1. Social Situation Observatory – Social inclusion and income distribution IKINET Limitations of regional innovation indicators Warsaw, 24 May 2006

2. Social Situation Observatory – Social inclusion and income distribution Growing importance attached to development of indicators to monitor need for policy action and effectiveness of policy measures already implemented As regards innovation, EU policy consists of two strands: innovation policy per se to strengthen EU as a knowledge-based economy cohesion policy to achieve more balanced pattern of regional development

3. Social Situation Observatory – Social inclusion and income distribution EU innovation policy - increased emphasis on policy action at regional level to take account of regional strengths, weaknesses and ambitions … … but also on cooperation, exchange of experience and establishment of trans-regional networks

4. Social Situation Observatory – Social inclusion and income distribution EU cohesion policy progressively re-oriented towards Lisbon objectives and especially towards promotion of innovation Recognition that capacity to innovate varies widely across EU regions, especially after enlargement, reflecting wide differences in access to knowledge and ability to exploit it

5. Social Situation Observatory – Social inclusion and income distribution If weaker regions are to develop, two necessary sets of conditions: 1. they need a suitable endowment of basic infrastructure (transport, telecommunications, energy, environmental facilities) and a labour force with appropriate skills and training

6. Social Situation Observatory – Social inclusion and income distribution 2. There is a need for: access to new technology efficient dissemination of new knowledge and its effective use creation of networks and clusters to encourage cooperation and realise economies strengthening of R&D capacity establishment of effective links with global centres of technological excellence

7. Social Situation Observatory – Social inclusion and income distribution Indicators at present focus on national rather than regional circumstances (European Innovation Scoreboard) But differences between regions within countries as important as between Member States Output as well as inputs indicators are included, but latter easier to measure, eg: R&D expenditure by sector R&D personnel by sector

8. Social Situation Observatory – Social inclusion and income distribution Output indicators used have a number of defects: patents registered at EPO under-record patent activity in new Member States especially Number of patent applications per million inhabitants, 2000-2002 Top 25 regions450 Bottom 25 regions2.4 Slaskie2.9 Mazowieckie8.7

9. Social Situation Observatory – Social inclusion and income distribution And are biased in favour of manufacturing relative to service enterprises

10. Social Situation Observatory – Social inclusion and income distribution There are also a number of context indicators: 1. Education attainment levels of work force 2. Participation in lifelong learning 3. Employment in high/medium tech manufacturing and high tech services 4. Innovating enterprises

11. Social Situation Observatory – Social inclusion and income distribution Problems in both defining the relevant indicators to use and in their timeliness: latest data on R&D expenditure by region are for 2002 for a number of countries – Poland, the Czech Republic, Hungary and Spain but for 2001 for some - Germany, France and the Netherlands for 2000 for Italy an for 1999 for UK and Greece latest CIS is for 2000 and not split by region

12. Social Situation Observatory – Social inclusion and income distribution Apart from being dated and incomplete, these indicators do not capture main aspects – in case of developing regions, capacity to absorb and diffuse innovations It is widely argued that regions need to undertake some R&D to be able to absorb new ideas and integrate them into the production process But question is how much?

13. Social Situation Observatory – Social inclusion and income distribution There are big differences between EU regions in terms of R&D expenditure relative to GDP

14. Social Situation Observatory – Social inclusion and income distribution Are these big differences between regions justifiable? Is expenditure in many lagging regions too low to enable them to absorb new knowledge? How much higher does it need to be?

15. Social Situation Observatory – Social inclusion and income distribution Some of the context indicators are clearly relevant as regards absorption capacity - education levels in particular, especially number with tertiary qualifications These also vary widely across regions

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17. Number of workers with upper secondary education also important and also differs between regions …

18. Social Situation Observatory – Social inclusion and income distribution but difficulty in interpreting the differences

19. Social Situation Observatory – Social inclusion and income distribution Importance of employment high and medium-tech manufacturing relevant as well But again need to interpret the differences carefully

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21. IKINET concerned with the transmission process with the means by which new technology or knowledge is transmitted between enterprises and regions Objective – to develop new and more suitable indicators

22. Social Situation Observatory – Social inclusion and income distribution A number of potential transmission mechanisms explored through case studies and questionnaires: supplier-customer relations supplier-supplier relations university/research centres-enterprise relations worker movements between enterprises and regions

23. Social Situation Observatory – Social inclusion and income distribution Concern not only to collect data but to gain a better understanding of knowledge generation and its transmission across enterprises and regions Identification of aspects which could be monitored – eg links between enterprises and research centres And also identification of existing data which could be used to monitor developments

24. Social Situation Observatory – Social inclusion and income distribution Two principal examples: LFS, or administrative records, to measure movements of qualified workers between jobs …

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26. Secondly, data from Dublin Foundation to measure influx of foreign-owned enterprises into medium- tech manufacturing and creation of jobs …

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