News from the IPL
INTRODUCTION
This newsletter is published by The Innovation Policy Lab at the Munk School of Global Affairs, University of Toronto, and sponsored by the Ministry of Research and Innovation. The views and ideas expressed in this newsletter do not necessarily reflect the views and policies of the Ontario Government.
ANNOUNCEMENTS
SEMINAR: Kevin Morgan: Smart Specialization and the Entrepreneurial State
Toronto, Ontario, 25 June, 2014
The European Union unveiled the most ambitious regional innovation strategy in its history earlier this year when it launched theResearch and Innovation Strategy for Smart Specialisation (RIS3) program. Although it builds on the past, the RIS3 program also aims to break with the past by privileging the “process of entrepreneurial discovery”, a process in which firms, governments, universities and civil society organisations are enjoined to collaborate to fashion more regionally distinctive models of innovation and development. The birth of RIS3 was influenced by a number of recent theories, like the advent of evolutionary economic geography and the social learning approach in innovation studies. The pertinent point , however, is that the RIS3 program makes enormous demands on each of the regional stakeholders, not least the regional state, which is expected to act in more entrepreneurial and experimental ways than ever before. This seminar explores the theory, policy and practice of the RIS3 program and poses the question: are old industrial regions are up to the challenge?
Ontario Centres of Excellence Operating at the Speed of Business
Ontario Centres of Excellence is aiming to reduce the time it takes to turn around an application for innovation funding by up to 50 per cent through a number of new steps that create a more streamlined and expedited review process. The changes are in keeping with OCE’s commitment to continuous improvement. In the previous two years, the number of applications reviewed has grown to 653 in 2013-14 from 326 in 2011-12. In the current fiscal year, OCE is projecting close to 1,000 applications for funding.
Newly Redesigned U.S. Cluster Mapping Website Launched
U.S. Cluster Mapping recently relaunched their website with new content and design. This website will allow policy makers, economic development professionals, and researchers will find powerful data and tools to understand clusters, improve institutions, and locate appropriate partners across the country
Editor's Pick
The 2014 State New Economy Index: Benchmarking Economic Transformation in the States
ITIF
The 2014 State New Economy Index measures how states and regions are performing in this environment, while offering policy reforms which can spur innovation-based economic growth. The index, produced by the Information Technology and Innovation Foundation (ITIF), ranks states on a series of measures that analyze the economic environment for success in the 21st century. The Index uses 25 indicators in five categories to assess states’ fundamental capacity to transform their economies and incubate innovation. The categories are: knowledge jobs, globalization, economic dynamism, the digital economy and innovation capacity. The 2014 index builds on six earlier indices, published in 1999, 2002, 2007, 2008, 2010 and 2012. The top five states in this year’s index are Massachusetts, Delaware, California, Washington and Maryland. The lowest scoring states in the ranking are Mississippi, West Virginia, Oklahoma, Arkansas and Louisiana.
Innovation Policy
The Dynamics of Employment Growth: Evidence from 18 Countries
Chiara Criscuolo, Peter N. Gal and Carlo Menon, OECD
Motivated by the ongoing interest of policy makers in the sources of job creation, this paper presents results from a new OECD project on the dynamics of employment (DynEmp) based on an innovative methodology using firm-level data (i.e. national business registers or similar sources). It demonstrates that among small and medium sized enterprises (SMEs), young firms play a central role in creating jobs, whereas old SMEs tend to destroy jobs. This pattern holds robustly across 17 OECD countries and Brazil, extending recent evidence found in the United States. The paper also shows that young firms are always net job creators throughout the business cycle, even during the financial crisis. During the crisis, entry and post-entry growth by young firms were affected most heavily, although downsizing by old firms was responsible for most job losses. The results also highlight large cross-country differences in the growth potential of young firms, pointing to the role played by national policies in enabling successful firms to create jobs.
Raising European Productivity Growth Through ICT
Ben Miller and Robert D. Atkinson, ITIF
After converging with the U.S. for over 40 years, since 1995 Europe has fallen farther and farther behind in productivity. This report discusses how lower rates of information and communication technology (ICT) investment by companies in Europe have played a key role in this dynamic, and analyzes the factors driving it. In particular, over-regulation in areas like the labor market and IT (e.g. privacy) and a desire to grow Europe’s IT industry through such ill-advised policies as supporting a “European Cloud”, hurt, not help, broad-based adoption of ICT. To get growth back on track, Europe needs to focusnot on growing IT companies, but on policies that encourage ICT adoption throughout the entire economy.
Efficency of Research and Innovation Systems for Economic Growth and Employment
Charles Edquist, CIRCLE
The concept of a holistic innovation policy is defined in this paper, as is why it is relevant and how it can be implemented. One of the main conclusions is that the innovation policies in European countries are still linear (and not holistic), in spite of the fact that the linear view has been completely abandoned by innovation researchers – and replaced by a systemic view of innovation processes. . Further it is noted that a considerable number of EU Member States have created public organizations (Councils) for innovation and/or research policy placed above ministries and usually chaired by the Prime Minister. The role and character of these bodies is discussed. The empirical results are based on a questionnaire sent to 23 EU Member States, out of which 19 (83%) responded.
Cities, Clusters & Regions
What Makes Cities More Productive? Evidence on the Role of Urban Governance from Five OECD Countries
Rudiger Ahrend, Emily Farchy, Ioannis Kaplanis and Alexander C. Lembcke, OECD
This paper estimates agglomeration benefits based on city productivity differentials across five OECD countries (Germany, Mexico, Spain, United Kingdom, and United States). It highlights the relationship between cities’ governmental fragmentation and productivity, and represents the first empirical analysis of how metropolitan governance structures affect this relationship. The comparability of results in a multi-country setting is supported through the use of Functional Urban Areas – an internationally harmonised definition of cities based on economic linkages rather than administrative boundaries. In line with the previous literature, the analysis confirms that city productivity tends to increase with city size; doubling city size is found to be associated with an increase in productivity of between two and five percent. What is more, city productivity is positively associated with the population size of nearby cities. On the governance side, the paper finds that cities with fragmented governance structures tend to have lower levels of productivity. For a given population size, a metropolitan area with twice the number of municipalities is associated with around six percent lower productivity; an effect that is mitigated by almost half by the existence of a governance body at the metropolitan level.
Entrepreneurship, Public Policy and Cities
Josh Lerner, The World Bank
Since the 2008–09 global financial crises, interest among policy makers in promoting innovative, ventures has exploded. The emerging great hubs of entrepreneurial activity, like Bangalore, Dubai, Shanghai, Silicon Valley, Singapore, and Tel Aviv, bear the unmistakable stamp of the public sector. Enlightened government intervention played a key role in each region’s emergence. This paper sheds light on how governments can avoid mistakes in stimulating entrepreneurship. A substantial literature suggests that promising entrepreneurial firms can have a powerful effect in transforming industries and promoting innovation.
Statistics & Indicators
ISO 37120: An International Performance Standard for Cities
Neal Peirce, Citiscope
The International Organization for Standardization issued a new standard for cities to follow in their data collection. Compliance with ISO 37120, as the standard is known, is not mandatory. However, the cities that do participate will be able to more easily compare themselves with peer cities. The 46 indicators are spread across a wide variety of categories including, economy, education, energy, environment, finance, fire and emergency response, governance, health, shelter, solid waste, telecommunication and innovation, transportation, urban planning, wastewater, water and sanitation. This article provides one assessment of the advantages and challenges to adopting this standard.
The Role of Public Support in the Commercialization of Innovations: Flash Eurobarometer
European Commission
This document reports on the results of a survey conducted across the 28 EU member states designed to benchmark innovation activities in a range of areas as well as explore barriers to commercialization, and the role of public funding in innovation.
Policy Digest
The Rise of Innovation Districts: A New Geography of Innovation in America
Bruce Katz and Julie Wagner, The Brookings Insitution
Introducing Innovation Districts
As the United States slowly emerges from the Great Recession, a remarkable shift is occurring in the spatial geography of innovation.
For the past 50 years, the landscape of innovation has been dominated by places like Silicon Valley—suburban corridors of spatially isolated corporate campuses, accessible only by car, with little emphasis on the quality of life or on integrating work, housing, and recreation.
A new complementary urban model is now emerging, giving rise to what we and others are calling “innovation districts.” These districts, by our definition, are geographic areas where leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators, and accelerators.They are also physically compact, transit-accessible, and technically-wired and offer mixed-use housing, office, and retail.
Innovation districts are the manifestation of mega-trends altering the location preferences of people and firms and, in the process, re-conceiving the very link between economy shaping, place making and social networking.
In recent years, a rising number of innovative firms and talented workers are choosing to congregate and co-locate in compact, amenity-rich enclaves in the cores of central cities. Rather than building on green-field sites, marquee companies in knowledge-intensive sectors are locating key facilities close to other firms, research labs, and universities so that they can share ideas and practice “open innovation.”
Instead of inventing on their own in real or metaphorical garages, an array of entrepreneurs are starting their companies in collaborative spaces, where they can mingle with other entrepreneurs and have efficient access to everything from legal advice to sophisticated lab equipment. Rather than submitting to long commutes and daily congestion, a growing share of metropolitan residents are choosing to work and live in places that are walkable, bike-able, and connected by transit and technology.
Led by an eclectic group of institutions and leaders, innovation districts are emerging in dozens of cities and metropolitan areas in the United States and abroad and already reflect distinctive typologies and levels of formal planning. Globally, Barcelona, Berlin, London, Medellin, Montreal, Seoul, Stockholm and Toronto contain examples of evolving districts. In the United States, districts are emerging near anchor institutions in the downtowns and midtowns of cities like Atlanta, Baltimore, Buffalo, Cambridge, Cleveland, Detroit, Houston, Philadelphia, Pittsburgh, St. Louis, and San Diego. They are developing in Boston, Brooklyn, Chicago, Portland, Providence, San Francisco and Seattle where underutilized areas (particularly older industrial areas) are being re-imagined and remade. Still others are taking shape in the transformation of traditional exurban science parks like Research Triangle Park in Raleigh-Durham, which are scrambling to meet demand for more urbanized, vibrant work and living environments.
Innovation districts represent a radical departure from traditional economic development. Unlike customary urban revitalization efforts that have emphasized the commercial aspects of development (e.g., housing, retail, sports stadiums), innovation districts help their city and metropolis move up the value chain of global competitiveness by growing the firms, networks, and traded sectors that drive broad-based prosperity. Instead of building isolated science parks, innovation districts focus extensively on creating a dynamic physical realm that strengthens proximity and knowledge spillovers. Rather than focus on discrete industries, innovation districts represent an intentional effort to create new products, technologies and market solutions through the convergence of disparate sectors and specializations (e.g., information technology and bioscience, energy, or education).
Innovation districts are still an early trend that, because of their multi-dimensional nature, has yet to receive a systematic analysis across the United States and other countries. Yet we believe that they have the unique potential during this pivotal post-recession period to spur productive, inclusive, and sustainable economic development.
Innovation districts help address three of the main challenges of our time: sluggish growth, national austerity and local fiscal challenges, rising social inequality, and extensive sprawl and continued environmental degradation.
They do so by providing a strong foundation for the commercialization of ideas and the creation and expansion of firms and jobs via proximity and collaboration. They are a vehicle for both revenue growth as well as the more efficient use of existing infrastructure. They offer the prospect of expanding employment and educational opportunities for disadvantaged populations given that many
districts are close to low- and moderate-income neighborhoods. And, at a time of inefficient land use, they present the potential for denser residential and employment patterns, the leveraging of mass transit, and the repopulation of urban cores.
The purpose of this paper is to capture this emerging trend, explore the large forces and local practices and practitioners that are driving it and provide initial guidance to U.S. city and metropolitan leaders on how best to recognize and extend the growth of their own innovation districts, building on the distinctive assets and potential of their economies.
Events
DRUID Society Conference 2014: Entrepreneurship-Organization-Innovation
Copenhagen, Denmark, 16-18 June. 2014
he conference will include a number of distinguished plenary presenters and intends to map theoretical, empirical and methodological advances, contribute with novel insights, clarify and develop intellectual positions and help identify common grounds and lines of division in selected current scientific controversies within the field. In 2014, the DRUID Special Flavor will be on Food Innovation. During the last decade, the food industry has seen notable innovation and entrepreneurship throughout its value chain, including, for example, search for original raw materials, adaption of advanced process technologies, exploration of new cooking methods and development of unique restaurant models. DRUID2014 will feature scientific as well as social activities reflecting Food Innovation, including paper sessions on innovation and entrepreneurship in the food industry, talks by leading chefs, and samples of innovative food and drink. With its New Nordic Cuisine, a burst of new Michelin-starred restaurants, and capturing the World’s Best Restaurant as well as Bocuse d’Or awards for several consecutive years, Copenhagen has established itself at the heart of food innovation. In addition, there is a broader movement around the notions of regional and modernist cuisine. The DRUID Society will of course take advantage of its local connections to present conference participants with samples of just how innovative the local food scene can be.
Kevin Morgan: Smart Specialization and the Entrepreneurial State
Toronto, Ontario, 25 June, 2014
The European Union unveiled the most ambitious regional innovation strategy in its history earlier this year when it launched theResearch and Innovation Strategy for Smart Specialisation (RIS3) program. Although it builds on the past, the RIS3 program also aims to break with the past by privileging the “process of entrepreneurial discovery”, a process in which firms, governments, universities and civil society organisations are enjoined to collaborate to fashion more regionally distinctive models of innovation and development. The birth of RIS3 was influenced by a number of recent theories, like the advent of evolutionary economic geography and the social learning approach in innovation studies. The pertinent point , however, is that the RIS3 program makes enormous demands on each of the regional stakeholders, not least the regional state, which is expected to act in more entrepreneurial and experimental ways than ever before. This seminar explores the theory, policy and practice of the RIS3 program and poses the question: are old industrial regions are up to the challenge?
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This newsletter is prepared by Jen Nelles.
Project manager is David A. Wolfe.