Innovation and Territorial Development: What is Left for Rural Areas?


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A presentation delivered remotely in Penela, PT - on June 28, 2013

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Innovation and Territorial Development: What is Left for Rural Areas?

  1. 1. Innovation & Territorial Development: What is Left for Rural Areas? Francesco Molinari,
  2. 2. In brief • 70% of global population will (by 2050) congregate in Cities, but another 30% will forever stay out of the urbanisation process – that makes billion of people, not necessarily passive receptors of socially oriented services, but an immense reservoir of culture, resources – and innovation • What patterns of evolution shall we foresee for these people / areas? Recently, smartness and specialisation have appeared (jointly or independently) as driving forces, which will be the topic of my speech today • This poses new challenges to policy makers in EU peripheral regions 28-06-2013 2Francesco Molinari
  3. 3. 28-06-2013 3Francesco Molinari Smartness = An Ecosystemic concept
  4. 4. Could these functions be part of rural world too? 28-06-2013 4Francesco Molinari _Design_of_Smart_Villages.pdf
  5. 5. Could these functions be part of rural world too? 28-06-2013 5Francesco Molinari  A positive answer in
  6. 6. Could these functions be part of rural world too? 28-06-2013 6Francesco Molinari The best, quickest and most efficient way is to build up from the bottom. Every village has to become a self sufficient republic. This does not require brave resolutions. It requires brave, corporate, intelligent work. (Gandhiji, Harijan, 18-1-1922) Quotedfrom _Design_of_Smart_Villages.pdf
  7. 7. Specialisation David Ricardo, 1817: In Portugal it is possible to produce both wine and cloth with less labour than it would take to produce the same quantities in England. However the relative costs of producing those two goods are different in the two countries. In England it is very hard to produce wine, and only moderately difficult to produce cloth. In Portugal both are easy to produce. Therefore, while it is cheaper to produce cloth in Portugal than England, it is cheaper still for Portugal to produce excess wine, and trade that for English cloth. Conversely England benefits from this trade because its cost for producing cloth has not changed but it can now get wine at a lower price, closer to the cost of cloth. The conclusion drawn is that each country can gain by specializing in the good where it has comparative advantage, and trading that good for the other. 28-06-2013 7Francesco Molinari
  8. 8. But the world has changed meanwhile 28-06-2013 8Francesco Molinari
  9. 9. Smart Specialisation • Shift from a mainly sectorial to a territorial discourse (“place matters”) • Key concepts (after Philip Mc Cann): – Embeddedness: what belongs to the place, to the community (of affairs, of citizens, etc.) – Related variety: specialised technological diversification (comparative, rather than competitive advantage) – Connectivity: i.e. access to markets, global value chains, etc. 28-06-2013 9Francesco Molinari
  10. 10. Innovation 28-06-2013 10Francesco Molinari International cooperation is conducive to all kinds of innovation… …BUT regional / national cooperation has little or no effect, esp. on DUL ALL types of interaction matter… CONCLUSIONS: 1) Excessive territorial proximity may be detrimental to innovation 2) Heterogeneity of industrial agents is important …BUT cooperation with competitors can significantly harm entrepreneurial capacity to innovate
  11. 11. Morale • Smart Specialisation Strategy design is a big opportunity for EU rural communities (regions) • Its most immediate implications are towards promoting the generation, exploitation, and dissemination of local ideas and knowledge • Maximising both intra- and inter-regional knowledge spillovers in the relevant scale domains • In this context, “Laissez-faire” leads to underprovision of innovation and governments need to play a dual role in fostering industrial growth and transformation (R. Hausmann& D. Rodrik, Economic Development as Self- Discovery, 2003) 28-06-2013 11Francesco Molinari
  12. 12. Thanks! • See you in person next time! • 28-06-2013 12Francesco Molinari