Local innovation eco-systems in England: strengths and challenges. Presentation by Professor Richard Evans European Institute for Urban Affairs Liverpool John Moores University to the Innovation and Local Growth Workshop Warwick Business School, The Shard, London 28th May

1. Local innovation eco-
systems in England:
strengths and challenges
Professor Richard Evans
European Institute for Urban Affairs
Liverpool John Moores University
Innovation and Local Growth Workshop
Warwick Business School, The Shard, London
28th May 2015
1

2. Scope of talk
• Rationale for research
• Methodological approach
• Caveats
• Findings
• So what for future research and
policy
2

3. Rationale for research
• Importance of place
• Contribution to national
performance, challenges
• Agglomeration effects & spillovers
• Smart Specialisation agenda
• Need for consistent local data
• Building on Witty Review etc.
3

4. Real Labour Productivity per hour
worked, 2010-14, 2010=100
4
Source: Eurostat

5. Real Labour Productivity –
Euros per hour worked, 2013
5
Source: Eurostat

6. Economic Output per person –
GDP per capita in PPS, 2013
6
Source: Eurostat

7. Method
• Source material: Research for BIS
on ‘Mapping Local Comparative
Advantages in Innovation’
• Joint report with Impact Science, big
data capability
• LEP-based geography
• 6 innovation elements (Allas)
• 23 constituent indicators
7

8. The Indicators (1)
8
Money
R & D
Expenditure
Innovate UK -
Investment in
Innovation
Investments by
British private
equity &
venture capital
association
members
R & D Tax
Credits
Innovation
Talent
Residents
employed as
science,
research,
engineering
& technology
professionals
& associate
professionals
Participation
in Higher
Education –
STEM and
Non-STEM:
Undergrad &
Doctorate;
Non-UK FT
postgraduates
NVQ
4+/3/2/1/Other
Qualifications
/ No
qualifications
Graduate
retention
rates
Science &
Technology
intermediary
institutions
Knowledge assets
Intellectual
Property
Protection -
Patents
Output &
quality of
scientific
research –
publications
& h-index
impact
measure
Knowledge
exchange/
collaboration
– interactions
between HE
Institutions &
business &
wider
community

9. The Indicators (2)
9
Innovation
Structures & Incentives
Industrial
structure &
cluster
development –
Industrial
strategy
sectors
Key sectors –
ONS Science &
Technology
definitions
LEP innovation
approach and
governance
Quality of place/ life
Broadband infrastructure
Earnings
Average travel to work
times
Broader environment
Business demography –
births & deaths
Employment rates
Innovation outputs
Productivity – GVA per capita /
GVA per hour worked
UK Community Innovation
Survey - % of firms engaged
in product or process
innovation

10. Caveats
• Reliance on accessible secondary
data
• Data limitations: coverage, scale,
reliability
• Partial coverage innovation, its
drivers
• Shortage data: process innovation,
low/medium technology, ecosystem
• LEP boundaries somewhat artificial
• Snapshot not trajectories
• Research should NOT therefore be
used to rank LEPs
10

11. Research findings
• Big picture – relative strength of
ecosystems
• Six innovation elements – spatial
variations in key indicators
• Performance selective LEPs relative
to national average
• Soft mapping: assets and
governance
11

12. LEP areas: comparatively strong
ecosystems
LEP Region Classification Average score
Oxfordshire SE 3rd Tier 7.5
Greater Cambridge & Greater
Peterborough
EoE (part EM) 3rd Tier 8.3
Thames Valley Berkshire SE Lon CR 10.5
Enterprise M3 SE Lon CR 10.6
West of England SW 2nd Tier 11.2
London London London 11.4
Solent SE 3rd Tier 12.4
Coventry and Warwickshire WM 3rd Tier 13.1
South East Midlands
EM (part SE &
EoE)
3rd Tier 14.1
Hertfordshire EoE Lon CR 14.1
Coast to Capital SE (part London) 3rd Tier 16.4
Derby, Derbyshire, Nottingham
and Nottinghamshire
EM 2nd Tier 16.7
Cheshire and Warrington NW 3rd Tier 17.5
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13. LEP areas: middling ecosystems
LEP Region Classification Average score
Leicester and Leicestershire EM 2nd Tier 17.6
Buckinghamshire Thames
Valley
SE Lon CR 18.1
Leeds City Region YH 2nd Tier 18.2
Greater Manchester NW 2nd Tier 18.3
Greater Birmingham and
Solihull
WM 2nd Tier 19.0
South East SE (part EoE) Lon CR 19.4
North Eastern NE 2nd Tier 19.7
Liverpool City Region NW 2nd Tier 20.3
Gloucestershire SW Rural 21.0
Swindon and Wiltshire SW 3rd Tier 21.0
York, North Yorkshire and
East Riding
YH Rural 22.2
Tees Valley NE 3rd Tier 22.3
Sheffield City Region YH (part EM) 2nd Tier 22.7
13

14. LEP areas: less strong
ecosystems
LEP Region Classification Average score
Dorset SW 3rd Tier 23.6
Heart of the South West SW 3rd Tier 23.6
New Anglia EoE 3rd Tier 24.4
Lancashire NW 3rd Tier 25.0
Northamptonshire EM 3rd Tier 25.6
Worcestershire WM Rural 26.5
The Marches WM Rural 27.9
Stoke-on-Trent and
Staffordshire
WM 3rd Tier 28.0
Humber YH 3rd Tier 28.1
Black Country WM 2nd Tier 28.8
Cumbria NW Rural 30.2
Greater Lincolnshire EM (part YH) Rural 30.3
Cornwall and Isles of Scilly SW Rural 31.0
14

15. Money: Business Enterprise
R&D Expenditure per FTE, 2013
15

16. Money: Total Innovate UK
grants £s per FTE, 2010-15
16

17. Talent: NVQ 4+ % of working age
population, 2013
17

18. Knowledge Assets: Patents
aged 5 to 10 years
18

19. Structures/incentives: IS Sectors LQs 2012
Source: Enterprise Research Centre 19
AEROSPACE
AUTOMOTIVE
LIFE SCIENCES
AGRI-TECH
EDUCATION
INFORMATION ECONOMY
PROF. & BUS. SERVICES
NUCLEAR
OIL & GAS
CONSTRUCTION

20. Broader Environment:
Employment Rates 2013-14
20

21. Innovation outputs: GVA per
hour worked, 2013
21

22. Strong LEP vs national
22
0
100
200
300
400
500
600
700
BERD per FTE
Innovate UK grants
per FTE
NVQ 4+, 16-64s
Patents aged 5-10
years, per capita
8 Industrial
Strategy Sectors -
Average LQs
Employment rate,
16-64s
GVA per hour
worked
LEP England

23. Middling LEP vs national
23
0
50
100
150
200
250
BERD per FTE
Innovate UK grants
per FTE
NVQ 4+, 16-64s
Patents aged 5-10
years, per capita
8 Industrial Strategy
Sectors - Average LQs
Employment rate, 16-
64s
GVA per hour worked
LEP England

24. Less strong LEP vs national
24
0
20
40
60
80
100
120
BERD per FTE
Innovate UK
grants per FTE
NVQ 4+, 16-64s
Patents aged 5-10
years, per capita
8 Industrial
Strategy Sectors -
Average LQs
Employment rate,
16-64s
GVA per hour
worked
LEP England

25. Soft mapping
• Knowledge assets and institutions
(HEIs; Science and Technology
intermediary organisations)
• LEP approach to innovation &
governance (innovation strategy;
ERDF allocation for innovation;
dedicated LEP innovation grouping)
25

26. Soft mapping
• London, Oxfordshire, Greater
Cambridge & Peterborough contain
most knowledge assets &
institutions
• Northern, Midland, South West city
regions also strong representation
• Rural LEPs have some specialist
strengths
26

27. Soft mapping
• Governance and networking
information patchy
• South East/East and northern LEPs
feature: Enterprise M3,
Hertfordshire, Greater Cambridge
and Peterborough, Leeds, North
East, Tees Valley
27

28. Conclusions - good news
• All LEPs have innovation strengths,
specialisms
• London/South East: good range of
innovation assets, highest ERDF
allocations (>30% EUSIF total)
• Important outliers: SW, Midlands, NW
• Midlands & North: high value manuf.
• Some categories investment &
expenditure relatively evenly spread
• Some interventions support
rebalancing efforts: Catalysts
28

29. Conclusions
• Research should help LEPs and
partners:
- strategy verification
- identify complementarities,
synergies
- identify partners who compensate
for their weaknesses
29

30. Conclusions - challenges
• Some LEPs more strings to bow than
others
• All face challenges, some more than
others
• Strongest, most balanced
ecosystems tend to be in London
and South East
• Some key drivers skewed in that
direction – skills, wealth, venture
capital
30

31. Conclusions - challenges
• Could this reinforce wider economic
realities - N-S divide?
• Sustainability of counterweights?
31

32. Where next - research
priorities?
•More data sharing/pooling
• Verification of LEP strategies,
investment decisions
• Addressing gaps in understanding –
strength ecosystem; non-private
sector innovation; measuring
demand-side innovation; social
media; entrepreneurialism; ‘buzz’
factor
32

33. Where next - policy?
• Greater awareness, sensitivity to
local strengths
• Eco-system approach
• Sustainability of investment
• Reality testing LEP/partner policies
• Use data for monitoring & evaluation
• Local levers powerful enough – LEPs,
combined authorities?
• Incentivising collaboration LEPs,
other regional/national stakeholders
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