How Governments encourage regional development through innovation - The RegioWin and NEO Award case.

Following my posts about The role of innovation in regional development and Steps to organize a regional innovation network. I want to share more ideas about how organizations that are already networks in terms of their assets, can be useful in communities. Mixing the theories, and the practical cases of governmental actions in regions. Some of this has been informed by the research I am doing this year with the Industrie- und Handelskammer (IHK) + TechnologieRegion Karlsruhe (TRK) + Karlsruher Institut für Technologie (KIT) in Karlsruhe, and some of it links to a proposal of the state of Santa Catarina in Brazil, for the creation of 13 centers of innovation.

Government plays a crucial role in driving innovation and they are key contributors to the ecosystem. Whether it is a state or federal governments, like in Germany, millions, if not billions of public-sector Euros flow each year to education, training, public basic and applied research, and early-stage financing to support innovation. Governments also assist in creating the right conditions for firms to grow and can influence innovation.

To achieve the innovation goal, in many cases, governments develop high-level policy attention and substantial funding for research and development. Also, provide support for innovative small and medium-sized enterprises. They also invest aggressively to create, attract and retain industries in strategic sectors.

Support for innovation requires conditions such as adequate investments in R&D. When we talk about this kind of support, we also have to think about the barriers, especially between industries and academia, where the focus is more on understanding basic phenomenon than on achieving concrete results. This barrier, for example, is often reinforced by a legacy of organizational incentives, like programs for SMEs grants to develop research. When providing grants to small/medium businesses the program increases commercialization of innovations derived from federal research and development funding, besides that, it enables the SMEs to try, to explore and to discover their technological potential. Another way of encouraging investment in R&D/invention is through incentives tax, companies can reduce their tax bill or claim payable cash credits as a proportion of their R&D expenditure.

Entrepreneurship policy is another role that the governments should invest time. Basically, this is primarily concerned with creating an environment and support system that will foster the rise of a new entrepreneur and the start-up early-stage growth. Most of the policy instruments focus on this area are related to improve access to financing and funding projects, to remove the excessive bureaucracy to new firms entry, to growth and to inform and promote the culture of entrepreneurship outside and inside of the education system. (Gabr & Hoffman,2006; Lundstr?m & Stevenson, 2005).

Strong protection of intellectual property rights (IP), the Governments here should promote a law to encourage the creation of intellectual goods giving people and businesses property rights to the information and intellectual goods they create — usually for a limited period of time. This incentive is really important for the creation of innovation and for the technological progress of the countries and regions. Inside of the big umbrella of intellectual property, it is possible to find a large subset of rights, including patents, trademarks, industrial designs, utility models, service marks, trade names, and geographical indications.

For many governments around the world, the cluster policy is the central point in regional and local innovation policy. The main reason is that governments realized that clusters can motivate the so-called “soft economy” as a drive motor for the economic development of the region. This kind of policy is based on cooperation and interaction of different actors and mainly consist of four models. The first one is focused on creating competitive advantage on the key sectors of the economy, the second focus on increasing the competitive of the SMEs, the third model is pointed at proving the competitiveness of entire regions, especially in the eyes of investors. Finally, the fourth model relates to innovation and policy task and is to approximate the area of science, research, and industry. Also, it is important to remember that a Cluster brand is necessary here, this is connected with the idea of spreading the cluster around the region, state, country, and international markets to bring more investments and partners in the region. Another aspect of the operation of the cluster policy is to build and strengthen networks in clusters and investing in human capital.

Innovation prizes are one of the oldest types of the innovation policy measure. Traditionally, prizes have been seen as an innovation policy instrument that can overcome market failure by creating an incentive for the development of a particular technology or technology application. Innovation inducement prizes normally have a single goal: to incentivize the creation of the desired technology.

Public/private partnership is another example, normally they offer considerable opportunities, the long-term projects are a safe way of investment and the focus is connecting the knowledge-base with industries to develop research. The government should focus in pushing research, 40 to 60 percent of the budget that came from the government, inside of the partnership should go to the small and medium-sized firms, that will need this help to develop innovation and grow.

The RegioWIN and NEO examples

Baden-Württemberg is among the most economically powerful states in Germany. This State has led the innovation regions of Europe since 2008. On February 2013, the Baden-Württemberg launched a program called RegioWin, with the main goal of improving competitiveness in the individual regions of the state through innovation and sustainability and thereby contributing to sustainable regional development. The RegioWIN program was developed from the European Regional Development Fund (ERFD), which aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions and it is jointly conducted by the Ministry of Economic Affairs, Labour and Housing, the Ministry of Rural Affairs and Consumer Protection and the Ministry of Science, Research and the Arts.

The focus of the program was to help develop connections around regional actors inside of the state government, offering an opportunity to promote processes as “regional governance” in regional networks. This strategy process results in measures, actions, programs and lighthouse projects with a large effect for regional development, which contributes permanently to the improvement of the state operational competitiveness. The state government uses funds from the European Regional Development Fund to promote the process of intelligent specialization in the regions. In the context of its dialogue-oriented regional structural and economic policy, RegioWIN attaches great importance.

The process was divided into two phases. In the first, the regional actors should bring a regional strategy concept. Together, a common understanding of the strengths and opportunities of the respective region is accomplished and leads to suitable strategies with a common objective for a regional innovation profile. The second phase, the actors should develop lighthouse projects with the specifications for further projects that are immediately ready for implementation.

The awarding of the Regional Strategy Concept in the first phase of the competition is a pre-requisite for the promotion of the elaboration of the Regional Development Concept and the projects in the second competition phase. It is intended to support each Regional Development Concept with a fixed amount of EUR 50,000 provided that it meets the requirements set in the second competition phase, in the end, the amount of funding from the ERDF must reach at least 100,000 euros per project. The funding is therefore subject to EU and budgetary approval. In the case of projects that fall within the remit of the Ministry of Finance and Economic Affairs or the Ministry of Rural Areas and Consumer Protection, the grant is provided as project funding in the form of share financing or in the form of grant.

The project will have 50% of the budget from the EU program and the state of Baden-Württemberg will add more 20%. Besides that, the state will have a close look at the projects that did not succeed with the awards and will give advice on other funds in Germany or EU to develop the project.

The target group of the competition is regional actors who are involved in the conceptual and strategic development of the functional space and its subsequent implementation. In principle, this includes all relevant actors from local authorities, industry, science, society, and administration in the regions who can contribute ideas for strengthening research, technological development and innovation as well as for a low-carbon economy in all areas. Specifically, these can be cities, municipalities, districts, associations, chambers, business development agencies, companies, trade unions, cluster initiatives, regional associations, universities, research institutes or their associations and other relevant social groups.

The RegioWIN project is a perfect example of public policies regarding innovation and with the focus of regional development. In this specific project, not only the focus was to develop regions through innovation, as well as connect the main actors through events, publications, and projects. These actors, are changing experiences, developing new technologies, connecting, exchanging knowledge through regions, states, and countries.

NEO — The city innovation award

NEO is an innovation Award of the TechnologieRegion Karlsruhe — TRK, started in 2010, focusing on innovation for the energy sector, and always searching to find innovations for the world of tomorrow. Each year the award is under a current topic of the future and since 2018 applications are accepted nationwide. The prize is for innovations based on a convincing guiding principle. The innovation should be communicated to a broad public and make an important contribution to the solution of a currently important problem in the field selected, but not be pure basic research. In addition, innovation should be marketable and have global relevance or internationality.

The TRK is made up of the ten medium-sized towns, associations, companies and the chamber of commerce. The primary objective of the cooperation was, and still is, to strengthen the TRK economic area, which includes around 80.000 IHK member companies and 512,175 employees. As part of one of the projects in the RegioWin Funds from the State of Baden-Württemberg, the TechnologieRegion Karlsruhe GmbH, now a private-public company, is a regional, cross-state location marketer focusing on business, innovation, and science. The introduction of regional management for the entire TRK represents an innovation for the region. The regional management TRK is a comprehensive instrument to develop and implement concerted solutions at the regional level with regard to the five dimensions of social challenges (economic, demographic, ecological, social, climatic).

The competition goes through two phases. After the first round of applications, the jury will make a pre-selection requesting ten candidates to submit a more detailed draft. The big award ceremony will happen and in front of around 200 representatives from business, politics, and science, the four finalists of the NEO award need to present a impressive contribution to the topic in video clips. The award is a total of 20,000 Euros.

The idea is to encourage entrepreneurs that want to develop a new product with an impact on society to continue the development. Besides that, the city has access to other projects that can be advice to other types of fundings or programs around Germany and Europe.

Sources:

Cooke, P. (2004) Regional innovation systems: an evolutionary approach. In: Cooke, P., Heidenreich, M., and Braczyk, H-J. (eds.) Regional Innovation Systems: The Role of Governance in a Globa-lised World. London: Routledge, pp.1–18

Edited by Jan Fagerberg, David C. Mowery and Richard R. Nelson. The Oxford Handbook of Innovation. Oxford ; New York :Oxford University Press, 2005.

Jackson, DJ. (2011) ‘What is an Innovation Ecosystem?’ National Science Foundation, Arlington, VA

Cunningham P. Edler J. Flanagan K. Laredo P . (2016), ‘The Innovation Policy Mix’, in J. Edler P.Cunningham A. G?k P. Shapira (eds), Handbook of Innovation Policy Impact , Cheltenham, Edward Elgar, 505–42.

Meyer-Krahmer, F. (1997): Technologiepolitik. In: Ropohl, D./Schmid, A. (Hrsg.):Handbuch zur Arbeitslehre. München: Oldenbourg.

Meyer-Krahmer, F. (1998): Nationale Forschungs-, Technologie- und Standortpolitikin der globalen ?konomie. In: Messner, D. (Ed.): Die Zukunft des Staates undder Politik: M?glichkeiten und Grenzen politischer Steuerung in der Weltgesell-schaft. Bonn: Dietz, 270–299

Gabr, H., & Hoffman, A. (2006).A general policy framework forentrepreneurship.FORA, Division for Research and Analysis,Copenhagen: Ministry of Business and Economic Affairs.