Austrian Paper Recommends Differentiated Approach for Innovation Policy

Innovation policy approaches need to address specific challenges, problems and opportunities found in different types of regions, according to a new research paper from the Vienna University of Economics and Business Administration. The paper, One Size Fits All? Towards a Differentiated Policy Approach With Respect to Regional Innovation Systems, was presented at the recent German Institute of Economic Research conference. In it, the authors stress there is no ideal model for innovation policy in tech-based economic development, instead making a case for more differentiated policies.

Various types of regions are analyzed, based on their preconditions for innovation, networking, and innovation barriers. The authors highlight the regional innovation system (RIS) approach, which is said to provide a useful framework for a differentiated approach.

Regions characterized by low levels of clustering, a lack of interaction and networks, and old dominant industries do not fit previous models upon which innovation polices were shaped, the authors argue. For example, best practice models of interactive innovation derived from high-tech, well-performing regions that focus on research and development (R&D) and technology diffusion cannot be fairly applied across all regions as they have in the past.

Three types of problem areas and their RIS deficiencies are outlined in the paper, including the main factors behind the regions' weak innovation and learning capabilities and how the problems could be handled. The following are discussed:

• Peripheral Regions, characterized by a low level of R&D and innovation due to dominance of small and medium enterprises in traditional industries, weakly developed firm clusters, few knowledge providers and a weak endowment with innovation support institutions;
• Old Industrial Regions, typically having many firms, dominant clusters and relevant organizations, but are too strongly oriented to old industries and technological trajectories leading to "lock in"; and,
• Fragmented Metropolitan Regions, which lack a specialized industrial pattern including knowledge bases and innovation networks despite having a concentration of companies and knowledge organizations.

More recently, a new policy model based on such elements as high-tech, knowledge-based creative industries, building up research excellence, attraction of global companies and stimulation of spin-offs has emerged. Approaches based upon the new model stem from the latest concepts of the new growth theory, the cluster approach, the knowledge economy, and literature on knowledge spillovers. According to the authors, the problem is they are often used in an undifferentiated manner for different types of regions, not considering strengths and weaknesses of regions in terms of their industries, knowledge institutions and innovation potential.

Recommendations provided for addressing the three types of regions should be used as a guideline, the authors conclude. However, regions must further develop the strategies to fit their own circumstances. In order to formulate and implement actions successfully, the authors also call upon policymakers to possess knowledge of RIS specificities and the factors undermining the system's dynamics.

One Size Fits All? is available through the conference website at: http://www.diw.de/deutsch/produkte/veranstaltungen/Regionalization_Innovation-Policy_Conf2004/program.html