Investigation of the Regional Innovation Paradox in the EU’s “Lagging” Regions

This research has been inspired by what has been termed the “regional innovation paradox” (Oughton, Landabaso and Morgan, 2002), which suggests that the more that innovation is needed in order to improve competitiveness in “lagging” regions (or less developed regions), the more difficult it is to invest effectively in research and development (R&D) in such regions, and the more likely it is that they will be seen to under-invest in R&D and innovation. Furthermore, it has also been inspired by the Oughton et al (2002) assertion that the main cause of this paradox lay in the fragmented nature of “regional innovation systems” in these regions, and the institutional characteristics of regions, rather than availability of public funds. The purpose of this research, therefore, has been to investigate how public policy towards and public investment in regional innovation systems has contributed to R&D and innovation performance in lagging regions. To do this, it adopted a mixed methods approach, combining use of quantitative and qualitative methods. Quantitative methods involved use of descriptive quantitative analysis of R&D and innovation inputs and outputs across a sample of lagging regions in the European Union (EU). Qualitative methods, meanwhile, involved the use of case study research of Galicia (Spain) and Puglia (Italy), using both secondary data (datasets, policy and strategy documents, funding programme documents, other reports and articles) and primary data (interviews with knowledgeable and experienced key informants). Research findings suggest that public authorities in lagging regions have increasingly turned their attention towards developing policies to promote R&D and innovation and foster regional innovation systems, and that such policies in turn have most likely contributed to an increase in investment in R&D and innovation in such regions and an increase in outputs arising from R&D and innovation activity. At the same time, however, perceived weaknesses within lagging regions’ innovation systems still appear to be evident, despite progress made and the associated growth in R&D and innovation investment and outputs, while the progress of R&D and innovation policy and performance in regions has also been affected by their interaction with other spatial levels (including interaction between policy makers at different spatial levels) and by the structural nature of the change being effected. The research presents a number of important contributions to both theory and practice. Firstly, it contributes to bridging an ongoing knowledge gap on the development of regional innovation systems in lower performing regions. Secondly, it provides a more mixed methods approach to investigation of issues surrounding the regional innovation paradox. Thirdly, it contributes to knowledge and understanding of how inter-dependencies between different spatial levels (including inter-dependencies in policy making) influence R&D and innovation activity in lagging regions, while cautioning against a “one size fits all”, best practice application of the regional innovation systems concept in lagging regions. And finally, it contributes to practice by highlighting policy implications for lagging regions, which include: stronger regional input or focus at all spatial levels of policy making; better collaboration and allocation of responsibility between different spatial levels of government; better integration of regional innovation policy with related policy areas; the need for long-term policy commitment in fostering innovation in lagging regions; the need for increased emphasis on non-R&D innovation initiatives; the need to improve understanding of the culture of both firms and supply-side institutions in lagging regions; better measures to promote collaboration between research institutions and firms, and among firms themselves; and targeted incentives to encourage research institutions and larger firms to increase R&D and innovation that aligns with regional needs. Keywords: regional innovation paradox; regional innovation systems; lagging regions; regional innovation policy