading to improved complementarity and reduced duplication of research activities, (ii) creating common platforms to address horizontal issues, (iii) exchanging information on legal and administrative procedures involved in delivering research programmes, (iv) improving research value for money through strengthened cooperation, (v) providing researchers with opportunities to be mobile among the various organisations involved in individual projects, etc. Therefore, it is important to plan the deployment of sectoral ERA-NET schemes at regional level to enable regions to initiate research cooperation with top class research regions. The ERA-Net scheme should provide funding to initiate research activities as well as networking opportunities.
14 13. 3 ) Clarifying the involvement of regions in technology platforms Technology platforms are an important research and development and innovation tool. In view of their potential positive impact on regional development, it seems paramount to clarify the nature and improve the transparency of regional authorities contribution to the establishment and management of these instruments. This requires developing clear and precise rules for the involvement of namely regional public authorities. This need is especially important as regional authorities are often called upon to take part in the funding of integrated projects downstream of technology platforms. Regions participation should be more explicit and effective in order to become a real stakeholders of the platform. This recommendation is justified by the fact that regions are often responsible for long term vision. 4 ) Pursuing knowledge-based regions and the integration of this initiative in the 7 th RTD- FP This initiative is particularly useful in facilitating the exchange of research experience and good practices and piloting regional policy approach as well as building up effective common strategies and actions. In this context, it provides excellent leverage to improve regional authorities awareness of the importance of research activities for regional development, especially among the least advanced region in this field. Indeed, the latter are often not able to develop policies and take in-depth action in the field of research and therefore lack the capacity to harness more advanced tools and instruments. Therefore, this initiative acts as a complement to the first two. However, it does not overlap regional ERA-NETs, which should primarily target regions with existing active policies and some experience with organising research activities. 5 ) Reviewing RTD-FP action in support of SMEs As clearly shown in this document, because SMEs are undeniably one of the drivers of regional development, many regions have active SME support policies in place. Therefore, it is important for the RTD-FP to act as a catalyst of existing regional efforts. To this end, the aim of the 7 th RTD-FP should be to: * come back to the earlier CRAFT facility management, i.e. open calls, as it is crucially useful for medium-sized companies whose inadequate dimension prevents them from undertaking significant research, and * stream lining regional intermediary organisations providing services directly to small and micro-businesses, whose financial and organisational resources are often inadequate to allow them to carry out their own research activities. * more tailor made scheme helping SME s to take part in the 7 th R&D programme namely through collaborative research projects.
15 14. Support for intermediary organisations should namely target those less-developed regions with an identified need to improve the level of research practice. The use of intermediary organisations would undoubtedly make it possible to reach more companies while reducing the costs and burden presently incurred by the European Commission in implementing its action in favour of SMEs. The Commission should also better take into account that SME s are red tapes adverse and need quick decision process mechanism. 6 ) Strengthening the ties between large research facilities and regional business communities The weakness and sometimes even, the absence of links between large research facilities and business communities is a phenomenon which is in evidence in many EU regions. Therefore, the European Commission should logically consider the option of launching, under the 7 th RTD-FP, an initiative aimed at testing the feasibility and long-term sustainability of schemes and instruments to strengthen such ties and, where needed, generate them. Access to certain research facilities for companies established in individual regions is one practical example of the type of ties to be promoted. The integration of research centres in regional clusters should also become the focus of more specific attention. 7 ) Developing genuine coordination between regional development and research policies The lack of such coordination, namely among regional policy makers, has often been underscored in recent years. The damage caused by absent coordination between these policies may worsen due of the growing importance of research activities in the next programming period of the Structural Funds, namely in relation to the future regional competitiveness and employment objective. A clear allocation of tasks and funding to those two policies is therefore highly desirable in order to avoid all forms of useless duplication, scattering and waste of public funding. Hence the importance, in view of the many specificities of the research policy, of framing regional policy action in this field in a complementary rather than competing context. Structural funding could for instance finance facilities supporting the transition between fundamental research and applied forms of research that are closer to business needs, in order to meet market requirements. In such a vision, in addition to carry out regional research programmes, Structural Funds would be harnessed to finance the development of facilities and instruments to leverage industrial and commercial uses for research outcomes funded in part by the RTD-FP.
16 15. 8 ) Promoting and possibly funding a multidisciplinary University-SME liaison office in each European region. In view of its educational value and potential positive impact, the next Framework Programme could contribute, at least temporarily and possibly alongside regions, to the funding of a facility of this type. The 7 th RTD-FP should also make provisions for funding a support scheme enabling experts to share their practices and organise exchange visits to improve their understanding of existing best practices in a variety of fields including marketing, research and technological development and economic intelligence. 9 ) Organising tripartite meetings with the European Commission, Member States and regions in the presence of regional research and innovation agencies Such meetings could be organised on a two year basis with the main objective of maximising regional delivery of Community research policy objectives. In view of their educational value, their aim would be to improve regional awareness and mobilisation on behalf of this domain. Beyond needs to be met through the 7 th RTD-FP, regions are of the opinion that developing a genuine regional dimension for the European Research Area also requires deployment by the European Commission of a number of tools including: - a regional scoreboard of research and innovation activities; - a European map of public and private research centres and regional centres of technological excellence; - a reference system to evaluate regional involvement in project consortia funded from research and development framework programmes; - a list of recipient regions whose projects have been cofunded under the 6 th and 7 th research and development framework programmes. The result of such meeting will be useful for work undertaken by the Cohesion Forum. MARIANNE/EURADA/REUNIONS/RESEARCH /Document de travail
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