Business clusters boost regional innovation

March 21, 2006

Brussels, 20 Mar 2006 On the final day of the European Business Summit (EBS), the Commission's DG for Enterprise and Industry organised a speaking lunch entitled, 'European innovation clusters: turning local strengths into global achievements', designed to explore how business clusters have been a positive force for regional innovation.

The speakers included Jozef Cornu, member of the Aho group which published the recent report into European innovation, Christian Ketels, an expert on clusters from Harvard business school, Carmen Becerril, director of Acciona Energía, responsible for stimulating a business cluster in northern Spain, and Hannes Leo from Sectoral Innovation Watch.

David White, Director for innovation policy at DG Enterprise and Industry, introduced the session by referring to innovation clusters as 'one of the greatest assets EU companies have'.

Dr Cornu began by going over some of the Aho group's findings, 'Trend lines within the EU are not good - production, ageing population, etc - there are a number of important challenges. If trends continue for 15 years, the EU will not even be in the top 6 economic zones. Politicians are not up to the level of the challenge. There is something of the 'Emperor's New Clothes', where everyone sees what is wrong, but nobody does anything about it,' he began.

'We need to create a single European market. We have government clusters and the euro, but the market is fragmented. Pharmaceuticals are moving their bases from the EU to the US, simply because firms are confronted with a fragmented market. In other areas it is the same. Road tolls are different throughout EU. We used to laugh at the Eurostar or Thayls trains having 6 different signalling systems, but the road systems are even more complicated because the market is so fragmented,' believes Dr Cornu.

'This fragmentation is a problem for all companies, especially start-ups. EU start-ups receive one-sixth of the start-up funding of US companies and this is down to fragmentation. EU start-ups find it difficult to progress even to medium-sized businesses. Innovation clusters improve things, as we can create centres of excellence, which is good for setting standards at an EU and cultural level, and develop a single market,' he stressed.

Hannes Leo from Sectoral Innovation Watch studies areas which have parallels with cluster activities and explained their advantages to companies, 'There are three dimensions - firms have a labour market advantage with skilled workers, there are outsourcing possibilities and technology advantages,' he said.

Christian Ketels examined exactly what clusters are, and while in broad agreement with Dr Cornu, he felt clusters could provide only part of an EU-wide solution to the general malaise: 'Clusters are not the tool to overcome these challenges. The single market has to happen anyway, but it's not enough. We need to start individual infrastructures. Clusters are certainly not a solution to the lack of political ability.

'But we should still push through EU clusters - clusters are part of the answer. Clusters give productivity advantages to companies. EU companies are moving to the Boston cluster for instance. Innovation is more geographically oriented, with spikes of activity on the map. They change the ways companies think about innovation. It is about outcomes. Clusters do provide an environment to turn ideas into products,' he believes.

Mr Ketels outlined the two broad models for clusters: 'Magnet clusters attract resources in, while network clusters have networks across disciplines. Both models work, but requirements needs to be examined. In the EU, often there are clusters building from a single industry or government-sponsored cluster. In the US, there is more collaboration between clusters.

Carmen Becerril from Acciona Energía explained how the work her company pioneered in wind farming in a relatively remote part of Spain near Pamplona stimulated cluster activity. 'In 1990, we installed our first measuring towers in the Navarra area, and decided there was sufficient resources for a profitable business. In 1994, we installed six 500KW turbines, near the village of Perdon. We believed it was important to have the goodwill of the local people, as the site was close to the village and a survey found that support was at 85 per cent,' she revealed.

'We planned for 1,000 MW around Navarra, and have already achieved 900 MW. It took time to educate and inform the local populations, but there was significant goodwill from the start. Our focus was on renewables. Now 45 per cent of the power in that area is supplied by wind, and we supply 3,500 MW across the world - a 2.3 million ton reduction in CO2.'

Such activity has led to a number contracts being awarded in Navarra, particularly for turbine manufacturers and R&D, providing more than 3,000 people with jobs, and this growth has propelled Spain to number two in world for wind power. 'We are now branching into photovoltaic, solar thermal and many more, for a wide view of renewables,' she adds. Ms Becerril concluded that while 'the cluster started in Navarra, it has spread to Spain and could now be all of the EU.'

Mr White finished by asking what the panellists would do to stimulate more EU-wide growth. Dr Cornu called for more unified markets and higher spending on imaginative projects; Mr Ketels wants clear strategies on Lisbon and to develop regions via EU instruments; Ms Becerril would like to see more development in industry; while Mr Leo called for a broader definition of innovation.

For further information, please consult the following web address: http:/// nt=120&page=26&page2=120?=en

CORDIS RTD-NEWS/© European Communities, 2005
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