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Innovation and Regional Development,Do European Structural Funds make aDifference?Bernard Musyck a & Alasdair Reid ba School of Economic Sciences and Administration, FrederickUniversity , Nicosia, Cyprusb Technopolis Group , Avenue de Tervuren 12 (1st floor), B-1040,Brussels, BelgiumPublished online: 02 Jul 2007.

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EUROPEAN BRIEFING

Innovation and Regional Development,Do European Structural Funds make aDifference?

BERNARD MUSYCK� & ALASDAIR REID��

�School of Economic Sciences and Administration, Frederick University, Nicosia, Cyprus,��Technopolis Group, Avenue de Tervuren 12 (1st floor), B-1040 Brussels, Belgium

ABSTRACT The article draws on a thematic evaluation of Research Technological Developmentand Innovation (RTDI) related actions supported by the Structural Funds to assist decliningindustrial areas or Objective 2 regions, during the period between 1989 and 1999. Over the 10year period, three main approaches were identified in Objective 2 regions, the last two becomingpredominant during the latter part of the period: technology push with funding of large projectssuch as science parks and research facilities; technology transfer with measures to disseminatetechnology; and demand pull with clearly identified and self contained RTDI priorities. Whiledrawing lessons from the last decade, the paper also integrates some preliminary observations onstructural funds investments for innovation during the current 2000–2006 programming periodand concludes with a review of possible scenarios for the further development of RTDI in laggingregions in the framework of the Lisbon Strategy.

Introduction and Theoretical Framework

The draft European Commission (EC) guidelines for regional policy (Structural Funds) for

2007–2013 are calling for a greater investment in Research Technological Development

and Innovation (RTDI), this paper attempts to shed some light on the pertinence and

impact of such policy measures. The growing importance attributed to R&D and inno-

vation as drivers of growth, first in theoretical literature and then through empirical analy-

sis, twinned with the spread of regionalization in European countries has led to an

increasing emphasis on regional innovation policies (Fischer, 2001; Borras, 2004;

Asheim et al., 2003; Fritsch & Stephan, 2005; Cooke, 2005). The relevance of regional

Correspondence Address: Bernard Musyck, School of Economic Sciences and Administration, Frederick

University, 7, Y. Frederickou Street, CY-1036 Nicosia, Cyprus. Email: bus.mb@fit.ac.cy; musyck@

primehome.com

ISSN 0965-4313 print/ISSN 1469-5944 online/07/070961–23 # 2007 Taylor & FrancisDOI: 10.1080/09654310701356696

European Planning Studies Vol. 15, No. 7, August 2007

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technology capability differences in explaining regional disparities in Europe has been

well documented (Fagerberg & Verspagen, 1996; Vence & Metcalfe, 1996; Sosvilla-

Rivero et al., 2006); that innovation is not restricted solely to what takes place in the

university laboratory, technology transfer centre or even industrial R&D unit is no

longer a surprising assertion.1 At the same time, there remains insufficient evidence

about the pertinence of the policy mix in favour of innovation adopted across the

diverse, in terms of economic structures and innovation capabilities, European Union

(EU) regions and even less about the impact of such policies.

During most of the 1990s, the process of design of the major EU policy instruments

geared towards fostering RTDI and regional development in Europe, respectively the

Research Technological Development (RTD) Framework Programme2 and the Structural

Funds3 was such that synergies were difficult to reach between objectives and actions

financed under both lines. With increased emphasis on innovation at European level

during the second half of the 1990s, the member states came under pressure to allocate a

greater proportion of Structural Funds to RTDI actions. The aim of the Structural Funds

is to first and foremost close the gap in terms of cohesion by enabling less-developed

regions (regions with less than 75% of the EU average gross domestic product (GDP) per

capita, or Objective 1 regions) and regions facing structural decline (rural and industrial

zones supported under Objective 2) to build capabilities. This is in terms of physical

assets (laboratories and equipment for technology development), support systems for enter-

prises (innovation centres, clusters, etc.) and human capital (technology related training,

exchange of research staff between universities and enterprises, etc.).

The Framework Programmes emphasize excellence as the essential criteria for funding

and takes physical RTDI infrastructure capacities as given, the various programmes seek

to maximize the research potential of the EU by encouraging top researchers and laboratories

to collaborate. The expectation is that scientific personnel from least favoured regions can

collaborate in leading-edge projects with researchers from the more developed regions of

the Union and thereby improve their scientific knowledge and technical know-how.

In theoryat least, theFrameworkProgrammeand theStructuralFundscanbeseenasmutually

complementary in promoting both an integrated European Research Area (ERA) and greater

economic and social cohesion, the first provides an opportunity for creating networks

between researchers in advanced and less developed regions favouring learning and diffusion

of knowledge; while the latter helps to upgrade RTDI infrastructure enabling researchers and

enterprises in less-favoured regions to collaborate within the ERA (Sharp, 1998). In reality,

Structural Funds, which are used in conjunction with other national and regional funds, have

a much more important role in funding RTDI in Objective 1 (Kaufmann & Wagner, 2005)

and Objective 2 regions than the RTD Framework Programme.

Initially, a major argument justifying the inclusion of RTDI actions in Structural Funds

operations was that of the technology gap between advanced and less-advanced regions of

the EU (Clarysse & Muldur, 2001; Vence et al., 2000; Pavitt, 1998; Oughton et al., 2002).

In this perspective, actions financed during the 1989–1993 programming period set priori-

ties to increasing the financial, infrastructure and human resources to RTDI, through build-

ing and equipping research laboratories, raising the number of researchers in regions

lagging behind in terms of these resources, and offering sectoral assistance for research

in sectors such as telematics, for instance.

Up to the mid-1990s, a linear (or supply driven) view of the innovation process pre-

vailed, at least at the operational level, according to which reinforcing the scientific and

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technological resources of a region would automatically generate economic growth

(Tait & Williams, 1999; Deniozos, 1997). Most efforts were devoted to the upgrading

and creation of RTD capacities, and to the fostering of technology transfer centres and

mechanisms in order to facilitate the process of industrial absorption of technologies

originating from research laboratories.

Since the 1980s, theoretical thinking has evolved from a linear understanding of the

innovation process, to a more interactive vision, where innovation arises from complex

feed-back loops between the market place and the firm, between various units of firms,

between the firm and knowledge producers, etc. Policies have evolved too, although at

a slower pace: in the linear view, the intervention logic for policy intervention was the

market failure argument, where there is a need to support investment in knowledge,

which would otherwise be under-funded by the private sector (i.e. left to themselves,

firms will under-invest in innovative activities because of their inability to appropriate

all the benefits arising from these activities). Once it is clear that innovation is not necess-

arily a product of investment in the knowledge producing sector, then the policy emphasis

shifts towards the support of networks or the correction of systemic failures (Garofoli &

Musyck, 2001, 2003).

More recently, the regional innovation systems wave of thinking (Braczyk et al., 1997;

Asheim & Isaksen, 2002; Asheim et al., 2003; Cooke et al., 2004), has deepened the

understanding that the performance of a firm is a function of its environment, and of

the firm’s capacity to organize relationships with it. This implies that sound policy

approaches should aim at developing learning capacities both of firms and of other

agents in the system, namely support organizations but also institutions. The creation of

an atmosphere of trust between regional agents has been put forward as an important cri-

terion for enhancing regional competitiveness as a whole, and thus providing better con-

ditions for enhancing innovation within the firm (Asheim & Isaksen, 2002; Moulaert &

Sekia, 2003). Theoretical developments were not limited to the regional innovation

system. Innovation policies have also drawn on other theoretical models notably industrial

clustering and learning regions. The first concept derives from scholarly work undertaken

to explain the rise of industrial districts, high-tech regions or regional production clusters

and other success stories, in a sense bringing together “economic geography with the evol-

utionary school of technological change” (see critical review of geographical clustering by

Hassink and Shin (2005, p. 571)). The concept of learning region introduced by Morgan

(1997) emphasizes the idea that actors in regional development are strongly connected to

each other and are also open to learning processes between regions and from within the

region. Thus policy-makers in learning regions may escape path-dependency and learn

from past mistakes at an institutional level (Hassink, 2001, 2005). This is not to discount

the role of history, as emphasized by Iammarino (2005, p. 513) “Only advanced historical

knowledge can make visible the extent of the integration between and within networks as

modes of governances in the region . . . history in terms of inheritance of regional struc-

tures and governance often acts as a filter for assessing new opportunities for social and

techno-economic growth” (see Musyck (2003) for an apt illustration of this process).

In the light of these theoretical developments, concrete strategic exercises at regional

level, carried out notably under the Regional Innovation and Technology Transfer Strategies

(RITTS) and the Regional Technology Plan/Regional Innovation Strategies (RTP/RIS)programmes of the EC, have gathered a lot of evidence about the needs of regional firms

in terms of innovation support, the way innovation policies are built and delivered and

Do European Structural Funds make a Difference? 963

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their weaknesses and strengths (Morgan & Nauwelaers, 1999). However, in practise, the

policy response has often remained based on a “supply-led” and “autarchic” approach—

with most efforts going into organizing the provision of services, which valorize the techno-

logical potential of the region (essentially the public research sector or the known research

interests of larger firms). In other words, a linear vision of innovation is still very much at the

basis of regional innovation policies, focusing on technology transfer mechanism and on a

closed view of the firm’s environment, unduly limited to the regional boundaries. For

evidence that the theoretical development of the innovation system approach on the one

hand and policy evolution on the other hand have influenced one another, but that the

linear approach continues to be influential in policy, see Mytelka and Smith (2002).

The objective of the present paper is to identify to what extent these broad trends in the

policy framework and guiding orientations have been met, on the operational level in

Objective 2 regions, by a change of policy in the field of regional development and the pro-

motion of science, technology and innovation. Several evaluations of Objective 2 funding

have been carried out during the last decade (see, for instance, Bachtler & Taylor, 1996,

2001; Bachtler & Michie, 1997; Eskelinen et al., 1997; Huggins, 1998; Maluquer-

i-Amoros, 1996; Basle, 2006), and the various Framework Programmes have also been eval-

uated on a systematic basis (Luukkonen, 1998) and special issues of academic journals have

covered the subject (Luukkonen & Lemola, 1998; Vonortas & Hinze, 2005; Bachtler &

Wren, 2006); however, it was the first time that a specific evaluation concerned the study

of RTDI measures in objective 2 regions.4 This first part of the paper starts with a brief

description of the methodology followed by the evaluation team, before documenting the

importance of RTDI funding and analysing its changing nature over the three programming

periods. The remainder proposes a discussion on the relevance of RTDI actions in the

context of cohesion regions and regions facing structural weaknesses.

An EU Wide Thematic Evaluation of RTDI Actions in Objective 2 Regions

The Changing Face of Objective 2 Regions

In terms of the nature of Objective 2 regions during the 1990s, if the official terminology of

declining industrial areas conjured up images of derelict factories, disused steel and

mining sites, etc., the reality at the end of the decade was somewhat more varied with

the zones concerned falling into three broad categories:

. areas of industrial tradition which remained dependent on one or two key industrial

sectors (or even companies) but which have often managed to restructure their activities

towards higher value added production;

. areas where the traditional sources of industrial employment had by and large disap-

peared to be replaced by new industrial and service sectors, with a rich tissue of

small and medium-sized enterprises (SMEs), whose expertise and know-how is never-

theless strongly linked to the heritage of the industrial decline (e.g. environmental tech-

nologies or services (see Musyck 2003) for example; new materials, logistics, etc.);

. and areas which were attempting to re-generate economic activity by attracting new

inward investors in “high-tech” sectors essentially capitalizing on factors related to

location; the availability of a skilled workforce and the presence of educational or

research facilities.

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As far as RTDI capacities are concerned, it is commonly agreed that Objective 2 regions

benefit from a tradition of academic and industrial research and a relatively important and

high quality research and technological development infrastructure.

The first Objective 2 programming period was started in 1989 as a result of the first reform

of the Structural Funds. The programme was divided in two parts 1989–1990 and 1991–

1992. These early Objective 2 programmes had a heavy infrastructure bias and the European

Regional Development Fund (ERDF) focused mainly on capital projects often to do with

transport, utilities, and reclaiming disused industrial sites. The introduction of a simplified

approach: the Single Programme Document (SPD) in the 1993 reform of the Structural

Funds opened up a new programming style, and allowed a better integration of different

measures (such as RTDI ones) in a coherent and articulated framework.

The thematic evaluation of RTDI in the Structural Funds was commissioned by the EC’s

Directorate General for Regional Policy (DG Regio) evaluation unit in December 1997 and

completed a year later. The evaluation was conducted in two lots, one for the Objective 1

(Tsipouri, 1999) and one for Objective 2 regions (ADE et al., 1999). The second of these

evaluation on which this paper draws dealt with a comparative analysis carried out across

11 member states and 86 Objective 2 zones eligible during the 1994–1999 period. Separate

findings specific to UK regions were published by Dabinett and Gore (2001).

The Growing Importance of RTDI Measures

The strategic importance given to RTDI in the different programming periods can be

partially evaluated through the quantitative identification of this element as a priority in

the SPDs. Table 1 suggests that RTDI was of limited importance until 1993. Even if

RTDI objectives and actions were identified and allocated within sub-programmes of

the Operational Programmes and Community Support Frameworks (CSFs) for the

period 1989–1993, there were no RTDI measures grouped in a specific priority in most

of the programmes (except for Spain and Italy) until 1993.

The programming period 1994–1996 represents a major change in the strategic import-

ance of RTDI. This element appears as a priority in the SPDs of nine countries (all except

Denmark and Sweden) and in five countries RTDI priorities exist in a majority of SPDs.

For the period 1997–1999 the situation is very similar with a slight increase in the number

of RTDI priorities within four of the nine countries mentioned for 1994–1996 (Belgium &

Luxembourg, Finland, France, and the UK). Those countries with no RTDI priorities in

1994–1996 have not changed their approach in the period 1997–1999.

From 1989 until 1993 the majority of RTDI measures focused support on science and

technology activities, with innovation being very limited in most of the countries. The

initiatives undertaken concerned mainly capital projects for the provision of premises,

hard infrastructure and equipment necessary to accommodate R&D activity (science

parks, research and technology centres, university research laboratories, etc.).

From 1994 onwards there was an increasing shift in emphasis in favour of innovation,

which becomes the dominant category of action. During the period 1994–1996, the most

common categories of intervention were: training in new technologies (detected in 58

regions out of 79); grants to stimulate contract research and technology transfer (40

regions out of 79); and in terms of innovation support measures, support to stimulate

actions was detected in 53 SPDs and incentives scheme to use specialized consultants

were present in 40 SPDs out of 79.

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The third programming period (1997–1999) saw a reinforcement of this trend with an

increasing majority of regions including a distinct RTDI priority in their SPDs. Table 2

presents the case of West Midlands (UK) as a good example of this transition to a vertical

approach with a prioritization of RTDI in the SPDs.

In short, during the first programming periods until 1994, RTDI projects and measures

were dispersed in other priorities; thereafter a RTDI priority approach started to dominate

in most of the member states and Objective 2 regions. Three main groups of approaches

can be identified:

Table 2. RTDI priority in West Midlands SPDs 1989–1999

The West Midlands area was one of the largest Objective 2 Programmes in the UK, and was arecipient of Structural Funds over the whole 10-year period of 1989–1999. Between each of theprogramming periods, a growing emphasis was placed on RTDI measures, which becameintegrated, in a single priority.

In the 1989–1993 programme, RTDI measures (essentially a property development type sciencepark and an advanced technology centre) were contained in a mixed “R&D/vocational training”priority. For the 1994–1996 programme, where an SPD format was adopted, the approachevolved to a priority entitled “Developing research and development in the region andencouraging technological innovation” integrating European Social Fund and ERDF measuresand with a focus on support for innovation and making research and high technology from theregion’s important academic research base available to firms.

In the 1997–1999 programme, the priority was titled “Innovation, technology and R&D” with astrong focus on business needs for innovation.

Source: ADE et al 1999.

Table 1. SPDs with RTDI identified as a priority (number of RTDI measures/total number ofmeasures)

Country 1989–1993Percentageof total 1994–1996

Percentageof total 1997–1999

Percentageof total

Austria No Objective2 programmes

2/4 50 2/4 50

Belgium/Luxembourg

1/5 20 1/5 20 3/5 60

Denmark None 0 None 0 None 0Finland No Objective

2 programmes4/7 57 5/5a 100

France na na 10/19 53 11/19 58Germany None 0 3/9 22 3/9 22Italy 4/9 44 5/11 46 4/11 36Netherlands 0/5 0 1/5 20 1/5 20Spain 7/7 100 7/7 100 7/7 100Sweden No Objective

2 programmesNone 0 None 0

UK None 0 10/12 83 11/12 92

aData for south-west Finland and south Carelia were not available for the period 1997–1999.

Note: na, not available.

Source: ADE et al. (1999).

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. Version 1: Technology push—project based approach. The first approach to program-

ming RTDI in the Structural Funds was characterized by relatively low levels of

funding for RTDI projects included in a small number of measures that are broad in

scope and do not entirely focus on RTDI related activities. In this model, essentially

that of the first period using CSFs, RTDI related projects were included in business

support (or even human resource priorities) and were essentially capital orientated

including funding for science parks and academic research facilities in addition to train-

ing in new technologies.

. Version 2: Technology transfer— RTDI measure approach. Considerable increases in

the amount of funding for RTDI actions are a characteristic of the second approach,

though as a general rule, the RTDI components of the programme were designed and

carried through without a great deal of thought to strategic goals. The European

Social Fund (ESF) measures often remain in a separate priority and no distinct RTDI

priority was created. In many areas applying this approach RTDI measures are incorpor-

ated into other priorities, such as for SME business support (e.g. western Scotland).

Roughly half of the Objective 2 regions adopted this approach in the programmes for

1994–1996 and this model continued to be prevalent in the 1997–1999 period. It

was popular in regions with strong regional RTDI support networks and grant

schemes such as Nord-Rhein Westfalen in Germany where the Objective 2 programme

provided extra money for pre-existing measures.

This programming approach suffered from some of the problems of the first model with

often little strategic basis for RTDI interventions nor coherence with other initiatives,

but some regions were able to make up for this through efficient delivery mechanisms.

By the end of the 1994–1996 programming period there was evidence that despite the

lack of structural elegance the main supply and demand side players were getting

together in some regions to consider new approaches.

. Version 3: Demand pull—RTDI priority approach. The RTDI priority structure was

heavily influenced by the Commission’s thinking about Growth Competitiveness and

Employment in the Delors’ White Paper (1993), which had highlighted the importance

of research and technological development and its practical application through inno-

vation. This approach influenced both the Commission services and actors at regional

level. They sought to give higher visibility to RTDI actions by designing a vertical

priority (i.e. all RTDI measures contained in a single priority rather than scattered

across the programme). This approach was implemented in roughly half of the

Objective 2 programmes in the 1994–1996 period.

These programmes had dedicated and highly visible integrated RTDI priorities containing

both ESF and ERDF measures. In some areas the partnership was directly involved in the

priority and became its “driver” through the establishment of a specific working group for

RTDI. These groups were able to take a more strategic view during the implementation

phase and often became involved in designing project selection criteria and other program-

ming tasks. There were important links through overlapping membership with the RIS

partnerships that were launched later under Article 10 of the ERDF.

The content also evolved. Measures for RTDI had a reduced emphasis on physical infra-

structure. Human resource measures were integrated into the same priorities and although

this may have been often window dressing it created a dynamic approach aimed at

connecting together economic development and employment projects. To conclude,

Do European Structural Funds make a Difference? 967

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Table 3 suggests that the 1994–1996 programming period represents an important

watershed with most countries adopting the RTDI priority approach.

The RTDI priority approach was not a universal panacea. Lack of demand for the

measures proposed, over emphasis on technology push linked to a failure to address the

needs of SMEs continued to present difficulties in some areas. Despite these criticisms

it tended to be in the RTDI priority programmes that the best linkage between partnership,

strategy and programme emerged, often with help from RIS partnerships.

Scale of Funding

It was relatively difficult to estimate the actual RTDI content and funding levels in the

various regions. The financial analysis was carried out on the basis of the SPDs for the

1994–1996 period and hence corresponded to the planned allocation of funds rather

than actual expenditure achieved during the programme. A classification of measures

was made according to the extent to which the funding available per measure is

devoted to RTDI: ��� for measures for which 100% of funds are dedicated to RTDI

(“pure” RTDI measures), �� for mixed measures with a majority of financial resources

devoted to RTDI; and finally, � for mixed measures which devote a minority of their

resources to RTDI. Table 4 shows a typical “�” measure and illustrates the problem of clas-

sifying measures according to their RTDI content.

The financial volume allocated to the different Objective 2 zones varied considerably

between Objective 2 programmes with the budget of the Aubange zone (Belgium, 3.15

MECU) being close to 300 times inferior to that of Nord-Pas de Calais (France, 923

MECU) or Piemonte (Italy, 695 MECU). For the 1994–1996 programming period,

Objective 2 regions planned on average to devote around 12% of their financial means

to measures, which were exclusively funding RTDI, related actions (��� measures).

This average figure was broadly in line with other calculations notably the estimation

of DG Research (EC, 1997) which attributed to RTDI related activities a share of

14.25% of Objective 2 funding during the period 1994–1999 (up from 11.5% in 1989–

1993) and 18.45% in 1997–1999.5

Table 3. Categorization of the evolution of RTDI activities

Country 1989–1993 1994–1996 1997–1999

Austria na Mix version 2/version 3 Mix version 2/version 3Belgium/Luxembourg Version 1 Version 2 Mix version 2/version 3Denmark Version 1 Version 2 Version 2Finland na Version 3 Version 3France Version 1 Version 3 Version 3Germany Version 1 Version 2 Version 2Italy Version 1 Mix version 2/version 3 Mix version 2/version 3Netherlands Version 1 Version 2 Version 3Spain Version 1 Version 2 Version 2Sweden na Version 2 Version 2UK Version 1 Version 3 Version 3

Note: the principle criteria used for establishing this table were the existence of priorities, the types of measures

and the number of project sponsors.

Source: ADE et al. (1999).

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It should be underlined, however, that the relative share of funding devoted to RTDI

measures from the overall SPD budget varied considerably from one country to

another. Spain and the three new member states (Austria, Finland and Sweden) all

devoted a share of SPD funds significantly higher than the EU average (from 16% in

the case of Finland to 26% in the case of Sweden) while the Netherlands, which in

many respects had one of the most developed national frameworks for RTDI policy,

gave a considerably lower priority to RTDI funding at regional level.

In certain member states, RTDI related actions were largely funded in composite

measures which lumped together technology transfer/development and innovation

promotion actions with, most notably, rather more generic business support activities

(the case in the Netherlands, France, etc.). The scope for infrastructure and equipment

type investments varied between member state, depending on the strategies adopted and

the existing level of RTDI infrastructure.

Overall, it was extremely difficult to provide a clear-cut quantitative answer to the ques-

tion of the share of RTDI within SPDs, and hence to draw inter-country or interregional

comparisons of the share of RTDI in SPD budgets. This would have required an in-

depth analysis at the level of the projects approved in each of the 86 zones. The figures

presented can however be taken as a close proxy for reality and a weighted average of

the amounts allocated to each of the categories produces a figure of 16–17% of Objective

2 funds devoted to RTDI during the 1994–1996 programming period.6

Nature and Evolution of Funding

During the 1994–1996 period, the vast majority of the RTDI budget was divided among

technology development measures (49%) and innovation support measures (42%). Here

too, important disparities also exist between countries and regions in terms of the import-

ance placed on the three main forms of intervention. While Austria, Denmark and the

Netherlands devoted more than 60% of their RTDI budget to innovation related measures,

Belgium, Italy and Spain planned to spend less than 30% in this field.

A second issue analysed was whether there were changes in the importance of RTDI

related funding between the two programme periods (1994–1996 and 1997–1999). RTDI

funding increased between 1994–1996 and 1997–1999 in most of the regions. However,

this increase in the absolute value of RTDI budget was only relative since the overall SPD

Table 4. Difficulties in identifying RTDI content

Measure 1.1 “Support for business initiatives” in the 1994–1996 SPD for Alsace gathers under asingle measure accounting for 15% of the SPD, actions as different as:

† Aids for capital investment in SMEs (which often have a very limited technology andinnovation content)

† Aids for intangible investment and access to counselling (same remark as earlier)† Support for exports actions (not relevant for analysis)† Support for joint business initiatives (which might have an innovation or technologytransfer content)

† Support for acquisition of technologies by SMEs (relevant to analysis)† Support for innovation projects in firms (relevant to analysis)† Recruitment of technicians in SMEs (probably relevant to analysis)

Source: ADE et al. (1999).

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budgets has increased in a number of regions more than proportionally to RTDI budget. This

decline in the importance of RTDI in the SPDs funding runs contrary to the strategic orien-

tations given by both European, national and regional authorities. One explanation of this

paradox is related to the absorption capacity of the Objective 2 zones. In the 1989–1993

and 1994–1996 periods, important amounts of funding were devoted to infrastructure and

equipment for research, technology or training centres and sciences or technology parks.

However, these traditional interventions already reached a certain degree of saturation and

thus, those infrastructure and equipment RTDI measures are loosing their relative marginal

importance. This is confirmed by Clarysse and Muldur (2001) who note that the lagging

behind regions do not seem to have any absorptive capacity at all, which leads them to ques-

tion whether these regions can benefit from the Framework Programme. Tsipouri (1999)

came to the same conclusion for Objective 1 regions as discussed later in this paper.

To sum up, between the programming period starting in 1994 and the one starting in

1997, a decreasing share of RTDI resources allocated to scientific and technological poten-

tial in favour of innovation related projects was observed. In fact, the share of innovation

related measures in the planned RTDI increased in almost all countries while for a large

majority of countries, the share of sciences or technology related measures in the RTDI

budget is at best stable or shrinks between the two periods.

RTDI as a Driver of Regional Development—Lessons from the 1990s

The over-arching conclusions that can be drawn from experience of implementing Struc-

tural Fund measures in favour of RTDI during the 1990s are twofold:

. many of the accepted theoretical and empirical evolutions concerning the performance

and capacities of regional innovation systems were still not being finding a practical

application in policy programmes;

. the tools and procedures for designing, implementing and evaluating RTDI actions

remained inadequate and often out-dated in the majority of regions.

Three key policy lessons can be highlighted which remain relevant for the current

programming periods:

. Firstly, in terms of content of the programmes, there remains a need to increase the

focus of investment and support measures more directly on business innovation and

improving interactions in regional innovation system and less on RTD infrastructure.

. Second, in terms of process, the best programmes were developed and supervised by

strong regional partnerships often using the EU’s regional innovation strategy

funding instrument.

. Thirdly, in terms of impact, the scope and tools used to evaluate regional innovation

policies remain sub-optimal often giving policy-makers little insight into what works

and what does not.

Key lesson 1: RTDI actions financed under the structural funds should first and foremost

aim to increase the intensity of business innovation activities

It may appear obvious to state that the Structural Funds should aim to increase the

competitive position of business in the zones concerned through enhancing the rate of

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product, process and organizational innovation. Indeed, as noted earlier, the RTDI related

content of Objective 2 programmes changed significantly between 1989 and 1999. There

was an evolution in the balance of RTDI activity from a science and technology focus in

the early programmes to a greater emphasis on technology transfer and innovation in

industry in later programmes. A similar trend was observed in terms of the type of inter-

vention with a shift from RTDI infrastructure (science and technology parks, equipping of

research orientated laboratories) which were more pronounced in the early programmes

with financing, human resource and direct support to business innovation actions

gaining in importance over the decade.

However, in many regions, programme management and project selection procedures

continued to inhibit the full potential of this change in objectives and forms of action:

. Where Structural Fund support is provided as a topping-up of existing regional or

national grant or loan aid schemes, there is a double problem with respect to community

value added. Firstly, in many cases the final beneficiary is not aware of community

support; and secondly, and more fundamentally, the schemes financed are rarely tai-

lored to respond to specific regional issues in terms of support to business innovation.

The result is that the opportunity to use Structural Fund money as a means of testing

new or innovative delivery mechanisms or to target new clients was effectively lost.

In this respect, the long-term effects of the Structural Fund interventions on upgrading

regional RTDI policy and capacity are reduced.

. A second issue is that in many programmes project selection is done in a manner where

often only lip-service is paid to the measure objectives when selecting project for

funding. This is due in part to a relatively limited level of competition for available

resources; and in part because project selection is strongly influenced by a budgetary

absorption logic, which favoured existing intermediaries.

Thus, a more concerted effort is required to balance supply and demand measures not only

in terms of the programme’s objectives and focus but also during the practical implemen-

tation of measures.

Key lesson 2: Reinforced partnerships and a regional innovation strategy should be a

pre-condition for increased funding of RTDI measures

Almost across the board, the national evaluators reported that the SPDs were poor in terms

of both the baseline data and strategic objectives of RTDI actions. The lack of well-defined

and measurable objectives for most of the RTDI actions financed under Objective 2 was

also underlined. Despite the efforts made both at national and EU level to provide a stron-

ger methodological framework for carrying out SWOTs of regional RTDI capacity few

Objective 2 programmes were founded on a clear and well-presented explanation of the

factors influencing the innovation activity of regional firms.

RTDI strategies were particularly weak in the 1989–1993 and 1994–1996 pro-

grammes. Although over half of these programmes had an RTDI priority very few were

based on an explicit and well-though out RTDI strategy. One explanation for this lack

of strategy is the widespread use of national or regional RTDI aid schemes as a main

conduit for support under the programmes. There is evidence that the situation was begin-

ning to be addressed in the latter half of the 1990s, often as a result of RTPs and RIS

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supported either by Objective 2 funds (the case of the Netherlands) or by the so-called

“Article 10” of the ERDF up to the end of 1999.

As noted earlier, the share of funding allocated to RTDI was estimated to be close to 16%

on average across the 11 member states concerned by Objective 2 during the 1990s. At the

same time, the regional level analysis highlighted a significant problem for regions to absorb

these levels of funding for RTDI. The underlying reasons appear to be two-fold:

. the existing relatively high capacity in terms of RTDI infrastructures in Objective 2

regions allied to considerable spend on building and equipment during the 1989–

1993 and to a lesser extent 1994–1996 period, led to a “drying-up” of projects able

to consume funds within the relatively short-programming periods;

. in a majority of regions, new forms of intervention based on business needs for inno-

vation support either did not emerge due to a neglect of the partnerships to take appro-

priate action to stimulate project development; or where such projects were selected,

business interest in the actions proposed via intermediaries often failed to meet

expectations.

In many respects, these problems reflect a project driven approach evident in the majority

of SPDs with very few regions managing to base RTDI actions on coherent and well

defined measures integrated in a strategic approach to promoting innovation.

More positively, the regional case studies identified a growing trend towards RTDI

partnerships that are bringing together the main players (both users and providers of

knowledge and innovation support) in the regions. In the best cases these partnerships

are driving the agenda. Often the industry side remains under-represented, but despite

this criticism these partnerships helped to focus the RTDI effort in the region. There

would appear to be a link between process and effect—the more dynamic partnerships

generating the best and most innovative approaches.

Key lesson 3: At all stages in the programming cycle, capacity to chart the outputs and

effects of RTDI actions must be strengthened

The national evaluation teams found low standard of record keeping in nearly all member

states especially regarding outputs and results of funded projects. There were patchy

attempts to automate data capture of physical outputs. Financial monitoring was better

organized but even here it was often difficult to obtain even simple data on the absorption

rates of specific measures. Considerable support under technical assistance is needed at the

inception of new programmes to create the monitoring framework.

Programme level evaluation was also patchy despite the efforts of the Commission to

spread best practice through the MEANS programme (Means for Evaluating Actions of

a Structural Nature). Very few individual projects seem to carry out systematic and

truly independent evaluations although this problem is not exclusive to RTDI measures

within Objective 2 programmes. However, there is a significant additional issue related

to both project and programme evaluations for RTDI where inappropriate output and

result indicators continue to be used, in particular, a focus on number counting as

opposed to understanding how projects have changed the innovation process in firms.

Much more attention is needed to assess the benefits at the level of the final beneficiary,

companies, in order to (1) induce policy learning, (2) to constantly improve operational

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objectives; and (3) to adapt funding to focus on the most effective projects, project leaders

and delivery methods.

To sum up, in Objective 2 regions, traditionally better endowed with academic and

industrial research capabilities, fewer ERDF resources were devoted in absolute terms

to enhancing RTDI capacity, than in Objective 1 regions. The main direction of the

measures funded by the ERDF was to increase the cooperation between this existing infra-

structure and industrial firms, in the view of fostering innovation: development of technol-

ogy and innovation centres, university transfer and spin-off interfaces, graduate placement

schemes, new technology related training, etc. The programmes gradually incorporated a

more holistic approach to innovation, through fostering firms clusters, supporting inno-

vation management, developing financial incentives, etc. Unsurprisingly, those pro-

grammes, which were driven by dynamic regional partnerships, generated the best and

more innovative approaches. However, as for Objective 1 regions, the evaluation

pointed to the weakness of RDTI strategies and the difficulty to design coherent and

strategic programmes to promote innovation (instead, a project-driven approach was the

rule). The difficulty was notably linked to the institutional barrier between science and

technology and economic ministries, administrations and programmes. Few programmes

were based on a sound SWOT analysis of the regional situation. This strategic weakness

started however to be addressed in the regions involved in RTP and RIS projects.

Innovation and Knowledge in the Structural Funds: 2000–2006—a Favourable

Evolution?

It is argued earlier that the conclusions to be drawn from evaluation of the results of Struc-

tural Funds interventions in favour of RTDI in the 1990s remain pertinent today as policy-

makers and programme managers gear up to define new programmes for 2007–2013. The

results of the financial support through the Structural Funds for regional innovation

measures in the 2000–2006 programmes are still not clearly understood7 but an analysis

of the programming measures financed under the programming period does allow some

insight into whether the programming and results of innovation measures has improved.

A recent working paper from DG Regio (EC, 2005b) attempted to quantify the level of

importance of Structural Fund investments in the Structural Funds as well as the objectives

pursued according to four broad categories of intervention:

. Infrastructures (INF) e.g. innovation centres, incubators or centres of research and

technology parks;

. Networks (NET) e.g. development of clusters, competence networks and technology

transfers;

. Innovative Projects (IP) e.g. efficient utilization of information and communication

technology (ICT), transfer of new technology to business, spin-offs (universities starting

new business) or start-ups and applied research projects;

. Environment for Innovation (EFI): concerning projects such as innovation in SMEs in

the fields of management, marketing, financing and human resources, strategies, advi-

sory services, financial engineering and human capital.

The total financial allocation to RTDI by the Structural Funds during the period 2000–

2006 was 13.3 billion Euro, around 6% of the total EU Structural Funds expenditure

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(Objective 1 and 2 regions combined) of 230 billion (EC, 2005b, p. 4). In terms of the

breakdown of Structural Fund expenditure during 2000–2006 between these different cat-

egories, there seems to be a relative equilibrium between the three largest: infrastructure,

innovative projects and environment for innovation at approximately 3.5–4 billion each.

The Commission working note argues that the period 2000–2006 has seen a widening

of the range of activities supported from direct subsidies and infrastructure (i.e. buildings

in and roads for technology parks) to financial engineering, networks and soft support e.g.

technology related services, marketing of innovations or innovative processes for enter-

prises or projects for turning researchers into entrepreneurs. This evolution from infra-

structure only to a value added approach can be seen from examples such as the

Phoenix project on microstructure technology and IT/software development in Dortmund

or the network of technology centres or clusters in the Basque Country.

Despite this relatively optimistic auto-evaluation by the Commission services, the

programming of innovation and knowledge during the 2000–2006 period still contains

some inherent weaknesses or throwbacks to a more linear and less systems based approach

to regional innovation policy. The networking actions aimed at improving linkages in the

innovation systems are the ones receiving the least absolute support and often the network-

ing actions identified by DG Regio as being good practice involve networks of science

parks or intermediaries and less often clusters of enterprises (a counter example is

Austria where the Structural Funds appear to have supported a larger number of sectoral

clustering activities).

Secondly, there remain marked regional differences in the innovation field. Innovation,

in particular technological innovation, tends to be concentrated in urban growth poles

which means that a country that may be very dynamic when measured by key innovation

scoreboard type indicators (business expenditure on R&D, patents, etc.) has nevertheless

weak regional areas falling behind. The need to tailor the objectives of innovation

measures in the Structural Funds to the specific regional strengths and weaknesses and

potential of different types of regions remains a key issue for 2007–2013. In particular,

it is becoming increasingly clear that setting investment targets (such as the so-called

Barcelona objective of spending 3% of GDP on R&D) has only limited relevance for

regions with a sectoral economic structure based on lower-tech sectors or services.

Many of the lagging behind regions fall into this category and certain policy-makers

risk making a mistaken parallel between low R&D investment and low innovation poten-

tial. As recent studies have shown, a considerable number of low-tech companies are in a

position to employ high-tech process technologies systematically and efficiently. In many

cases, the high-tech environment is a central requirement for the development perspectives

of low-tech enterprises in general (Hirsch-Kreinsen et al., 2006). In a similar analogy, the

future growth potential of many less R&D intensive European regions depends on their

capacity to integrate technologies into their low-tech economies by developing appropri-

ate intraregional and interregional linkages. The next section explores precisely this issue

of the potential for public interventions in favour of innovation to boost competitiveness.

Can Public Support for Innovation Help Less-favoured Regions Achieving Higher

Competitiveness?

From the outset, it should be recalled that government funded R&D faces obvious limits.

Indeed, the experience of the past 40 years has taught us that the central agents in

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promoting and implementing technical change are private business firms, not govern-

ments. Pavitt (1998, p. 563) recalls that 60–70% of all European R&D is performed by

business firms, and between 50% and 60% funded by them. The purpose of innovation

policy should be to create favourable framework conditions within which private business

firms are encouraged to improve continuously their technological and related organiz-

ational practices. While governments provide essential inputs into technical change,

they do not control the central process and they have very little influence on the rate

and direction of technical change. Having said this, a high priority of European policy-

makers is to prioritize the development of R&D and related competencies in Europe’s

technologically lagging regions. There are different views on whether this can be

achieved, ranging from the pessimistic idea that lagging regions are “trapped” in a tech-

nology gap to a more realistic perception of things based on the idea that lagging regions

could specialize in adapting technologies produced in the core regions.

Clarysse and Muldur (2001) consider that most lagging regions find themselves in a

“low R&D trap”. They categorized European regions in six different groups of regions

which resemble each other at the technological and economic side, from industrial

leaders to laggards. Not surprisingly, most cohesion regions are found in the last categories

(e.g. “economic catchers-up”, “technological catchers-up” and “laggers behind”). They

conclude that the gap between the “industrial leaders” and the “laggers behind” is gradu-

ally increasing, both at the technological and economic side. In fact, Europe is evolving

towards a state in which a small group of regions dominates the economic and technologi-

cal landscape. Even worse, they conclude that EU RTD policy (mainly the Framework

Programme) reinforces the existing technological competencies because of the competi-

tive bottom-up selection of the various research proposals. In other words, those, which

are the strongest, profit most and those which are somewhat weaker profit less. This

state of affairs has also been exacerbated in the late 1980s and early 1990s when substan-

tial EU subsidies were allocated to large prestigious research centres in less-favoured

regions (Deniozos, 1997). The problem with these research centres is that they were not

always able to diffuse technology effectively.

In the same vein, Vence et al. (2000) explain the difference in participation in EU

Framework Programme as a result of uneven capability of research, but also other

factors such as complementarities within national systems of innovation, national incen-

tives and policies, linguistic factors, traditional experience in cooperation relationships,

etc. Their empirical analysis suggests that R&D efforts is the main explanatory factor

of differences in regional participation in the Framework Programme. Thus for cohesion

regions, it is the “cumulative causation or circularity of this kind of relationship might

create a ‘vicious circle’ for peripheral regions, falling down into a ‘low R&D trap’: low

R&D implies low participation in European programmes, and vice versa, low participation

increases the gap with regard to core regions” (Vence et al., 2000, p. 38). In such a frame-

work, there is no other option than reinforcing the regional R&D capability of the public

and private bodies alike, and the creation of R&D infrastructure becomes an urgent action.

However, there is no specific need for a mere physical infrastructure as supported by pre-

vious Structural Funds programmes, instead, there is a need to create human capabilities,

supporting the creation of research teams in technology centres and private firms, able to

overcome the threshold of minimum efficiency. This also requires having access to finan-

cial support for R&D projects in the fields where the industry of peripheral regions is

active. Thus, for Vence et al. (2000) to conclude, “progress in regional participation

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and cohesion may require paying more attention to the regional dimension of policies and

programmes in order to take into account regional features to really strengthen Regional

Systems of Innovation” (p. 38).

Concrete steps undertaken by the Commission mainly through the development of RIS

in regions benefiting from Structural Funds, are delivering positive results (Morgan &

Nauwelaers, 1999). Other appropriate policies may probably also include the expansion

of funding for access to education and training in Europe’s richer regions complemented

with enhanced training and support for smaller firms in lagging regions. Practically, this

could mean more training opportunities for researchers and innovation specialists from

less-favoured regions with increased emphasis on returning grants and improved access

to large R&D infrastructures while maintaining necessary and sufficient investments in

scientific equipment in the less-favoured regions. A possible challenge for the future

European Regional Policy may take the shape of increased interregional collaborations

within the Union. This may be accompanied by new responsibilities for the regions

concerned: peripheral and structurally weak regions may need to engage in a thorough

process of self-evaluation, probably enhanced by some international benchmarking

efforts, to identify their own specific strategic needs. There will be no transfer of expertise

without strategy. Moreover, the Commission cannot be expected to continue funding

measures and programmes for which no sound monitoring and evaluating measures

have been put into place. The development of an appropriate evaluation culture based

on a systems approach (Arnold, 2004; Smits & Kuhlmann, 2004; Bachtler & Wren,

2006) may be a necessary condition for the successful design and implementation of a

regional strategy for innovation.

Which Way Forward? On the Road to Lisbon from a Cohesion Perspective

The strategic and operational guidelines to ensure that all EU regions invest sufficiently in

contributing to the Lisbon Strategy, and hence to growth and cohesion, form the context

for the next period of EU Structural Fund support. Under the current reform of cohesion

policy for the period 2007–2013, the Commission is responsible for the elaboration of the

Community Strategic Guidelines on Cohesion which set the framework for policy inter-

ventions for the new generation of programmes. A key element in the new strategic

approach will be to seek ways in which regional and cohesion policies can contribute to

the Lisbon competitiveness agenda.8 The Guidelines set out a framework for new pro-

grammes which will be supported by the ERDFs, the ESF and the Cohesion Fund. One

of the three key guidelines is to improve knowledge and innovation for growth by encoura-

ging innovation, entrepreneurship and the growth of the knowledge economy by research

and innovation capacities, including new ICTs.

The Guidelines acknowledge that innovation is the result of complex and interactive

processes, including the ability of enterprises to connect to complementary knowledge

from other market players, organizations and institutions. The Commission underlines

that investments in innovation represent an overarching priority for cohesion policy

throughout the Union. Their co-financing should be the main priority in the regions

covered under the new regional competitiveness and employment objective, where

limited financial resources need to be concentrated so as to reach critical mass and gener-

ate a leverage effect. The main objective should be to promote a business climate which

promotes the production, dissemination and use of new knowledge by firms.

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Hence, the orientations for the next programming period of the Structural Funds

increase yet again the policy focus of the EU’s intervention in favour of promoting a

knowledge economy through increased concentration of funding on RTDI. The rationale

for this is set out in the Cohesion Report of the European Commission (EC, 2004). The

document states that the aim of policy is not to ensure that all regions have the means

for contributing equally to advances in new technologies, but that they should nevertheless

be equally placed to take advantage of those advances and to put them to productive use.

This discussion raises a number of interesting research questions: For instance whether

it is possible for a region with limited expertise in knowledge creation to take full advan-

tage of new knowledge? Is it sufficient to use dissemination and technology transfer instru-

ments to upgrade the regions with limited capabilities for indigenous knowledge creation?

Or are there arguments for investment in knowledge infrastructure in less-favoured

regions to repair structural imbalances in innovation potential? Regions have attempted

this latter route in the 1990s using Structural Funds although the immediate impact on

the economic growth of regions is not assured as was underlined by the evaluations dis-

cussed in the first part of this paper.

At a strategic level, evidence suggests that a number of actions are arguably more effec-

tive if taken at the regional level; these include raising awareness of the importance of

science, research and innovation amongst the general public and enterprises; building

public–private partnerships to structure research potential and stimulate investment in

innovation, analysing and defining regional priorities and communicating and debating

them with policy-makers at national and European level. Indeed, some of the leading

European regions have taken significant steps to defining and implementing a regional

research and innovation policy, thereby improving their image on the European and

global stage. Increasingly regional authorities profile their region by means of advanced

clusters and specializations, simultaneously realizing that critical mass should be attained

by cooperation with other regions. Having said this, one should not forget that regions in

Europe are embedded in varying national political administrative frameworks and that for

those regions located in centralized countries it will be more difficult to set up their own

regional innovation policy than in regions located in federal countries. Certain countries,

such as Sweden, Finland or Austria identify the regional policy as an integrated part of

their RTDI policy. This policy is then put into practice by regionalized organizations

with, in certain cases, top-ups according to the regional situation as for instance the

Finnish technological development organization (TEKES) which owns 14 regional

centres and where RTDI projects in less-developed areas can be topped-up with an

extra 10% of funding. In other countries such as Denmark, the national innovation strat-

egies do not have any explicit regional dimension but most larger cities like for instance

Aalborg have devised separate innovation strategies. In federal member states like

Germany or those with a strong decentralization such as Spain, the regional dimension

is strongly present and most regions or Lander have a RIS.

Various types of policy approaches can be identified across EU regions, notably policies

with focus on high-tech growth, networks and clusters or the learning economy. Policy-

makers and programme designers need to consider these carefully when drafting the

new RTDI measures within the Structural Fund programmes and before investing con-

siderable sums of money. As noted earlier, most regions and countries, notably the cohe-

sion countries, have followed the high-tech growth, linear inspired model, with limited

direct spill-overs in economic terms and even doubtful results in terms of improving

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research excellence. The need for targeted and strategic investments in research infrastruc-

ture through the Structural Funds cannot be denied but they need to be done on the basis of

a careful analysis of regional RTDI potential (e.g. through regional technology foresight

programmes which identify key technologies for the regional society and economy and not

simply by the triple mantra of prioritizing “nano-, bio- and materials-technology”). Most

investment in regions with limited RTDI potential and capacity may benefit from going on

the learning economy9 type actions which focus on improving absorptive capacity for new

technologies and creating innovative cultures. That said, to innovate regions will require

some advanced basic science capabilities. “The option of being a ‘learning region’ entails

mimicking yesterday’s new knowledge not innovating tomorrow’s” (Cooke et al., 2003,

p. 377). If less-favoured regions aim to develop more substantial endogenous capacity

for innovation “they will need to adopt a twin-track approach: They’ll need to recognize

that local circumstances are the only meaningful point of departure for a genuinely attuned

regional strategy and they’ll also need to recognize that local resources are a necessary but

not a sufficient condition for progress” (Morgan, 2004, p. 18).10

At an operational level, policy-makers have constantly been innovating in the type of

instruments used in R&D and innovation policy. While there were many clues in research

on innovation to suggest the importance of linkages—especially between innovators and

their customers—policy clearly moved into more networked approaches to innovation

ahead of the development of the current body of innovation systems literature. In effect,

innovation policy instruments have evolved in the way illustrated in Figure 1. Traditional

instruments have focused on handling actors (companies, professors, etc.) one at a time

and using single measures, such as subsidizing a company R&D project in order to over-

come market failure or funding a professor’s idea for a commercially useful project. Some

innovation agencies have started using multiple measures to increase the capabilities of

individual actors. For example, Enterprise Ireland has a process called “company

development” where selected, high-potential companies are individually accompanied

through several policy instruments in order to strengthen their capabilities. Other

Figure 1. Innovation instrument evolution and expected outcomes Source: Arnold (2004).

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one-stop-shop company development approaches work in similar ways, though not always

as explicitly as in the Irish case.

Innovation policy instruments with a stronger focus on R&D have tended to follow the

horizontal trajectory towards linking or bridging measures, especially between academia

and industry but also among clusters of firms and research institutes. More recent instru-

ments tend to involve larger networks incorporating a wider range of different types of

actors and using multiple measures to reach multiple objectives (Multi-Actor, Multi-

Measure Programmes— MAPs): the north-west corner of Figure 1. Of course, the latter

are much harder to put together and function operationally which means that regions

without a real capacity for strategic policy intelligence find it difficult to move in this

direction. The effect of RIS type actions in building-up and sustaining such policy intelli-

gence capacities is fundamental. A good example is the case of Central Macedonia in

Greece which on the basis of a first phase of funding for a RTP in the mid-1990s has

built up an impressive series of projects (both regional and interregional) and a strong

expertise within the regional university on enterprise-focused RTDI policies (Komninos,

2002; Kyrgiafini & Sefertzi, 2003). A recent evaluation of the effects of RIS on Structural

Fund spending confirms the need for strategic intelligence in the formulation of such

policies (EC, 2005a).

Conclusion

To conclude, the new Structural Funds regulations for the period 2007–2013, introduce a

regional competitiveness and employment objective balancing the traditional cohesion

objective. Under both of these objectives, research, innovation and the knowledge

economy will be given a stronger emphasis. Thus regions will be given an opportunity

to consolidate (or in some cases rationalize) their innovation support network but

should also be encouraged to focus financial resources on new approaches aimed at creat-

ing stronger regional innovation systems. The danger is that this opportunity will be

hijacked by the advocates of the “Barcelona objective” (namely the objective to spend

3% of GDP on R&D by 2010) who tend to ignore that this objective is an input indicator

only relevant for a limited number of high-tech regions. Indeed, according to the Mytelka

and Smith (2002) argument, as pointed out in the introduction, while theory has had some

impact on policy, the linear, technology push approach has not been eliminated. The

evidence of past programming periods presented in this article suggest that the extent to

which regional authorities and stakeholders can move beyond a technology push,

infrastructure driven approach towards a systems, learning economy approach will be

fundamental to the value added created from this further massive injection of EU funds

in Europe’s regional knowledge economies.

Seizing the opportunity to use Structural Funds to support a more balanced re-

positioning of regional innovation systems based on a strategic analysis of regional

drivers and barriers will also pose new challenges for programme managers and

evaluators. Bachtler and Wren (2006, p. 151) note that Structural Funds in the next

programme period may be used in some parts of the EU for funding specialized

areas of support such as “regional innovation networking, specialist advisory support,

environmental sustainability, financial engineering, innovative applications in the use

of Information Technology, and specialist training”. Yet, in many regions the knowl-

edge necessary to develop and implement a sophisticated policy mix involving more

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complex MAPs as opposed to the classic single actor-single measure type actions is

missing. Hence, maintaining Structural Fund support for innovation governance

measures at regional level (continuation of strategic partnerships, foresight, strategic

and economic intelligence, benchmarking and policy studies, etc.) is vital, if a

further round of EU regional policy is not to deceive.

Acknowledgement

The authors are grateful to David Jacobson and two anonymous referees for their construc-

tive comments.

Notes

1. That this is not just assertion is substantiated in the work of the FP5 project, PILOT (www.pilotproject.

org). See, in particular, Hirsch-Kreinsen et al. (2005).

2. See www.cordis.lu for further information on the EU’s RTD Framework programme.

3. See http://europa.eu.int/comm/regional_policy/index_en.htm for further information on EU regional

policy and the Structural Funds.

4. For an evaluation of RDTI measures in Objective 1 regions see Tsipouri (1999) discussed later in this

paper but also Kaufmann and Wagner (2005) as well as Kuitunen (2002).

5. It is noteworthy that the report talks about the contribution of Structural Funds to R&D rather than

the contribution of R&D to the achievement of the Structural Funds objective of promoting regional

development!

6. This estimation is based on a weighted sum of coefficients given to the three types of measures: 1 for pure

RTDI measures; [0.66; 0.75] for mixed measures with a majority of resources dedicated to RTDI; and

[0.25; 0.33] for one star measures. The set of solutions is [16.3; 17.3].

7. An EU25 wide strategic evaluation of innovation and knowledge measures in the Structural Funds

is being carried out for DG Regio by Group Technopolis. The final results should be available by

September 2006 but remain under a contractual embargo at the time of writing.

8. The Commission published on 6 July 2005 a draft Community Strategic Guidelines entitled “Cohesion

Policy in Support of Growth and Jobs: Community Strategic Guidelines, 2007–2013”. The Guidelines

set out a framework for new programmes which will be supported by the ERDF, the ESF and the

Cohesion Fund. Available at: http://europa.eu.int/comm/regional_policy/sources/docoffic/2007/

osc/index_en.htm.

9. Incidentally, Henderson (2000) analysed the relative success of regional policy initiatives designed to

stimulate learning and confirmed the development of significant interactive learning processes among

the regional state, firms and intermediaries in Europe’s less-favoured regions. Kuitunen (2002) came

to a similar conclusion underlying that one of the major benefits attributable to the Structural Funds

is the improved strategic thinking amongst regional actors. In the same vein, Muscio (2006) shows

how the innovative potential of industrial communities can be enhanced through the promotion of capa-

bilities of self-governance at the local level while stressing also that access to institutional actors (uni-

versities and technology centres) of a RIS will be facilitated if the firms’ linkages with the regional and

local socio-economic context are strong.

10. Hospers (2004, p. 9) cautions against an excessive use of territorial benchmarking in EU regional

policy: “Politicians are just like entrepreneurs in that they tend to imitate a first mover in the hope

to share in its success—but as more imitators enter the scene, the profit opportunities of the innovative

policy fade away and a shake out is likely to set in”. He argues that the starting point of an effective

local policy will be in the existing culture and structure of the area under consideration: local tra-

ditions will need to be combined with global trends, with much creativity, the old economy

becomes then the basis for the new development. The author cites various examples of European

regions where traditional local activities were revived through the introduction of new technologies

or production processes and the authors of this article have themselves devoted an entire piece of

research on this theme (Musyck, 1993).

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