Regional Innovation: Government policies and the role of Higher Education Institutions

Front matter

REGIONAL INNOVATION

Government policies and the role of Higher Education Institutions gt

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Table Of Contents

E Eo PIQUIES E E EE E E A cede enuav ede Ss E A E E E E E E T i Enae pele a E e E E E A i List of abbrevigtionS siicccccctececsteteciestieecvesceteczentiescventeteczentieecvescaseczsntiessventeseczentienczes i Foreword snrrssena a a A shaudlses Uuevasceateveesducveneys v INtrOUUGTION: copanan ei i ees 1 Te MMO CUA CIO Ip ses eee oes ea ees eee A ee eeeeesniaees 3

2. Regional innovation: Trends, underlying factors and systemic performances 25. on see ssc. ccc edenhieetaenhsce chek dinss ANAE shed EENE E NEEE ERARE E ERNE adiic esas 3 2.1 What iS INMOVOTION? oe eeeece ccc ccceeeceeeeeeeeeeseeeeeaeeeeeseceecaeeeeeseesaeseseeesseeaeeneeeees 3 2.3 Innovation and growth .o.eccccccccsccsccssecssecssecsseceecssecseceecssecseeseesseenseeseeses 5 2.4 The regional dimension: Underlying factors and constructed aaae ES E T A ised! 10 2.4.1 Theoretical ASPOCtS oo. .eeecccceceeceeseeseeseceeeeeceteeeseceseseeseeeteeteeeeeeeees 10 2A 2 FAGON CAMOIY SIS. gernes orean e shane E E 11 2.5 The importance of regional ACtOrS oo... eee eeeeeeeeeeeeeteeeeeeeeeeeeteeteeteeneees 13 2.6 Regional divergence .o..eeecccccecceceesecseeeeeeseeeeseseeeeeecseseesesesessesesersetesiesteeeeees 15 2:7 SOLE POTGMELERS: sisese eiedeeaw cree ve E aie E EEE 16 2.7.1 The absorptive capacities of firms and notably small and 2.72 ChEGUVE CAPIRGL sessen e easton n 17 2:7:3 SOCIAL capital. spese ih Siete aE AAE 17 3. Regional policies themes and targets ....cccccccccsccseecseecseecseeseeseeseeseesseens 17 ZAI Man ISSUES aaa Aa EA EAE R AAE AAA AREA NAERAN 19 3.2.1 Main problems and ISSUES oe. eeeeceeccceceeeeceeeeeeeeeseeeeeaeeeeeeeeeeeeneeees 20 3.3 Collaboration measures: Cluster policies oo... cceeeeeeeeeeeeeeeteeteeteeeeeeees 21 3.3.1 Other common issues confronting CIUStELS oo. eeeeeeeeeeeteeeeee 24 3.4 Cooperation between firm and public research oo... eects 25 3.5 Further education oriented measures: Technical colleges «0... 26 4. Governance for industrial and innovation development „s.s.s 27

Chapter 2: Supporting innovators, innovation policy instruments

Ls Introductio M nrnna titan niece diel deletes 31 2. Promoting the provision of real Services oo... eeceeeeeeeeeeeeeeeeeteeteeeeeeeeeeeteeteeteees 32 3: What are reali Services? steria a ahuss ea ei pelts Biase ate NIN Rates 33 A. PTIGIIGISSUCS 5. cece E E aias ete ude shed O SE ARAA 35 5. Multipurpose iiras truiCture tusia a a e Eea i 36 ea Sa E E E E E EEE E E E E EE N 38 6.2 Technology ExteNSiON SELVICES wo..ccccccccccccsccseecseecseeceesseesseesseesseesseeseenseens 40 6:3-Stañdärds and metrology ensinan e a a 41 64 Productivity Centre S roren iiie enira i EE NEEE En ANEN 42 6.5 Information and COMMUNICATION SEFVİCES ...ss.ssssssisisisesirsrirerirrerrrrerrn 42 7. Focusing on entrepreneurship and new innovating firMS a...se 43 7.1 Diversified policy initiatives to support small innovative firms s.s... 45 T2ATVCU DORIA Gi rN S a A E N A N 47 8: Vemtire COPIAU sansun hunne eet ea oe aa teen eee 53 8.2 Examples of policy Measures oo... eeeeceeceeceeeeeeeeeeeseeeeeeeeeeeeseseeteeeeeteeteeeeees 54 8:3 BUSINGSS:ONGEIS» speiri i E EEEE EE tien 57 9.1 Improving cluster access to know-how and international markets .... 59 9.2 Creating favourable conditions for the co-location of firms „s... 61 9.3 Supporting INNOVATION IN NETWOFKS oo. eeeeceeseeeeeteeeeeeeeeeeeeeeeeeeeeteeteeneeeeees 63 TOs COMEIUSIONS se: Geetha tees iSong ert defo, Chel Mesias Hee adn ed ete 66 BIDIIGO TORRY stscrietviee eenart tae ocirel Madd en eid aul Gua a de 68 Te IMTrOGUCTION: aiea cieesa taut teedeteta adie decebenediall an VAN a a 69 2. The contribution of universities and other higher education institutions TO regional ECONOMIES oo... eeceeeeeeceeceeeeeeeseeeeeeeeseeseeeeeeeeseeteeneeeeees 70 ZA Drect Inpact sat dic. dace ee seas eae asas ebm acd aes HEEL SE 70 2.2 Indirect impacts and knowledge effects „s.s.s 71

2.2.2 The provision of technology and research output s.s.s 73

2.2.3 The promotion of spin-offs and the diffusion of an entrepreneurship culture oo... ee cccceeeeteeceeseteeeesecseteseeeesesteeneteteneees 74

2.2.4 Other contributions to socio-cultural and policy development .... 75 . Regional involvement of higher education institutions „s.s.s 76 3.1 The characteristics of national education SYStEMS s.s... 76

3.2 Barriers to the cooperation between higher education institutions and firms in the field of research and INNOVATION n.se 77

. Government policies for better integrating higher education institutions in-regional:-development:ss: asec: sete as o aE a AN AE eek: 80 4.1 Linking with education policies ooo. eccccceeceseeceeeeeeeeeeeeeeteeneeeeeteeteeneeeeees 81

. Higher education institutions and cluster-based initiatives occ 85 6.2 Poles of competitiveness in France oo.eeeceecceseeseeseeeeeeeeeseeteeeeeeeeeseeteeneensees 87 6.3 The Japanese cluster programmes oo... eeeecceseeceeceeeeeeeeeteeteeeeeeeeeteeteeteenees 89

7. Coordination and Synergies oo... eeeeceesececeeeeeececeeseteeeseceeeseseeesesesesesestestesteensees 90 8. Areas for policy improvement and good practices n.s... g3 Ors GOOG" SIKE S AE A T A E T 95

8.2.2 Promoting local economic development s.s.s 96

8.2.3 Contribution to regional systems of governance n.s... 96

924 GOOG: Pract eS arr caer man AAEE remain eee ae 96

8.3 Transfer of technology and commercialisation of academic research .... 97 6:3) GOOG: Practicest:. tc a tee ate eae 98

S4 Bridging the gap secie d nd ia dove E EE E 99 8.4.1. GOOG" practicas psio reroror aia a E E e 100

8.5 Contribution of teaching and learning to the labour market and the regional ECONOMY, reenen RA a A 101

BOsESGOOGPFOGUCES: in eA tk Gis als la ele se E a Be at 102

8:6 Policy coordinati eenen heehee eave heehee 8.0.1- GOOG; Pra Chee S e isch i e A E etiam dete AE T

8.7 Evaluation of regional engagement in higher CCUCOTION IMNStIUTIONS se eei aanta ie MONA aaan

8:7 GOOG: practice S areno aa a A potent BIDIGG ROB NY oerien teaa e E E E E Re E AA 1. The case of Brazil: region and innovation policies „s.s.s.

TT INtroductioN arn iN E E anes nas EES T2- Suppor’ to small INAUSUHIES: vesceesceds scevseessveateet veeelseesteedvieetieeeens eeteebees 1.4 Decentralisation of INNOVATION POLICY ee eeeeeececeeeeteeeeeteeteeeeeeeteeeeeees 1.6 Higher education and the regional ECONOMIES... eeeeeeeeeeeeeeees 1 F-GOMEIUSIONS nnana e e E E sds sdedeue ere ds esa taddenere es EA

2. The case of Egypt: Barriers to innovation — trends, issues and POIICY TESBONSES ereere a a a E AEE E AE EAE TaT

DT MUO AU CUO veneta AEEA R E E hehe ee 2.2 Context and framework CONITIONS oo... eect eeeeeeeeeeeeeeeeeeeeeeeteeeees 2.3 Potential: and Challenges: ices at ooh ati nnd ott eetesien: 2:3 Hoher educato .2.fa2 cae aka ae at a od DESPISE Vetere aves toe Mie eee ee oss heed nd ree ea OB a aad» heen Me ZA Recent trends sac ceceties Packed etelied aa e TNs ot a aE 2.5 Removing obstacles to INNOVATION oe. eeeeeeeeeeeeeeteeteeteeeeeeeeeeteeeeteetees 2:5.1 Transter- of. techmologles:.3.esiesicniwieleeeletethi a gees 2.5.2 Entrepreneurship and spin-offs oo... ccececceceseeseeseeeeeeeeeseeeeteeeeeeees 2.5.3 Collaborative projects and academia industry cooperation .... 2.6 INNOVATION POLICY FESPONSES vo..ceecccccsccsccssccssccsscesseceecssecseecseeessessseesseeses 2.6.2 Shortage in skills in research and innovation management ....

2.6.3 Weaknesses in networking and cooperation with external PArtE S roetine a A E aaa a en de

2.6.4 Shortage in skills to manage intellectual property s.s.s

3. The case Of South Koread oo... ieeeeeccccccececssssscecceeeceecsnnseeeeceeecessnsaseceeeseeesnnaaeecs 130

3.1 Policy successes and persistent IMbAlONCES oe ee eeeeeeteteeeeeee 131 3.2.EMpPhaSiS: ON CUSTE yee ei aE E Meh eon donien ond elees 133 3.3 Promoting regional INNOVATION SYSTEMS ....cccceccccsecteecteesteesteeseesseeeaees 135 3.4-FOCUSSING-OM CITIES: sarmi a ae s Ee N aE A ENEE S 136 BiIBhogtraphy aerea annin a a asin EE E N 140 COMCIUSION o ae i aE EA E E a SA 142 LASUPTA-SCONOMICTECGION erata ae aiieete e T E 145 T.-CentralSúpra REGION: sseni a ee a a a 146 T2 SouthWest Supra REGION minn a unaided 146 1.3 South EGSt: Supra REGIO Minien a a a e atts 146 3 Daly LIVING: SONET Enne ta aie teeta O E a a Miadiiatides 147

LIST OF FIGURES igure 2.1 igure 2.2 igure 2.3 igure 4.1

Shanghai R&D service platform n..s.s.ssssssssiseisiersrirriirinrirrerirrerirrsrnn 37 Financing Cycle sexs nsskson innana E ETE 54 Map OF Brazil i052 cassis Ge RT E 115 Map of EGY BE sisasiceccssstcesczasscnscastcdercdascde aN N REA EAEN NE NON ANSA ENANSA TE 129 Mapot- South KOSG rimase nnn iee a a n 134

LIST OF TABLES

Table 1.1 Table 4.1

Table 4.2 Table 4.3

Ranking of main universities in Egypt (Scimago international

Classification 2012) oocceececcccccccccccccccccccccceccecececceecececeeecececececeeececeneeeess 118 Ratio of innovation-active enterprises per region sssr 120 INNOVATIVE CITIES IN KOLO oo. eeeeeceecceeeeeeteeeeeeeeeeeeeeeseeeeeeeeeteeneenieenetens 137

LIST OF ABBREVIATIONS

ABDI

Brazilian Agency for Industrial Development

ANPROTEC Association for the Promotion of Innovative Organisations

ASRT AUC BIC BNDES BRICS CAPES

Academy of Scientific Research and Technology American University in Cairo

Business Innovation Centres

National Bank for Social and Economic Development Brazil, Russia, India, China and South Africa

Brazilian Federal Agency for the Support and Evaluation of Graduate Education

Federal Centre for Technological Education Commercial International Investment Company Centre for Metallurgical R&D

National Council for Industrial Development National Council for Science and Technology Comprehensive National Territorial Plan

National Council of State Research Agencies

CONSECT| Council of Science, Technology and Innovation Secretaries of State CRITTS Regional Technology Transfer Centres

DI Daedok Innopolis

DLS Daily Living Sphere

EIA Egyptian Incubator Association

EIIF EU Egypt Innovation Fund

EIS European Innovation Scoreboard

EMBRAPA Brazilian Agricultural Research Corporation

ENCT| National Strategy for Science Technology and Innovation (2012-2015) EPO European Patent Office

ERA European Research Area

ERDC Economic Regional Development Committee ERDP Economic Regional Development Plan

EU European Union

FAPEMIG Foundation for R&D Support of Minas Gerais FAPERJ Foundation for R&D Support of Rio de Janeiro FAPEST Foundation for R&D Support of Sao Paulo

FDI Foreign Direct Investiment

FEZ Free Economic Zone

FINEP Research and Projects Financing Agency FNDCT National Fund for Science and Technology Development GAFI General Authority for Investment

GCI Global Competitive Index

GDP Gross Domestic Product

GRI Government Research Institute

GUC German University in Cairo

HE Higher Education

HEI Higher Education Institution

HEIF Higher Education Innovation Fund

HKPC Hong Kong Productivity Council

ICT Information and Communication Technology ILP Industrial Liaison Programme

IMC Industrial Modernisation Centre

INMETRO National Institute of Metrology, Quality and Technology INPI National Institute of Intellectual Property IPA Investment Promotion Agency

List of abbreviations

IPCC Intergovernmental Panel on Climate Change IPO Initial Public Offering IPR Intellectual Property Rights IT Information Technology JIT Just-In-Time JPC-SED Japan Productivity Centre for Socio-Economic Development JTF Jordan Technological Fund AERI orea Atomic Energy Research Institute KAIST orea Advanced Institute of Science and technology ARI orea Aerospace Research Institute KICOX orea Industrial Complex Corporation IPO orea Intellectual Property Office KIST orea Institute of Science and Technology ISTEP orea Institute of Science and Technology Evaluation and Planning KOMPSAT orea Multipurpose Satellite RIBB orea Research Institute of Bioscience and Biotechnology K-STAR orea Superconducting Tokamak Advanced Research TP nowledge Transfer Partnership LIDC Localised Industry Development Centre MCTI Ministry of Science Technology and Innovation MEC Ministry of Education MENA Middle East and North Africa MEP Manufacturing Extension Partnership MEST Ministry of Education, Science and Technology METF Middle East Technology Fund MHSER Ministry of Higher Education and Scientific Research MIDIC Ministry of Industrial Development and Trade MIN Ministry of National Integration MIT Massachussets Institute of Technology MKE Ministry of Knowledge Economy MLTM Ministry of Land, Transport and Maritime Affairs MUCSAT The City of Scientific Research and Technology Applications NFRI Nuclear Fusion Research Institute NRC National Research Centre NTBF New Technology Based Firms

NURI New Universities for Regional Innovation

OECD Organisation for Economic Cooperation and Development PACTI Action Plan for Science Technology and Innovation (2007-2010) PDP National Production Development Policy

PE Private Equity

PESEX Programme to Support Exports

PINTEC Survey of technological innovation

PNDR National Policy for Regional development

POSTECH Pohang University of Science and Technology

PRO Public research Organisation

PROMESO Promotion of the Sustainability of Subregional Areas R&D Research and Development

RDI Research, Development and Innovation

RIC Regional Innovation Centre

RIS Regional Innovation Systems

ROK Regions of Knowledge

RSII Regional Summary Innovation Index

SAS Science Age Society

SEBRAE Support Services for Micro and Small Enterprises SENAI National Service for Industrial training

SEPI Skill Enhancement Partnership Initiative

SER Supra Economic Region

SFD Social Fund for Development

SME Small and Medium size Enterprises

SOFTEX Association for the Promotion of Brazilian Software Excellence SSI Small Scale Industry

STDF Science and Technology Development Fund

TT Technology Transfer

TTIC Technology Transfer and Innovation Centre

TTO Transfer of Technology Office

UNIDO United Nations Industrial Development Organisation VC Venture Capital

WEF World Economic Forum

WIPO World Intellectual Property Organisation

Foreword

It will become evident in this book that sustainable socioeconomic development, essentially the triple bottom line of social, economic and environmental development, requires at least four pillars in order for it to attain its objectives.

The networks that role players build amongst themselves and the institutions they operate within comprise the first pillar. The second pillar consists of the innovations these networks bring to bear. The third pillar refers to the choice of location and concentration of such innovations in the region. The fourth pillar entails the national and regional policies that will help to interweave all the rest of the pillars together into an ecosystem. This book focuses mostly on the last pillar.

In March 2010 the Council (the apex governing body) of the Central University of Technology, Free State (CUT) in South Africa, adopted a vision that demands of the university to be engaged in order to produce social and technological innovations towards socioeconomic development — primarily in the central region of South Africa. The latter consists mainly of the Free State province, parts of the Northern Cape, and other neighbouring parts of the Eastern Cape, North West, Gauteng and Lesotho. These parts constitute the educational feeder area of CUT.

As part of making sense of this vision, CUT participated in the third round of reviews of the contributions of Higher Education (HE) to city and regional development — especially through innovation — held by the Organisation for Economic Cooperation and Development (OECD) in October 2010. This had been commissioned by the Free State provincial government and its knowledge partners, which includes the University of the Free State (UFS) and CUT.

| should hasten to reveal that in recent years, when South Africa appeared wanting to be an African trailblazer in education, research and innovation, the OECD has conducted a number of reviews: a review of national policies for education in South Africa (2008); a review of South Africa's innovation policy (2010); a review of South Africa's economy (2010); and a review of HE in regional and city development in the Free State (2012).

Sadly, the gross domestic expenditure on research and development (GERD) in South Africa has not improved. It currently hovers at 0.76%, lowest of all the BRICS nations (Brazil, Russia, India, China and South Africa). India, scoring second lowest, is at 0.87%. The latter, which has peaked at 0.95%, is at a level South Africa used to be a few years ago. Clearly knowledge, research and innovation centres like universities have their work cut out for them.

Since the days of these reviews — especially the 2010 review of the Free State — there have been several engagements between CUT and international experts in the fields of innovation and entrepreneurship. These engagements have, amongst other things, led to the establishment of a Regional Innovation Forum

Free State (RIFFS), which brings together all the role players in the region (including the UFS and CUT).

In the context of the work of the OECD in South Africa, several workshops, further studies and study tours have been undertaken by CUT to find the best ways to implement our vision and to make our contribution regionally and beyond. The workshop that took place in January 2012, facilitated mainly by Patrick Dubarle, a retired member of the OECD and hosted by the Faculty of Engineering and Information Technology of CUT, was the first post-review engagement of CUT on how to deploy innovation in the region.

World regions are seen as cauldrons of societal development that have gained currency over the last few decades. Simply put: nations do not just spawn development equitably and evenly throughout their landmasses. Regions provide the backbone and spawn broader national development within themselves through drive, initiative, innovation, networks, and the comparative and competitive advantages that emanate from all these factors. Ultimately, a successful country emerges.

There are examples of this everywhere in the world: the motor industry in Germany focused on the regions of Baden-Wurttemberg in the southwest and Bavaria in the southeast; the successful region of Daegu in South Korea that specialises in textile manufacturing; the region of Catalonia in Spain that is the backbone of the whole Spanish economy; Silicon Valley in the Unites States of America; and many other regions of the world that the programme of regional reviews of the OECD has educated us on.

| am delighted that through this book CUT is demonstrating that our vision is not just limited to practical implementation, but extends to researching, innovating and educating South Africa and the world about how universities could engage more deeply and with greater meaningfulness in regional development.

The focus of this book on innovation policy and instruments is very important in a unitary state like South Africa. Whilst the recommendations of the OECD — especially on innovation — have clearly shown that South Africa needs to coordinate its activities much better at national and regional levels, policy may not have moved quickly enough to allow the ecosystem to work seamlessly. The Department of Science and Technology of South Africa has been working tirelessly to cascade the national system of innovation to the country’s regions. However, these areas do not have structures in place to manage regional development. Whilst provinces have departments of social and economic development and others, the ones that have to drive and support innovation are non-existent.

As the book clearly suggests, it is not just coordination and management structures that we need for regional innovation to thrive, we also need coordination at the level of mechanisms, platforms and instruments for vi

Foreword innovation. Thus, beyond just government leadership in policy and structure, there is a lot that the quad-helix of government, universities, business/ industry and broader organs of civil society should do to coordinate innovation instruments amongst themselves. We need seamless planning, the pooling together of resources and execution by all partners.

| have fervent hope that this book will inspire us all towards regional innovation and ultimately regional development. | am proud that our meagre intellectual and practical efforts at CUT have helped us to do this.

On behalf of CUT, | will forever be indebted to the authors of this book and to our Faculty of Engineering and Information Technology — especially the Dean, Prof. Alfred Ngowi. Thanks are also extended to our Deputy Vice-Chancellor: Academic and Research, Prof. Henk de Jager, who provided the authors resources, time and space to write; to our Dean for Research and Innovation, Prof. Laetus Lategan, who provided research related support to complete this project; and, most importantly, to the whole university for the support it provided to the faculty to engage in this important work.

Thandwa Mthembu

Vice-Chancellor and Principal

Central University of Technology, Free State (CUT) 14 January 2015 vii