Innovation in Peripheral Areas Sara Davies and Rona Michie Scottish Parliament Cross Party Rural Policy Group, 26 January 2011 UK Innovation Centre (BIS,

Innovation in Peripheral Areas

Sara Daviesand Rona Michie

Scottish Parliament Cross Party Rural Policy Group, 26 January 2011

UK Innovation Centre (BIS, ESRC, NESTA and TSB)

Sara Davies and Rona Michie, European Policies Research Centre, University of Strathclyde

2

Ongoing debates

• Innovation is seen to be fuelled by the concentration of people - sharing ideas, knowledge and skills – so in cities not peripheral areas?

• Is co-location enough? Do cluster policies work?• Does ICT end the benefits of F2F? Does it

generate new kinds of proximity?• Other challenges for businesses in peripheral

areas – cost of reaching suppliers & customers – small labour pool


3

• Few exceptional places with leading firms in global markets (e.g. Finland, Norway) – long-term policy

• R&D-driven innovation based on immobile natural resources (e.g. sea, cold) – external expertise

• Solutions to local problems (e.g. tele-medicine, social enterprise) - potential wider application

• Image-based innovation (e.g. food, tourism) – selling to large external markets – role of ICT

• New ways of working (e.g. business/knowledge services) - serving large external markets – ICT

Innovation in the periphery differsbecause sectors differ


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Innovation in the periphery differs because the context differs

(Source: Miles et al., 2009)

• Entrepreneurship• Skills• Finance• Public research• Competition• Demand• Openness


5

Policy recommendations (1):Support existing strengths

• Questions over value-for-money of cluster policies – path dependence

• Not impossible to create world-leading innovation in the periphery but it takes long-term political commitment & funding

• Focus targeted support on existing strengths – Innovation linked to immobile natural resources (e.g.

sea, cold, dark, space)– Innovation linked to solving local problems with a

potential wider application (e.g. tele-services, social enterprise)


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Policy recommendations (2):Build openness

• Core problems for peripheral areas are– Few people – Distance to other people

• Many weaknesses in the innovation context can be overcome via openness– Broadband (& transport) infrastructure – Human brokering

• E.g. Norway: external R&D and funding plus own human and natural resources


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Openness:Broadband infrastructure

• Firms can find out about and access:– External finance– External research, knowledge & ideas– External customers– External competitors

• Significant demand in peripheral areas– Coverage and speed

• High priority in many small peripheral countries; also in Wales and Cornwall


8

Broadband lines per 100 inhabitants, 2009(Source: EUROSTAT)

0

5

10

15

20

25

30

35

40

Nethe

rland

s

Sweden

Finla

nd

Germ

any

Fran

ce UK EU

Irelan

d

Spain

Italy

Lithu

ania

Latv

ia

Poland

Roman

ia

Bulgar

ia


9

Households with broadband (%) 2008(Source: EUROSTAT)

0

20

40

60

80

100

H&I

Denm

ark

Nethe

rland

s

Sweden

SE Eng

Finla

nd UK

Scotla

nd

Fran

ce

Germ

any

SW S

cotla

nd

East S

cotla

nd

Poland

Greec

e

Roman

ia

NE Sco

tland


10

Household download speed (Mbps)(Source: www.netindex.com)

0

510

1520

25

3035

40

South

Kore

a

Lithu

ania

Latvi

a

Romania

Sweden

Nether

lands

Germ

any

Finlan

d

Hungar

y

Franc

eUK

Spain

Poland

Irelan

d

Greec

e


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(a) Threshold=512Kbps (b) Threshold=1Mbps (c) Threshold=4Mbps (d) Threshold=8Mbps

Areas with download speed lower than the threshold indicated

(Source: Bernardi & Marina, 2010)


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Openness: Human brokering to external excellence

• To access private finance outside the region– Not a major focus– Regional venture capital (e.g. Sweden’s Norrland Fund) may

increase capacity to broker to external funders• To work with excellent researchers in UK / internationally

– E.g. Tekes (Finland) helps firms access universities and research centres abroad

• To find out about world class competitors in UK / world– E.g. 15 ELY centres (Finland) help firms to find information on

competitors abroad via searches, seminars, funding for trade fairs

• To engage with leading users and customers– E.g. 20 Innovation Norway offices help innovative SMEs find

customers and manage contracting


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Policy recommendations (3):Develop human capital

• Core problems for peripheral areas = few people and distance to other people

• Innovation = generation, adaptation and absorption of knowledge– Often not about radical ideas but about combining and

applying existing knowledge

• Depends on high level of skills across the whole population – so high quality education for all

• QoL to retain/attract people & facilitate returning


14

Highest qualifications by Scottish school-leavers, %, 2008-09

(Source: Scottish Government, 2010)

05

101520253035

Tota

l

Larg

e ur

ban

Other

urb

an

Acces

sible

small

towns

Small

rem

ote

towns

Acces

sible

rura

l

Remot

e ru

ral


15

Mathematics, average score,15 year olds(Source: PISA, 2009)

420

440

460

480

500

520

540

560


16

Reading below Level 2, % of 15 year olds

(Source: PISA, 2009)

0

5

10

15

20

25


17

Education in Finland(OECD, 2010)

• Consistently close to top of international league tables since 2000 with small differences between top and bottom students (and schools)

• Gradual reform to a comprehensive (non-streamed) system from 1970s, with:– Commitment to ensuring that each child achieves, concern

beyond education – Highly qualified, autonomous teachers – Systems of professional accountability – Emphasis on creativity, problem-solving, teamwork, self-

direction– Modest funding focused on the classroom

• Difficult socio-economic context– Precarious history & difficult Cold War situation– Poorer than neighbours & banking crisis / recession in 1990s– Internal socio-cultural & political divisions


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Innovation policy for peripheryin time of fiscal constraints

• Key context factors for innovation in peripheral areas are openness and skills

• Policy recommendations– Support existing strengths (esp. where the

periphery has real advantage)– Upgrade broadband coverage and speed– Build policy capacity to broker to external

excellence on behalf of firms – Work to improve education standards for all


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Thank you for listening

[email protected]

http://www.eprc.strath.ac.uk/irr


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Sources & useful links

• Bernard G and Marina M (2010) BSense – a system for enabling automated broadband census, University of Edinburgh, http://broadbandforall.net

• Miles et al. (2009) The wider conditions for innovation in the UK, Report for NESTA, London

• OECD (2010) Strong performers and successful reformers in education, Paris

• Scottish Government (2010) SQA Attainment and school leaver qualifications in Scotland: 2008/09, Edinburgh

• www.netindex.com• www.pisa.oecd.org• http://www.ukirc.ac.uk/

Innovation in Peripheral Areas Sara Davies and Rona Michie Scottish Parliament Cross Party Rural Policy Group, 26 January 2011 UK Innovation Centre (BIS,

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