The globalising learning economy Implications for innovation policy.doc
The globalising learning economy:Implications for innovation policy December 1997Report based on contributions from seven projects under the TSER programmeDG XII, Commission of the European UnionBengt-Åke LundvallSusana BorrásPREFACEThe European Union is mobilising considerable effort to cope with the major challenges confronting European society: in a context of increasing globalisation of the economic activities, the EU has to ensure the implementation of a sustainable economic and social development which takes account simultaneously of the need to create jobs, to strengthen the level of competitiveness of companies, to fight social exclusion and to ensure the protection of environment and the quality of life of its citizens. But, at the same time it has to anticipate and prepare for the needs for a new society based increasingly on knowledge and learning capacity of its citizens.Socio-economic research, carried out at the European level through the projects financed by the Targeted Socio-Economic Research Programme (TSER) aims to contribute to the current debates on these issues, and to provide the European, national and regional decision-makers with new knowledge which could enable them to improve the definition and the implementation of their various policies. This report is the result of a specific pilot action to establish the dialogue between researchers and decision-makers on the role that technology and innovation play in the economy. Having as a starting point the work undertaken in seven current TSER projects, this action, directed by Professor Bengt-Åke Lundvall, brought together a group of researchers from different disciplines and schools of thought. Together with political decision-makers, they debated the results of their research and sought to find answers to, and new insights into the following questions: · What is the impact on innovation policies as a result of the emergence of a global economy, based increasingly on knowledge and learning?· What are the effects of globalisation, including European integration, on national innovation systems? Do innovation systems develop towards greater European integration or towards greater fragmentation?· What are the mechanisms which allow a better design of research and development policies taking into account the phenomenon of globalisation and learning?· What is the most suitable political level of intervention in this new context?Conclusions stress the need for greater co-ordination of the various policies not only at the sectoral but also at the transnational level in order to better face the challenges of the globalisation. Stress laid on the co-ordination of the research, innovation and education policies supports the efforts of the European policy in these sectors which could find increased effectiveness if a similar approach were followed in the Member States. These combined efforts would certainly contribute to better preparing us for the requirements of the European society of tomorrow.Foreword and acknowledgementsThis report - a European Commission initiative - draws some provisional policy conclusions from the research currently being carried out in specific European projects under the Targeted Socio-Economic Research (TSER) Programme of the EU. In late spring 1997 the unit in charge of the programme in DG XII asked Professor Bengt-Åke Lundvall of Aalborg University (former Deputy Director for DSTI at the OECD) to take the lead in a pilot action to inform policymakers of findings from seven ongoing TSER projects. This entailed two meetings with project participants and other experts, and more than 30 contributions from project members, and has resulted in the following report.One basic objective of the exercise has been to provide policymakers with a reasonably coherent world view and with basic principles for policy-making on innovation in this new context. Another objective has been to point out research areas where more work is needed. These objectives have determined the process for producing the report, as well as its content and structure. The first meeting in Brussels (2425 April 1997) gave us the opportunity to present TSER project co-ordinators and other invited contributors with a brief sketch of what we regard as the most salient transformations currently taking place in technological innovation at world level and in Europe. The participants suggested additional elements, features and corrections to this general framework, as well as a number of specific topics to be addressed in the report. With this as a starting point, the major lines of the report were drawn, and some of the participants agreed to write specific contributions.The report has extensively benefited from these and other forms of contributions. Without them it would never have been completed on time nor in its current form. When writing/editing the report, we were faced with the difficult task of trying to fit in the different contributions we received, while following a coherent line of argument. It has not been an easy task, and we have undertaken major editing and writing in order to preserve the coherence of the overall report. This means that the report is not based exclusively on the preliminary results and findings of the TSER projects and that we have also used other references and sources.A draft version of the report was submitted in mid-September. This served as a basis for a second meeting in Brussels (2930 September 1997) with TSER project co-ordinators, and other invited experts, academics and national and EU policymakers. The contents of the draft report were discussed, and the valuable and constructive comments made at these lengthy sessions served as input for the authors producing this final version.Writing this report was possible only because of the collaboration and enthusiasm of many people, first and foremost the commitment and vision of Achilleas Mitsos, Miroslav Bures, Virginia Vitorino and Ronan OBrien, who launched and supported this initiative technically by organising the meetings in Brussels and with whom we have had on-going communication. We would like to thank all those who wrote special contributions for the report, namely Erik Arnold, Anthony Bartzokas, Patries Boekholt, Phillip Cooke, Johan Hauknes, Dylan Jones-Evans, Luis Sanz, Gert Schienstock, Simone Strambach and Peter Wood. Without them this report would not have been possible.Special thanks should also go to Daniele Archibugi, Kristine Bruland, François Chesnais, Jesper Lindgaard Christensen, Giovanni Dosi, Charles Edquist, Dieter Ernst, Jan Fagerberg, Dominique Foray, Paul A. Geroski, Ken Guy, Erik Iversen, Alexis Jacquemin, Andrew Jamison, Björn Johnson, David Keeble, Mikel Landabaso, Franco Malerba, Keith Pavitt, Mario Pianta, Sven Otto Remoe, Margaret Sharp, Keith Smith, Rolf Sternberg, Michael Storper, Morris Teubal, Bart Verspagen and Hans Westling, who kindly sent us recent published and unpublished material, as well as invaluable comments on our draft version. We are also in intellectual debt to the many experts who commented the report in earlier versions at meetings and seminar. Still we are entirely responsible for the structure and content of the report.Aalborg and CopenhagenDecember 1997Bengt-Åke LundvallSusana BorrásThe Globalising Learning Economy:Implications for Innovation PolicyTable of ContentsFOREWORD AND ACKNOWLEDGEMENTS3TABLE OF CONTENTS9CHAPTER 1: INTRODUCTION13The challenges of the globalising learning economy for innovation policy13Developing a new vision and policy paradigm15The contents of the report17PART I: CHALLENGES RAISED BY THE GLOBALISING LEARNING ECONOMY21CHAPTER 2: GLOBALISATION AND THE INNOVATION PROCESS23Introduction23Major features and effects of globalisation23Market liberalisation and de-regulation24Increased communication in the world market27The effects of globalisation28Changes in the innovation process29The nature of the innovation process29What has changed in the 1980s?29Knowledge production and distribution in the new socio-economic conditions31Codified and tacit knowledge31Intensified codification trends32The limits of codification32Knowledge creation and globalisation33The learning process and the learning economy35Social and regional polarisation36Policy perspectives37Regional, national and European policy responsibilities in the learning economy39CHAPTER 3: A NEW THEORETICAL RATIONALE FOR INNOVATION POLICY41Introduction41Economics and innovation policy41Neo-classical theory and technology policy43The economic peculiarities of knowledge and learning44Market failure in transacting codified knowledge44Tacit knowledge and market failure45The key characteristics of the neo-classical approach47Optimising and innovation47Equilibrium and innovation47Representative firms in the learning economy48Learning in the neo-classical model48Market failure in the learning economy49Spill-overs in the learning economy50New growth theory50Policy-making in the old paradigm52New theoretical insights and macro-trends in policy action52The new policy rationale55New directions for innovation policy over the last two decades58Picking winners or creating general framework conditions?58Recent trends at national level60Concluding remarks62CHAPTER 4: POLICY LEARNING63Introduction63Enhancing policy learning64Making more extensive use of external and independent sources for policy (re)formulation65Enhancing the social and political participation in the definition of technological alternatives67Learning from others68The European dimension of policy learning69Change, continuity and effectiveness in S&T policies70The need for further socio-economic studies73PART II: THE NEW THEORETICAL CONTEXT AND ITS POLICY IMPLICATIONS75CHAPTER 5: SCIENCE POLICY IN THE NEW CONTEXT77Introduction77Scientific activities take place in an artificially simplified environment78Barriers between research institutions and industry are functional and dysfunctional80Does it pay for national governments to invest in basic science?81On the importance of advanced demand84The regional, national and European levels regarding science-policy85CHAPTER 6: INNOVATION POLICY AND NEW WAYS OF ORGANISING THE FIRM91Introduction91Intensified competition forces firms to find new ways of doing things91Main trends in modes of organisation and in skill requirements93Where do the new organisational principles come from?94The new organisational mode as a framework for product innovation94New trends in skill requirements95Creating learning to learn capabilities and environments96Japanese versus US principles of organisation96Organisational principles and national systems of innovation97European diversity98Public policies to support the introduction of new modes of organisation and human resource development99Public policy in relation to human resource development101The need for a New New Deal101Dividing policy responsibilities between regions, nations and the European Union102CHAPTER 7: CREATING NETWORKS AND STIMULATING INTERACTIVE LEARNING105Introduction105Networks and inter-firm co-operation105The regional and local dimension of networks107The costs and risks of networking109Policy experiences with networks110Types of support mechanism112Public schemes - rationale and lessons114CHAPTER 8: KNOWLEDGE-INTENSIVE SERVICES IN THE LEARNING ECONOMY117Introduction117The interaction between services and manufacturing117What are knowledgeintensive services?118The innovation process and the role of knowledge intensive services120The transformation of knowledge-intensive services over the last two decades122Policy implications123CHAPTER 9: TECHNOLOGY PROCUREMENT AND USER-ORIENTED POLICIES125Introduction125What is Government Technology Procurement?126The rationale for and against government intervention126The US and European models127Towards a second generation of policy instruments?1281. “Procurers as end-users” v “Procurers as catalysts”1292. “Creation-oriented” and “dissemination-oriented” procurement.130User-producer co-operation: Technology procurement without government130The EU and national technology procurement policies.132CHAPTER 10: INNOVATION AND COMPETITION POLICY IN A NEW CONTEXT135Introduction135Competition and competition policy in the globalising learning economy135The Schumpeterian trade-off136Competition and incremental innovation137Competition and co-operation138Spill-overs, sticky knowledge and inter-firm co-operation139Globalisation, regionalisation and technological alliances141Competition and co-operation in the learning economy142Positioning European firms in global networking143Can competition become too intense?143Should competition policy aim to slow down the rate of change?145Increasing the capability to absorb change146The division of policy responsibilities between regional, national and European level147Summary147PART III: CONCLUDING REMARKS149CHAPTER 11: CONCLUDING REMARKS151Introduction151The model152Transformation pressure152Ability to innovate and adapt to change152Costs and benefits of change and their social and spatial distribution153The globalising learning economy153Building up transformation pressure154New demands on the ability to innovate and adapt to change154More uneven social and spatial distribution of the costs and benefits of change155Policy alternatives155Creating a balance between transformation pressure, innovative capability and distributional objectives156Increasing the ability to innovate moving along the technological trajectory157Human resource development157New forms of organisation158Building innovative networks158A new role for the service sector159Integrating research institutions into the innovation system159Innovation policy in a wider perspective160Responding to the inherent contradictions in the globalising learning economy160The parallel with post-war US military procurement of information technology and software161Building new technological systems162A European agenda for innovation policy163Elements of an agenda for socio-economic research164REFERENCES167Chapter 1: Introduction There is no execThe challenges of the globalising learning economy for innovation policy One of the most fundamental trends in the economy over the last decades has been the accelerating rate of innovation and change, driven by intensified competition in many product and service markets. This reflects changes in
