Maximizing the potential of regional assets

Lagging regions tend to have relatively weak human capital endowments as well as other disadvantages that hamper innovation, such as significant physical distance from innovative metropolitan areas. Nonetheless, these regions frequently have long traditions in specific agricultural or manufacturing sectors, and possess valuable traditional knowledge and/or other assets that make them singular.

For instance, they might be endowed with rich natural resources and biological diversity, have a large share of young population with entrepreneurial ambitions, or have dense networks of social relations. Innovation policies that take into account these local assets and promote innovative ways of seizing their potential have good chances of being successful in fostering regional growth and territorial inclusiveness. In turn, it is necessary to avoid “picking winners”: promoting the development high-tech industries in regions that lack the adequate human and physical endowments is likely to become a failed policy and a major waste of public resources (Hospers and Beugelsdijk, 2002; Tödtling and Trippl, 2005).

Relevant instruments include the following: 

(1) Design of tailor-made development plans, including with regard to research and innovation

For example, to tackle territorial disparities with regard to research, development and innovation capacities in the United States, the Experimental Program to Stimulate Competitive Research (EPSCoR) provides awards to territorial jurisdictions to foster their research capabilities and improve their science and engineering research and education programmes. One of the programme’s tracks provides selected jurisdictions with up to USD 20 million for five years to support physical, human and cyberinfrastructure improvements in research areas identified as having the best potential to improve the jurisdiction’s R&D competitiveness.

Mexico’s Productive Territories programme, for example, designates technical teams in charge of designing development plans for specific poor rural areas, taking into account existing assets and local needs. The technical team also ensures that local communities access all federal support programmes for which they are eligible. 

(2) Identify areas of specific relevance for a region and train potential local entrepreneurs in those sectors

This is the main objective of the Science and Technology Entrepreneurship Development programme in India. The analysis of region’s potential is made by specialised agencies that receive governmental funds.    

(3) Use intellectual property protection, such as geographical indications, to increase the reputation of local products

Intellectual property (IP) rights for traditional activities, including agricultural products, handicrafts and traditional knowledge, offer opportunities for inclusive growth in lagging areas, as they facilitate the integration of previously excluded local communities in innovation processes. Several types of IP rights are particularly relevant for traditional sectors (OECD, 2014):

  • Geographical indications (GI) are signs used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin (WIPO, 2016a). GI can thus result in higher prices for local agricultural products, foodstuffs, handicrafts, wine and spirit drinks, for example, compared to those from other regions, generating resources for regional development and facilitating the integration of previously excluded groups in innovation systems. They might also have spin-off effects, for example in the areas of tourism or gastronomy. Success stories such as Café de Colombia, Roquefort cheese in France and Rooibos Tea in South Africa illustrate their potential (El Benni and Reviron, 2009). 
  • Traditional knowledge (TK) is a living body of knowledge passed on from generation to generation within a community, often forming part of its cultural and spiritual identify (WIPO, 2016b). Claiming local group or community ownership over traditional knowledge can help support communities in lagging regions to engage in innovation activities. In the area of healthcare, for example, traditional medicines – such as Ayurveda, which is native to the Indian subcontinent – can act as inputs for local groups to patent and develop innovations. Research institutions and companies can provide needed research capabilities to effectively turn products with economic potential into IP-protected products that generate economic returns for local groups. Products must pass regulatory tests before they can be sold on foreign markets, a process that also requires support from research institutions. It is worth noting that local entrepreneurs have also deployed non-IP strategies to successfully market these types of products.
  • Copyright refers to the rights that creators have over their literary and artistic work; it is the main type of IP used for creative endeavours and in the entertainment industry. 

IP ownership rights do not alone generate economic value to the economy or to specific groups. Substantial investment is also needed to maintain high product quality and develop effective marketing strategies to ensure brand recognition. It is the effectiveness of  brand promotion srategies that has allowed for the success of the above-mentioned examples. 

(4) Support to regional governments to implement STI projects

Colombia’s Royalties for Science, Technology and Innovation programme is a case in point. The scheme devotes 10% of the royalties obtained from the extraction of non-renewable natural resources to finance regional STI projects that generate long-term capacities in the region, conditional on being consistent with public policies at the national, territorial and sectorial levels. The instrument also encourages the articulation of actors of the Colombian innovation system by favouring proposals submitted by regional governments jointly with universities, science parks and companies.

Experimental Program to Stimulate Competitive Research – United States

1980-present

Objective: Assist jurisdictions that have historically received little federal R&D funding in developing and strengthening their research capabilities, and improve science and engineering research and education programmes at their universities and colleges.

Target: Jurisdictions.

Instrument: Federal awards co-financed by individual jurisdictions (states or territories).

Productive Territories Programme – Mexico

Pilot phase

Objective: Reduce poverty and increase productivity of rural households in Mexico.

Target: Poor rural households.

Instrument: A technical team develops a tailored development plan for each location, taking into account existing assets and local needs. 

Royalties for Science, Technology and Innovation programme – Colombia

2014-present

Objective: Increasing the scientific, technological, innovation and competitiveness capacities of regions.

Target: Regions with weak innovation performance.

Instrument: Fund to support regional STI activities that contribute to the production, use and absorption of knowledge by industry and society.

Science and Technology Entrepreneurship Development – India

Initially launched in 1985 and reformulated in 1996-97–present 

Objective: The programme aims to promote the development of lagging areas by supporting micro-enterprises.

Target: Micro-entrepreneurs in lagging regions.

Instrument: Financial support is provided to selected implementing agencies (educational or research institutions, government or non-government agencies with experience in promoting micro-entrepreneurship) for 4 years.

References

El Benni, N. and S. Reviron (2009), “Geographical indications: Review of seven case studies world wide”, NCCR Trade Working Paper No. 2009/15, National Centres of Competence in Research, Berne.

Hospers, G.J. and S. Beugelsdijk (2002), “Regional cluster policies; Learning by comparing?”, Kyklos, Vol. 55, No. 3, pp. 381-402.

OECD (2014), National Intellectual property Systems, Innovation and Economic Development: With perspectives on Colombia and Indonesia, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264204485-en.

Tödtling, F. and M. Trippl (2005), “One size fits all? Towards a differentiated regional innovation policy approach”, Research Policy, Vol. 34, No. 8, pp. 1203-19.

WIPO (2016a), “Geographical indications”, www.wipo.int/geo_indications/en/ (accessed 25 January 2017).

WIPO (2016b) “Traditional Knowledge”, www.wipo.int/tk/en/ (accessed 25 January 2017).