Science Cities, 2008

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This is chapter for unpublished book by ippr north on science cities in Britain and beyond.
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   1 Science cities in the context of European and internationalinnovation policies (Chapter for unpublished book on English science cities)Olga Mrinska for ippr north, 2008omrinska@gmail.com Introduction The links between science, innovation and economic development   first emerged as a subjectfor research and policy-making in the mid-20 th century. The shift from an industrial to a post-industrial economy meant that in order for countries, regions and cities to enhance theireconomic growth and competitiveness, they would have to find new roles and models for theirresearch and applied science facilities. Hence, science and innovation policies began to emerge both at the national and regional levels to harness places’ existing intellectual potential and to attract more talent and investment from elsewhere. This stimulated energeticcompetition between places  – between cities and regions  – that were all aiming to becomebeacons of science and technology. The further transition towards a knowledge-basedeconomy in the 1990s only accelerated this trend. The UK’s most recent response has been the Science City initiative, launched in 2004 when York, Manchester and Newcastle receivedthis status. Three more cities  – Birmingham, Bristol and Nottingham  – followed in 2005.For the British Government, science cities are not only about achieving the goals of stateinnovation policy (greater link between business and universities, greater commercialisation ofinnovations, etc). They are also a key instrument of the UK’s regional policy. Science cities areintended to attract resources and innovative production beyond the so-called Golden Triangleformed by Oxford, Cambridge and London (the area with the highest concentration of scientificand research activities in the UK) by redistributing research activities into parts of countrywhere the economic structure currently lacks innovation-intensive sectors. This is linked to avariety of mechanisms to promote greater collaboration between scientific and researchinstitutions, the business community and local authorities (though not by allocating largeamounts of funding). In other chapters we analyse how successful this initiative has so farbeen from different perspectives, including that of business community.Of course, the UK is not the only country to pursue territorial innovation policies. Many othercountries in Europe and elsewhere have also developed policies to address regional gaps intechnology and innovation. Science cities, scientific parks or technopoles are one instrumentamong many which have been used to stimulate more innovation-intensive production inmanufacturing and services and to strengthen the competitiveness of national economy(others include stimulation investment in R&D, enhancing skills and reforming the educationsystem, deregulation and support of innovative businesses, and creating a beneficialenvironment for intellectual property rights). The core goal of this chapter, therefore, is toplace the concept of science cities in the wider context of European innovation policies and tolook at international examples (from the EU, the US and Japan) of similar policies and theireffectiveness in spurring regional economic growth of the regions and improving citizens’ well-being.   2 Historical background The idea of creating special regimes to promote science and research and enhance theircommercialisation through closer links with the private sector first emerged in the aftermath ofthe Second World War. In the 1950 and 1960s, many states both in the developed world andin the Communist bloc experienced rapid economic growth due to high levels ofindustrialisation, mass production, and higher demand for new technologies and know-how.Those countries which already had extensive applied and basic research facilities aimed tostrengthen these facilities either to achieve higher economic success and raise theattractiveness of their research and innovation facilities (e.g. the US), to harness theeffectiveness of those facilities through a higher concentration of human capital in ‘growthpoints’ (e.g. the USSR), or to enhance their military and defence capacities (both the US andthe USSR). Countries which lacked this scientific base but experienced tremendous economicgrowth (Japan) designed scientific policies which would spur the creation of a solid sciencebase and effective applied research capacities which would then be able to compete withstronger partners.The ideas of science cities and technopoles thus began to emerge in the 1960s in differentparts of the world. The difference between a science city  and a technopole  is that the latterrepresents a town or city that already has significant knowledge production capacities andother important economic functions, while the former is based around newly-built facilities(usually on green field or brown field), often in less developed areas with existing or relocatedscientific and educational institutions. When implementing science city projects, therefore,governments and other actors usually face much higher costs related to building newinfrastructure and attracting researchers and entrepreneurs (though this is not always thecase). On the other hand, the science city model also provides an opportunity to create ‘ideal’ towns and settlements ‘from scratch’ which have different functional zones and all necessarysocial and cultural infrastructure and are also more environmentally sustainable.Projects related to technopoles focus more on linking existing infrastructure and facilities,attracting more capital and human resources, and achieving higher commercial success fromresearch and innovation in order to stimulate activity in other economic sectors in the city orregion. One example of such policies is the French technopoles  initiative in the 1970s and19 80s inspired by Perroux’s growth poles theory, when government research facilities were relocated from Paris to technopoles or science cities in the less developed cities of Grenoble,Lille or Toulouse (Cooke, 2006). Another example is Japan’s Technopoles programme  in the1980s, which used technology-led development policies to promote the economicdevelopment of peripheral regions (Kitagawa, 2007).There are usually three major drivers behind the creation of science cities  – nationalgovernment, universities, and regional/local government  – any one of which may play the leadrole. For example, Silicon Valley is a classical case of initiative spurred by the university  (Stanford University) which was supported by businessmen (often alumni of the sameuniversity) and later by local/state authorities. The Research Triangle Park (RTP) in NorthCarolina, USA, is an example of an initiative led by state and local authorities and thensupported by universities and private sector. By contrast, the famous Tsukuba science city inJapan is the product of central government policy , which had the aim of decentralisinggovernment research and engineering research institutes, intellectual resources and stateR&D funding outside the overheated Tokyo-Osaka area. Central government also drove the   3 creation of science cities in France in order to reduce the gap between Ile-de-France and therest of the country  – though they were largely also supported by the local government andbusiness community. The Sophia Antipolis science city established near Nice in 1972 is one ofthe most successful examples of this kind of intervention. The Soviet Union took this evenfurther, establishing around 70 science cities, most of them outside of the big Europeanconurbation zones in areas deep in Siberia (including the famous Akademgorodok nearNovosibirsk). All these initiatives in different parts of the world developed actively in the 1950s,1960s and 1970s.These areas all achieved substantial success in research and science, though the results interms of commercialisation were much more mixed. Soviet (now Russian) science citiessuffered harshly from the national economic crisis, and only now are some of them beingrevitalised with substantial state investment and stronger links with the business sector.Tsukuba science city is still one of the greatest growth poles for Japanese governmentinnovation policy and government R&D spending, as traditionally the Japanese businesssector, which is responsible for roughly four-fifths of total R&D spending, does not investsubstantial amounts in national research institutions and universities. RTP in North Carolinahas had periods of success but is currently reviewing its strategy in line with modern trendstowards the commercialisation of science and in response to harsh competition from similartechno parks in the US and abroad. Silicon Valley has been a tremendous success thanks toits emphasis on attracting business-minded researchers and creating conditions for theirbusinesses to grow and support its creative milieu. Its links with Stanford University remainfundamental, but this science park is largely driven by private sector initiatives and their visionfor future development. Challenges for the innovative economy in the EU Traditionally, the countries of the European Union have been world economic leaders andgrowth poles for innovation and science (alongside the USA and Japan). However, recenttrends in the world economy, which have seen a huge increase in flows of goods, capital andpeople due to the dramatic impact of globalisation process, has led to substantial changes.The rise of China, India, Russia and some Latin American economies means that the EU nowneeds to compete not only with its traditional partners (the US and Japan), but also with theseemerging world powerhouses. Though these countries currently have much lower levels ofwealth and innovative development, they will have many opportunities to catch up thanks tonew trade patterns, foreign investment, global relocation of business and the intensification ofinternational production networks, all of which can drive innovative production and services.As a member of the EU, the UK enjoys the benefits brought about by close economicintegration and social cohesion. However, it also shares the weaknesses of the Europeaneconomy, characterised in recent years by relatively modest rates of growth of productivity,investment in education, science and R&D, inadequate deregulation, and a tendency towardsoverprotective measures. Compared to the US, the EU has a much less innovative andentrepreneurial business community, which invests much less in R&D. It also has aninadequate skills mix which does not meet the demands of the modern economy. The EUSingle Market has had huge benefits for the manufacturing sector, but has so far failed toaccommodate the growing role of service industries, which remain highly disintegrated andnationally regulated. Radical changes are needed, both in policy and in the behaviour of   4 citizens and businesses, to reverse current trends which see Europe falling behind other worldpowers.This policy shake-up began in 2000, when the European Commission and the then 15member states launched the Lisbon Strategy, which was meant to be an overarching policyframework aimed at improving the productivity of the European economy and closing the gapin economic growth between the EU and its core competitors  – the USA and Japan. This was Europe’s response to the growing challenges of globalisation and rapid technologicalprogress. It was acknowledged that in order for the EU to compete in the new globalenvironment, which is determined by intensity of knowledge and innovation in the total output,radical changes in the national and community policies were necessary.The Lisbon Strategy set a very ambitious target for the EU: to become the most dynamic andcompetitive knowledge-based economy at the global scale by 2010. A multitude of prioritiesand action plans in the macro-economic and micro-economic spheres were set up to achievethis ambition. However, within a few years it became clear that the Un ion’s ability to meet this  ambition was overstated, given the scale of task, the complexity of governance arrangementsand the relatively short timeframe. A major review of the Lisbon Strategy at the end of 2004 byHigh Level Group chaired by Wim Kok concluded that Europe is still not ready to compete withother world powers and actually risks falling further behind due to increased competition fromthe growing economic powers of China and India (Kok 2004). The European economyperformed relatively weakly in 2000-2004, and investment in R&D was insufficient due to thehigher strain on public finances. Moreover, the EU enlargement in 2004 caused a drop inoutput per head of 12.5 per cent (Kok 2004). The inconsistency of national regulatory regimes,and the formalistic approach of certain member states towards meeting their Lisbonobligations, meant that the EU as a whole was actually losing the momentum required toachieve radical changes.Among the key challenges identified in Kok review were the protracted internal negotiationand complicated co-ordination procedures which must be followed to formulate, approve andimplement policies that take on board the positions of all member states. Such co-ordinationbecame even more challenging after the EU enlargements of 2004 and 2007. However, manycommentators agree that although the accession of 12 new members with significantstructural problems and lower levels of prosperity has caused some problems, it has onbalance had a positive impact on the Single Market. The market became more competitivedue to the expansion of consumer markets, the inclusion of a cheap but qualified workforce,and the increased division of labour. The Union is in a quite unique situation where it canenjoy the gains of both low-cost and high-cost economies, with steadily growing trade, capitaland people flows among 27 member states. Lower transaction costs and universal standardsacross the Union make trade, especially in intermediate goods, much simpler. Central andEastern European countries are still more competitive markets for offshored manufacturing, asdistance remains an important factor determining the cost of production, especially due to therecent dramatic rise in the price of fuels (see Castro Coelho et al 2008).After this rather critical review in 2004, the Commission re-launched the Lisbon Agenda ofGrowth and Jobs in 2005 (EC 2005), concentrating on fewer priorities and highlighting theneed to streamline governance structures and regulatory procedures. It was decided toconcentrate on two key tasks:
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