Regional Innovation Monitor - European Commission · 2014-09-15 · specific context of the region...

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Version: Final Date: 31 August 2011

Regional Innovation Monitor Regional Innovation Report (South Transdanubia) To the European Commission Enterprise and Industry Directorate-General Directorate D – Industrial Innovation and Mobility Industries

Andrea Szalavetz

Technopolis associate

PREFACE

The Regional Innovation Monitor (RIM)1 is an initiative of the European Commission's Directorate General for Enterprise and Industry, which has the objective to describe and analyse innovation policy trends across EU regions. RIM analysis is based on methodologies developed in the context of the INNO-Policy Trendchart which covers innovation policies at national level as part of the PRO INNO Europe initiative.

The overarching objective of this project is to enhance the competitiveness of European regions through increasing the effectiveness of their innovation policies and strategies. The specific objective of the RIM is to enhance the scope and quality of policy assessment by providing policy-makers, other innovation stakeholders with the analytical framework and tools for evaluating the strengths and weaknesses of regional policies and regional innovation systems.

RIM covers EU-20 Member States: Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom.

This means that RIM will not concentrate on Member States where the Nomenclature of territorial units for statistics NUTS 1 and 2 levels are identical with the entire country (Estonia, Latvia, and Lithuania), Malta which only has NUTS 3 regions, Slovenia which has a national innovation policy or Cyprus and Luxembourg which are countries without NUTS regions.

The main aim of 50 regional reports is to provide a description and analysis of contemporary developments of regional innovation policy, taking into account the specific context of the region as well as general trends. All regional innovation reports are produced in a standardised way using a common methodological and conceptual framework, in order to allow for horizontal analysis, with a view to preparing the Annual EU Regional Innovation Monitor reports.

European Commission official responsible for the project is Alberto Licciardello ([email protected]).

The present report was prepared by Andrea Szalavetz ([email protected]). The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Member States or the European Commission.

Copyright of the document belongs to the European Commission. Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear.

1 http://www.rim-europa.eu

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Table of Contents 1. Main Trends and Challenges in the Regional Innovation System 1

1.1 Recent trends in regional economic performance 11.2 Recent trends in regional innovation performance 31.3 Identified challenges 5

2. Innovation Policy Governance 72.1 Degree of institutional autonomy 72.2 Institutional-set up, co-ordination and implementation mechanisms 82.3 Availability and use of policy intelligence tools 102.4 Key challenges and opportunities 11

3. Innovation Policy Instruments and Orientations 133.1 The regional innovation policy mix 133.2 Appraisal of regional innovation policies 163.3 Good practice case 173.4 Portfolio of innovation support measures 183.5 Towards smart specialisation policies 193.6 Possible future orientations and opportunities 20

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Appendices Appendix A Bibliography ............................................................................................... 22Appendix B Stakeholders consulted .............................................................................. 23Appendix C RIM Repository information ..................................................................... 24Appendix D Explanation of factors of Innovation Performance, Governance and Policy........................................................................................................................................ 25Appendix E Statistical data ............................................................................................ 28Appendix F RIM survey responses ................................................................................ 29

Figures Figure 1-1 Economic and innovation performance indicators for South Transdanubia 3Figure 2-1 Governance, policy, and innovation performance for South Transdanubia 11

Tables Table 3-1 The regional innovation policy mix ................................................................13

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Executive Summary 1. Introduction: Main recent trends in the Regional Innovation System South Transdanubia (ST) is an underdeveloped and declining region with shrinking contribution to Hungary’s GDP (from 7.4% to 6.5% between 2000 and 2008). In 2008 ST’s GDP per capita was 42.8% of EU27 and 68.3% of the national average (down from 75.1% in 2000). Similarly to Hungary as a whole, ST was hard hit by the economic crisis of 2008-2009, though given its relatively underdeveloped status, the relatively low share of manufacturing in regional GDP, and the scarce presence of export-oriented, efficiency-seeking multinational companies, economic performance in general and industrial output in particular dropped not as substantially in 2009 as in other more developed regions. Though the number of unemployed kept increasing over the 2000s ST’s unemployment rate is currently (2009) only slightly higher than the national average. The real problem and the region’s lagging status are better reflected by ST’s activity rate, which is the lowest in Hungary: 51.8% in 2009, whereas the national average is 54.7%.

In line with its lagging economic performance, innovation performance indicators are also meagre in ST compared both to EU and to the national average. As for the EU benchmark, the most conspicuous difference is in terms of regional BERD/GERD: while the EU27 average was 64% between 2000 and 2008, and the Hungarian average 43.6%, in ST the respective indicator amounted to 14.1%. RTD financing in ST is mainly driven by public investment (its share is the highest within total financing while the share of BERD is the lowest, mainly because of the small number of innovative companies).

As for regional GERD/GDP ST’s 0.4% (between 2000 and 2008) is far behind both the Hungarian (0.9%) and the EU27 average: 1.9%.

Following some years of decline in regional GERD in absolute terms, in 2009 there was a promising turn of the tide: regional GERD increased by ~22%, to ~€26.3m),2 and now it accounts for 2.4% of total GERD. The number of researchers grew as well (from 673 to 748) but both indicators are still the lowest among the Hungarian regions. Recent tendencies reflect a promising start, nevertheless the pace of recent overall improvement in innovation performance indicators needs to continue and accelerate for many years to permit ST to catch up to the national average.

2. Major innovation challenges and policy responses Challenge 1: Unsatisfactory innovation activity and poor ability to capture national and European resources available to support innovation purposes

Innovation activity is below the critical mass. Innovation activities in the key innovative sectors, e.g. biotechnology, and eco-industry are restricted mostly to basic research: industrial applications are rare. Although the region can now boast of a number of innovation success stories, business innovation at the beginning of 2011 has remained sporadic and below the critical mass. Policy addresses this challenge through regular communication on the importance of innovation as well as through

2 This high increase is in fact statistical artifact. If total the value of expenditures is much lower than the national average,

small corrections, together with a couple of new EU-supported projects appear already as high increases in regional

GERD.

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measures to improve innovation culture (e.g. ST Innovation Prize). According to the available evidence (innovation output indicators) this situation has hardly improved.

South Transdanubian innovation stakeholders’ ability to capture national and European resources, measured by the share of resources gained over the amount of available resources is poor3 and has even deteriorated in the second half of the 2000s (with the exception of 2009). In 2009, South Transdanubian innovation stakeholders participated in three EU-funded (INTERREG, CENTROPE etc.) programmes. According to DDRIÜ’s annual reports (DDRIÜ 2009, 2010), policy addresses this challenge through systematic provision of innovation related services. The agency provided information about national and European tendering possibilities, and organised workshops on new programmes and ways of submitting successful applications. As for outcomes, in 2009 ST captured already 100 % of the Baross Gábor resources earmarked for the region and stakeholders submitted (as consortium members) five international project applications (CENTROPE, IPA and SEE).

Challenge 2: Poor performance in terms of commercialisation and technology transfer

The so-called European paradox is acutely present in South Transdanubia. Despite the high scientific degree of the research carried out in the research organisations, and the non-negligible scientific results achieved, industrial applications remain sporadic. Industrial companies have little information about regional research activities and results. Science centres on the other hand also have little information about private actors’ technological needs. Policy addresses this challenge by supporting innovation co-operation e.g. by introducing targeted support to research projects submitted by industry-university consortia. Moreover, a new project, “Technology and Knowledge Transfer in ST”, was launched (supported by the Social Renewal OP) in the framework of which matching events targeting industry applications of regional universities’ scientific findings are being organised. As for outcomes, it is too early to judge.

Challenge 3: Dominance of traditional and mature sectors, small share of industries with high R&D-intensity

Structural burden, i.e. the lower-than-the-average share of R&D-intensive sectors and industries hampers the improvement of ST’s innovation performance. Beyond a higher-than-the average share of agriculture and of the energy sector; the lower-than-the-average weight of manufacturing and of the services sector, the manufacturing mix itself features a structural burden as well. Food and wine industries, traditional machinery and equipment manufacturing, light industry as well as low local value adding electronics assembly dominate within the regional manufacturing mix. Key technology- and knowledge-intensive industries such as ICT (software development), eco-industry, biotechnology etc. are present, but their output is below the necessary threshold: therefore the regional market for technology is underdeveloped. Policy addresses this challenge by supporting the innovation activity of actors in the key strategic sectors and the technology absorption of actors in traditional and mature sectors. Policy efforts have however been below the threshold that would have initiated some structural change related intensification of innovation activity. Moreover, recent policy moves towards smart specialisation and concentration of scarce resources to key innovative industries have been jeopardised by the presence of too many applicants in a wide variety of scientific disciplines and sectors for the status of key priority technology/industry.

3 As for the resources allocated in the frame of Baross Gábor Programme, the indicator of „resources gained over the resources available” was 92% in 2006, and 33% in 2008.

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3. Innovation policy governance National innovation policies started to take the regional / spatial dimension increasingly into account in the early 2000s. According to the 2003 Act on the Research and Technological Innovation Fund, 25% of the Fund’s yearly income is designated to regional innovation purposes. Out of the regionally earmarked, though centrally announced calls, the allocation of HUF5bn (€20m)4 used to be decided upon by the regions themselves. The regionalisation of innovation policy governance was gradually reversed in the second half of the 2000s. Centralisation of innovation policy implementation increased, for example the measure that devolved decision-making over the allocation of €20m of annual innovation support to the regional level was abolished in 2010. In early 2011, the mere survival of the RIA network is still undecided: from the second half of the year RIAs will not receive any further central financial support to their operation.

The South Transdanubian Regional Innovation Agency (DDRIÜ) (founded in 2005) is the main actor and the key coordinator of the regional innovation network. The decentralisation of policy design and implementation took the form of task delegation: DDRIÜ’s institutional autonomy is ensured by a three-year funding by the National Office for Research and Technology (NKTH) that covers the costs of DDRIÜ’s activities. DDRIÜ enjoys full autonomy in the design/update of the regional innovation strategy. In contrast, DDRIÜ’s autonomy with respect to RIS implementation has become increasingly limited over the past couple of years. Competence sharing between the regional and national levels has been subject to and shaped by the national level’s recurring centralisation efforts. The content of regionally decentralised innovation support programmes is decided upon centrally (by NKTH), and DDRIÜ’s responsibility is restricted to identifying the key strategic sectors in ST, that would receive targeted support in the framework of the regionally decentralised programmes.

Following the general elections in 2010, national innovation institutions were restructured. A three-legged system was created in which innovation strategy formulation is the responsibility of the Ministry for the National Economy while policy implementation in terms of the allocation of funding (support to innovation activities in the framework of the National Development Plan – the New Széchenyi Plan) pertains to the responsibility of the Ministry of National Development. The management of the Research and Technological Innovation Fund has been transferred from NKTH to the newly created National Research Innovation and Science Policy Council. Both NKTH’s and the regional innovation agencies’ (RIAs) position are still unclear in this system.

RIAs have accumulated non-negligible network capital and region-specific knowledge. They deliver high quality public goods and the type of activities they perform cannot be taken over by central actors. These factors forecast that RIAs’ network will be maintained albeit with limited power and restricted budgets.

4. Conclusions: future actions and opportunities for innovation policy Within half a decade, innovation stakeholders in South Transdanubia have all climbed a steep learning curve. A lagging region with meagre innovation performance, and a small number of isolated innovation actors has been transformed into a networked regional innovation system. Among the achievements we can enumerate 1) the considerable investment into the region’s R&D infrastructure; 2) institutional development: the establishment of numerous intermediary and transfer institutions; 3) increasing awareness and improvement of innovation culture; 4) development of

4 HUF/€ exchange rate is 250 for the years 2004-2007; 265 for 2008; and 275 for 2009 and 2010.

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regional innovation stakeholders’ intra-regional, inter-regional, cross-border and EU-level linkages; 5) some intensification in regional SMEs’ innovation activities and 6) move towards smart specialisation: enhancement of the region’s image as one, specialised in technologies and sectors that improve the quality of life such as biotechnology, healthcare and cultural and creative industries.

These non-negligible developments in a wide variety of innovation related areas have however been insufficient to improve the region’s innovation performance in a statistically significant manner. ST is still at the bottom of the league table of Hungarian regions with respect to most performance indicators. The stubbornly remaining deficiencies of the regional innovation system are as follows: 1) regional actors’ below the critical mass innovation activity; 2) poor commitment to innovation co-operation (network linkages are confined to information sharing); 3) below-the-national-average capability to attract funding from national and European sources and 4) meagre commercialisation performance.

Nevertheless, we can claim that the main institutional, infrastructural and cultural preconditions of improving the regional innovation potential have been put in place. A lagging region’s innovation potential takes time to improve, and the impacts of any improvement are reflected in the statistical data only with substantial delay.

Future policy actions should

• At the national level lay emphasis on continuity aspects that diminishes regional innovation stakeholders’ uncertainty. The coherence of regional innovation policy implementation with national priorities ought to be improved not through stronger than before resource centralisation but rather through the elaboration of an efficient evaluation and monitoring system.

• At the regional level, accumulate network capital and contribute to network building, i.e. “open up the region” and try to intensify regional stakeholders’ networking with European universities as well as with firms interested in industrial and commercial applications of scientific findings. Try to improve regional stakeholders’ capability to participate in EU-funded international innovation projects.

• Concentrate on sustainability aspects. R&D infrastructure building is not sufficient: the operation of existing science parks and knowledge clusters can be sustainable only with a diversified portfolio of innovation co-operation projects. Well-functioning national–regional co-operation in innovation policy governance could be exemplified in this respect by a careful division of labour between the two governance levels: e.g. support to infrastructure building in regional knowledge clusters ought to be decided upon and managed by the national level, while support to intra-cluster co-operation activities, and to regional stakeholders’ networking by the regional level.

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1. Main Trends and Challenges in the Regional Innovation System

1.1 Recent trends in regional economic performance

Encompassing three counties (Baranya, Somogy, Tolna) South Transdanubia (ST) has 945,000 inhabitants (5.3% less than in 2001). ST is an underdeveloped and declining region (area of 14,169 sq km), characterised by low population density (66.9 persons per sq km while the national average is 107.6); a large number of poorly accessible settlements; and relatively modest share of manufacturing (industrial output was only 5% of total Hungarian industrial output in 2009).

GDP growth between 2000 and 2008 was inferior to the national average (average annual growth was 7.4% while the national average amounted to 9.4%). This resulted in the region’s shrinking contribution to Hungary’s GDP (from 7.4% to 6.5%). In 2008, the region’s GDP per capita was €6819, ranking 4th in Hungary. Its GDP per capita was 42.8% of EU27 and 68.3% of the national average (down from 75.1% in 2000). Central Hungary’s (the top ranking region) GDP per capita was 2.4 times higher than that of ST.

Sectoral GDP per capita compared to national average is a telling indicator: it reveals that the region’s economic structure is substantially different from that of other regions. Agricultural GDP per capita was 142.7% of the national average in 2008. As for industry (mining and manufacturing), the respective figure was a mere 45.3%. The relatively high share of agriculture is also reflected by comparative employment shares: agricultural employment accounts for 5.6% of regional employment (2009), while the national average is 3%.5

In summary, ST’s economic structure reflects a higher-than-the average share of agriculture (8.9% versus 4.2%). On the other hand the region’s manufacturing base is much lower than the average. Though the weight of industrial GDP is not much below the national average (27.7% versus 29.3%), the share of manufacturing within total industrial output is the lowest in ST: 73.8%. This is explained by the relatively high share of the energy sector, due to the fact that Paks Nuclear Power Station is in ST. As for the services sector, its GDP share is also somewhat lower than the national average (63.5% versus 66.4%), with tourism and higher education being important contributors.

The number of registered companies amounted to 152,154 (end of 2009): 9% of total.6 The last data for foreign invested enterprises are available for end 2008: their number was 1298: ~4.5% of total. The regional stock of FDI was however much smaller than the region’s share of the total number of foreign invested enterprises suggests: 1.2% of total. ST is far behind other regions in terms of per capita foreign capital: this indicator was 5.5% of Central Hungary’s (the region ranking first in this respect) respective indicator and 12.5% (!) of the national average in 2008. ST’s inferior-to-the-average competitiveness and FDI attraction potential is also reflected by poor export performance: in 2009, industrial export sales accounted for only 4.4% of Hungarian

5 Employment in public administration is also higher than the national average: 10.3% versus 9.1%. 6 The number of active enterprises is however much lower: 59,823 in 2008. The intensity of

entrepreneurship activity (number of active enterprises per thousand inhabitants) is therefore the second lowest: 62.3 in Hungary (versus 69.8 the national average). Furthermore, the value of this indicator has considerably declined since 2000, when it was 72.

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industrial exports.7 Economic actors’ average investment per capita between 2001 and 2007 was 83.8% of the national average.

The region’s unemployment rate (for a population aged between 15-64 years) was 11.0% in early 2009 (the national average being 10.0%). Compared to 2000, employment decreased by 6% in the region by 2009 (from 358,400 to 337,800), and employment rate was as low as 46.1% (the national average being 49.2%). Worth to be mentioned, that the region’s activity rate is one of the lowest: 51.8% in 2009, whereas the national average is 54.7%. The number of inhabitants receiving state aid (social contributions) was 30,528 in 2008, 14.3% of total recipients.

ST is a rapidly aging region, the aging index: the number of old age (>65) inhabitants relative to that of children (0-14) increased from 91.5 to 116.4 between 2001 and beginning 2009.

Similarly to Hungary as a whole, ST was hard hit by the economic crisis of 2008-2009, though given its relatively underdeveloped status and the relatively low share of manufacturing in regional GDP, economic performance in general and industrial output in particular dropped not as substantially in 2009 as in other more developed regions: the volume index of industrial output was 87.3 versus the national average of 82.1. Industrial export sales decreased also less substantially than the national average (its volume index was 90.2 versus 81.2). In contrast to an overall drop in the rate of gross fixed capital formation in 2009 (by 5%), regional investment increased by 23% compared to 2008. This increase was mainly due to improved performance in the construction sector: this sector’s output increased by 42% in 2009.

In summary, recent developments in economic performance were ambiguous, but despite some progress, the region’s lagging, underdeveloped status has not changed.

ST’s lagging status is mainly due to its peripheral geographical location, poor accessibility and unfavourable settlement structure and economic structure. ST’s unsatisfactory FDI attraction potential prevented the region from undergoing substantial structural change: mining and heavy industry suffered huge losses following the change of the regime, and lost output was not compensated by local entrepreneurship or by newly established foreign subsidiaries. The region hosts 19 industrial parks, but several of them still have large idle capacities.8

The usual key driver of economic growth in catching-up economies: the attraction of export-oriented foreign direct investment is poorly available in the region. Beyond inadequate accessibility the region’s intermediate development level is the main explanatory factor for the scant presence of foreign investors. From the point of view of infrastructure and accessibility, ST’s development level is similar to those of Croatia and Serbia, while its wage level makes it more similar to Hungary’s national average.9 These factors make it very difficult for the region to attract large, export-oriented investors. Efficiency-seeking investors usually opt for relatively developed, well-accessible regions, if they seek a cheap eastern location, they would usually “jump over” the intermediate spaces.

According to analysts (Hrubi, 2009) and to recent policy papers the health industry, cultural & creative industries, ICT and eco-industries can be considered the main drivers of regional modernisation.

7 This poor performance is bound to improve with the run-up of production by Huawei Technologies (a new export-oriented investor in the region). Other multinational investors in the region (Elcoteq, Hauni Hungária and Flextronics) also calculate with substantial production and export increase.

8 Data are available for 2005, when there were 17 industrial parks in the region with 215 companies, and 49% of the parks were still unbuilt.

9 Note, that average gross wages in ST amount only to 84.9% of the national average (2009).


1.2 Recent trends in regional innovation performance

In line with its lagging economic performance, innovation performance indicators are also meagre in South Transdanubia compared both to EU and to the national average. Regional GERD amounted to €21.6m in 2008, (2.15% of the total), which was a decrease in absolute terms compared to 2005-2007. Regional R&D intensity (regional GERD over regional GDP) was less than the half of the national average in 2008 (0,41% versus ~1%) and far behind the EU27 average: 1.9%.

Figure 1-1 Economic and innovation performance indicators for South Transdanubia

Source: Eurostat.

Figure 1-2 Benchmarking key regional innovation performance indicators, 2009

No. of R&D

organisations No. of researchers

FTE GERD (€m)

South Transdanubia 210 748 26.3

Central Transdanubia 188 1,095 59.8

West Transdanubia 229 978 50.8

North Hungary 209 877 43.3

North Great Plain 325 1,653 106.4

South Great Plain 358 1,737 82.5

Central Hungary 1,379 12,976 699.4

Source: CSO

In 2009 however, there was a promising turn of the tide: regional GERD increased by ~22%, to €26.3m, and accounted for 2.4% of total GERD – this is nevertheless still by far the lowest value among Hungarian regions (only 60% of North Hungary’s GERD, which ranks the second lowest). At the same time the number of researchers increased (from 673 to 748) but this is still the lowest among the Hungarian regions (3.6% of the total).

These tendencies reflect a promising start, nevertheless the pace of recent overall improvement in innovation performance indicators needs to continue and accelerate for many years to permit ST to catch up to the national average.


ST is the last in Hungary in terms of GERD per R&D organisation: this indicator is only ~25% of the national average. In 2008 there were 246 research centres in ST (8.7%) of the total. The indicator of GERD per R&D organisation also improved in 2009, since the increase of regional GERD coincided with a decline in the number of research organisations (from 246 to 210).

Much improvement is necessary also in the field of indicators reflecting the sustainability of regional innovation performance (or its improvement potential). RTD financing in ST is mainly driven by public investment (in ST the share of public financing was the highest within total financing while the share of BERD the lowest). Regional BERD/GERD is particularly low in the light of both the EU27 and the Hungarian national averages: EU27 average amounted to 64% between 2000 and 2008, the Hungarian average to 43.6%, whereas the value of the respective indicator was 14.1% in ST (Regional Innovation Scoreboard, 2009)10. According European Commission’s Regional Innovation Scoreboard data, in 2006 BERD amounted to 22% of GERD, while public R&D activities contributed nearly half (44%) to total R&D expenditures.

Although the region can boast of a number of innovation success stories: innovative SMEs in biotechnology, in electronics, eco-industry, food industry, automotive parts and components etc., the share of SMEs innovating in-house was a mere 1% in 2006 (Eurostat, 2006). This indicator has however considerably improved since 2006 as a result of regional innovation support programmes. In 2009, the Centre for Regional Studies of the Hungarian Academy of Sciences surveyed the regional enterprises’ innovativeness as well as their engagement in innovation co-operation. Measured with the help of a representative sample of 300 companies, researchers found that 31.5% of them can be labelled innovative (Csizmadia and Grosz, 2009). The indicator on innovation co-operation has also improved in the last couple of years. According to the 2006 Community Innovation Survey 31% of regional SMEs have engaged in innovation co-operation. This deficient commitment to co-operation is partly a general Hungarian cultural feature, which has however also changed as a result of various cluster programmes and other support measures promoting innovation co-operation in the region. The 2009 regional survey found, that 50% of innovative companies (149 companies out of 300, in the representative sample) co-operated with other actors in the framework of their innovation activities.

In the 2000s, employment in high-tech industries and in knowledge-intensive services was a mere 4.8% of total employment in ST: below the national average of 5.6%. One of the weaknesses of regional innovation performance is the lack of multinational companies with local R&D departments.

Another important deficiency of regional innovation performance is that in the light of data on the distribution of national resources for innovation support purposes, the region’s ability to capture a fair share of national resources is poor. This is partly explained by the fact that the number of innovative companies capable to apply for support is inferior to that of other regions. Even in the case of resources earmarked for the support of ST’s innovation activity, the share of competitive research funding regional innovation stakeholders could access to, kept declining in the second half of the 2000s (Kiss, Kocsis and Sitányi, 2009).

ST accounts for a relatively small share of Hungary’s core innovation resource: human capital. The share of the population aged 25 to 64 years with a tertiary educational attainment was 23% in 2006: less than half of Central Hungary’s (the region ranking first) respective indicator (53%). Since ST is relatively well-endowed in terms of higher education institutions (in 2007, the number of students in tertiary education was

10 http://www.proinno-europe.eu/page/regional-innovation-scoreboard


37,486 and ST was ranking fourth in this respect in Hungary )11, this deficiency suggests that graduates leave the region in search of promising job opportunities.

Hungarian performance with respect to lifelong learning is in general much below the European average: the share of the population aged 25 to 64 participating in education and training was 29% of the EU27 average in 2009. Regional data from Eurostat are available only for 2006: lifelong learning in ST was 26% of the adult population: a medium performance in Hungarian comparison. The share of households with broadband access was 44% in early 2010, the second lowest in Hungary (national average being 52%).

Regarding innovation output indicators, ST contributed by a mere 3.4% to Hungary’s total EPO filings between 2000 and 2008. In 2008 the number of (Hungarian and foreign language) publications related to the region was 1235: 3.26% of the total. Comparing ST’s performance in terms of total EPO filings per thousand inhabitants to the Hungarian and the EU27 averages (34.4% and 3.9% respectively) it becomes self-evident that Hungary itself is far behind the EU27 average performance in this respect, and ST is much below the Hungarian average.

1.3 Identified challenges

While strong regional knowledge bases; an increasing but still low number of innovative SMEs; and the highly efficient institution that coordinates regional innovation can be considered the key drivers of regional innovation performance, the list of key barriers is considerably longer. Part of the barriers can be traced back to the legacy of the socialist system: poor accessibility and unfavourable settlement structure and economic structure. Other barriers include the low presence of multinational companies, and regional economic actors’ overall low innovation activity. Few of them are capable to participate in national and European tenders that would provide substantial support to innovation activities but require a prohibitively large share of co-financing (above 50%). Another important barrier is that the region’s ability to capture national resources is inferior to that of other regions.

In the light of the above drivers and barriers the three most important challenges for the region’s innovation performance are as follows.

Challenge 1: Unsatisfactory innovation activity and poor ability to capture national and European resources available to support innovation purposes

The number of innovative SMEs is unsatisfactory and there are practically no multinational companies that carry out local R&D activities. Private companies can accumulate too little resources to become engaged in R&D activities in general and step on an innovation-driven growth path in particular. The region’s peripheral and lagging status is a barrier to innovative companies’ growth. Most of the policy measures – be they announced and managed in a decentralised manner or centrally (e.g. OPs, technological platform and cluster programmes) – support SMEs’ product development and process innovation activities. Other measures (e.g. financing the establishment and upgrading of technology transfer institutions, or of incubators, science parks) support commercialisation. Since innovative companies’ growth is determined mainly by overall economic factors, innovation policy measures could not substantially improve this situation: support programmes and policy alone could not push local economic actors to an innovation-driven growth path. What programmes and policy could achieve was to contribute to the emergence of individual success stories and raise awareness, provoke (slowly and gradually) some changes in mentality.

11 Source: CSO


Regional actors’ participation in international (in particular in EU-funded) support programmes is also below the expectations. Although the intensity of regional actors’ tender applications has considerably increased in the past couple of years (mainly due to DDRIÜs systematic and efficient services and information provision: knowledge transfer in the field of tendering, application writing and innovation management) their efficiency in accessing national and international resources have remained poor. Since the annual amount of regionally decentralised funding has grown, actors’ ability to capture the resources, measured by the share of resources gained over the amount of available resources has even deteriorated. This deficiency is exacerbated by the fact that beyond the decentralised, the central and the European grants that provide funding to innovation purposes, finance for innovation is barely available: there are no business angels, seed capital or venture capital funds in the region. Furthermore, the spatial distribution of winning applications is very concentrated: in the 2005-2008 period applicants from only nine out of the region’s 653 settlements have gained innovation support (Kiss, Kocsis and Sitanyi, 2009). In 2009 this tendency was further exacerbated: the two most important cities, Pécs and Kaposvár accounted for more than 70% of total support.

Challenge 2: Poor performance in terms of commercialisation and technology transfer

The so-called European paradox (the failure to translate scientific results into marketable innovations) is acutely present in South Transdanubia. The region has two outstanding knowledge bases (the University of Pécs and the University of Kaposvár); various science centres and knowledge clusters, co-operation research centres, and an accredited biotechnology cluster. Despite the high scientific degree of the research carried out in these organisations and the non-negligible scientific results achieved, industrial applications remain sporadic. Industrial companies have little information about regional research activities and results. Private R&D performers’ efforts remain below a critical threshold and few of them co-operate with the region’s knowledge bases: private R&D efforts remain isolated in the majority of the cases, or, at least restricted to user-producer interactions. Science centres on the other hand also have little information about private actors’ technological needs. This explains the region’s meagre performance in terms of technology-oriented entrepreneurship and in terms of the number of spin-off companies.

Challenge 3: Dominance of traditional and mature sectors, small share of industries with high R&D-intensity

Structural burden, i.e. the lower-than-the-average share of R&D-intensive sectors and industries hampers the improvement of ST’s innovation performance. Beyond a higher-than-the average share of agriculture and of the energy sector; the lower-than-the-average weight of manufacturing and of the services sector, the manufacturing mix itself features a structural burden as well. Food and wine industries, traditional machinery and equipment manufacturing, light industry as well as low local value adding electronics assembly dominate within the regional manufacturing mix. Key technology- and knowledge-intensive industries such as ICT (software development), eco-industry, biotechnology etc. are present, but their output is below the necessary threshold: therefore the regional market for technology is underdeveloped. As for another innovative sector: cultural and creative industries excessively depending on – shrinking – public funding.

Policy addresses this challenge by supporting the innovation activity of actors in the key strategic sectors and the technology absorption of actors in traditional and mature sectors. Policy efforts have however been below the threshold that would have initiated some structural change related intensification of innovation activity. Moreover, recent policy moves towards smart specialisation and concentration of scarce resources to key innovative industries have been jeopardised by the presence of too many applicants in a wide variety of scientific disciplines and sectors for the status of key priority technology/industry.


2. Innovation Policy Governance

2.1 Degree of institutional autonomy

The main governance level for the design of innovation policy in the region is the regional level, with the South Transdanubian Regional Innovation Agency (DDRIÜ), an independent non-profit firm since 2008 being the main actor and the key coordinator of the regional innovation network. At the time of DDRIÜ’s foundation in 2005, the agency was a department of South Transdanubian Regional Development Agency (STRDA), but in 2008 it was converted into an independent non-profit firm.

DDRIÜ’s operational autonomy is ensured by a three-year funding, since it won a tender announced by the National Office for Research and Technology (NKTH)12 in 2007: “Tender to support regional innovation agencies' R&D- and innovation related tasks”. The grant – a predetermined yearly amount of €400,000 – covers the costs of DDRIÜ’s activities for three years between July 2008 and June 2011. By the end of this period DDRIÜ has to become partly self-financing. Therefore, it developed a range of innovation-related services: consultancy (e.g. innovation audit, elaboration of project ideas, IPR consultancy); technology transfer and marketing services; enterprise development services; training services etc. that ensure some independent revenue above the central support.

DDRIÜ enjoys full autonomy in the design/update of the regional innovation strategy (RIS). Of course a wide range of actors in the regional innovation system have been involved in the design/update of RIS: representatives of the region’s knowledge bases, of public and private research organisations, transfer institutions, clusters, chamber of commerce, enterprise agencies, various NGOs (e.g. the Hungarian Innovation Association, STRDA), consultancy firms specialised in innovation-related issues, as well as representatives of the national level (NKTH).

In contrast, DDRIÜ’s autonomy with respect to RIS implementation has become increasingly limited over the past couple of years, because of the increasing centralisation of innovation policy implementation by the central government. Regional innovation support measures have become nearly identical over time, although the RIAs’ experts have been involved in the design of the measures. The 2008 and the earlier calls still reflected regional specifics, but in 2009 the texts of the calls were already identical in the case of all regions. The content of regionally decentralised innovation support programmes was decided upon centrally (by NKTH), and the RIAs’ role has been restricted to determining the range of key strategic sectors, that would receive targeted support in the framework of the regionally decentralised programmes. According to NKTH officials’ view, “full” decentralisation resulted in a multitude of highly diversified programmes, which was very difficult to administer and monitor. Therefore NKTH prepared a menu of programmes and regions could select from this menu and take region-specific features into account. This made the process of regional innovation policy implementation more efficient and easier to manage and administer.

The role of the RIAs is to collect the tender applications and to check, whether they meet all the formal prescriptions. The selection of winner applications is the responsibility of the regional development agencies. In South Transdanubia STRDA’s Regional Innovation and Economic Development Committee is responsible for the decision upon the applications. Once the winning projects are selected, beneficiaries sign the contract with representatives of the national level (NKTH) and support is

12 Since the end of 2010, the new name of the Office is National Innovation Office (NIH). In this report the old name and abbreviation will be used.


transferred from the State Treasury. DDRIÜ’s responsibility is restricted to grant management, to the management of the administrative procedures of the regionally earmarked grants.

In summary, beyond operational autonomy, DDRIÜs independence is manifest in strategy design & prioritisation, but not in strategy implementation, or in financing.

2.2 Institutional-set up, co-ordination and implementation mechanisms

National innovation policies started to take the regional / spatial dimension increasingly into account in the early 2000s.13 According to the 2003. XC. Act on the Research and Technological Innovation Fund, 25% of the Fund’s yearly income14 is designated to regional innovation purposes. The distribution of this amount among the regions is determined by the region’s population (with a weight of 0.5) and by the region’s development level (the weight of this determinant is also 0.5). The utilisation of part of this decentralised amount (in 2005-2006 €16m respectively, in 2007-2008 €20m respectively) is decided upon by the regions (the regional development agencies) while the allocation of the remaining part is decided upon by the president of NKTH.

The first regional innovation strategy papers and regional information society papers were prepared by the regional development agencies (RDAs): the only existing organisations in regional development. RDAs had their own experts specialised in science, technology and innovation policies, and occasionally they also involved external experts, academics and consultancy firms’ services into RIS preparation. Strategy preparation coincided with institutional development, with the setting up of bodies specialised in innovation policy design and implementation. In the South Transdanubian case, STRDA15 submitted a proposal to the European Union’s RIS/RITTS tender call and gained support to elaborate its regional innovation strategy. RIS was prepared in 2004 (work to formally update the strategy began in 2010). Strategy preparation coincided with the setting up of the South Transdanubian Regional Innovation Council, and the foundation of the ST Regional Innovation Agency (DDRIÜ) in 2005: first as a department of STRDA. DDRIÜ was granted (by NKTH) three-year support, to develop its organisation, accumulate expertise and manage its activity.

Following the first three-year-period of the RIAs’ activity NKTH contracted an independent body, the Federation of Technical and Scientific Societies (MTESZ) to evaluate the RIAs’ performance and make recommendations about the further improvement of the institutional set-up.

The unambiguously positive evaluation of MTESZ has prompted NKTH to continue and upgrade its programme aiming to strengthen regional innovation institutions. A new tender was announced in 2007 and the organisationally transformed ST Regional Innovation Agency started its second three-year term in July 2008 already as an independent, non-profit firm.

As far as horizontal coordination mechanisms are concerned, DDRIÜ regularly informs the South Transdanubian Regional Development Council about its activity. It co-operates with NKTH; as well as with STRDA – it participates in the meetings of STRDA’s Regional Innovation and Economic Development Committee. Since STRDA is the intermediary body of the South Transdanubian Regional Operational

13 Regionalisation in terms of regional development started earlier: regional development councils and agencies (RDAs): coordinators of development policy at a regional level were set up in 1997.

14 The income of the Fund grew from €141.6m in 2004 to €189.2m in 2008 (Source: Borsi et al. 2010). 15 STRDA submitted the proposal as member of a consortium comprising Shannon Development (Ireland);

Yorkshire & Humberside Technology Network Ltd. (UK), and South Transdanubian Regional Research Centre.


Programme, which includes several measures that target regional innovation activities – information sharing between the two organisations is crucial.

DDRIÜ has a broad co-operation network, including the Hungarian Innovation Association and the regional bureau of the Central Statistical Office. It co-operates with all actors of the regional innovation system including the region’s industrial parks, clusters, and incubators. DDRIÜ regularly organises workshops and conferences for regional innovation stakeholders, which serves as a forum for regional dialogue and contributes to the identification of demands and necessities. DDRIÜ’s officials try to keep updated about the theoretical and empirical developments in regional science, therefore they co-operate with the Regional Research Centre of the Hungarian Academy of Sciences in Pécs: they are present at RRC’s workshops and conferences, and occasionally DDRIÜ contracts RRC-researchers to carry out some policy related investigations.

Horizontal co-operation among regional innovation agencies (RIAs) has become formalised through the creation of RIA’s network (RIÜNET): an initiative of DDRIÜ. RIÜNET provides opportunity for an active dialogue and information sharing across RIAs and between RIAs and the National Office for Research and Technology. The creation of DDRIÜ’s representation office in Brussels has produced another channel of horizontal co-operation among the RIAs.

ST has a variety of transfer institutions: industrial parks, incubators, technology transfer offices (TTOs); enterprise agencies, industrial associations and chambers of commerce at county level and consultancy firms specialised in innovation-related issues. These specialised intermediary institutions contribute to RIS implementation. They facilitate linkage building, technology diffusion and transfer, provide information and consultancy services, and assist innovation stakeholders in innovation management issues. Industrial parks and incubators facilitate innovative companies’ growth. Enterprise agencies, industrial associations and chambers of commerce contribute to network building, information collection, communication and awareness increase: e.g. they also grant innovation prizes. Despite the existence of a dense network of innovation intermediaries, according to Csizmadia–Grosz’s 2009 survey, demand for the activity of these institutions in ST is below the national average.

As noted above, central – regional competency sharing is subject to and shaped by the national level’s recurring centralisation efforts. As there were ardent discussions in 2007 between NKTH and the RIAs about the design of the regionally decentralised support programmes, the so called Baross Gábor calls (see section 3.4) were not announced that year. The explicit devolution of funding (that the utilisation of €20m of decentralised funds is decided upon by the regions) was abolished in 2010. DDRIÜ’s own budget has remained minimal and the yearly amounts to cover the costs of RIAs’ activities are being transferred with increasing delays, e.g. more than half of the amount designated for the third year (ending in the first half of 2011) is still to be transferred.16

Debates over inter-departmental competency sharing have also produced changes in the coordination of regional policy implementation. Regionally decentralised innovation programmes managed jointly by NKTH and the regions have always been more popular than EU co-financed, centrally announced operational programmes targeting innovation (managed by the National Development Agency and administered by the intermediary organisation: the Hungarian Economy Development Centre, MAG Zrt.). Three reasons explain regional actors’ biased interests. Firstly, the former type of programmes require relatively little co-financing by recipients. In

16 Because of fiscal austerity measures the government suspended the funding of innovation in the second half of 2010, and froze €58m of the Research and Technological Innovation Fund. (In reality, this “temporary” freeze proved to be a waiver. An additional amount of €43.6m (contracted by NKTH but not paid in 2009, and transferred to the Fund’s 2010 budget) was frozen as well.


contrast, the required level of beneficiaries’ co-financing in the case of operational programmes is often above 50%. Secondly the overly bureaucratic management of the latter type of programmes which constitutes hardly bearable administrative burden for beneficiaries. The third reason is the availability of advance payments in the former type of programmes, which is indispensable in the case of deficiently capitalised actors, unable to pre-finance the costs of innovation projects.17

This resulted in a relatively poor response to calls of Operational Programmes announced by the National Development Agency, which prompted national policy-makers’ adoption of ever stricter regulations. The scope of objectives that can be supported from the Research and Technological Innovation Fund were limited and the preconditions of gaining support from NKTH narrowed.

As for international coordination mechanisms, DDRIÜ is member of various international networks (European Regions Research and Innovation Network; Technology Innovation International, Lisbon Regions etc.), and maintains a broad network of international co-operation. Cross-border and inter-regional coordination mechanisms include co-operations to participate jointly with other regions in EU-funded programmes (INTERREG IV; South East Europe and Central Europe Programmes). In the frame of EU-financed programmes Finnish, Greek and Austrian international innovation management consultancy firms provided consultancy services and transferred knowledge to DDRIÜ. DDRIÜ’s representation office in Brussels is maintained jointly with the Croatian Regional Development Agency of Slavonia and Baranja.

2.3 Availability and use of policy intelligence tools

DDRIÜ employs various evidence-based methods to substantiate regional innovation policy design. It contracted external experts to carry out sectoral analyses to identify regional engines of growth. Based on stakeholders’ inputs, experts assessed regional technological strengths. They evaluated the region’s main technological resources, priorities and the bottlenecks that hinder the development of selected excellence centres. DDRIÜ has also contracted surveys that analyse regional enterprises’ commitment to innovation and innovation co-operations. Additionally, surveys identified regional actors’ infrastructural needs, and innovation management gaps and bottlenecks that could be solved with consultancy services.

Results are not only communicated in workshops and conferences, (part of them are published in DDRIÜ’s website), but they are also integrated in the monitoring part of the policy cycle (i.e. in the annually prepared reports on DDRIÜ’s activities) and they are also used in the process of preparing updated versions of the regional innovation strategy. For example, technology assessment exercises contributed to identifying the subsectors of broadly defined target sectors (food industry; health industry, ICT, cultural and creative industries, eco-industries) the promotion of which is best tailored to regional resources and needs.

In 2009, DDRIÜ introduced an EFQM Excellence Model to control organisational quality as well as the quality of its operation. It identified the main indicators with the help of which the quality of the operation can be documented and evaluated. In 2010 it contracted external experts, who evaluated the strengths and weaknesses of the Agency. Organisational quality improvement was facilitated also by the intelligence gained through international co-operations and good practice transfer from international management consultancy firms.

17 Responding to regional actors’ biased interests, authorities have increased the support-intensity of innovation-related EU co-financed operational programmes (they have reduced the percentage of recipients’ co-financing obligation) and have introduced the possibility of advance payments.


DDRIÜ prepares annual reports for NKTH, in which it summarises its activities and achievements. Reports are published in DDRIÜ’s website as well.

Figure 2-1 Governance, policy, and innovation performance for South Transdanubia

Source: RIM survey.

2.4 Key challenges and opportunities

The main challenge, faced by regional innovation policy-makers is the ongoing restructuring of the national innovation institutions the impact of which on regions is still ambiguous. Nevertheless, a short-term negative impact of institutional restructuring is already clear: partly because of fiscal austerity measures, and partly because the time requirement of institutional restructuring was considerable, no tender calls targeting regional innovation were announced in 2010 (neither Baross Gábor, nor Innocheck programmes). 2010 was a blind spot of regional innovation, also because several tender calls of Structural Funds co-financed, centrally announced operational programmes targeting innovation as well as various tender calls of the South Transdanubian Operational Programme were suspended following the elections (e.g. the one for e-government development, cluster development, business incubator development etc.).

According to the new (2011) institutional structure, national innovation policy design and implementation has become split between two ministries. Innovation strategy formulation is the responsibility of the Ministry for the National Economy while policy implementation in terms of the allocation of funding (support to innovation activities in the frame of the National Development Plan – the New Széchenyi Plan) pertains to the responsibility of the Ministry of National Development. The management of the Research and Technological Innovation Fund has been transferred (from NKTH) to the scope of authority of the minister of National Development. This split will have an impact on NKTH’s organisation as well. According to the Government Resolution No. 303/2011, NKTH will be transformed and instead of its former assignment of managing the Research and Technological Innovation Fund it will become an innovation-management organisation.

Both NKTH’s and the RIAs’ position are still unclear in this new system. There are at least three factors that will shape RIAs’ future competence. Firstly, national innovation policy decision-makers are not completely satisfied with the efficiency and the outcomes of past decentralised innovation support decisions. The system of seven regions makes the funding that can be provided under the auspices of individual


regional support programmes too fragmented, below the critical mass. Moreover, regional level decisions (in the case of Baross Gábor programmes) were often criticised for their poor coherence with national innovation priorities. Secondly, the current political approach does not advocate further regional decentralisation: recent institutional restructuring decisions and political statements point rather to an intensification of centralisation tendencies. Thirdly however, despite occasional disagreements, the network capital and the region-specific knowledge RIAs have accumulated, is recognised and highly esteemed by national policymakers. RIAs deliver high quality public goods and this type of activities and services cannot be taken over by central actors. All in all, these factors forecast that RIAs’ network will be maintained with limited power and restricted budgets.

According to the preliminary version of the National Action Plan of Hungary,18 the government will unify the system of innovation support. 2011 will be the year of transition to a new system that will be based mainly on operational programmes. In 2011, the amount available in the Research and Technological Innovation Fund for supporting national and regional innovation activities will be sufficient mainly to cover past (contracted but still unpaid) obligations: few new regional or national calls will be announced.

In summary, the main challenge is that regional innovation systems will fade away. Institutions of regional innovation policy design and implementation may merge into the institutions of regional development (or be maintained without real power and decentralised resources), and the regional level degraded. Achievements of a six-year systematic and efficient work to create a dense network of regional innovation stakeholders may thus be withered.

18 http://www.kormany.hu./download/3/64/10000/ENIT.pdf


3. Innovation Policy Instruments and Orientations

3.1 The regional innovation policy mix

Regional innovation policy measures try to address the major policy objectives identified in the regional innovation strategy by targeting

• institutions responsible for the coordination and governance of the regional innovation system as well as the ones responsible for horizontal R&D policies;

• corporate R&D activities, as well as higher education institutions- (HEIs) or public research organisations- (PROs) based R&D activities;

• technology-oriented entrepreneurship, and

• innovation culture.

Table 3-1 The regional innovation policy mix

Name of scheme

Policy objective

BGP Innocheck Financed by RIAs

STOP Other

Institution-building, institutional capability accumulation

X X X

R&D activities (corporate) X X X X

R&D activities (HEI- and PRO-based) X X X

R&D infrastructure development X X X

SMEs’ product development activity X X X

Technological development in SMEs X X X

Technology-oriented entrepreneurship X X X X

Science-industry co-operation and technology transfer

X X X X X

Human resources development X X X

Innovation stakeholders’ participation in international projects

X X X

Improvement of regional innovation culture

X X X

BGP = Baross Gábor Programme, STOP = South Transdanubian Operational Programme, Other = other OPs including Economic Development Operational Programme and Social Renewal Operational Programme as well as national innovation policy schemes

Source: compilation by the author

The priority ranking of policy objectives is clearly reflected by the shares of funding beneficiaries can access to in the frame of the individual measures. Business R&D and investment into research infrastructure rank first and second (in terms of their share in total funding). The third priority is the (indirect) support of technology-oriented entrepreneurship (including the growth of innovative enterprises) through the support of intermediary organisations’ competence and services.

The two most important regional support programmes that target R&D activities and entrepreneurship are the Baross Gábor Programme and Innocheck Programme.


Before detailing these two programmes, a general overarching measure has to be mentioned, that targeted the development of regional innovation institutions. This measure, already analysed in preceding chapters, financed the setting up of the main coordinating institution of the regional innovation system: the regional innovation agency, and provided funding so that the agency (DDRIÜ) could carry out a predetermined set of activities. Announced first in 2004, the measure was renewed and extended in 2007. DDRIÜ’s activities of regional innovation strategy design and delivery have been financed from this scheme during two periods of three years respectively (2005-2007 and 2008-2011).

Baross Gábor Programmes (BGP) are announced each year (except for 2007 and 2010) in each region. They consist of two to four calls, the most important one being the support of regional R&D projects. Although the calls usually emphasised technology transfer among the targeted activities (not only research and technology development), applications submitted in industry–university partnership (including both research and its commercialisation) were quite rare before 2009. Therefore, the 2009 call prescribed that all BGP applications have to be submitted in industry–university consortia.

Other BG calls included the support of the development of R&D infrastructure. Both universities (and public research organisations) and private firms’ R&D infrastructural investments were among the target groups. Large scale support (beneficiaries of the 2009 call received altogether €500,700) promoted investment into laboratories’ research instruments etc.

In 2009, BG calls were also announced to support innovation stakeholders’ participation in international projects, but in the South Transdanubian region there were no winning projects.

The last type of BG call was announced to support regional innovation stakeholders’ competence building. This included institutional development (establishment of technology transfer offices and competence centres); as well as services development in the case of existing stakeholders (e.g. university-based co-operation research centres, and knowledge centres; regional chambers of commerce and industrial parks). The total amount contracted in the frame of this call was €471,500 in 2010.

Innocheck and Innocheck Plus programmes were among the most successful policy measures that targeted regional SMEs’ product, process and organisational development projects. Innocheck programme was first announced in 2005 and targeted regional SMEs’ innovation projects. The measure provided support also to SMEs’ access to innovation related services (feasibility studies, innovation management services, IPR consultancy, and even more importantly: technical and testing services) – in that latter case funding was transferred directly to services providers. Under the 2005 call applicants could submit their proposals continuously up till 2008, but the programme was so popular that it was quickly oversubscribed and suspended in 2006 because resources allocated to this programme have run out. The second Innocheck call was announced in 2008 and suspended in early 2010 (by that time resources had long been run out).

Measures to improve innovation culture and communication were financed by DDRIÜ, occasionally with the help of corporate sponsors. One such measure is the announcement of the annual South Transdanubian Innovation Prizes. Different categories are rewarded (corporate innovation award in the micro- and small enterprises category and in the medium-sized and large enterprises category, as well as in various sectoral categories (e.g. health industry, ICT); young innovator award, life achievement award to personalities who have contributed to the development of regional innovation, and a quality award proposed by the Association of South Transdanubian Chambers of Commerce. Award ceremonies usually receive high publicity and contribute to the aim of promoting innovation culture in the region.


The regional innovation policy mix is broader than the range of support measures that target regional innovation. An element of key importance is DDRIÜ’s systematic network building activity aimed to inform regional innovation stakeholders about regional, national and international tender announcements, as well as about the regional supply of and demand for knowledge and innovation activities. DDRIÜ has developed a range of services to regional actors, including knowledge transfer about tendering, about innovation management, IPR, ways and means of technology transfer etc. DDRIÜ has established a Brussels-based office and has become member of various international regional innovation related organisations (e.g. the European Regions Research and Innovation Network, ERRIN) in order to gain first-hand information about new tender calls, events, new European research priorities (e.g. intelligent energy) etc. These activities were supported by the grant NKTH provided to RIAs as intermediary organisations.

DDRIÜ’s linkage building and communication activities are supported also by a tender call announced in the framework of the Social Renewal Operational Programme, won by the University of Pécs. Since this tender supports technology transfer and commercialisation, the university contracted DDRIÜ to build linkages between the university’s research departments and regional, national and international stakeholders, interested in the university’s research results. DDRIÜ’s tasks include “the other side of the coin” as well: it communicates regional actors technology development needs to the various research departments of the university.

Regional innovation policy mix does not target human resources in terms of supporting higher education institutions’ education activity. In Hungary this is supported rather by regional development policy (mainly by national programmes and Structural Funds co-financed operational programmes). Nevertheless, RIAs carry out non-negligible human resources development in the framework of their training, tender consultancy and innovation management consultancy services. A national programme with regional implications was the Regional University Knowledge Centre Programme19 (2004-2006), in the frame of which altogether 19 universities have gained support in Hungary, and one in ST (the pharmaceutical and healthcare knowledge centre of the University of Pécs gained €4.8m). This programme intended to provide concentrated (above a critical mass) support to university-based research projects.

South Transdanubian innovation stakeholders can access also to JEREMIE20 funding instruments. Within the framework of JEREMIE-type funding venture capital investments are the most relevant from the point of view of regional innovation (JEREMIE funding instruments include also micro loans and SME working capital loans as well as portfolio guarantee funds). The six cohesion regions of Hungary will be allocated €100m in the form of venture capital investments during the period of 2010-2013. So far, only a dozen of investment decisions have been taken, and one of the beneficiaries was a South Transdanubian SME: a company specialised in developing e-invoicing systems.

Above and beyond the enumerated regional innovation support measures, Structural Funds co-financed measures announced in the frame of the regional operational programmes are becoming the key funding schemes for regional innovation stakeholders. Several measures of the South Transdanubian Regional Operational Programme target the development of clusters, incubators, innovation transfer centres and science parks. There is one accredited cluster in ST in the healthcare industry (the Biotechnology Innovation Base). In early 2010 six projects of the cluster have received funding from STOP of a total value of €2.2m. Moreover, five new (still not accredited)

19 From 2005 on this programme was renamed Pázmány Péter Programme 20 JEREMIE, i.e. Joint European Resources for Micro to medium Enterprises,

http://www.eif.org/what_we_do/jeremie/index.htm


clusters incorporating 180 companies (in the eco-industry, energy sector, construction, and ceramics industry) have received funding of a total value of €570,000.

3.2 Appraisal of regional innovation policies

The chief merit of regional innovation policy is that within half a decade it managed to create a networked system from previously isolated innovation stakeholders. Due to DDRIÜ’s systematic network building, information sharing, communication and not least, due to the broad range of services it has developed, stakeholders are now aware of support opportunities and of regional innovation supply and demand. They have become increasingly capable to participate in research projects, and they are aware of regional, national, cross-border and international co-operation possibilities that could enhance the success of their own efforts.

Regional actors respond actively to tender calls, and innovation culture has been enhanced. Important steps have been taken to improve lagging regional innovation performance indicators.

In summary, despite the lack of spectacular improvement in innovation performance indicators, and despite the fact that disparities between the innovation performance of this lagging region and the advanced Central Hungarian region have increased, paradoxical as it may sound, we can still claim that regional innovation policy responds to the identified policy challenges. Policy efficiency can be documented with selected hard indicators, as follows.

Regional actors’ unsatisfactory innovation activity has clearly improved, and the number of actors that have submitted applications to tender calls announced by NKTH increased considerably (in contrast to preceding years, BGP calls in 2009 were already oversubscribed). The number of EU-funded research projects is bound to increase as regional innovation stakeholders have submitted several applications to European tender calls. Poor technology transfer and commercialisation performance is bound to improve as well, due to the recent contract DDRIÜ signed with the University of Pécs. (DDRIÜ will start a comprehensive linkage building activity – supported by the Social Renewal OP – between the university’s research departments and national and international innovation stakeholders to promote the commercialisation of the university’s research results.)

Some external factors have also had an impact on the efficiency of policy delivery. Policy cycles produced a major negative impact mainly by reducing the predictability of policy implementation as well as that of the institutional system. Another negative external factor has been the usual delay with the transfers of central support21 both to corporate and university grant recipients and to intermediary organisations responsible for innovation policy implementation.

Other external factors have however produced positive impacts. One of them was the European Cultural Capital Programme, in the frame of which several research infrastructure objectives of the University of Pécs could gain support, and representatives of the cultural and creative industry could benefit as well. The development of cultural and creative industry in the frame of this programme was a good example for the alignment of regional and national objectives and the synergy effects of this alignment. Otherwise, DDRIÜ has always made attempts to link regional innovation objectives with national ones and the priorities outlined in the regional

21 The time requirement of the selection process (decisions on the winning project applications) has also been prohibitively long. According to Borsi et al. (2010), between 2004 and 2009, the average time that elapsed between applicants’ submissions of a project proposal and the signing of the contract on funding by NKTH and the winners was 200 days. Borsi et al. note, that in the case of Baross Gábor and Innocheck Programmes this time requirement was much higher than the average. (pp. 161-163)


innovation strategy coincided with a number of priorities specified in the national strategy.

3.3 Good practice case

One example for regional good practice is the South Transdanubian Innovation Prize (STIP) founded by DDRIÜ. The region can boast of several success stories (e.g. the ones of innovative SMEs, that had been beneficiaries of various support measures; the ones of the region’s knowledge bases, that had benefited from supported investment into their research infrastructure), but we selected this measure for good practice case because it fulfils several criteria at the same time. STIP enhances innovation culture, and targets some of the region’s key innovative sectors. At the same time it contributes to the marketing and PR efforts of innovative firms, in particular to the promotion of the recipients’ innovative project ideas. The main innovative feature of this measure was that it managed to fulfil several policy objectives with the help of minuscule funding.

STIP was launched in 2009, and renewed and extended in 2010. Due to the major communication efforts related to it, its impact goes much beyond the funding it represents (otherwise the prize is symbolic, only one category (young innovators) is accompanied by funding (of €1,000). Recipients of the other categories get simply the certificates of the reward, together with a glass ceramics statuette.

Awards are granted in the following categories: 1) micro and small enterprises; 2) medium-sized and large ones; 3) innovative enterprises in the health industry; 4) in agriculture or in ICT; and 5) young innovators (project ideas). County-level chambers of commerce can nominate one enterprise respectively and the sixth prize is awarded to the one selected by DDRIÜ’s committee of experts. In 2010, the above categories were complemented with a new one, a so-called life achievement award, granted to an outstanding individual who has contributed to the development of the region’s innovation potential.

The popularity of the measure is mainly due to its extensive communication. Award ceremony takes place on Science Day (November 3rd) and several high-ranking officials (both from the region and from the national level e.g. representatives of NKTH, and of the Hungarian Innovation Association) attend the meeting. The event usually gets extensive coverage in the regional and the national media and brochures are prepared that present the prize and the awarded enterprises.

The origins of this regional instruments stem from the National Innovation Prize that was established by the Hungarian Innovation Association in 1991. Since 2000, selected sectoral prizes are granted as well, e.g. (industrial, agricultural, environmental and technological grand prize). Furthermore the Hungarian Patent Office and the Hungarian Chamber of Commerce also grant innovation prizes. Another extension of the measure was the inclusion of the category of young micro- or small enterprises in 2008. The prize is accompanied by a funding of ~€3,600. The incentive of granting innovation prizes has been taken up by the regions (i.e. the regional innovation agencies) in the second half of the 2000s. In the South Transdanubian case, county-level chambers of commerce and a regional bank co-operated with DDRIÜ in the establishment and the management of the system.

According to recipients’ perception the prize improves their image, and makes their marketing more efficient, which can be translated into increased sales, new markets and new co-operation opportunities. STIP has achieved the planned outcomes also from the point of view of policy-makers who had introduced it. It increased regional stakeholders’ awareness of the importance of innovation activities. Moreover, it improved the region’s image concerning its innovation potential.


3.4 Portfolio of innovation support measures

Beyond the regionally decentralised policy measures financed from the Research and Technological Innovation Fund and from the regional operational programme, measures of selected national operational programmes, i.e. of the New Hungary Development Plan (recently New Széchenyi Development Plan) also target innovation and technology transfer activities.

In the frame of the Economic Development Operational Programme (EDOP) regional SME-actors in ST gained support to their market-oriented research and development activities. Regional university-based co-operation research centres and accredited innovation clusters gained support for their RTDI activities. EDOP contains measures to support eco-industry actors’ technology development projects, (several regional actors have gained support). Other regional actors gained support benefiting from the measure to improve their e-services, and to carry out ICT-based process development.

Measures funded by the Social Renewal Operational Programme targeted among others, higher educational institutions’ education activities, while other measures supported technology transfer activities. South Transdanubian actors could benefit from both of them.

National policy schemes to support innovation are highly diversified each individual policy objective is supported by a number of partly overlapping policy measures. The ones, considered important by regional actors were the following:

• Apponyi Albert programme aiming to support researchers’ mobility;

• Basic research programmes financed by the National Scientific Research Fund;

• Co-operative Research Centres (university-based research centres with a portfolio of industry-university research linkages);

• National Technological Platform Programmes (strategic research programmes) etc.22

The importance of these programmes for South Transdanubian actors is hard to evaluate, since they can decide individually or rather in consortia, but not necessarily with other regional actors, to apply for support.

One clear tendency can however be observed with respect to shifts in the importance of the individual schemes, i.e. within total funding available to support regional actors’ innovation purposes: the share of regionally decentralised programmes funded from the Research and Technological Innovation Fund is shrinking relative to that of programmes co-financed by the Structural Funds: the South Transdanubian Operational Programme and the innovation related centrally managed operational programmes. In a way, this is a self-evident process: Structural Funds have opened unprecedented opportunities to new EU members. The volume of the support these Funds provide are by an order of magnitude larger than the one available from the Research and Technological Innovation Fund. The shift towards OPs also contributes to the streamlining of innovation funding: in fact, several applicants wanting to gain support to their investment into production equipment applied for “innovation support”, since this type of support was in principle available. Applicants formulated their proposals in a creative manner and specified “innovation purposes”. The availability of support for SME development funded in the frame of OPs contributes to a better separation of innovation purposes from investment purposes.

The importance of national programmes is slowly increasing in absolute terms as regional actors become increasingly capable to submit successful applications.

22 See ProInno Europe’s annual reports: “Inno-Policy Trendchart, Hungary” for a detailed portfolio of national policy measures.


Otherwise, their weight is shrinking within overall funding available to (and captured by) the region’s innovative actors.

On the one hand, the overall coherence between the regional, the national and the European innovation policy objectives can be considered favourable if policy implementation avoids duplications and enhances rather the synergy effects, i.e. ensures complementarity between the support measures announced at different levels.

On the other hand, the main threat of this situation is that given the never before seen volume of EU funding available to support innovation, governments trying to implement fiscal austerity programmes and balance their budgets will be tempted to withdraw from the funding of innovation purposes. This is however against the principle of additionality i.e. that EU Structural Funds may not replace the national expenditure by a Member State. In reality, current tendencies in Hungary point to this direction (suspension of regionally decentralised schemes, merging national innovation support programmes into OPs; disappearing national innovation promotion programmes; dominance and still further increasing weight of Structural Funds within total innovation funding).

3.5 Towards smart specialisation policies

Beyond horizontal priorities aiming to intensify regional SMEs’ innovation activities; promote linkage-building among economic actors and developmental institutions; and create an adaptive and flexible business service infrastructure, the 2004 regional innovation strategy emphasised the necessity of targeted development in the case of selected sectors that improve the quality of life. Eco-industry; cultural industry; and life sciences related industries were enumerated under this heading. Furthermore, the strategy prioritised the region’s existing main industries as well: the food & wine industries; the processing of textile and textile products, and machinery and electronic products.

The issue of smart specialisation has come to the foreground in the daily practice of project generation and grant management. The allocation of scarce resources has provoked recurring debates among regional policy-makers. “Concentrating scarce resources to selected key technologies/sectors that are among the promising assets of the region and that coincide with national technological/sectoral priorities may be useful, since this would strengthen public perception (i.e. the region’s image) concerning the region’s R&D potential” – was the usual argument. For example cultural and creative industries are among the region’s well-known strengths,23 which was already well-publicised first by the Hungarian Pole Programme, later by the European Cultural Capital Programme. The denomination of the pole city Pécs was Qualitypolis: it emphasised that development programmes focused on quality of life, i.e. on cultural and creative industries, healthcare and eco-industries.

Though there have been no counter-arguments to deny the benefits of concentrating resources to promote selected key technologies/sectors, smart specialisation in ST is jeopardised by the presence of too many applicants for the status of key priority technology/sector.

One of them is biotechnology: ST can boast of well-documented strengths also in this field. As mentioned previously, ST hosts an accredited innovation cluster: the Biotechnology Innovation Base with 23 companies (it was established in 2005). Regional innovation policy-makers have however identified a broader sector as key priority in the region’s shift to smart specialisation: the health industry. The Pécs

23 The South Transdanubian Cultural Innovation Competence Centre (CICC) and the ST Cultural Industry Cluster are the key organisations that coordinate cultural and creative industry (C&CI) actors’ linkages in the region. Chief events include the international film festival series CinePécs, the national theatre festival POSZT and the European Cultural Capital Programme.


Healthcare Innovation Centre (PEIK) was created as an umbrella organisation, to promote regional biotechnology companies’ linkage building with university research departments, with health services providers, and representatives of health tourism. PEIK will contribute to the commercialisation and marketing of biotechnology research findings, and enhance spin-off activity (technology-oriented entrepreneurship). Health industry will thereby be considered in the broadest sense when smart specialisation strategy is formulated and implemented: it will include biotechnology, healing thermal spas related tourism and other types of health related tourism, the provision of health services as well as medical research24 and medical research related software technologies.

Agriculture and the food and wine industries are among the region’s traditional strengths with related innovation bases and university research departments: they were thus also included among the targeted sectors. ICT and eco-industries will also be included into the updated version of the regional innovation strategy. The recently completed Science Building in the premises of the University of Pécs (funded by the Social Infrastructure Operational Programme of the New Hungary Development Plan) will host not only a Biosciences Centre but also an Environmental Sciences Centre and an Information Technology Centre.

The above-enumerated list of key technologies and sectors reflects the difficulties of designing a smart specialisation strategy. Even a lagging region with relatively meagre innovation performance hosts numerous stakeholders in a wide variety of scientific disciplines and sectors. They all carry out intensive lobbying activity to be identified as strategic region-specific sectors/technologies.

The move towards smart specialisation can be regarded as a dynamic process in ST, involving both the selection of new strategic sectors and technologies (the above-mentioned ones) and “deselection” of others. Recently, there were two sectors that have lost their previous status of specially targeted industries (region-specific engines of growth): the processing of textile and textile products, and machinery and electronic products (these latter have partly been included under the heading of ICT).

The main lesson that can be drawn from the design and implementation of smart specialisation policy in the region that policy-makers have to maintain a careful balance between becoming one-sided and depriving thereby promising innovative actors in other technologies/sectors from the support they would merit and becoming excessively inclusive and all-embracing for fear of excluding worthy actors from support.

3.6 Possible future orientations and opportunities

Within half a decade innovation stakeholders in South Transdanubia have all climbed a steep learning curve. A lagging region with meagre innovation performance, and a small number of isolated innovation actors has been transformed into a networked regional innovation system. Among the achievements we can enumerate

1. the considerable investment into the region’s R&D infrastructure;

2. institutional development: the establishment of numerous intermediary and transfer institutions;

3. awareness increase and improvement of innovation culture;

4. development of regional innovation stakeholders’ intra-regional, inter-regional, cross-border and EU-level linkages;

24 The organisation of “Medipolisz South Transdanubian Regional Knowledge Centre of the University of Pécs” has to be mentioned here as a centre of excellence where researchers develop and carry out the pre-clinical testing of pharmaceutical products, and develop innovative diagnostic methods to increase the efficacy of drug therapy.


5. some intensification in regional SMEs’ innovation activities and

6. move towards smart specialisation: enhancement of the region’s image as one, specialised in technologies and sectors that improve the quality of life.

These non-negligible developments in a wide variety of innovation related areas have however been insufficient to improve the region’s innovation performance in a statistically significant manner. ST is still at the bottom of the league table of Hungarian regions with respect to most performance indicators. Among the stubbornly remaining deficiencies we can enumerate regional actors’ 1) below the critical mass innovation activity; 2) poor commitment to innovation co-operation (network linkages are confined to information sharing); 3) below-the-national-average capability to attract funding from national and European sources and 4) meagre commercialisation performance.

Nevertheless, we can claim that the main institutional, infrastructural and cultural preconditions of improving the regional innovation potential have been put in place. A lagging region’s innovation potential takes time to improve, and the impacts of any improvement are reflected in the statistical data only with substantial delay.

Future policy actions should break with previous practice in two main regards. At the national level, more emphasis should be laid on continuity aspects (changes in the national institutional setting as well as in policy measures are prohibitively frequent). On the other hand, an efficient evaluation and monitoring system has to be put in place at both the national and the regional levels.

Future opportunities depend on the direction of the restructuring within the regional and the national innovation systems. In the likely scenario of maintaining only a formal regional innovation system with power- and resourceless institutions, it is up to the corporate, the HEI- and the PRO-based regional innovation stakeholders to pursue their activities within an increasingly centralised system: grab the funding opportunities offered by the Structural Funds, carry out RTD activities, co-operate with each other, build new linkages and try to commercialise their results. DDRIÜ’s past six-year-activity was an effective “initial push” for these actors, permitting substantial capability accumulation.


Appendix A Bibliography

Borsi B. (2010) A Kutatási és Technológiai Innovációs Alap 2004.01.01. – 2009. 12.31. közötti működésének átfogó értékelése. (A comprehensive assessment of the Research and Technological Innovation Fund’s operation between 01.01.2004 and 31.12.2009) Ernst & Young and GKI, Available at: http://www.nih.gov.hu

Csizmadia Z., Grosz A. (2009) Vállalati innovációs kérdőíves felmérés a dél-dunántúli régióban. (Survey on enterprise innovation activity in the South Transdanubian Region). Available at: http://www.ddriu.hu

DDRIÜ (2009) Dél-Dunántúli Regionális Innovációs Ügynökség Nonprofit Kft, Szakmai Beszámoló, 2008. július 1. – 2009. június 30. (Annual Report on Activities 01.07.2008 – 30.06.2009), Available at:

http://www.ddriu.hu/userfiles/File/I_ Szakmai Beszámoló.pdf

DDRIÜ (2010) Dél-Dunántúli Regionális Innovációs Ügynökség Nonprofit Kft, Szakmai Beszámoló, 2009. július 1. – 2010. június 30. (Annual Report on Activities 01.07.2009 – 30.06.2010), Mimeo

Hrubi L. (2009): Tudás és újraiparosítás a dél-dunántúli régióban. In: A régiók újraiparosítása. A Dél-Dunántúl esélyei. Pécs: MTA Regionális Kutatások Központja. pp. 61-68 (Knowledge and reindustrialisation in the South Transdanubian region. In: Reindustrialisation of the regions. Opportunities for South Transdanubia)

Kiss M, Kocsis T, Sitányi L. (2009) Az Innovációs Alap hatása a Dél-Dunántúl vállalkozásainak innovációs potenciáljára (Effect of the Innovation Fund on the innovation potential of South Transdanubian enterprises), Területfejlesztés és Innováció, vol. 4, No. 2, Available at: http://balkancenter.ttk.pte.hu, pp. 2-9

MTESZ, (2008) Jelentés a RIÜ-pályázatok megvalósításában ellátott tanácsadói feladatok teljesítéséről. (Report on Hungarian RIAs’ activity) Available at: http://www.nih.gov.hu/hivatal/elemzesek-hatteranyagok/mtesz-jelentese-090525

Sitányi L. (2010) Innovációs környezet és a társadalmi tőke kapcsolata: Innováció-vizsgálat a Déldunántúlon, (Innovation environment and social capital: Innovation survey in South Transdanubia), Pécs: DDRIÜ


Appendix B Stakeholders consulted

1. Tamás Kocsis, Managing Director of the South Transdanubian Innovation Agency (date of interview: 13.01.2011)

2. István Vadász, Vice-President for Fund Handling and Regional Affairs of the National Innovation Office (date of interview: 20.01.2011)

3. József Barkó, Director for Regional Affairs, National Innovation Office (date of interview: 21.01.2011)

4. László Sári, Director for Development, South Transdanubian Regional Development Agency (date of interview: 26.01.2011)


Appendix C RIM Repository information

Baseline regional profile

MAGYARORSZAG DUNANTUL Region South TransdanubiaNUTS Code HU23

Regional Profile

Introduction

South Transdanubia (ST) is an underdeveloped region at Hungary's Croatian border, characterisedby a large number of poorly accessible settlements and a relatively low share of manufacturing.Starting from an underdeveloped basis, the region's innovation system is rapidly developing throughR&D infrastructure- and inter-regional linkage building.

Repository

Support mesures

Baross Gábor Programme, (South Transdanubian Region) for the Development of R&Dinfrastructure (REG_DD_INFRA_09)South Trandanubian Operational Programme, joint investment activity in regional clusters,development of new servicesBaross Gábor Programme, (South Transdanubian Region) for the support of SMEs' innovationactivity (DD_KKV_07)Tender to support regional innovation agencies' R&D- and innovation related tasksBaross Gábor Programme, (South Transdanubian Region) for the support and development oforganisations providing innovation services (REG_DD_KOMP_09)Baross Gábor Programme, (South Transdanubian Region) for the support of R&D activities(REG_DD_KFI_09)

Policy documents

South Transdanubian Operational Programme Action Plan 2011-2013Regional Innovation Strategy of the South-Trandanubian RegionSouth Trandanubian Operational Programme 2007 - 2013Regional Information Society Strategy of the South-Transdanubian Region

Organisations

Biotechnology Innovation BaseSouth Transdanubian Regional Innovation Agency Nonprofit Ltd.South Transdanubian Regional Development Agency Non-Profit Limited Liability

http://www.rim-europa.eu/index.cfm?q=p.baseline&r=HU

http://www.rim-europa.eu/index.cfm?q=p.baseline&r=HU2

http://www.rim-europa.eu/index.cfm?q=p.support&n=12681&r=HU23











http://www.rim-europa.eu/index.cfm?q=p.policy&n=15192&r=HU23




http://www.rim-europa.eu/index.cfm?q=p.organisation&n=14735&r=HU23



Economy

ST encompasses 3 counties (Somogy, Tolna, Baranya). The region's GDP per capita was EUR 6,819(ranking 4 th in Hungary) (2008). Its GDP per capita was 42.8 % of EU27 and 68.3 % of the nationalaverage. ST accounts for 6.5 % of Hungary's GDP (2008).

The number of registered companies amounted to 142,034 (2009) 8.9 % of total. The number offoreign invested enterprises was 1298 in 2008: ~4.5 % of total. The regional stock of FDI washowever much lower than the region's share of the total number of foreign invested enterpriseswould suggest: 1.15 % of total. Economic actors' average investment per capita between 2001 and2007 was 83.8 % of the national average.

The region's unemployment rate was 11.0 % in early 2009 (the national average being 10.0 %),while its activity rate was 51.8 % (the national average being 54.7 %). Compared to 2000,employment decreased by 6 % in the region by 2009 (from 358,400 to 337,800). The number ofinhabitants receiving state aid (social contributions) was 30,528 in 2008, 14.3 % of total recipients.

ST is a rapidly aging region, the aging index: the number of old age (>65) inhabitants relative to thatof children (0-14) increased from 91.5 to 116.4 between 2001 and beginning 2009.

With indicators much below both the national and the European average this region still possessesstrengths that bear upgrading opportunities. The most important strengths are related to the region'scultural assets, thus the main opportunities are only indirectly related to knowledge generation: 1)the last sections of the national highway that connects the region's capital with Budapest werecompleted in 2010, so by now the region's accessibility has greatly improved; 2) Pécs is theEuropean Capital of Culture in 2010 which led to significant development in the region's tourism. 3)ST's regional innovation agency (RIA) is very efficient in promoting innovation linkages andco-operation, as well as inter-regional horizontal linkages in the field of policy development. This isthe only RIA in Hungary with a representation office in Brussels. The non-negligible R&Dinfrastructure development at the University of Pécs also bear significant opportunities.

Research, Development & Innovation

In 2008 there were 246 research centres in ST (8.7 %) of the total. The number of researchers was673 (3.6 % of total). Regional GERD amounted to EUR 21.5 million, 2.15 % of the total.

According to the data of the Regional Innovation Agency (DDRFÜ), in ST the share of the centralbudget in innovation financing was the highest in Hungary over the period of 2004-2008, and at thesame time the share of BERD was the lowest.

University of Pécs affiliated research centres and knowledge clusters include the ST Co-operationResearch Centre, Medipolisz: the Transdanubian Regional University Knowledge Centre; and theBiotechnology Innovation Base (an accredited cluster with 19 biotech companies). New centreswere recently established: the Biosciences Centre; the Environmental Sciences Centre and theInformation Technology Centre.

Bay Zoltán Foundation for Applied Research is in the process of establishing a research institute inthe newly developed Science Building of the University of Pécs. The new institute will focus onrenewable energy issues.

Research activities of the University of Kaposvár focus on agricultural, veterinary, medical,environmental and food sciences.

An important public (social sciences) research institute is the Centre for Regional Studies of theHungarian Academy of Sciences, located in Pécs.

A large corporate player in the regional innovation system is the Paks Nuclear Power Plant, andthere are also several highly innovative SMEs: e.g. Soft Flow Hungary (developing software forcytometry); Geopard Ltd (the former research centre of Mecsek Coal Mining Company, specialisedin geophysics and environment protection), and Lasram Ltd. (specialised in laser technology).

ST has a variety of transfer institutions (the most important one is its regional innovation agencywith a representation office in Brussels); industrial parks, incubators, technology transfer offices;etc. However, according to a recent survey prepared by the Centre for Regional Studies of theHungarian Academy of Sciences in 2009, demand for the activity of transfer institutions is muchbelow the national average.

In summary, although ST's innovation potential is lower than that of the national average, importantinitiatives have been taken to improve performance.

Governance

The main player of regional development strategy design is the ST Regional Development Council(STRDC), together with the agency responsible for implementation (STRDA). The main actor ofregional innovation strategy design and implementation is the ST Regional Innovation Agency(DDRIÜ) an independent nonprofit firm since 2008 (at the time of its foundation in 2005 the agencywas a department of STRDA).

DDRIÜ's mission includes the support of 1) R&D and commercialisation 2) the internationalisationof the region's research activities and regional actors' participation in international researchprogrammes; 3) RIS actors' networking and the establishment of innovative clusters. DDRIÜprovides consultancy and technology transfer services and it maintains an information database onregional innovation actors and activities. DDRIÜ monitors and evaluates regional innovationprogrammes.

A formal innovation strategy document was first prepared in 2004. At present its revised andupdated version is being prepared. RIAs in Transdanubia are in regular contact: they co-operate witheach other regarding strategy development and share policy best practice experiences. Theyregularly initiate joint programs e.g. workshops, business meetings etc. DDRIÜ initiated theestablishment of RIÜ-NET (a network comprising seven Hungarian RIAs and the National Officefor Research and Technology).

DDRIÜ's representation office in Brussels is maintained jointly with the Croatian RegionalDevelopment Agency of Slavonia and Baranja.

An important funding actor is the Research and Technological Innovation Fund. The main regionaloperational programme is STOP of the New Hungarian Development Plan. Further importantfunding source is the economic development operational programme (its first objective is related toinnovation and knowledge economy). 46 regional innovation related projects were supported in theframe of this latter OP.

EU-funded programmes (INTERREG IV; CIP; FP7 and the ERDF co-financed Central EuropeProgramme) constitute a further channel for the funding of regional innovation action programmes.

Policy

The main objective of ST's regional innovation strategy is the creation and development of acompetitive and innovative enterprise sphere, that is capable to generate high income, and achieverapid and at the same time sustainable development. To achieve this objective, the strategyformulated four focal points: 1) Promotion of linkages among economic actors and developmentalinstitutions 2) Creation of an adaptive and flexible business service infrastructure 3) Promotion ofsectors that improve the quality of life of the region's population e.g. eco-industry; cultural industry;life sciences related industries and 4) Enhancing the competitiveness of the region's main industries:food & wine industries; processing of textile and textile products, machinery and electronic products.

Other objectives include SME development (in particular the development of SMEs' innovationefforts and their linkages with research institutions; promotion of innovative clusters; improvementof the quality and conditions of innovation related higher education (human capital development);support to technology transfer and commercialisation etc.

ST prepared a strategy for the development of the regional information society in 2005. The mainobjectives included awareness increase, infrastructure development, content- and e-servicesdevelopment as well as the promotion of IT-oriented entrepreneurship. The share of households withaccess to the Internet has slowly developed but is still below the national average (41.9 % versus48.4 % in 2008).

Emerging technologies related R&D efforts are in the field of bio- and life sciences &eco-innovation; information technology, and laser technology.

Dominant part of supported R&D projects was in the field of life sciences related infrastructuredevelopment. Wine industry R&D projects and energy efficiency projects have also receivedsupport, as well as IT projects in sectors including agriculture and tourism. Financial support wasgranted to transfer organisations to develop their innovation related services (consultancy,technology transfer; commercialisation).

Support measure

MAGYARORSZAG DUNANTUL Region Del-DunantulNUTS Code HU23

Support Measure



Title of measure

Baross Gábor Programme, (South Transdanubian Region) for the Development of R&Dinfrastructure (REG_DD_INFRA_09)

Full title

Baross Gábor Program – Dél-Dunántúli Régió „Kutatás-fejlesztési infrastruktúra fejlesztése”(REG_DD_INFRA_09)

Duration

From: 2009 To: 2010

Policy objectives

2.3.1. Direct support of business R&D (grants and loans)2.1.2. Public Research Organisations2.1.3. Research and Technology Organisation (private non-profit)2.1.4. Research Infrastructures

Presentation of the measure

The measure offers non-refundable financial support to cover the costs of investment into theupgrading of R&D infrastructure, or into the building and equipping research laboratories. Grants ina range of minimum HUF10m, maximum HUF80m can be applied for by actors whose activity isR&D-intensive (e.g. universities, research firms, companies with research laboratories) in the fieldof the food industry or eco-industry, biotechnology, bioinformatics.

Keywords

Research infrastructureApplied business research

Budget, source and type of funding

Currency: HUF

Source of funding 2010

National public funds

Regional public funds 160,000,000

EU Structural funds

Private funds

Other

Form of funding provided

Grants

Policy learning

Extent the measure can be considered as a success and worthy of policy learning

It is too early to judge the success of the measure (e.g results of first call for proposals still notknown).

Evidence of outcomes based on evaluation and other evidence

This type of grant targets R&D infrastructure development that is strongly related to businessdemand. Therefore it is successful, winners make the investments and report that it was useful.

Do's and Don'ts

In order to avoid rent seeking by PROs or by business entreprises, some degree of co-financing bythe recipients or their business partners should be stipulated.

This measure is recommended as an example of regional good practice topolicy-makers from other regions:

No

Organisation(s) responsible

National Office for Research and Technology

Support measure


Support Measure

Title of measure

South Trandanubian Operational Programme, joint investment activity in regional clusters,

http://www.rim-europa.eu/index.cfm?q=p.organisation&n=12572



development of new services

Full title

Dél-Dunántúli Operatív Program, Regionális jelentőségű klaszterek közös beruházásainaktámogatása, szolgáltatásainak kialakítása és fejlesztése

Duration

From: 2010 To: 2012

Policy objectives

1.3.1. Cluster framework policies2.2.3. R&D cooperation2.3.1. Direct support of business R&D (grants and loans)


The measure aims at supporting regional cluster establishement and the development of existingclusters' services and innovation potential. Its specific objective is the promotion ofindustry-academia linkages, and joint investments that contribute to both parties' competitiveness.(Example for winning projects includes the creation or infrastructure development of incubators andindustrial parks at several settlements; the establishment of a South Transdanubian Eco-IndustryCluster; as well as of an Energetics Cluster in the region). A specific target is the promotion oftourism-related clusters, the development of tourism-related new products and services. (Examplefor winning projects includes the South Transdanubian Thermal Bath Association's project for thedevelopment of thermal baths.) Projects lasting minimum one, maximum three years can besupported.

Keywords

Science-industry cooperationApplied business researchInnovation support services


Currency: HUF

Source of funding 2010 2011 2012


Regional public funds 80,000,000 50,000,000 30,000,000

EU Structural funds

Private funds

Other


Grants

Policy learning




This project tries to boost industry-university interactions and cluster-based co-operation in the fieldof R&D. This per definition enhances demand for technology and commercialisation of researchfindings. The measure led to significant cluster initatives.

Do's and Don'ts

The most important don't of this initiative is the following. The call provoked non-negligibleinvestments in tender proposal writing by many regional stakeholders. Following the publication ofthe first winner projects, the whole measure was frozen by the new government.


No


National Development Agency

Support measure


Support Measure

Title of measure




Title of measure

Baross Gábor Programme, (South Transdanubian Region) for the support of SMEs' innovationactivity (DD_KKV_07)

Full title

Baros Gábor Program Dél-Dunántúl Kis- és középvállalkozások innovációs fejlesztéseinektámogatása (DD_KKV_07)

Duration

From: 2009 To: 2009

Policy objectives

2.3.1. Direct support of business R&D (grants and loans)4.1.1. Support to sectoral innovation in manufacturing


The measure (announced annually with slight modifications each year) supports new productdevelopment and the diffusion of energy efficient technologies. Targeted industries include food,textile, machinery, metal processing, electronics, and IT-related industries. In the health sectorindustry university co-operation and innovation capacity building is supported.

A further objective is to support product development in the eco-industry and the adoption ofeco-industry's solutions among SMEs. Examples for winning projects include the development oftechnologies to reduce hazardous waste at a chemical firm, the development of alternative energyresources for public lighting systems.

Keywords

Applied business researchSmall and medium-sized enterprises


Currency: HUF




EU Structural funds

Private funds

Other


Grants

Policy learning


There has been a positive response by beneficiaries to the measure (e.g. over-subscribed in terms ofrequested versus available budget) but it is too early to judge results or impact


Innovation initiatives that promise rapid tangible results in the business sphere were supported.

Do's and Don'ts

Transparency of decision-making should be enhanced, evaluation and monitoring includingcost-benefit analyses should complement the system.


No



Support measure


Support Measure

Title of measure

Tender to support regional innovation agencies' R&D- and innovation related tasks




Full title

Pályázat Regionális Innovációs Ügynökségek kutatás-fejlesztést és innovációt segítő feladatainaktámogatására

Duration

From: 2009 To: 2011

Policy objectives

5.1.1. Support to the creation of favourable innovation climate (e.g. awareness campaigns)1.1.1. Strategy policy documents1.1.2. Activities of official advisory and consultative forum


This is a three-year-grant by the National Office for Research and Technology aimed at covering thecost of operation of regional innovation agencies. The winning agency has to provide a three yearstrategic plan that includes actions to improve regional innovation climate, methods to enhance RISactors' linkages, the efficiency of local innovation activity and quality- and knowledge-basedupgrading of the region.

Keywords

Innovation support servicesFiscal incentives


Currency: HUF

Source of funding 2009 2010 2011


Regional public funds 100,000,000 100,000,000 99,937,000

EU Structural funds

Private funds

Other


Grants

Policy learning


There has been a positive response by beneficiaries to the measure (e.g. over-subscribed in terms of

requested versus available budget) but it is too early to judge results or impact


The major positive feature of this measure is that it is long term, which contributes to the stability ofplanning and allows long-term projects to be initiated.

Do's and Don'ts

A support measure of long duration that inceases predictability.

The main "Don't" of the measure is that in June, 2010 the transfer of contracted funding was stopped,the available amount frozen.

If this period lasts for several months, the regional innovation agency will have to close and many ofthe achieved results will get lost.


Yes



Support measure


Support Measure

Title of measure

Baross Gábor Programme, (South Transdanubian Region) for the support and development oforganisations providing innovation services (REG_DD_KOMP_09)

Full title




Baross Gábor Program (Dél-Dunántúl) az innovációs szolgáltatásokat nyújtó szervezetekfejlesztésének támogatására (REG_DD_KOMP_09)

Duration

From: 2009 To: 2010

Policy objectives

5.1.1. Support to the creation of favourable innovation climate (e.g. awareness campaigns)4.2.1. Support to innovation management and advisory services


This is an ongoing measure announced each year, that offers support to regional actors specialised ininnovation services provision e.g. (technical assistance, training, technology transfer etc.) tofacilitate the development of their activities (e.g. methodology development, development of newservices, improved technology commercialisation etc.). Actors that received support are technologytransfer offices of higher education institutions, regional industrial parks, chambers of commerce,public benefit organisations. Support in a range of minimum: HUF5m, maximum: HUF30m isgranted to the above-enumerated actors.

Keywords

Innovation support services


Currency: HUF




EU Structural funds

Private funds

Other


Grants

Policy learning




The main negative factor is the lack of evaluation which encourages rent-seeking.

The positive factor is that well-known actors received funding that have already shown goodperformance in innovation related services provision.

Do's and Don'ts

In the case of such soft indirect policy measures, that target the quality improvement oforganisations engaged in the provision of innovation-related services, the efficiency of support isdifficult to quantify. Therefore a regular evaluation of the projects and the monitoring ofbeneficiaries' performance as well as their use of public funds is indispensable.


No



Support measure


Support Measure

Title of measure

Baross Gábor Programme, (South Transdanubian Region) for the support of R&D activities(REG_DD_KFI_09)

Full title

Baross Gábor Program (Dél-Dunántúl) K+F projektek támogatására (REG_DD_KFI_09)

Duration




From: 2009 To: 2010

Policy objectives

2.2.3. R&D cooperation2.3.1. Direct support of business R&D (grants and loans)2.1.1. Universities4.1.1. Support to sectoral innovation in manufacturing


This is an ongoing measure: calls are published every year. The measure targets applied research:product, process and technology development projects can receive direct, non-refundable financing.Consortia including partners from both the business sphere and from universities or public researchinstitutes can apply for support. In the South Transdanubian region the main targeted industries areeco-industry, food industry, machinery, metal processing, cultural services, health services,electronics, and textile industry. The minimum amount that can be applied for as a grant is HUF5m,the maximum is HUF80m.

Keywords

Science-industry cooperationApplied business research


Currency: HUF




EU Structural funds

Private funds

Other


Grants

Policy learning




This is strong deman-pull innovation which promises efficient use of public funds.

Do's and Don'ts

In the case of several decisions the amount of the grants is not rounded, which is not reallyunderstandable for outside analysts. Amounts allocated to specific research projects e.g. researchhow the thermal water in Harkány can be used in health industry or development of woodfenestration products are not rounded to HUF million, in some cases not even to HUF thousand, butrounded to hundreds (e.g. the University of Pécs was granted HUF8,641,300 and its consortiumpartner from the business sphere received HUF12,167,400 for the development of fenestrationproducts). Maybe better communication can improve the transparency of the decision-makingprocess. Evaluation of the results is also lacking.


No



Policy document


Policy Document

South Transdanubian Operational Programme Action Plan 2011-2013

Dél-Dunántúli Operatív Program Akcióterv 2011-2013

Organisation responsible





South Transdanubian Regional Development Agency Non-Profit Limited Liability

Content

This is a short summary document about the main priorities and the related tender possibilities of theSouth Transdanubian Operational Programme in the period between 2011 and 2013. The documentsummarises the main indicators and the projected values of individual OP priorities, changes in thetendering possibilities, the amounts to be allocated for the individual programmes and the number ofprojected winners. Innovation related programmes include the support of clusters as well as thedevelopment of e-governance. This latter objective is bound to receive HUF 500m support

Year of publication

2011

Link to website

Link: http://www.nfu.hu/download/32186/DDAT_TELJES_20101220.pdf

Policy document


Policy Document

Regional Innovation Strategy of the South-Trandanubian Region

A Dél-Dunántúli Régió Regionális Innovációs Stratégiája



Content

Recognizing that the region's lower-than-the-national average innovation potential and theexcessively high share of central government financing in total regional R&D outlays are the mostimportant barriers of regional competitiveness improvement, the regional innovation strategy


http://www.nfu.hu/download/32186/DDAT_TELJES_20101220.pdf




important barriers of regional competitiveness improvement, the regional innovation strategyconcentrates on ways to enhance regional SMEs' innovative activity. The key objective ofdevelopment efforts is to enhance the regional innovation potential through the promotion ofregional SMEs. This necessitates the establishment of a developed IT base, investment into theupgrading of SMEs' technology, into logistics and quality control; e-commerce and trademarks. Theimprovement of access to financing for innovative SMEs is an indispensable condition to enhancethe regional innovation potential - therefore, the strategy calls for the elaboration of new financinginstruments (e.g. a regional venture capital fund). The targeted industries include the food and wineindustries, selected manufacturing industries and the health sector. The follow-up and updating ofthe strategy is currently being prepared.

Year of publication

2004

Link to website

Link: http://www.ddriu.hu

Policy document


Policy Document

South Trandanubian Operational Programme 2007 - 2013

Dél-Dunántúli Operatív Program 2007 - 2013



Other organisation(s) involved

National Development Agency

http://www.ddriu.hu





Content

The Programme describes the competitive situation of the region, lists the areas of developmentalinterventions, formulates the main strategic goal of development and prepares the actions toaccomplish this goal. It lists the main indicators with the help of which development can bemeasured (e.g. regional GDP per capita; activity rate and number of new jobs; migration balance;investment etc.); gives details about the communication strategy, about monitoring and evaluation.

The main objective of the programme is catching-up; convergence to the development level ofHungary's most developed regions, and reduction of regional social disparities. Fields to focus oninclude public and business services (especially knowledge-based ones); tourism and culturalindustry. Actions also target competitiveness increase: cluster development, SME promotion and thefinancing of industrial park development in the textile and food industries, machinery and electronicsindustries; eco-, health- and cultural industries.

Year of publication

2006

Link to website

Link: http://www.nfu.hu/download/1763/DDOP_070705.pdf

Policy document


Policy Document

Regional Information Society Strategy of the South-Transdanubian Region

A Dél-Dunántúli Régió Információs Társadalom Stratégiája



Content

http://www.nfu.hu/download/1763/DDOP_070705.pdf




Following a short description about what purposes information society strategy serves in general,and about national level IS strategy and other external conditions, the document details the relationof the IS strategy to the development plan and the innovation strategy of the region. The documentsurveys the region's assets, the development level of e-governance, the use of Internet by theregion's companies. Then it presents IS action plans for the 3 NUTS 3 regions as well as someNUTS 4 and 5 regions within South Transdanubia. It formulates the regional level priorities:infrastructure development; content- and e-services development; awareness increase and IT-relatededucation; etc. It lists the indicators that can be used to measure the evolution in the targeted policyfields as well as the monitoring plan.

Year of publication

2005

Link to website

Link: http://www.deldunantul.com

Organisation


Organisation

Biotechnology Innovation Base

Biotechnológiai Innovációs Bázis

Link: www.bibnet.hu

1, Finn utcaPécs,7630

Mission

The mission of this cluster organisation is to promote the co-operation of its members by an activeparticipation in tenders and to facilitate cluster members' innovation and commercialisation activities.

Activities

The cluster, established in 2005, encompasses companies operating in the medical biotechnology

http://www.deldunantul.com



http://www.bibnet.hu

The cluster, established in 2005, encompasses companies operating in the medical biotechnologysector. The main research areas include diagnostic and prognostic markers and rare disorders (i.e.biological, physiological, medicinal challenges concerning the aging related diseases). Otherresearch activities include agro-alimentary research in the service of medicine and healthcare, aswell as food safety.

The clusters activity is to market its members' research potential, identify external fundingopportunities; promote linkages among cluster members and encourage them to submit jointapplications for the support of research projects.

Organisation


Organisation

South Transdanubian Regional Innovation Agency Nonprofit Ltd.

Dél-Dunántúli Regionális Innovációs Ügynökség Nonprofit Kft.

Link: www.ddriu.hu

23-25 Király utcaPécs,H-7621

Mission

The Agency is a regional umbrella organization based on the synergic operation of its founders. Itsmission is to design and implement regional innovation strategy, in particular to improve regionalSMEs' innovation capacity, to support the technology transfer activities of regional knowledge basesand to foster the international knowledge exchange.

Activities

Beyond its main activity of regional planning innovation strategy design, implementation andprogramme monitoring, the Agency provides innovation related services e.g. innovation audit,assessment and elaboration of innovative project ideas, professional innovation consultancy forSMEs, venture capital intermediation, financial consultation, elaboration of market plans, managingthe application for grants, marketing services, IPR consultancy, technology transfer services,incubation, enterprise development service and innovation management- and industry specifictrainings. These services ensure income for the Agency that is designated to finance its anotherimportant activity: networking (i.e. initiation and implementation of international and interregionalinnovation projects; partner search; elaboration of new forms of co-operation; cluster developmentand development of the services of industry parks, incubators and innovation centres). Furthermore,



http://www.ddriu.hu

the Agency has developed a regional innovation database and has thereby become a virtualinnovation marketplace.

Organisation


Organisation


Dél-dunántúli Regionális Fejlesztési Ügynökség Közhasznú Nonprofit Kft.

Link: www.deldunantul.com

3, Mária u.Pécs,H-7621

Mission

The mission of the South Transdanubian Regional Development Agency is to further thedevelopment of the region, to contribute to its catching-up and to increased regional competitiveness.

Activities

Activities include regional programming, elaboration and implementation of the regionaldevelopment plan;

The Agency promotes and coordinates stakeholders' co-operation; i.e. it co-operates with stateauthorities, local municipalities; NGOs and other partners involved in the processes of regionaldevelopment.

One of the most important activities is enterprise support, the identification of priority areas andadministration of support projects.

Further activities include regional identity building; information provision about the region; researchand economic monitoring; preparation of reports about the region's performance.

Investment promotion into the region; building up and maintenance of a regional informationdatabase; negotiation with potential investors.

Management and administration of financial instruments allocated for development purposes:

Organisation of the internal and the international relations of the region.



http://www.deldunantul.com


Appendix D Explanation of factors of Innovation Performance, Governance and Policy

D.1 Innovation Performance Factors

After having normalised all indicators to a common range of 0 to 1, a factor analysis or principle component analysis has been used to identify the main patterns, reducing the eight indicators into three main factors or components of innovation performance. The resulting factors can also be seen as composite or summary indicators.

Innovation performance factors

Innovative

entrepreneurship Technological

innovation Public

knowledge Non-technological innovators 0.91 Technological innovators 0.86 Higher education R&D 0.52 Non-R&D innovation expenditure -0.84 Business R&D 0.77 Patents 0.71 Government R&D 0.89 Tertiary educated 0.64 The first factor can be labelled as ‘Innovators or Innovative entrepreneurship’. It is mostly based on a high score on the share of both non-technological innovators (those introducing market- and or organisational innovations) as well as technological innovators (product and or process innovations) among SME’s in the region. This factor therefore identifies those regions where a large share of all SME’s are innovators.

The second factor is labelled ‘Technological innovation’ because it mostly refers to patent generating business R&D with relative low score on non-R&D innovation expenditures as share of their turnover. In regions where this factor shows a high score, technology generating firms are well represented.

The third factor is labelled ‘Public knowledge’. This component of innovation performance is based on the co-location of R&D expenditures at government research institutes and to a lesser extent on the share of population with tertiary education.

D.2 Governance Factors

The first distinctive governance characteristic is labelled ‘Autonomy’. For regions where the regional innovation strategy is politically binding and containing fixed targets, we also find the highest degree of both general institutional autonomy as well as autonomy regarding innovation policy. In essence, formalisation contributes to the autonomy factor and autonomy is associated with an assessment of innovation policy as effective.

The second distinctive characteristic is named: ‘Relying on Structural Funds’. It is based on the similarity in the answers regarding the strategic relevance and significance in terms of funding of EU Structural Funds for regional innovation policy. At the same time these regions report a low level of cooperation with other regions and the innovation system can be characterised as more public-driven.

A third distinctive factor is made up of the similar answers to the two other questions on coordination, namely the existence of vertical and horizontal coordination mechanisms. Finally, a fourth factor is labelled ‘Central, top-down’ because they combine a centralised policy delivery and top-down approach in policy design.


Governance Factors

Autonomy

Relying on Structural

Funds

Coordina-tion

mecha-nisms

Central, top-down

-How formally binding is the regional innovation strategy document on the regional public authorities ?

.84

- The general degree of institutional autonomy of the regional authorities in the region

.73

-To what degree is priority setting, design and monitoring of innovation policy subject to the design and of formalisation of the general set-up of institutions tasked with the development of innovation policy in your region (1=informal, 3= formal)

.68

- Degree of institutional autonomy of regional authorities in your region with regard to the design and implementation of regional innovation policies

.68

- How effective is the regional governance process? .58 - The relevance of the EU Structural Funds for regional innovation policy, for strategy development

.79

- The significance of the EU Structural Funds for regional innovation policy, in terms of funding

.70

- Inter-regional co-ordination projects and mechanisms (e.g. co-operation between agencies in different regions)

-.68

- Characterise the regional innovation system according to key drivers of innovative activities (1=private, 2=different, 3=public)

.68

- Horizontal coordination projects and mechanisms between regional players (e.g. inter-departmental working groups, council or multi-sector platforms)

.80

- Vertical co-ordination projects and mechanisms between local, regional, national and European authorities involved in designing or implementing innovation policy

.73

- Regional system of policy delivery is centralised (3), mixed (2), or de-centralised (1)

.81

- Design of regional innovation policies follows a top-down approach ( as opposed to bottom-up)

.80

D.3 Policy Factors

The first distinctive factor regarding the innovation policies is labelled ‘Public innovation policies’. A high contribution to this factor comes from the survey questions regarding: policies for public sector innovation, for open innovation, public procurement, and theme based policies aiming at societal goals.

The second policy factor is labelled: ‘Demand & service innovation policy’ because of the co-existence of demand-side policies and service innovation policies.

The third policy factor is named: ‘Cluster & S-I partner-ship policy’ since it is based on the frequent combination of Cluster policies and policies promoting new forms of public-private-partnerships for Science-Industry (S-I) co-operation and in addition the implementation of eco-innovation policies contributes to this factor.

The fourth factor is labelled ‘Research supply policy’ because it is based on the positive answers to the question on supporting research efforts (the supply side), in combination with an opposite negative answer to the question on ‘market and innovation culture (which is more on the demand side).

‘Policy making support’ is the name we have given to the fifth policy, similar to the main indicator. The last policy factor is ‘HR, creation & growth innovators’ which combines human capital development with policy aimed at creation and growth of innovative firms.


Innovation Policy factors

Public innovation policies

Demand & service innovation policy

Cluster & S-I

partner-ship

policy

Research supply policy

Policy making support

HR , creation & growth innovato

rs Policies for public sector innovation

.72

Policies for open innovation .66 Public procurement policies .64 Theme-based policies aimed at broader societal goals

.62

Demand-side policies .79 Policies for innovation in services .50 Support for the internationalisation of innovation policy.

.47

Cluster policies .70 Policies promoting new forms of public-private-partnerships for science-industry co-operation

.61

Eco-innovation policies .58 Innovation related tax policies .57 Support research efforts .74 Market and innovation culture policies

-.62

Support to policy making and horizontal policies

-.79

Support human capital development

.82

Support creation and growth of innovative enterprises

.67


Appendix E Statistical data

Indicator Dél-Dunántúl (2000)

Dél-Dunántúl (2008 or most recent)

EU 27 (2008 or most recent)

Per Capita GDP (in Current EUR) 3,823.7 6,027.2 (2006)

25,131.9

Growth of Regional per Capita GDP (in %)

12.7 -0.9 (2006)

0.7

Unemployment Rate (in %) 7.8 10.3 7

Gross Expenditure on R&D (GERD; in current EUR)

15 24.2 (2007)

237,000.2

Share of Business Expenditure on R&D in GERD (in %)

8.3 21.8 (2007)

63.9

EPO Patent Applications (by Priority Year)

1.86 2.57 (2006)

37,689.12 (2006)

Share of Population Involved in Life-long Learning (in %)

2.47 2.45 9.34

Non-R&D innovation expenditures of all enterprises as a percentage of turnover (normalised scores within a 0 (lowest) to 1 (highest) range)

N/A 0.39 (2006)

0.41

(2006)

Source: Eurostat and Community Innovation Survey


Appendix F RIM survey responses

Dél‐Dunántúl(HU23) Average Categories

0 1 2 3 4 5

Governance

PleaseindicatethegovernancelevelthatismostimportantforthedesignandimplementaFonofinnovaFonpolicyintheregion(1=regionallevel,2=naFonallevel,3=sub‐regionallevel) 1 1,52 50% 48% 2%

PleaseassessthegeneraldegreeofinsFtuFonalautonomyoftheregionalauthoriFesintheregion(1=regionalauthorityisanadministraFveappointeeofthenaFonalgovernment,2=regionalauthorityincludingelectedcouncilbutnolegislaFvepowersandnoorminortaxraisingpowers,3=federatedenFtywithlegislaFvepowerinsomebutnotallfields,limitedornotaxraisingpowers) 2 2,11 23% 43% 34%

PleaseassessthedegreeofinsFtuFonalautonomyofregionalauthoriFesinyourregionwithregardtothedesignandimplementaFonofregionalinnovaFonpolicies(1=verylow,2=low,3=average,4=high,5=veryhigh) 3 3,10 7% 18% 39% 31% 5%

ThedesignofregionalinnovaFonpoliciesfollowsa(1=boSom‐upapproach,2=inputfrombothsides,3=top‐downapproach,4=strongtop‐downapproach) 2 2,25 11% 57% 28% 4%

TowhatdegreeispriorityseTng,designandmonitoringofinnovaFonpolicysubjecttothedesignandofformalisaFonofthegeneralset‐upofinsFtuFonstaskedwiththedevelopmentofinnovaFonpolicyinyourregion(1=informal,2=mixed,3=formal) 3 2,19 18% 45% 37%

IstherearegionalinnovaFonstrategyintheformofapublisheddocument(1=yes,2=no) 1 1,34 66% 34%

HowformallybindingisthisdocumentontheregionalpublicauthoriFes?(1=anowniniFaFvedocumentofanon‐publicbodyorpartnershipwithnobindingconstraintsonregionalauthoriFes,2=a'pact'signedbyabroad‐basedpublic‐privatepartnership,3=apoliFcallybindingpolicycontainingfixedtargets) 1 2,21 25% 29% 46%

PleaseindicateiftherearehorizontalcoordinaFonprojectsandmechanismsbetweenregionalplayers(e.g.inter‐departmentalworkinggroups,councilorpla]ormswithactorsfromdifferentsectors):(1=notyetverydeveloped,2=somewhatdeveloped,3=quitewelldeveloped) 2 2,26 13% 49% 39%

Pleaseindicateifthereareinter‐regionalco‐ordinaFonprojectsandmechanisms(e.g.co‐operaFonbetweenagenciesindifferentregions)(1=notyetverydeveloped,2=somewhatdeveloped,3=quitewelldeveloped) 3 1,88 27% 59% 14%

PleaseindicateifthereareverFcalco‐ordinaFonprojectsandmechanismsbetweenlocal,regional,naFonalandEuropeanauthoriFesinvolvedindesigningorimplemenFnginnovaFonpolicy(1=notyetverydeveloped,2=somewhatdeveloped,3=quitewelldeveloped) 2 2,02 20% 58% 22%

PleasecharacterisetheregionalinnovaFonsystemaccordingtokeydriversofinnovaFveacFviFes(1=private‐driven,2=mixed,3=public‐driven) 2 2,26 12% 50% 38%

Pleaseindicateiftheregionalsystemofpolicydeliveryiscentralisedorde‐centralised(1=ratherdecentralised,2=mixedform,3=rathercentralised) 2 2,47 5% 42% 52%

PleaseindicatethesignificanceoftheEUStructuralFundsforregionalinnovaFonpolicy,intermsoffunding(1=<10%,2=11‐24%,3=25‐49%,4=50‐75%,5=>75%) 2 2,96 14% 30% 19% 19% 18%

PleaseindicatetherelevanceoftheEUStructuralFundsforregionalinnovaFonpolicy,forstrategydevelopment(1=verylow,2=low,3=average,4=high,5=veryhigh) 3 3,27 11% 17% 25% 28% 19%

IsthereaspecificStructuralFunds’regionaloperaFonalprogrammefortheregion(1=yes,2=no) 1 1,10 90% 10%

If1,isthisStructuralFundsROPadministeredattheregionallevel.(1=yes,2=no) 1 1,12 88% 12%

Involvement of the Region in Hot Innova4on / RTDI Policy Topics (0 = none, 1 = planned, 2 = implemented)

SupportfortheinternaFonalisaFonofinnovaFonpolicy. 2 1,09 34% 24% 43%

Clusterpolicies 2 1,28 31% 10% 59%

PoliciespromoFngnewformsofpublic‐private‐partnershipsforscience‐industryco‐operaFon 2 1,21 28% 22% 50%

PoliciesforopeninnovaFon 0 0,68 58% 15% 27%

Demand‐sidepolicies 2 0,55 64% 18% 18%

PoliciesforinnovaFoninservices 2 0,77 52% 19% 29%

PoliciesforpublicsectorinnovaFon 0 0,64 60% 17% 24%

Publicprocurementpolicies 0 0,39 72% 17% 11%

InnovaFonrelatedtaxpolicies 0 0,37 77% 9% 14%

Eco‐innovaFonpolicies 0 0,80 50% 19% 30%

Theme‐basedpoliciesaimedatbroadersocietalgoals 2 0,72 53% 22% 25%

Priori4es on which regional innova4on policy is most strongly focused (1 = very low, 2 = low, 3 = average, 4 = high, 5 = very high)

Supporttopolicymakingandhorizontalpolicies 2 2,71 21% 24% 32% 12% 12%

Supportresearchefforts 5 3,94 1% 12% 20% 25% 42%

Supporthumancapitaldevelopment 3 3,41 3% 17% 29% 39% 12%

SupportcreaFonandgrowthofinnovaFveenterprises 5 3,85 2% 9% 23% 37% 30%

MarketandinnovaFonculture 3 2,84 13% 24% 37% 16% 10%

Technopolis Belgium Avenue de Tervuren 12 B-1040 Brussels Belgium T +32 2 737 74 40 F +32 2 727 74 49 E [email protected] www.technopolis-group.com

Regional Innovation Monitor - European Commission · 2014-09-15 · specific context of the region...

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