INNOVASI DAN PERTUMBUHAN REGIONAL

PROGRAM PASCA SARJANA ILMU EKONOMI UNIVERSITAS INDONESIA

14 Desember 2012

Innovation Base Regional Economic Development Model

Regional Innovation Environment Inputs and Output

Innovation and Productivity Growth

• Improving a region’s standard of living requires steady growth in productivity.

• For advanced industrial economies, productivity growth increasingly depends on the capacity for innovation. Innovation creates competitive advantage in two ways:

• by reducing bottom line costs — applying technology in ways that lower operating costs in order to compete against lower-wage countries

• by growing top line revenues through the introduction of new-to-the-world or differentiated products and services that command a price premium in the market

Inputs to Innovation Capacity

• Successful innovation, and the increased productivity and prosperity that results, is the output of the dynamic interplay of a variety of regional factors.

• Every region has a different set of assets, networks,• and an underlying economic culture that determines its

success in supporting innovative firms and people• The interplay between these innovation inputs creates

the regional innovation environment that impacts the ultimate prosperity of the region

Assets in Innovation Context

• Assets in the innovation-based economic development model include the human, intellectual, financial, physical, and institutional capital resident in a region.

• The asset base incorporates many common criteria for corporate location decisions, such as: availability of skilled labor, the quality of transportation infrastructure, cost of doing business, and proximity to customers. Assets also include other factors that are not as widely discussed but are important to innovation, such as: research and development investment, technology transfer, and entrepreneurship support programs.

Innovation and Regional Growth

• How can differential innovative efforts (in the form of R&D expenditure) help explain the differential regional growth performance?

• What geographical factors influence this relationship? • Does the process of innovation in peripheral areas exhibit

specific features that differentiate it from the process of innovation in other areas?

• What is the role of indigenous socio-economic conditions in the process of absorbing externally produced knowledge and the translation of endogenous innovative efforts into economic growth?

• Are the EU’s regional development policies – one of the most important large scale regional policy experiences – likely to produce an improvement in the capability of peripheral and disadvantaged areas such as to satisfy their individual needs?

Indigenous Innovative Activities

• Regional growth differentials on the basis of differentiated innovative activities mechanisms through which knowledge is created and translated into growth.

• Technological progress in the traditional neoclassical perspective, as independent of capital accumulation, economies of scale, human capital truly public good, its creation is unrelated to the rest of the economic system. Its effect on growth rates is regarded as a “residual” matter (the views of Solow 1957; Borts and Stein 1964; Richardson 1973

• With technological knowledge, decreasing returns to capital in the long run, automatic convergence in regional growth rates without any role being assigned to indigenous innovative activities.

Permanent Disparities

• Thus the inclusion of innovation efforts into the determinants of growth allows this theoretical perspective to account for permanent regional disparities in the rates of growth regions that are well endowed in terms of knowledge and human capital, thanks to their accumulated pool of knowledge, will have a “continuous advantage over less well-endowed regions which rely on exogenously embodied technology (in the shape of new capital equipment purchased from other regions) because they are not capable of producing their own” (Armstrong and Taylor 2000, p. 87).

• The potential for the concentration of economic activity and for divergence becomes more evident when issues such as the minimum thresholds of R&D and of appropriability of technology – highlighted by the neo-Schumpeterian strand of the endogenous growth approach – are considered.

• For R&D investment to be effective a minimum threshold of investment is necessary, making the relationship between investment in R&D and economic growth not linear

INNOVASI DAN PERTUMBUHAN REGIONAL

Sumber: R Capello et al (2011)

Conceptual map of existing literature on innovation and growth

INNOVASI DAN PERTUMBUHAN REGIONAL

Sumber: R Capello et al (2011)

REGIONAL INNOVATION SYSTEM

Sumber: McCann (2007)

Types of knowledge exchange in the innovation process

Sumber: McCann (2007)

Regional innovation systems: typology and evolution

Sumber: McCann (2007), after Cooke (2004)

What is entrepreneurship?

• What is the exact nature of entrepreneurship and its role in economic theory?

• How much have theory and research advanced since Schumpeter’s theory of long waves?

• What are the links of entrepreneurship to economic growth?

• Can entrepreneurship be considered as the interface between small business (the micro level) and economic growth (the macro level)?

• Given that entrepreneurship plays a role in economic development, how can it be fostered?

Characteristic of an Entrepreneur

• Risk seeking: the Cantillon or Knightian entrepreneur willing to take the risk associated with uncertainty

• Innovativeness: the Schumpeterian entrepreneur accelerating the generation, dissemination and application of innovative ideas

• Opportunity seeking: the Kiznerian entrepreneur perceiving and seizing new profit opportunities (OECD 1998; Carree and Thurik 2002)

ECONOMIC ANALYSIS OF WATER SUPPLY

Innovations Leading to a Decrease in the Average Cost of Production

Sumber: McDaniel (2002)

Evolutionary and Revolutionary Innovations

Sumber: McDaniel (2002)

Comparing the Impact of Innovations in Short-Run and Long-Run Reductions

Sumber: McDaniel (2002)

Characteristics of an Entrepreneur

• Self-esteem/self-confidence

• Determination to finish a task and succeed

• Persistence/diligence to keep trying

• Willingness and ability to take calculated risks

• Optimism about success of efforts

• Creativity: Ability to see a need and end result of efforts

• Focus: Orientation to continuously pursue a goal

• Foresight/insight: Ability to see the future as it might be

• Unwillingness to accept failure and the ability to learn from mistakes

• Responsibility/ability to accept control and willingness to accept results

Relationship Between Short-Run Average Costsand Long-Run Average Costs

Examples of Technologies and Their Resulting in Betterand Cheaper Products

The Product Curve Using Labor as the Variable Input

Average and Marginal Product Curves

Five Types of Industrial District

● Marshallian – small firms, localized investment links, preferred suppliers, labour market loyalty, flexible work regime

● Marshallian (Italianate variant) – with added cooperation, design intensive work and collective institutions plus local government support

● hub and spoke – Hollywood-like oligopolies plus suppliers, high

intra-district trade, low cooperation among oligopolies

● satellite platform – externally owned oligopolies, low cooperation, low social capital, strong government support

● state anchored – government installations, scale economies, low local investment, strong external linkages

Sumber: Markusen (1996)

Related variety platform: forestry diversification

Source: After Watkins and Agapitova (2004)

Broadcasting model diffusion curve

Source: Morone and Taylor (2010)

Rate of diff usion at time t