GLOBELICS Academy 2004: Lisboa - 3 June 2004

CENTER FOR INNOVATION, TECHNOLOGY AND POLICY RESEARCH, IN+

Instituto Superior Técnico, Technical University of Lisbon

http://in3.dem.ist.utl.pt

CENTER FOR INNOVATION, TECHNOLOGY AND POLICY RESEARCH, IN+

Instituto Superior Técnico, Technical University of Lisbon

http://in3.dem.ist.utl.pt

Technological Changeand

the challenges for development:building on the experience of less favoured regions

Manuel Heitor

in collaboration with: Pedro Conceição and Paulo Ferrão

Technological Changeand

the challenges for development:building on the experience of less favoured regions

Manuel Heitor

in collaboration with: Pedro Conceição and Paulo Ferrão

What is this lecture about?...

To extend human capability through

innovation and competence building,

with

infrastructures, incentives and institutions

fostering social capabilities to comply with distributed knowledge bases and an acelerated rate of technical change

To extend human capability through

innovation and competence building,

with

infrastructures, incentives and institutions

fostering social capabilities to comply with distributed knowledge bases and an acelerated rate of technical change

Structure of the Argument Structure of the Argument 1. The perception today: a diversified context

• Technical Change: complexity and uncertainty

• Distributed knowledge base

1. The perception today: a diversified context• Technical Change: complexity and uncertainty

• Distributed knowledge base

• Increasing reliance on market-based mechanisms to promote innovation • Increasing reliance on market-based mechanisms to promote innovation

2. LFR´s - Beyond Infrastructures?• Building evidence: Material Flow accounting

• Implication 1: Infrastructures and sustainability – which opportunities for innovation?

• Implication 2: Infrastructures and urban concentration – which routes for innovation?

2. LFR´s - Beyond Infrastructures?• Building evidence: Material Flow accounting

• Implication 1: Infrastructures and sustainability – which opportunities for innovation?

• Implication 2: Infrastructures and urban concentration – which routes for innovation?

4. Policy implications: innovation and competence building4. Policy implications: innovation and competence building

3. Knowledge and Learning: understanding knowledge economics3. Knowledge and Learning: understanding knowledge economics

Technical Change: materials

STEELS

CAST IRON

IRON

COOPER

ALLOYSTEELS

GLASSY METALS

AL-LITHIUM ALLOYS

DUAL PHASE STEELS

MICROALLOYED STEELS

BRONZE

SKIN FIBRE GUMS

RUBBER

LIGHTALLOYS

SUPER ALLOYS

TITANIUMZINCONIUMETC

NEW SUPER ALLOYSDEVELOPMENT SLOWMOSTLY QUALITYCONTROL ANDPROCESSING

CONDUCTINGPOLYMERS

HIGH TEMPERATUREPOLYMERS

HIGH MODULUSPOLYMERSBAKELITE

NYLON

WOOD

PAPER

STONEFLINT

POTTERT

GLASS

CEMENT

REFRACTORIES

PORTLANDCEMENT FUSED

SILICA CERMETS

EPOXIES

POLYESTERS

COMPOSITES

POLYMERS

METALS

CERAMICS

POLYMERS

COMPOSITES

CERAMICS

METALS

ALLOYS

10 000 BC 5000 BC 0 1000 1500 1800 1900 1940 1960 1980 1990 2000 2010 2020GOLD

CERAMIC COMPOSITES

COMPOSITESMETAL-MATRIX

SURFACEENGINEERING

RE

LA

TIV

E I

MP

OR

TA

NC

E

SUPERCONDUCTORSTOUGH ENGINEERING

CERAMICS

KEVLAR

BRICKS (with STRAW)

IVORY

10000 BC5000 BC

0 1000 1500 1800 1900 1940 1960 1980 1990 2000 2010 2020

Source: Ashby (1998); IPTS(1999)

Technical Change: perspectives The Convergence: telecommunications and computers ...

The QUESTION : scope and scale

PRODUCTS

PRODUCT

•more technologies to produce each product

•more products produced from a given technology

Source: von Tunzelmann (1999))

TECHNOLOGIES

PROCESSES

TECHNOLOGY

PROCESSES

New reactors

Nuclear fusion

New energy biomassPhotovoltaic materials

Fuel cells

Superconductors

Supervision of energy processes

Robotics

Security systems

energy

Batteries

Pacemakers

Artificial Heart

Recombin. DNA

New drugs

Enzymatic Synthesis

Membranes

Biocompatible materials

Instrumental analysis of dna sequences

biotechnologies

Power lasersBio-leaching

Biological ore processing

New alloys

Ceramics and composits

Computer based design of new materials

materials

Photovoltaic applications

Biosensors

Biochips

Semiconductors

Superconductors

Telematics

Automation

Computers

information technologies

energybiotechnologiesmaterialsinformation technologies

Emerging interactions... Source: BIPE

fromto

The CONTEXTNathan Rosenberg (2001):

“uncertainty in the realms of both science and technology ... have enormously important consequences and a main concern is how organisations and incentives migth be modified to accommodate these uncertainties.”Fonte: OECD(2001), “Social Sciences and Innovation”

Chris Freeman (2001):

“There is an irreducible uncertainty about future political, economic and market developments ....,technological innovations may actually increase it, since they add to the dimensions of general business uncertainty, the dimension of technological uncertainty.”

Fonte: SPRU (2001)

The focus: less favoured regions …Why?

A specific issue:A specific issue:• “With some notable exceptions, the regional developmment debate in LFRs has been dominated by exogeneous models to such an extent that development tends to be conceived as something that is introduced to, or visited upon, less favoured regions, from external doors…

• …this kind of regional policy did little or nothing to stimulate localised learning, innovation and indigeneous development within LFRs”, Henderson & Morgan (1999)

• “With some notable exceptions, the regional developmment debate in LFRs has been dominated by exogeneous models to such an extent that development tends to be conceived as something that is introduced to, or visited upon, less favoured regions, from external doors…

• …this kind of regional policy did little or nothing to stimulate localised learning, innovation and indigeneous development within LFRs”, Henderson & Morgan (1999)

• Low value, Low networking...but high rate of change• Peculiar institutional framework...• ...and social dynamics!

• Low value, Low networking...but high rate of change• Peculiar institutional framework...• ...and social dynamics!

The perception today: a diversified contextThe ‘globalizing learning economy’:

– a world characterized by accelerating technical change

The challenges: • How to manage the risks of being innovative?

• Which Networks to access to distributed knowledge bases ?

• How to foster learning as moving along a given trajectory and capability to cope with the emergence of new trajectories?

• How clusters can remain open to what is going on outside the cluster and how to stimulate radical change when this is necessary?

The challenges: • How to manage the risks of being innovative?

• Which Networks to access to distributed knowledge bases ?

• How to foster learning as moving along a given trajectory and capability to cope with the emergence of new trajectories?

• How clusters can remain open to what is going on outside the cluster and how to stimulate radical change when this is necessary?

To compete in such a world it is important:• to go beyond infrastructures, and access to knowledge…• but, it is even more important, to be able to learn as old competences become obsolete, and this requires adequate incentives and a dynamic institutional framework

To compete in such a world it is important:• to go beyond infrastructures, and access to knowledge…• but, it is even more important, to be able to learn as old competences become obsolete, and this requires adequate incentives and a dynamic institutional framework

to go beyond infrastructures:

Building evidence: Material Flow accounting

Method: Material Flow Analysis... Why does it matter?

Material use leads to environmental damage “One half to three quarters of annual resource inputs to industrial

economies are returned to the environment as wastes within a year”, The weight of nations, WRI (2000)

International trend: Increase material productivity by a factor of:

2 in global terms4 in next 20 to 30 years (EUROSTAT, 2001)*10 in next 30 to 50 years (Factor 10 Club, 1995)**

Considered in national policies (e.g. The Netherlands, Austria; Kuhndt and Liedtke, 1998)***Supported by European Union (factors 4 and 10; Reijnders, 1998)****

International trend: Increase material productivity by a factor of:

2 in global terms4 in next 20 to 30 years (EUROSTAT, 2001)*10 in next 30 to 50 years (Factor 10 Club, 1995)**

Considered in national policies (e.g. The Netherlands, Austria; Kuhndt and Liedtke, 1998)***Supported by European Union (factors 4 and 10; Reijnders, 1998)****

* Economy-wide Flow Accounts and Derived Indicators. A Methodological Guide

** Carnoules Declaration

*** “Translating a Factor X into Praxis”, in Third ConAccount Meeting: Ecologizing Societal Metabolism

**** “The Factor X Debate: Setting Targets for Eco-Efficiency”, J. Industrial Ecology, 2(1)

Aggregation by mass

* Resource Flows: The Material Basis of Industrial Economies

Material Flows accounting (MFA) Adriaanse et al. (1997)*

DMI vs GDP: the International trend

Adapted from Bringezu and Schütz, 2000, Total Material Requirement of the European Union, European Environment Agency, Technical report No 55.

(1988-1997)

0

0

ln)(

DMIDMI

DMIDMIL

t

t

Looking at sustainability:Decomposition of DMI variation

Canas, Conceição and Ferrão(2002)

Identity between Sustainability and Production (Malaska, 1998)*:

Contributions calculation (Chung e Rhee, 2000)**: Logaritmic Mean Divisia Index (LMDI) Method

GDP

DMI

POP

GDPPOPDMI

* Moll, 1999, Reducing Societal Metabolism. A Sustainable Development Analysis

Sustainable development associated with decreasing material flow

** A Residual-free Decomposition of the Sources of Carbon Dioxide Emissions

000

ln)(ln)(ln)(

GDPDMI

GDPDMI

L

POPGDP

POPGDP

LPOP

POPLDMI ttt

1985-1996

-60

-40

-20

0

20

40

60

80

Denmark Finland France Greece Irland Italy Portugal Spain Sw eden UK

DMI/GDP

DMI

DMI/EMP

Decomposition of DMI variation International disaggregation

Employment in construction

Domestic DMI 1960 1970 1980 1990 1998

Non-renewable (%) 19,6 38,6 63,3 65,2 75,4 Ores 6,2 3,8 1,9 2,4 1,0 Stone, clay, sand 12,4 34,2 61,1 62,7 74,3 Marine salt 1,0 0,5 0,3 0,1 0,1Renewable (%) 80,4 61,4 36,7 34,8 24,6 Vegetal 79,0 60,5 36,3 34,4 24,4 Animal 1,3 1,0 0,4 0,4 0,2Total (1000 t) 26999 38352 64231 77016 124835

A case study: Portuguese DMI Canas, Conceição and Ferrão(2002)

Imported DMI: Mineral Products (includes fuels and ores)

Implication 1: Infrastructures and sustainability

…which opportunities for innovation?

Testing a relationship:Innovation and sustainability

What’s the relevance of the technological innovation?

The technological innovation contributes to the economic growth and allows the use of new processes and products that cause less environmental damage or use resources more efficiently.

What’s the relevance of this theme?If the kuznets Hypothesis is valid, then the reduction in

environmental damages can be achieved as a consequence of the natural economic development process, that bases largely in the adoption of new production and consumption technologies. The result in terms of public policies is that the stimulus to the innovation can have positive consequences in the reduction of the environmental damages.

The Porter Hypothesis:

environmental regulation may lead, in the short term, to additional costs at the firm level, but will give rise, at the long term, to the adoption of

new technologies and innovation, leading to growth

Static model Dynamic model

Innovation and sustainability : the approach...

The Environmental Kuznets Hypothesis: Economic growth and environmental degradation are related through an “U” inverted curve

• How far does this applies to Material Flows ?

The Environmental Kuznets Hypothesis: Economic growth and environmental degradation are related through an “U” inverted curve

• How far does this applies to Material Flows ?

GDPGDP

Conceição, Heitor and Vieira(2002); Canas, Conceição and Ferrão(2003)Conceição, Heitor and Vieira(2002); Canas, Conceição and Ferrão(2003)

Environmental concerns as drivers of innovation

% of innovating firms

Important

Not Relevant

Small size

Large Size

Group

Low-technology

High-technology

Low productivity

Low productivity

High productivity

High productivity

High Exports Share

Low Exports Share

High Exports Share

Low Exports Share

Testing the “Porter Hypothesis”Testing the “Porter Hypothesis”Data from CIS II (1995-1997)- PortugalData from CIS II (1995-1997)- Portugal

Industry Services

Dimension

Productivity

Exportations

-++

+--

Quantitative analysis

Qualitative analysis:• Environmental concerns stimulate technological innovation • Relevant role of networking with Technological Centres and of the industrial associations• Effectiveness of the innovation is guaranteed through the involvement of all the value-chain: the need for networking and supply chain management• Consumer Pressure = Fundamental Factor to implement SD

Testing the “Porter Hypothesis”Testing the “Porter Hypothesis”

Support for inverted “U” EKC:

DMI modelling: Aggregated Data Canas, Conceição and Ferrão(2002)

203,018,137,12 ititit yydmi

205,033,216,4 ititit yydmi Model 1Model 1

Model 2Model 2

country control country control

country and year controlcountry and year control

Maximum DMI per capita:21940 $USA e 22293 $USA

* R2=0,27Random effects

* R2=0,98Fixed effects

Model results for observed GDP per capita

* Statistical significance at 1% level

* *

* *

GDP per capita (1000 $USA - 1990 prices and PPP )

Environment and InnovationResearch Conclusions and Policy Implications

Canas, Conceição and Ferrão(2002)

2. LFR´s: the case of the Portuguese Economy (1960-1998):

– Increase in material use and intensity:

Growth since middle 80’s can be due to infrastructure needs (highways, wastewater treatment facilities, Vasco da Gama Bridge)

– Based in non renewable and building sector linked materials

1. Industrialised Economies (1960-1998):

– Aggregated data supports Environmental Kuznets Curve

– Evidence of GDP per capita relative dematerialization trend

• Evolution driven by overcome of infrastructure needs

• External events dependence (e.g. energy crisis)

• Influence on economic structure of specific sectors

?

Source: Kostof, S. (1991) “ The City Shaped: Urban Patterns and Meanings through History”.

Implication 2: Infrastructures

and urban concentration

…which routes for innovation?

Implication 2: Infrastructures

and urban concentration

…which routes for innovation?

Urban vs. Rural Population

Percentagem da População Total a Viver em Cidadescom 750.000 habitantes ou mais - Previsões 2015

0

10

20

30

40

50

60

70

80

90

100

Cidades

Perc

en

tag

em 1975

1985

1995

2005

2015

Source: United Nations - Department of Economic and Social Affairs, (2002), “World Urbanization Prospects: The 2001 Revision – Data Tables and Highlights”, http://www.un.org/esa/population/publications/wup2001/wup2001dh.pdf

Urban population in cities with more than 750000 people (Forecast for 2015)

Urban population in cities with more than 750000 people (Forecast for 2015)

A case study: Portugal

Source: United Nations - Department of Economic and Social Affairs, (2002), “World Urbanization Prospects: The 2001 Revision – Data Tables and Highlights”, http://www.un.org/esa/population/publications/wup2001/wup2001dh.pdf

The “Donnut” effectEmerging urbanization trends:

Increasing urban population, but reduced urban density

Our research hyphotesis:

The progressive integration of mobile ICT´s with sustainable mobility equipments and concepts will facilitate improving well being in urban regions if adequate incentives and institutions are adaptatively implemented through a policy learning process

Digital Cities:

which rational?

Source: Woolman, M. (2000) “Digital Information Graphics”

A case study: Kyoto Digital CityLaunched by NTT and Kyoto University in 1998

Relaunched as Digital City Kyoto Experimentation Forum in 1999

34 services divided in four categories

Information

Community

Showroom

Laboratory

Personal Pages

GeoLink

3D Kyoto

Source: Ishida, T. (2000) “Kyoto Digital City”

A case study: Amsterdam Digital City

Electronic space for political discussion and participation

10,000 registered users in the first weeks

Quickly transformed

The demand for these services declined steadily

Most important assets discontinued (content production) or sold (school portal in 2000.

Source: Besselaar, P. (2000) “Amsterdam Digital City”

Source; OECD (2000). Information Technology Outlook, Paris: OECD.

Further evidence: network readiness

Source; The Global information Technology Report 2002-2003: Readiness for the Network Society, World Economic Forum

• LARGE growth rate of ICT expenditure ( 1992 to 1997)

• A cluster of countries where the effect of increasing GDP on network readiness is less pronounced and other factors, namely at institutional and contextual level, have been shown to particularly influence country’s competitiveness

The “first generation” of digital cities: Some facts about Portugal

Bra

gan

ça 1

999

Mar

inh

a G

ran

de

199

9

Ave

iro

199

8...

Bra

gan

ça 2

000

Framework of Analysis

A case study: the region of Alentejo

Source: http://www.alentejodigital.pt/

A system study: Alentejo Digital

“Ilities” have not been considered...

But…Communities of Practice have been establishedDriving factor Sample Experiences RemarksScientific Biorede - Biology knowledge network about local

biodiversity, molecular biology and estuary ecosystems launched at Aveiro (www.biorede.pt )

Website developed and managed by Research Centre

Education / Training “Engineering in Portugal”, providing historical data and information for Basic and Secondary Schools, as well as university students (http://www.engenharia.com.pt/)

Learning materials and information exchange between experts, teachers and students; Website managed by Research Centre

Public Health Health information and communication network of the Bragança Digital City extension services (www.espigueiro.pt/servico_cooperativo/servico_coop_puh.html )

Portable computers and Internet access to foster the communication and information exchange between doctors and patients

Managing Public Risks

Water quality monitoring and public diffusion system (www.simoqua.pt )

Raise public awareness about water quality, flooding and other public risks

Corporate strategy and competitiveness

Marinha Grande local-industry (moulding, plastics and glass) network (www.marinhagrandedigital.com/ )

Extranet managed by Technological Centre

Marinha Grande and Aveiro clearly shows the important mutual relationships that specific project-based communities have on the facilitation of network societies, but also the fact that the implementation of digital cities may significantly improve the efficiency of those communities

Some ConclusionsValue-based networks have the potential to make both public administration and

markets more effective, which helps promoting learning trajectories for the inclusive development of society, …

... but require effective infrastructures, incentives and adequate institutional frameworks;

A continuous pubic effort is needed, as also a better understanding of the effectiveness of the mix of public support mechanisms and private incentives for the development of digital cities;

In early stage developments, digital cities do require continuous support, together with adequate monitoring and evaluation procedures.

Mobilization of the Information Society is one of the most critical factors to be considered in the design, implementation and exploitation of digital cities;

Market mechanisms do not necessarily work at the level of the issues associated with digital cities, namely in less favourable zones.

They require an effective mix of public support mechanisms that take a relatively long-term perspective

Digital cities cannot be promoted independently of an innovation policy fostering capacity and connectivity

Source: Kostof, S. (1991) “ The City Shaped: Urban Patterns and Meanings through History”.

A city as a complex system:

...which architecure?

Source: Koolhas, R. (2000) “ Mutations”

Emerging Trends of Next Generation Cities…

Layer of Analysis From To Implications and requirements

Infrastructure/access

Conspicuous objects Invisible infrastructure

Embedding ICT infrastructures in urban daily life, fostering human-centered systems

Fixed access Roaming Competitive mobile services and improved regulatory framework for increased individual participation

Content/ services

One-way distribution of information

On-line collaboration and participation

Specific knowledge of institutional and local contexts in order to help developing interactive contents

Web functionalities Networked Activities New competences in content and services development, enhancing user activities and networks

Human and social Context

Technology supply Mobilization of users Mobilizing “change agents” to foster communities of practice, CoP´s, and user involvement

Standards Interoperability Building individual and social competences through knowledge-based adaptive human centred environments

FROM DIGITAL CITIES TO MOBILE REGIONS

Density/Qualityof access points

Div

ersi

ty/c

ompl

exity

of in

form

atio

n av

aila

ble

Descriptivecontents

AdvancedData services

FixedNarrowband

MobileBroadband

Typical/PlainDigital Cities

MobileRegions

From Digital Cities to Mobile Regions

Research Question:What critical factors enable a digital city to become a mobile region? What sort

of public policies to promote these factors?

Dimensions of analysis:Technological: understand what types of technologies need to be in

place to support a mobile region and which players are willing/should provide it?

Organizational: understand who are/should be the leaders for the transition and under what (business) model should they operate?

Behavioral/Geographic: understand how the resident culture shapes the demand for elements of a mobile region (i.e, contents and services) and thus affects its development

Others: think about other lines of research that need to be addressed in order to understand all the facets of this process

Technological Change: telecommunications

Technological Change:

impact and questions ...1. Knowledge Diffusion

2. Knowledge Creation

• corporate competitiveness depends on innovation capacity

• globalization has increased market demand on nre products, processes and services

•Increasing interdisciplinarity and complexity of the knowledge base

•Significant contribution of technology for scientific development

QUESTION: inovation/ adoption of new technologies?

QUESTION: Which, and how to develop the scientific base?

3. Knowledge Transfer• the need to promote systems of education and training diversified

QUESTION: Which education and training systems?

Knowledge diffusion: What can we learnt?

Partnerships reflect that:

- competence is built over time through interactive learning demanding proximity and there are increasing returns in the production and use of knowledge

- competence is localized – some of the knowledge is tacit and cannot easily be disentangled from the cluster - it is embodied in people, organizations and networks

- Competence building should be directed to open minds to new trajectories

Therefore, the key to understand shared prosperity is a better understanding of learning and knowledge creation in the economy.

Not everything is regional:…the national system of innovation

• a national technological infrastructure that supports competence building in all kinds of firms

• a social and legal system that creates trust and interaction among people: good elements in the system is not enough. Focus needs to be on the interaction between the elements.

• a national action to foster public understanding of science, PUS, fostering “critical minds”...

Knowledge diffusion: What can we learnt?

Knowledge diffusion: What can we learnt?

Implication 1:

Knowledge Production - an evolving scene...

Traditional analysis Emerging questions

CONTEXT specific community application

SCOPE disciplinary transdisciplinary

SKILLS homogeneity heterogeneity

ORGANIZATION Hierarchical & Static(preserved)

Transient & Dynamic(changing)

Taxonomy: Gibbons et al (1994)

MODE 1 MODE 2

Implication 2: Knowledge Production - Distributed Knowledge bases

1. An increasing number of sources of knowledge

2. A broad base of effective interaction: fostering multiple knowledge flows

3. Their dynamics lie in the flows of knowledge , which may not obey to national science policy

4. The number of nodes in the networks accelerates with time, being unaffected by existing institutional structures

5. Knowledge production exhibits heterogeneous, rather than homogeneous, growth

Source: Keith Smith (2000)

Promoting Systems of Innovation and Competence Building:

The Technology and Innovation gap…

Clusters and INSTITUTIONAL NETWORKS to mediate:

•mediate information exchange

• knowledge creation

•capacity for collective action

•potential for interactive learning

•efficacy of voice mechanisms

Clusters and INSTITUTIONAL NETWORKS to mediate:

•mediate information exchange

• knowledge creation

•capacity for collective action

•potential for interactive learning

•efficacy of voice mechanisms

fostering innovation across diversity

1. People

2. Knowledge

3. Ideas

Institutions

Infrastructures

Incentives

capacity

Connectivity(trade)

Knowledge for inclusive development…

Most development programmes stand on their ability to build use knowledge for inclusive development and lack a relational infrastructure for collective action

Most development programmes stand on their ability to build use knowledge for inclusive development and lack a relational infrastructure for collective action

This requires a shift :

• from state-led or market-driven processes, regardless time, space or milieu

• to institutional perspective, looking at the quality of institutional networks and looking systematically to infrastructures, Incentives and Institutions

This requires a shift :

• from state-led or market-driven processes, regardless time, space or milieu

• to institutional perspective, looking at the quality of institutional networks and looking systematically to infrastructures, Incentives and Institutions

Which Public Policies?

• supporting existing trends and relationships• supporting existing trends and relationships

• renewal of existing trends and relationships• renewal of existing trends and relationships

• creating general framework conditions that support the emergence of new clusters and relationships• creating general framework conditions that support the emergence of new clusters and relationships

• taking specific action to initiate new clusters• taking specific action to initiate new clusters

Keeping the trajectory...Keeping the trajectory...

…an important and somewhat more difficult role to play …an important and somewhat more difficult role to play

o The need to combine protection with competition!o The integration of knowledge institutions vs reliable knowledgeo The need to combine protection with competition!o The integration of knowledge institutions vs reliable knowledge

…outside what policy makers can do ?? …outside what policy makers can do ??

Fostering strategies which promote the integration of policies, but also the diversification of actions:

– Funding the quality of supply: knowledge production– Promoting new markets: knowledge diffusion

Policy Implications ...

but also:

• people: new competences and social capabilities

• scope: national and/or international

requires:• time: long-term perspectives• context: specific sectorial and/or regional issues• value: promoting new market strategies

debate….