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
White House Announces US$26 Million Advances Manufacturing Jobs and Cluster Development Challenge
The Obama Administration has released details on this year’s $26 million Advanced Manufacturing Jobs and Innovation Accelerator Challenge, a multi-agency initiative to assist in the development and implementation of regionally-driven economic development strategies that support advanced manufacturing and cluster development. The challenge will fund approximately 12 new awards, each with a project period of up to three years. The deadline for applications is July 9, 2012.
SBA Invites Licensing Applications for New US$1 Billion Early Stage SBIC Initiative
The Small Business Administration (SBA) is now accepting the first stage of the licensing process for the new five-year $1 billion Early Stage Small Business Companies initiative. In 2012, the SBA may commit up to $150 million to support eligible investments funds focused on early/seed stage investments. By licensing and guarateeing leverage to these investment funds, SBA intends to help early stage small business overcome the valley of death, the period when it is difficult for early stage businesses to access capital due to the lack of necessary assets or cash flow for traditional bank funding.
Editor's Pick
Accelerating Innovation in the Bioscience Revolution: Report from the 2011 Lake Tahoe Retreat
Milken Institute
In the fall of 2011, a remarkable group of leaders came together to find new ways of overcoming the barriers that have prevented more progress in medical research. The meeting brought together forward-thinking leaders in medicine, business, and government who pledged to rethink the way research in the sector is conducted, the way risks are assessed and the way companies are structured. Participants focused on ways to jumpstart innovation in the biosciences and accelerate the process of turning scientific discoveries into therapies — from harnessing the power of crowdsourcing to creating multidisciplinary networks to establishing open collaboration and safe-harbor environments in medical research and development. The report provides important context on the need to spur greater advances in medical research and lays out dozens of actionable policies.
Innovation Policy
The Power of Simplicity: Toward a Smarter and Streamlined Innovation Policy in the EU
Ernst & Young
Innovation. Around the world, few words enjoy such resonance across the political and business communities. And the European Union is no exception. Gripped by the grim reality of austerity and the fear that recession may be returning to haunt their economies once more, policy-makers and business leaders are turning to Europe’s innovators as the best — and perhaps only — hope for much-needed growth. A huge range of programs, projects and funding streams have been designed to help stimulate innovative activity across the Member States. But therein lies the challenge. While acting with the best of intentions, the sheer variety of such activities means that the clarity and effectiveness that these times demand can sometimes prove elusive. This report analyses the results of a cross-Europe survey of 680 business leaders to discover their perception of the EU’s innovation policy. The results are striking. Just 27% of respondents are familiar with the work of the European Commission to promote innovation, 82% think that access to EU funds should be made easier, and 82% believe that EU policy is too fragmented and needs greater coordination. This report suggests that a more streamlined and simplified system can deliver a market-driven innovation policy that will help catalyze growth. It proposes a system in which government promotes the development of worldclass infrastructure; helps facilitate the transformation of ideas into innovative products and services; and acts as an innovation buyer through the strategic use of public procurement.
The Importance of Manufacturing in Economic Development: Past, Present and Future Perspectives
Wim Naude and Adam Szirmal, UNU-MERIT
The structural transformation of a traditional economy dominated by primary activities into a modern economy where high-productivity activities in manufacturing assume an important role remains a defining feature of economic development. The challenges to attain such structural transformation may be more daunting than in the past. Based on a recent UNU WIDER/UNUMERIT project on industrialization this paper discusses the past and present roles of the manufacturing sector in structural change and analyses new challenges facing industrial policy. New challenges discussed in the paper include: (i) integration into global value chains, (ii) the shrinking of policy space in the present international order, (iii) the rise of the Asian driver
economies, (iv) new opportunities provided by resource-based industrialization, (v) the accelerating pace of technological change in manufacturing, (vi) how to deal with jobless growth in manufacturing, (vii) creating adequate systems of financial intermediation, and (viii) how to respond to the threats of global warming and climate change. This paper argues that structural transformation of developing countries requires a type of manufacturing sector development that can deliver high-quality employment, that is aligned with the international division of labour, and that would not lead to autarky, or a reversal of global gains in establishing openness in trade. Industrial policy can make valuable contributions in this regard if the lessons of the past and the challenges of the future are sufficiently taken into consideration.
Cities, Clusters & Regions
Mastering the Metro: How Metro Regions Can Win Friends and Influence Economies
Bruce Katz and Jennifer Bradley for Next American City FOREFRONT
In his 2012 TED talk, venture capitalist and LinkedIn co-founder Reid Hoffman extolled the power of “network literacy” which is, he said, “absolutely critical to how we’ll navigate the world.” He continued, “In a networked age, identity is not so simply determined. Your identity is actually multivariate, distributed and partly out of your control. Who you know shapes who you are.” If networks are the new, fast and partly-out-of-your-control vehicles for individual career building, could they also be the vehicles for building stronger economies and more livable communities in metropolitan areas? Today’s metro networks are different from the cadre of business elites, elected officials and technocrats that arose in the mid-20th century. They are larger, looser and more diverse both in terms of membership and their geographic span. Networks like these have been slowly rising for some time, but they have never been better suited to our current political and economic moment. The realities of economic restructuring, global competition, fiscal pressures, environmental imperatives, technological possibilities and a dysfunctional federal government require new models of collaboration within and among metropolitan regions.
The Role of Canada’s Major Cities in Attracting Foreign Direct Investment
Alan Arcand, The Conference Board of Canada
Global foreign direct investment (FDI) flows, a driving force of globalization, have increased substantially in recent decades. There is a general consensus in studies of inward FDI that it confers benefits on the host country. Not surprisingly, therefore, attracting foreign direct investment has become a central component of industrial policy in most countries, including Canada. Although most analysis of FDI is conducted at the national level, partly because of data constraints, the lion’s share of global investment activity flows through the world’s cities. This report highlights the key role that cities play in attracting inward FDI. It argues that a proactive and coordinated effort by the Consider Canada City Alliance (CCCA), aimed at attracting FDI, would lead to significant benefits, not only for its members, but for the country as a whole.
Strategies for Innovation: A Framework for Accelerating the Province of New Brunswick
New Brunswick has always been home to innovative companies and an innovative government, where ideas have stretched the boundaries of what is possible. Global markets have taken notice. Despite the success of the province, to address several major challenges for the decade ahead, to transform the economic landscape for traditional and emerging industries, and to compete in an ever-changing global economy, a greater emphasis on innovation and the adoption of industry best practices is required. New Brunswick is uniquely positioned to adopt an innovation-based economic development (IBED) policy that will be used to guide government’s support and involvement in priority sectors of the economy. An IBED policy framework for New Brunswick will help address economic transition by breaking down barriers between organizations and individuals and creating a culture that supports risktaking, tolerates failures and celebrates success. Focused on the priority sectors identified by the Department of Economic Development: 1) information and communications technology, 2) biosciences, 3) value-added food, 4) value-added wood, 5) industrial fabrication, and 6) aerospace and defence, the strategy objectives can be summarized into five categories: 1) innovate government, 2) make New Brunswick a better place to start and grow a business, 3) change the mindset of New Brunswickers to be innovative thinkers rather than passive learners, 4) build an innovation ecosystem that supports access to ideas, people and capital, and 5) improve local, regional, national and international collaboration between industry, academia and government.
The Center for an Urban Future
In just a few short years, New York’s tech sector has emerged as an increasingly powerful economic driver for the city. At a time when few other industries were growing in New York, more than a thousand new tech start-ups were formed in the city. This burst of tech company formation has created thousands of good paying jobs in the five boroughs, attracted large amounts of capital from outside the city, pumped new life in the city’s entrepreneurial economy, and lured some of the world’s smartest and most innovative people to New York at a time when the most competitive cities are the ones with the best human capital and greatest capacity for innovation. The flood of digital start-ups in recent years has also transformed the city from a second-rate tech center to literally the nation’s second leading hub for technology companies. And as this report shows, there is ample evidence that what’s happening in New York’s tech scene today is no flash in the pan. Though a number of the recent Internet start-ups will ultimately fail, New York appears to be building a sustainable tech sector—one that is benefiting from a much stronger local tech ecosystem than existed in the city’s first wave of tech growth in the 1990s and taking advantage of several big technology trends that play to New York’s natural strengths.
Statistics & Indicators
W. Mark Brown and K. Bruch Newbold
This paper examines the process by which migrants experience gains in earnings subsequent to migration and, in particular, the advantage that migrants obtain from moving to large, dynamic metropolitan labour markets, using Toronto as a benchmark. There are two potentially distinct patterns to gains in earnings associated with migration. The first is a step upwards in which workers realize immediate gains in earnings subsequent to migration. The second is accelerated gains in earnings subsequent to migration. Immediate gains are associated with obtaining a position in a more productive firm and/or a better match between worker skills and abilities and job tasks. Accelerated gains in earnings are associated processes that take time, such as learning or job switching as workers and firms seek out better matches. Evaluated here is the expectation that the economies of large metropolitan areas provide workers with an initial productive advantage stemming from a one-time improvement in worker
productivity and/or a dynamic that accelerates gains in earnings over time through the potentially entwined processes of learning and matching. A variety of datasets and methodologies, including propensity score matching, are used to evaluate patterns of income gains associated with migration to Toronto.
Policy Digest
The Power of Simplicity: Toward a Smarter and Streamlined Innovation Policy in the EU
Ernst & Young
Innovation. Around the world, few words enjoy such resonance across the political and business communities. And the European Union is no exception. Gripped by the grim reality of austerity and the fear that recession may be returning to haunt their economies once more, policy-makers and business leaders are turning to Europe’s innovators as the best — and perhaps only — hope for much-needed growth. A huge range of programs, projects and funding streams have been designed to help stimulate innovative activity across the Member States. But therein lies the challenge. While acting with the best of intentions, the sheer variety of such activities means that the clarity and effectiveness that these times demand can sometimes prove elusive. This report analyses the results of a cross-Europe survey of 680 business leaders to discover their perception of the EU’s innovation policy. The results are striking. Just 27% of respondents are familiar with the work of the European Commission to promote innovation, 82% think that access to EU funds should be made easier, and 82% believe that EU policy is too fragmented and needs greater coordination. This report suggests that a more streamlined and simplified system can deliver a market-driven innovation policy that will help catalyze growth. It proposes a system in which government promotes the development of worldclass infrastructure; helps facilitate the transformation of ideas into innovative products and services; and acts as an innovation buyer through the strategic use of public procurement.
Innovation = economic growth
Innovation is essential for Europe’s economic growth — a fact not lost on policy-makers in Brussels and across the Member States. In the aftermath of the financial crisis and aware that the EU is facing increasing competition from the world’s rapid-growth markets, recent years have seen a massive increase in public funds, a proliferation of lines of action, the creation of communities, platforms, infrastructures and even a dedicated initiative — Innovation Union. However, this wide array of actions — all of which have been created with the best intentions — have not generated the expected level of success. Europe will again miss its goal of achieving a level of R&D of 3% of GDP by 2020. And the European Commission’s projections to 2050 show that EU Member States’ (EU27) share of global patents is set to fall from 40% to approximately 20%. This is all despite the fact that the EU27 forms the world’s largest single market. Why is this the case?
The challenges
• Innovation policy is too complicated
Spread across countless programs, actions and strategies, innovation has for years been pursued via intricate decision chains, objectives and proposals. This has resulted in an enormous chunk of public money being deployed by an unprecedented number of decision-makers, agencies and ad hoc institutions. The desire to become more innovative and competitive has led to the creation of new programs that largely overlap with pre-existing ones;
• R&D gap
Between 2005 and 2009 the sources of R&D funding in the EU27 have shifted toward a greater presence of public funding with a reduction, in percentage terms, of private R&D. This contrasts with the US, South Korea and Japan where private R&D spending has been on the increase in recent years. The only European countries where private R&D spending is above 2% of GDP are the ones leading in innovation performance — Sweden, Finland and Denmark. In addition, the fragmentation of innovation levels, already systemic before the economic crisis, seems to have widened in the past months:
• Sectoral competitiveness and IT issues
The low-tech specialization of many EU firms has often been cited by the European Commission as one of the causes of Europe’s innovation gap and Europe seems to be faring poorly in terms of information and communication technology (ICT). The overall weak position of the EU27 in ICT is also mirrored by a gap in scientific specialism. Europe is significantly lagging behind Japan in technology-intensive sectors including electric components, audiovisual electronics, and telecommunications — and the US leads by far on medical equipment.
• Inadequate infrastructure
Building resilient and world-class infrastructure in Europe has not proved easy. Although initiatives have been launched to develop network infrastructure across the EU27, 73% of respondents to our survey want the EU to spend more money on building a common broadband infrastructure. There is also currently no European single market for e-communications, further hampering the creation of a pan-European world-class e-infrastructure. Insufficient investment has been directed toward areas such as distributed computing infrastructure systems which would enable round-theclock access to data and lead to increased productivity for European researchers and would-be entrepreneurs:
• Limited financing options
The absence of a genuinely integrated market for many of the most innovative sectors including, most notably, knowledge-intensive services, is a serious issue. Financial markets are also currently disjointed and the level of regulation varies across borders. The lack of harmonization prevents cross-border venture capital investment and the creation of funds in areas where financing for innovation is most needed.
Recommendations
We propose a new, three-tier approach to EU innovation. It aims to improve its effectiveness and reduce administrative burdens for companies wishing to rely on existing funding tools and other initiatives by EU institutions.
• Layer 1: Governments should act as leaders and investors by creating the main building blocks of an innovative environment — world-class infrastructure, a high-performing education system and research and innovation-friendly legal rules.
• Layer 2: Governments should create funding and facilitating initiatives to strengthen links between researchers, entrepreneurs and private investors, possibly with the help of public funds and tax credits.
• Layer 3: Government has the key task of “nudging” existing innovation efforts toward long-term policy goals. This should mostly occur through the strategic use of public procurement and launching a limited number of partnerships that address key long-term
market failures.
We believe there should also be a stronger focus on the EU’s “Grand Challenges” and key strategic R&D sectors. As highlighted
by industry, European Innovation Partnerships should be promoted in all cases in which strong societal needs are at stake. In those partnerships, market participants have so far been able to avoid the current fragmentation of competences at EU level. This has occurred by involving all relevant Directorate Generals of the European Commission and participants from other EU institutions in a dialogue that has focused on industry, EU citizens and global technology challenges.
Policy-makers should consider innovation at every phase of the policy cycle. In particular, competition policy should be handled by the European Commission in a way that is compatible with innovation. The recent announcement by the Competition Commissioner, Joaquín Almunia, that the state aid regime will be revised and made more growth-friendly is to be strongly welcomed.
While there is no catch-all solution, a smarter and more streamlined innovation policy will underpin a much-needed economic resurgence across the EU.
Events
Regions and Communities in Transition: Recognizing Economic Turning Points
Oklahoma City, 4-8 June, 2012
The Council for Community and Economic Research (C2ER) Annual Conference and the LMI Training Institute Annual Forum bring together leading economic and workforce development researchers from across the U.S. This year’s conference will enable participants to maximize their data resources and analytical capabilities to accurately identify changes as they occur in regional economies.
Taking Flight: Making an Ontario Aerospace Cluster a Reality
Toronto, 7 June, 2012
The aerospace sector in Ontario has weathered the recent economic storm and the forces of globalization better than most of the manufacturing base. With appropriate support, investment and a dynamic enabling environment it could act as a beacon for innovation and manufacturing excellence in the province. Canada 2020, in partnership with the Program on Globalization and Regional Innovation Systems at the Munk School of Global Affairs, University of Toronto, will be hosting a day-long conference that looks at the issues around developing an aerospace cluster in Ontario. The purpose of this conference is to convene the relevant parties from industry, government and educational institutions to identify the gaps that need filling to move the Ontario aerospace industry from sector to cluster.
Towards Transformative Governance? Responses to Mission-Oriented Innovation Policy Paradigms
Karlsruhe, Germany, 12-13 June, 2012
The Lund Declaration, which was handed to the Swedish Presidency of the Council of the European Union by 400 prominent researchers and politicians in 2009, states that “European research must focus on the Grand Challenges of our time moving beyond current rigid thematic approaches. This calls for a new deal among European institutions and Member States, in which European and national instruments are well aligned and cooperation builds on transparency and trust.” The declaration thus asks EU institutions to play a crucial role in bringing the relevant public and private actors together, and helping to build more cooperation and trust in order to address the overarching policy objectives.This declaration has taken up and reinforced a development in the past few years in which governments and the European Union have adopted a new strategic rhetoric for their research and innovation policy priorities which addresses the major societal challenges of our time. This is evolving into the third major policy rationale besides economic growth and competitiveness. It is not yet clear whether and how any transformative effects from this new mission-oriented approach can already be identified. The conference aims to attract papers that discuss possible transformative effects at different levels, i.e. on the actors performing research, innovation processes, scientific fields and technological sectors, the institutional funding and research landscape, society, the demand and user/beneficiary side, research and innovation policy and financing, and national and European political framework conditions. It also invites contributions that critically discuss methodological issues, conceptual developments and novel normative challenges around innovation and R&D policy triggered by the – alleged – mission oriented turn.
Entrepreneurship and Innovation Networks
Faro, Portugal, 14-16 June, 2012
Following the tradition established by the previous symposia, starting in 1998, the symposium is designed to bring together leading-edge views of senior academic scholars and mix them with the critical and creative views of postdocs and PhD students engaged in their thesis work. We welcome researchers from various fields, such as economic geography, economic history, entrepreneurship,
international business, management, political science, regional economics, small business economics, sociology and urban and regional planning. The objectives of the fifteenth Uddevalla Symposium 2012 are: i) to provide a unique opportunity for scholars including senior and junior researchers to discuss path-breaking concepts, ideas, frameworks and theories in plenary key-note sessions and parallel competitive paper sessions, and ii) to facilitate the development and synthesis of important contributions into cohesive and integrated collections for potential publication. Therefore, unpublished complete papers are invited for presentation and feedback from other scholars. A selected list of these papers will be subjected to review and development for publication in scholarly venue.
Copehagen, Denmark, 19 June, 2012
Conference highlights include keynotes offered by Gautam Ahuja, Melissa Schilling and Joel Baum as well as three plenary debates: 1. Support Paul Stoneman and Otto Toivanen or Giovanni Dosi and Sid Winter wrestling over the merits of neoclassical economy in innovation studies. 2. Join the debate on the value of the exploration/exploitation trade-off with John Cantwell and Ram Mudambi pitched against Marco Giarratana and Lori Rosenkopf. 3. Enlist in the dispute over the current IPR-regime effects on growth with Eric von Hippel and Georg Von Krogh against Vincenzo Denicolo‘ and Scott Stern.
CALL FOR PAPERS – XXIII ISPIM Conference: Action for Innovation: Innovating from Experience
Barcelona, Spain, 17- 20 June, 2012
The plea for innovation is universal. Managers and politicians have understood that innovation is needed on an everyday-basis to strengthen the competitiveness of organisations, regions and countries. Innovation, however, requires more than good ideas and intentions. Leadership, foresight, courage, investment, inspiration and perspiration are needed to turn intentions and ideas into effective action. Even with these elements in place, not every initiative is successful. However, every action and each experience provide new insights into the causes of failed and successful innovation. Successful innovators, be they individuals, organisations, intermediaries or policy makers, must therefore overcome the paradox of building on experience, and yet breaking away from the status quo, with a permanent innovation mindset. These challenges of “Action for Innovation” are the core focus of this conference.
CALL FOR PAPERS – Sustaining Regional Futures
Beijing, China, 24-26 June, 2012
The Conference will address some of the biggest issues facing regions and sub-national areas around the world, gateways are being organised on the causes and implications of different patterns of regional development. The gateways are dedicated to assessing the forms and successes of regional policies in managing regional disparities; establishing basic public services; supporting endogenous growth and the comparative advantages of regions; promoting regional competitiveness and sustaining harmony between the economy, society and the environment. Papers on each of these themes are encouraged – on different countries’ and regions’ experiences, and on comparative studies.
Science and Technology Policy in Global Context
Waterville, NH, 5-10 August, 2012
The global context for science and technology policies is changing quickly. Knowledge is flowing around the world ever more freely. International collaboration is growing in every field. Economies that have traditionally grown through innovation face new competition from rising economic powers. Intellectual property regimes are in flux and under attack. Scientists and engineers trained in Europe and North America are returning to their regions of origins more often. Science and technology are embroiled in global regulatory issues like the ground rules for nanotechnology and synthetic biology, renewable and nuclear energy, and access to essential medicines. The 2012 Gordon Research Conference on Science and Technology Policy will delve deeply into this range of issues, asking how the questions and answers of science and technology policy need to change in response to international developments. The program will tap the best recent research on the global dimensions of research, innovation, human resource, and regulatory policies, as well as perspectives from S&T policy practitioners from around the world.
Research Network on Innovation Summer School 2012
Montpellier, France, 29 August – 1 September, 2012
This Summer Schoolaims to update on the works considering the sectoral dimensions of innovation, or using and questioning the concept of Sectoral System of Innovation (SSI). This initiative also proceeds from the perspectives opened by the international symposium held in 2010 in Montpellier on innovation in agriculture and agri-food (http://www.isda2010.net/fr/) and calling for comparative analyses with research on innovation in other sectors. The aim is to question specificities and convergences of innovations in different sectors and to discuss the relevance of the concept of Sectoral Systems of Innovation (SSI).
13th International CINet Conference: Continuous Innovation Across Boundaries
Rome, Italy, 16-18 September, 2012
The Continuous Innovation Network (CINet) is a global network set up to bring together researchers and industrialists working in the field of Continuous Innovation. The mission of CINet is to develop into a school of thought on Continuous Innovation. Consistent with this mission, CINet organises an annual conference. This announcement concerns the 13th CINet conference, which will take place in Rome, Italy, on 16-18 September 2012. Furthermore, CINet promotes a PhD Network to foster research collaboration among PhD students and their institutions on innovation in the widest sense of the word. As part of that initiative, a PhD workshop is organised just prior to the 13th CINet conference, on 14-15 September. Besides that a CIYA Workshop will be organized, aimed at young academics working in the field of continuous innovation.
Leuven, Belgium, 27-28 September, 2012
The EPIP (European Policy for Intellectual Property) association will hold its 7th Annual Conference on September 27-28, 2012 in Leuven (Belgium). Scholars and practitioners interested in the economic, legal, political and managerial aspects of intellectual property (IP) rights are encouraged to attend the conference with or without paper presentation. The conference aims to explore and stimulate debate regarding open innovation and creation, and to examine the interaction between open innovation and proprietary IP mechanisms. Is the IP rationale under pressure in view of these changing innovation dynamics? Are IP strategies ‘in motion’ in response to these emerging trends of increased openness?
Porto, Portugal, 11-13 October, 2012
The Regional Innovation Policies seminars place the emphasis on regions, acknowledging its relevant role for constructing sustainable competitive advantages. Previous seminars held at Porto (University of Porto), Salzburg (University of Salzburg), Santander (University of Cantabria), Edinburgh (Napier Edinburgh University), Grimstad (University of Agder, Norway) and Lund (Lund University – CIRCLE, Sweden) have contributed to the discussion on the role of regional policies to promote innovation and economic development. The 7th edition returns to Porto and will be hosted by INESC Technology and Science – INESC TEC – a Portuguese Associate Laboratory coordinated by INESC Porto and internationally recognized for its commitment to science and technology advance. The conference is directed toward researchers, policy makers, and practitioners interested in issues related to regional innovation policy, regional competitiveness and regional development. Although participants are encouraged to present their work in open or organized sessions, it is also possible to attend without presenting a paper.
The Governance of a Complex World
Nice, France, 1-3 November, 2012
In a period of crisis – according to many commentators the most important one since the Great Depression – the governance of an ever increasingly complex world is a major challenge to economics and social sciences, especially in the current stage where no clear consensus has emerged so far in our scientific communities. The aim of the 2012 International Conference on “The Governance of a Complex World” is the identification of major propositions of political economy for a new society, grounded on structural, technological and institutional change. We encourage submissions dealing with different levels of governance (countries, industries, firms, individuals), where innovation is viewed as a key driver to stir our complex world out of the crisis. We especially welcome analyses in the field of knowledge dynamics, industrial evolution and economic development, dealing with key issues of the emergence and persistence of innovation, entrepreneurship, growth of firms, corporate governance and performance, agglomeration/dispersion of industrial activities, skills dynamics, economics of science and innovation, environment as a driver of innovation.
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This newsletter is prepared by Jen Nelles.
Project manager is David A. Wolfe.