Regional Innovation Strategy
for the South Moravian Region
2014-2020
May, 2014
Contents
List of Abbreviations
List of Tables
Introduction
Analytical Part
1.Position of the Region
2.Research and Development in the Region, Innovative Business
3.Public Administration and its Role in the Innovation System of the Region.
4.Main stakeholders of the innovation system - results of the stakeholder analysis
Knowledge intensive companies relevant for SMR innovation system.
Public universities and research organisation that are directly relevant for the innovation system.
Support infrastructure for research and innovation
Public administration and its research and innovation support activities
5.SWOT Analysis
6.Methodology for creating RIS SMR
7.Specialisation of the Region - Key Economic Domains
Proposal Part of the Regional RIS
Vision and mission
Kea areas of changes A: Pro-innovation administration and governance
Key areas of changes B: Excellence in Research
Key areas of changes C: Competitive Innovative Companies
Key areas of changes D: Top European Education
Key areas of changes E: Attractive region (communication)
Implementation Structure RIS SMR
Annexe 1: Action Plan no. 2014/01
Annexe 2: Data for the analytical part of RIS JMK
Annexe 3: Project types in RIS in terms of financing regional interventions from structural funds
List of Abbreviations
ASAcademy of Sciences of the Czech Republic
CERITCentre for Education, Research, and Innovations for ICT
CTTCentre for Transfer of Technologies
CTOChief Technology Officer
CRCzech Republic
CSOCzech Statistical Office
ECEuropean Commission
ERAEuropean Research Area
ESF European Social Fund
ESIFEuropean Structural and Investment Funds for 2014–2020
EPOEuropean Patent Office
EUEuropean Union
FTEFull Time Equivalent
GDPGross Domestic Product
GVAGross Value Added
HWHardware
ICTInformation and Communications Technology
KETsKey Enabling Technologies
MITMinistry of Industry and Trade
SMEsSmall and Medium-sized Enterprises
MEYSMinistry of Education, Youth and Sports
NACEIndustrial classification
OECD Organisation for Economic Co-operation and Development
OP EIOperational Programme Enterprise and Innovations
OP R&DfIOperational Programme Research and Development for Innovation
OP EC OP Education for Competitiveness
OP RDEOperational Programme Research, Development and Education
PCTPatent Cooperation Treaty (International patent system – WIPO)
p.p.percentage point
PISAProgramme for International Student Assessment
FDIForeign Direct Investment
RIVInformation Register on R&D results (information data system for research, experimental development and innovation, IS R&D)
RIS SMRRegional Innovation Strategy of the South Moravian Region
SFStructural Funds EU
SITCStandard International Trade Classification
SSSecondary Schools
SWSoftware
TA CRTechnology Agency CR
USPTOUS Patent and Trademark Office
v.v.i.public research institution
R&DResearch and Development
R&D IResearch, Development and Innovation
ROResearch Organisation
STPScience and Technology Park
UUniversities
KIB Knowledge Intensive Business
KISKnowledge Intensive Start Up
PSPrimary Schools
List of Tables
Table 1: Distribution of companies with own R&D capacities in SMR, in 2011
Table 2: The overview of the implemented/ongoing SELECTED interventions focused on supporting research, development, and innovations in the South Moravian Region (OP R&DI centres/PO1,PO2/and OP EC are not stated on the list).
Table 3: Categorisation of the economic specialisation domain Advanced Production and Machinery Technology
Table 4: Categorisation of the economic specialisation domain Precision instruments
Table 5: Categorisation of the economic specialisation domain SW and HW development
Table 6: Matrix of innovation and research needs (knowledge domains and research capacities of R&DfI centres vs application fields in SMR)
Table 7: Matrix of innovation needs and social challenges (social challenges and research capacities of R&DfI centres vs application fields in SMR)
Table 8: Key entities of the implementation structure of RIS SMR and its members (listed institutions in the working groups involved in the definition of RIS SMR), as of 12 May, 2014.
Introduction
The Regional Innovation Strategy for the South Moravian Region 2014-2020 (hereinafter, RIS SMR) is a fundamental strategic document for the South Moravian Region and the Statutory City of Brno for the implementation of their policies in order to support competitiveness, in particular, on the basis of innovations, and to maximise economic benefits of public investment into research and education.
The purpose of RIS SMR is to create conditions for competitive knowledge-intensive businesses, in particular, through investment into improving the quality of education, research and the image of SMR, as well as through direct support of business activities where the market fails (e.g. supporting startup companies and supporting knowledge intensive activities in mature companies).
The presented strategy is the fourth generation of RIS. The first generation was discussed in 2002, the second in 2005 and the third one in 2009. The third generation of RIS SMR was also approved as a strategic document for the Statutory City of Brno and SMR.
RIS SMR is known as a sectoral strategy for the South Moravian Region which is governed by the Development Strategy with regards to the development policy of the Statutory City of Brno by the Strategy for Brno. However, these superior documents only define the basic directions for supporting economic competitiveness. RIS SMR develops these directions into specific priorities, objectives, activities and projects/programmes.
The fourth generation of RIS SMR is also known as the smart specialisation strategy [1]for the South Moravian Region which is the ex-ante condition of the European Commission for investments from European Structural and Investment Funds and community programmes to support research, development and innovations (Horizon 2020, COSME etc.) for the programming period 2014-2020.
The RIS SMR was defined thanks to the broad-based involvement of relevant partners from the educational, research and innovative ecosystems of South Moravia. Working groups have discussed key issues, proposals how to resolve these issues, and objectives; measures and projects were defined. When defining the RIS SMR, the methodology of the European Commission[2] and instructions of the MEYS, that is the guarantor of compliance with the ex-ante conditionality of the EC, were complied with.
The document is divided into two parts - an analytical part and proposals. The analytical part includes basic characteristics of SMR in terms of the economic position of the region and analysis of key stakeholders in the system. A special emphasis is put on the current outputs and the RIS implementation results, and the analysis of activities of support institutions. The SWOT analysis summarises the main points made by the working groups and it represents the main input for the proposal part. The proposal part includes the mission statement, vision, and strategic and specific objectives. The strategy proposal part includes an identification of key economic domains, and strategic and specific objectives that are binding for the entire period of strategy implementation. Strategy objectives will be fulfilled through the Action Plan (a portfolio of project plans) that will be regularly updated.
In order to successfully manage the RIS SMR a Steering Committee was set up, comprising representatives from Universities, the Academy of Sciences CR, key economic domains and the local government. The Steering Committee of the RIS SMR will regularly discuss proposals for new projects made during the working groups meetings, and it will monitor the progress made during the implementation of the strategy.
Analytical Part
1.Position of the Region
The South Moravian Region (hereinafter "SMR") is one of the biggest regions in the CR. Its1,168,650 inhabitants[3] rank it the fourth most populated region in the CR. It represents 11.1% of the population of the CR, and its share of GDP is 10.5%. Despite this disproportion[4], in the monitored period, the region had the highest GDP per inhabitant, despite the fact that the differences between the regions outside Prague are not prominent[5]. The efficiency and position of SMR is based, in particular, on the economic power of Brno and its broader surroundings. Brno is the second most important control and economic centre of the CR with a high concentration of activities with an added value (ICT, specialised services, research organisations, etc.). There are no other areas in the region, apart from the metropolitan area[6], that would be significantly driving the national economic growth. Some fairly large parts of the region (in particular, microregions around Znojmo, Břeclav, Hodonín, and the northern parts of Blansko) can be characterised as areas that are economically lagging behind. In terms of the Czech Republic, the region can be characterised as developed, however, there are big internal differences in terms of economic efficiency and the local labour market.
As a result of the control function of Brno, the South Moravian Region has the second largest share of service sector after Prague (pursuant to data for 2012, 61.2% for employment; 60.2% for gross added value (hereinafter "GAV") in the economic structure. The share of the secondary sector is slightly lower than in the whole of the CR (35.8% for employment and 37.2% for GAV). The primary sector (3.1% for employment, 2.4% for GAV) is also slightly below the CR average (3.3% or 2.4%). In terms of individual industries (NACE), the economy of the South Moravian Region is mostly driven by the processing industry and services with a high added value[7]. In terms of the whole CR, the share of processing employment has slightly decreased in the CR in the last ten years by 2.3 p.p, however, in SMR it only dropped by 1.0 % p.p. and, in the pre-crisis period of 2002-2007, the share of processing employment in the region increased whilst, in terms of the CR economy, it showed a drop. The processing industry is the main driving force of the regional economy, which generates major revenues outside of the region. The next main source of income outside the region is, thanks to Brno, the public sector (universities, hospitals, research institutes of national importance, etc.).
The Czech economy as a whole is driven by foreign companies. In this respect, the position of SMR is quite specific. In comparison with other regions (Table 1 of the Annexe), it is evident that in 2005, SMR was one of the least successful regions in the CR in terms of cumulative influx of direct foreign investment (hereinafter "DFI"). As of 31. 12., 2005, the DFI amounted to CZK 50.6 thousand per inhabitant, which was the fourth lowest value amongst the regions and only 36.5% of the national average. The main wave of the DFI influx in the Czech Republic started in 1997-2005[8]. In the period after 2005, SMR, together with Prague, represented the main target region for the DFI in the CR (see Table 1 in the Annexe). This change explains the above stated finding that every year since 2007, the interim development of GDP in the region has been better than the development of GDP in the whole CR [9]. In terms of RIS, i.e. in terms of the development of knowledge economy, the structure of the DFI has gradually changed for the benefit of activities with a higher added value, including company R&D activities, which is important. Thanks to Brno, SMR will keep on taking advantage of this trend as DFI into activities, with a higher added value, concentrates into larger economic centres, in particular, into centres where there is a wide pool of highly qualified people.
In terms of international competitiveness and with regards to the local economy generating income from abroad, the main specialisations of SMR are, according to NACE classification:
- engineering industry - NACE 29,
- electro technical - NACE 27 and eletronic - NACE 26 - industry.
Nearly half of the export of SMR is from these sectors (key product groups are presented in Table 2 in the Annexe). These branches and the related metalworking industry (NACE 25) represent 20% of the private sphere of the regional economy[10]. It is evident that specialised companies, concentrating their skills into specific fields, are able to compete in foreign markets and generate income for the local economy. It is important that these industrial sectors are strongly interlinked (e.g. industrial automatisation, delivery of investment units, etc.). In SMR region, i.e. in Brno, we can see a dynamic development of IT; a majority of IT companies specialise in SW solutions for industry. The dynamic development of IT and its link to the traditional specialisation in engineering and electrotechnics create a beneficialenvironment for the development of modern technologies and knowledge intensive companies.
In addition to this performance-dominant specialisation, there are other specific specialisations that have a major impact on the non- metropolitan regions. In particular, in the southern and eastern parts of the region, agriculture and food industries play an important role. The competitiveness of these industries must be evaluated within the context of the national market and the market of the surrounding countries. The region has an agricultural tradition and suitable conditions for agricultural activities, and, also, well-established companies involved in processing and producing foodstuffs. It is easy to access the nearby markets of big cities which, in accordance with the long-term trends, show a growing demand for high quality food, supported by strong purchase power (Brno, Bratislava, Vienna). South Moravian wine making is known for its first-quality products and it is of national importance; in the areas of Znojmo and Břeclav wine making is a major driving force supporting, among others, a specific type of tourism.
In terms of the development of knowledge economy, university education and healthcare represent fundamental specialisations. There are over 80 thousand university students studying in Brno which creates the human resources necessary for the development of enterprise and innovation, and the development of research. Thanks to the accessibility of talent, some Czech companies from other regions consider relocating, or placing their R&D activities in Brno. Brno University of Technology represents the main partner forR&D for many companies from Moravia. There are two big university hospitals providing top quality healthcare, and the very special Masaryk Oncology Institute, together with the first quality Medical Faculty, have a major capacity for creating and using new medical and related technologies. They represent a considerable source of human resources. For these reasons, and in relation to the global trends of demographic aging and a bigger emphasis on health and quality of life, these institutions represent a major development potential for the development of knowledge economy in SMR.
2.Research and Development in the Region, Innovative Business
Based on the scope of R&D capacities, SMR has the second best suitable conditions for the development of knowledge economy after Prague. Its share of total R&D expenditure (GERD), in 2012, amounted to 20.3% of the total expenditure in the CR. Its share of GDP is 10.5%. Based on the number of employees in R&D, the share is 18.8%. The regional innovation system can be, if simplified, divided into the creators of new knowledge (most often research organisations) and their users (in particular, companies but also other parties of the application sphere - e.g. hospitals). In terms of research organisations, SMR is the second most important region in the CR, following Prague. This is thanks to the concentration of university capacities in Brno. Within the CR, SMR share of R&D capacities in the "University" sector reached 27.4%, in 2012, by employees and 33.8% by R&D expenditure. The big difference in the share of expenditure and employment in R&D in the university sector is connected to the extraordinary investment of research centres supported from the OP R&DI 2007-2013. In addition to universities, there are also 8 institutes of the Academy of Sciences of the CR. SMR share of R&D capacities in the "government sector" is 12.3% by employees and 12.9% by R&D expenditure.
The ranking of the region by R&D capacities is not only due to the concentration of universities and public research organisations. SMR share of R&D capacities in companies in the CR is 15.1% by R&D employees and 16.0% by R&D expenditure. In terms of RIS, the dynamic growth of the number of companies implementing their own R&D is important. Judging by this parameter, SMR is the most successful region in the CR (see Table 3 in the Annexe). The number of companies with own R&D increased in the CR by 527 companies in 2006-2011. Out of which 104 companies (19.7%) were from SMR. In total, there were 367 companies in SMR with their own R&D in 2011.
It is not only the number of companies who implement the R&D but also the number of companies who implement R&D systematically and invest a critical volume of resources into the area. This documents a certain level of technological aspiration. In 2011, 99 out of 367 companies invested, into their own R&D, more than five million CZK[11]. Key economic sectors in SMR represented by the companies: engineering (NACE 25, 28) – 12 companies; electrical engineering (NACE 26, 27, 33) – 19 companies, ICT (NACE 61, 62, 63) – 17 companies and life sciences (NACE 01, 10, 21, 86) – 7 companies[12]. Another 47 companies fall into NACE 72 (research activities) and other services. A considerable part of the entities implement R&D activities whose results are used in the user areas of the key sectors stated above. In 24 out of the 99 companies, the R&D expenditure exceeds 30 million CZK, out of which in 13 companies the R&D expenditure exceeds 50 million CZK.
In order to target regional innovation strategies, the sectoral structure of business R&D expenditure is important (see Graph 4 in the Annexe). Out of the total 6.2 billion CZK of business R&D expenditure, two thirds fall onto key sectors - electrical engineering, electronics, engineering and IT industry. Both domestic companies (e.g. Alta, Zetor, Tescan, etc.) and foreign companies (for example, Honeywell, FEI, ABB, etc.) have large R&D capacities in SMR. R&D activities are implemented by 10 leading international companies in Brno, and more are joining in. The industrial tradition, quality of engineers and the capacity of universities representing a source of highly qualified people, in combination with the already existing concentration of business R&D, create suitable conditions for the development of production in technologically demanding industrial fields. They also create suitable conditions for services related to technologically (knowledge) demanding industrial production.
These conditions concern Brno, in particular, as demonstrated in Table 4 below. The companies implementing their own R&D were distributed within individual SMR areas (districts) as follows, in 2011: Blansko – 28 companies, Brno-City – 235 companies, Brno-surroundings – 41 companies, Břeclav – 12 companies, Hodonín – 15 companies, Vyškov – 22 companies, Znojmo – 14 companies. Despite the concentration of companies implementing their R&D in Brno (64%), the data in Table 4 shows that by supporting the creation of suitable conditions for the development of knowledge-intensive companies, this can have and has a major impact on the non-metropolitan areas of the region. It is exactly these companies, focusing on technology innovations of higher order which represent the examples of continuing complex restructuring of the economic base in the non-metropolitan regions. These companies serve as an example to others that a competitive advantage based on innovations does not have to be only built in metropolitan centres with a high concentration of talent and specialised services. In the non-metropolitan regions, these companies represent a source of inspiration for their immediate surroundings and a major source of spreading knowledge and modern management practices. They also stimulate innovation of local suppliers by their high demand.