Rogut, Piasecki Paper

8/6/2019 Rogut, Piasecki Paper

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Eight European Urban / Regional Studies Conference

Repositioning Europe in an era of global transformation15-17 September 2010 Vienna, Austria

Foresight as an instrument to create regional advantage. The case ofPolish regions

Anna Rogut, Bogdan Piasecki

Entrepreneurship and Economic Development Research Institute (EEDRI)

Spoeczna Wysza Szko Przedsibiorczoci i Zarzdzania w odzi,

121 Gdaska St.

90-519 d, Poland

tel: 0048 42-66 42 243

fax 0048 42-66 42 246

Abstract

According to the report of the European High Level Group on Key Technologies, Europefaces the need for a revision and restructuring of its socio-economic model. The Europeaneconomy is based on old paradigms and its research and development activity is insufficientlycommercialized. To move forward, it is necessary to implement creative disorganisation ofthe system based on long-term, coherent investments in key technologies, which involves amore pro-active, intelligent approach to accomplishing long-term objectives. This goal may befurthered by making use of those assets where Europe has already established its position andis able to maintain and consolidate it to pursue leadership. The same may be said about Polishregions, which, despite the lack of unique assets, represent enormous potential accumulated intheir intellectual, scientific, research and material resources, tradition and industrial culture.

The adequate exploitation of this potential may lead to developing an exceptional new qualityand thus may provide foundations for a boosted international position of the regions. Thisnew quality should draw on traditional and emerging areas of regional competence, which arecontinuing to expand and encompass new, related fields of activity. To implement this vision,it is necessary to take bold decisions with respect to transformation directions for the regionalsocio-economic base. The debate on the future taking place in the context of a number ofrecently launched foresights may be a point of departure for such decisions. The objective ofthe paper is to present the results of this debate in the context of seeking new regional devel-opment paths (revolutionary vs evolutionary), supporting the regional authorities in shapingeconomic structures effectively (managing the transformation of resources to take advantageof tradition, industrial culture, and the intellectual, scientific, research and material potential,

and to prevent the lock-in effect), and fostering the development of mechanisms enhancingresilience to regional socio-economic shocks.


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Introduction

Diagnosis of innovativeness in Poland has led to a series of statistical analyses, reports andprogramme documents1 which revealed a considerable technological gap in Polands econ-

omy. This is in particular reflected by the low ranking of Poland and its regions (Figure 1) inthe European Innovation Scoreboard (Hollanders, Tarantola and Loschky 2009, PRO INNOEurope 2010). Admittedly, Poland has moved in recent years from catching-up countries tomoderate innovators but it still has a low synthetic innovation indicator and ranks only 27thout of the total 33 states2. Poland comes ahead of only Bulgaria, Romania, Lithuania, andLatvia among the EU countries and Croatia, Serbia, and Turkey among the non-EU coun-tries. The low level of innovation has been also confirmed by the latest Global CompetitivenessReportranking Poland 21st among European Union members3 and 24th in the technologicalreadiness pillar (Schwab 2009).

Figure 1: Innovation position of Polish provinces against EU27

Source: Hollanders, Tarantola and Loschky (2009), p. 6

1 The latest documents include: Kierunki zwikszania innowacyjnoci gospodarki na lata 2007-2013 (MG 2006),Narodowa Strategia Spjnoci (MRR 2007a), Strategia rozwoju nauki w Polsce do 2015 roku (MNiSW 2007),Strategia rozwoju spoeczestwa informacyjnego w Polsce do roku 2013 (MSWiA 2008), Krajowa StrategiaRozwoju Regionalnego (MRR 2010), Nauka i technika w Polsce w 2008 (GUS 2010) and the report Polska 2030.

Wyzwania rozwojowe (Boni 2009).

2 The survey involved 27 members of the European Union as well as Croatia, Serbia, Turkey, Island, Norway,and Switzerland.

3 Out of the total 133 countries, Poland ranked 52nd in terms of the innovation indicator and 48th in terms of thetechnological readiness indicator.


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It is true that over the last two decades Poland has achieved considerable progress; however,this has taken place mainly in "traditional" sectors and for the most part thanks to increasedemployee expertise and technical competence, and not because of intensified research orfaster commercialization of research results (MG 2006, MRR 2007b, Weber, Meske andDucatel 1999). The key technology sectors of Polands economy remain poorly developed

(Wojnicka et al. 2006, GUS 2010). This places the country closer to the so-called low road toindustrial restructuring, which takes advantage of production costs differences rather thantechnological development and innovation as a source of international competitive advantage(Pyke and Sengenberger 1992, Davis 1995, Rogut 2008).

A simple extrapolation of the current trends seems to offer a pessimistic scenario in the me-dium term (to 2020) and in the long term (to 2030) for the structure of the economy, which isgoing to remain dominated by sectors of medium-low and low technologies and less knowl-edge-intensive services. Such a scenario would confirm recent concerns of the EuropeanCommission that the technological process of catching-up with the old members (EU15) bythe new members (EU10) would be a two-speed process, setting the Baltic countries, whichare quickly approaching the EU average, apart from the other new members, including Po-land (Bureau of European Policy Advisers 2006, see also: Armbruster et al. 2005). Moreover,according to this scenario it might take decades to close the innovation gap completely inrelation to the EU27 average (PRO INNO Europe 2008). Hence, the Polish regions should

very seriously consider the warning formulated by the European High Level Group on KeyTechnologies about the need to revise and restructure social and economic models and abouttransferring from old to new paradigms to dramatically intensify R&D commercialization.'The way forward () depends on a creative system disruption based on long-term coherentinvestments in Key Technologies' (European Commission 2006a, p. 5), which involves a mo-re pro-active, intelligent approach to accomplishing long-term objectives (Carlsson 1997). ForPolish regions this may be all the easier since the enormous potential accumulated in theirintellectual, scientific, research and material resources, tradition and industrial culture is al-ready available. The adequate exploitation of this potential may lead to developing an excep-tional new quality and thus may provide foundations for a boosted international position ofthe regions. This new quality should draw on traditional and emerging areas of regional com-petences, which are continuing to expand and encompass new, related fields of activity(Rogut and Piasecki 2008). This might prove extremely difficult, taking into account the evo-lutionary nature of local development, characterized by strong path dependency and possiblelock-in effects (Balmann et al. 1996, Capello and Nijkamp 2009, Frenken and Boschma 2007,Hudson 2007, Lee and Mason 2008, Mathews 2002, Puffert 2004, Rafiqui 2009, Reimer 2007,

Thomas 2005). However, it is possible, especially if path dependence and lock-in are phe-nomena that obtain under particular conditions, and are themselves the result of more fun-damental evolutionary mechanisms, such as selection and adaptive learning (Martin andSunley 2006, p. 11) and the development of the region is an ongoing, never-ending interplayof path dependence, path creation and path destruction that occurs as actors in different are-nas reproduce, mindfully deviate from, and transform existing socio-economic-technologicalstructures, practices and development paths (ibid., p. 11, see also: David 2002, Garud andKarne 2001, Maskell and Malmberg 2007, Martin 2009, Martin and Sunley 2007).

Thus, it is realistic to assume that revising the regional socio-economic-technological structureis to a large extent a matter of strategy rather than path dependence (Lipsey and Carlow 2002,Manic 2008). The condition for this is to develop dynamic capability defined (in the case ofregions) as the ability to identify and shape opportunities using organizational search andexploration processes (Malik 2008, p. 221, see also: Eisenhardt and Martin 2000, Teece 2009,

Zhou and Li 2010), as well as the critically important capacity to purposefully create, extend,or modify regional resource base (Helfat et al. 2007) or the capacity to construct regional ad-


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vantage (Asheim, Boschma and Cooke 2007, Cooke and Leydesdorff 2006, European Com-mission 2006).

The development of dynamic capability in the region is fostered by what some call the re-gional development platform or strategic policy intelligence. In the first case, this means re-gional resource configurations based on the past development trajectories, but presenting thefuture potential to produce competitive advantage existing in the defined resource configura-tions (Harmaakorpi and Uotila 2006, p. 779) whereas in the second case the set of actions tosearch, process, diffuse and protect information in order to make it available to the right per-son at the right time in order to make the right decision (Clar et al. 2008, p. 2). In both in-stances, the purpose is to provide political decision makers with comprehensive, objective,politically unbiased and forward-looking information and knowledges. And in both casesforesight is a central activity. It is difficult to pinpoint the region which was first to initiatesuch measures, with the pioneers including Andalusia, Catalonia and Valencia in Spain, Uusi-maa in Finland, Stuttgart in Germany, West Hungary, Lombardy in Italy, Flevoland in Hol-land, Yorkshire, Humberside, North East England, West Midlands and Wales in Great Britainand Grand Lyon in France (FOREN 2001, STRATA-ETAN Expert Group 2002, UNIDO2005).In the recent years, a number Polish regions have joined in. While some of them have alreadyinitiated the foresight debate, some are in the process of acquiring their first experiences.

The remaining part of the paper presents the results of this debate in the context of seekingnew regional development paths, supporting the regional authorities in shaping economicstructures effectively, and fostering the development of mechanisms enhancing resilience toregional socio-economic shocks. The empirical part of the paper discusses achievements ofthese foresight projects, paying particular attention to foresight of advanced industrial andecological technologies for the sustainable development of the country4.

Path dependence, path creation and path destruction. Foresight results

First endeavours to launch foresight activities in Poland were undertaken simultaneously withthe development of Regional Innovation Systems (RIS). Though assessment of the future wasnot the main goal of RIS projects, they paved way for methods (and in particular scenarios)characteristic of foresight (EEDRI 2004), promoting a new style of debate concerning theparadigms of future development. The debate is focused on two axes: aspiration/motivationand targeted output, the former involving the area between mapping out diversity and reach-ing consensus, and the latter concerned with the area between democratisation and advising

(Figure 2).The Sectoral Operational Programme Improvement of the Competitiveness of Enterprises(Journal of Laws Dz.U. 2004.166 1744) provided an opportunity to use foresight more exten-sively as ten regional technological foresights were undertaken. They have proved that Polishregions have a significant potential, which is, however, focused on already existing assets witha long tradition and an established position. This position can and should be further enhancedso as to gain technological leadership in certain areas. These areas include: IT, mechatronics,eco-business, environmental technology, the construction and building materials industries,food-processing, the aviation industry, the chemical industry, the pharmaceutical industry,

4 Project financed under the Innovative Economy Operational Programme, contract no. UDA-POIG.01.01.01-00-012/08-00.


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Figure 2: Directions of the debate over the future ofregions

Democratisation: fostering conditionsunder which participants might usetheir own knowledge to formulate andexpress their judgements, opinionsand views on matters which concernthem directly and which require un-dertaking public measures, with theresults being of considerable impor-tance and possibly binding.

Advising: soliciting the participantsopinions and ideas, which may be vitalin decision-making. The resultsachieved through particular methodsmay be used further on in the deci-sion-making process.

Mapping out diversity: generating anoption/information package or testing

alternative strategies in a neutral envi-ronment. Consensus reaching: making a deci-

sion on a particular issue by mutualconsent.

Source: Steyaert and Lisoir (2005), p. 13

biotechnology, the power industry, the creative industries, broadly defined health care ser-vices, educational services sand business and knowledge process outsourcing. So far, consid-erable progress has been observed in these areas, but still insufficient for them to becomecompetitive on the European scale (Grysa and Ponecki 2007, Hausner 2008, Malik and Dy-mek 2008, Mieczkowski et al. 2007, Rogut and Piasecki 2008, Woniak 2008).

The obstacles include insufficient absorptive and development capacity (Mahroum et al.2008), which means that the dissemination of technologies with the greatest developmentalpotential is too slow, and it is unclear around which technological niche a significant competi-tive position and technological leadership may be built. The latter was confirmed by the re-cently completed sectoral foresights (Czaplicka-Kolarz 2007, Gambin, Wojkowski and wid-erska-roda 2010, Rogut and Piasecki 2010) and the national foresight (NPF Polska 2009,Kowalewska and Guszyski 2009). They drew attention to the fact that in Poland a lot ofinteresting scientific research projects are being conducted in such fields as nanotechnology,spintronics, surface physical chemistry, aviation technologies, robotics, etc. Unfortunately, themajority of these projects lack adequate intensity and continuity to move from the laboratory

scale, through semi-technical stage to full commercialisation. Furthermore, Poland does nothave an industrial base that would be ready to invest in the commercialisation of these tech-nologies (Bendyk 2009).

The aforementioned conclusions are borne out by the first results of the ongoing foresight ofadvanced industrial and ecological technologies for the sustainable development of the coun-try aimed at identifying the directions of research/technologies, out of those proposed by thenational foresight, in which Poland may gain a significant competitive position or technologi-cal leadership by 2030. The study is based on expert methods focused on the assessment oftechnology readiness level and the competitive position of Poland in five fields covering alto-gether twenty one integrated (Table 1) and seventy six specific directions of research.


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Table 1: Fields of research/technology assessed as to their technology readiness level

Field Integrated research directions

Apparatus for non-destructive testing Apparatus for testing the wear characteristics

of materials and machines Specialised systems and devices for testing

and certification

Specialised research and testing apparatus

Information technologies for designing, test-ing and calibrating of measurement apparatusand specialised research devices

Optomechatronic technologies and systems Specialised mechatronic technologies and

devices

Mechatronic technologies and control systemssupporting manufacturing and maintenanceprocesses

Information and communication technolo-gies, diagnostic and control systems

Coatings and layers for particularly demand-ing applications manufactured with the helpof surface engineering methods, including sol-gel methods

Hybrid layer manufacturing processes Devices and systems for advanced plasma

surface engineering technologies Materials for advanced surface engineering

technologies

Advanced material technologies and nanotech-nologies and technical systems supporting theirdesign and application

Advanced computer methods for the designand technology of surface processing and forthe optimisation of layer/coating properties

Technologies for manufacturing more envi-ronmentally friendly supplies for machines

Technologies for achieving more efficientconsumption of resources and materials

Recycling and waste management technolo-gies

Low-waste technologies for the manufactur-ing, maintenance and repairs of machines anddevices

Environmentally friendly technologies formanufacturing energy

Environmentally friendly technologies, moreefficient utilisation of raw materials and re-sources; renewable energy sources

Logistic systems in waste and energy man-agement

Technical systems improving the safety offacilities and technical processes

Monitoring and diagnosis of technical proc-esses and facilities

Technologies for technical and environmentalsafety

Systems increasing environmental safetySource: Rogut and Piasecki (2010)


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To assess the technological readiness level (TRL), the project uses a modified TRL index con-sisting of 10 levels (Table 2) that indicates the advancement of particular research directionsand commercial applications (the lower the number, the lower the technological readinesslevel is). The TRL index serves as a proxy measure to assess the criticality of certain re-search directions/technologies, that is, the degree to which they correspond to the criteria of

generic and precompetitve technologies5

. The former denote technologies with great potentialfor versatile applications in a wide range of products and processes used in various industries,which result in external effects not restricted to individual applications. The actual utilisation(commercialisation) of generic technologies requires further research and development works(Keenan 2003, Kuusi 1999). The term precompetitive defines a certain stage in the innova-tion process rather than technology as such, and is applied to actions undertaken before theactual commercialisation of a particular technology (market research, prototypes).

Table 2: Technological readiness level

Technology cycle Level TRL (description)

1 Basic principles observed and reportedBasic/applied rese-arch 2 Technology concept and/or application formulated

3 Analytical and experimental critical function and/or character-istic proof-of concept

Early commertialisa-tion (mode-ling/testing) 4 Component and/or breadboard validation in laboratory envi-

ronment5 Component and/or breadboard validation in relevant envi-

ronment6 System/subsystem model or prototype demonstration in a

relevant

environment (ground or space)7 System prototype demonstration in a space environment

Full commertialisa-tion (prototyp-ing/testing/demon-stration)

8 Actual system completed and flight qualified through testanddemonstration (ground or space)

9 Actual system flight proven through successful mission op-erations

Diffusion

10 Market success

Source: On the basis of: Armbruster et al. (2005), Homeland Security Institute (2009), Mankins (2009),Wonglimpiyart i Yuberk (2005)

The results show that all integrated research directions/technologies are relatively advanced,positioned between the stage of early commercialisation (modelling/testing) and full com-

5 A popular definition of critical technologies describes them as technologies crucial to the future of a certainarea, sector, region, country, etc. (Mogee 1991). In practice, this term may denote any of four different ap-proaches: critical technology as the state of the art, critical technology as a component of national self-sufficiency, critical technology as a pace-setting factor for specific applications or critical technology as genericand precompetitive. If one examines these approaches with respect to policy relevance, clear differentiationbetween critical and non-critical technologies, and the reproducibility of results, then the interpretation of criticaltechnologies becomes narrowed down to a pace-setting factor for specific applications and generic and precom-petitive technologies (Popper, Wagner, Larson 1998). However, as the former interpretation (technologies as apace-setting factor for specific applications) is limited to the results of technology implementation, so under the

Advanced Technologies Project critical technologies are understood as generic and precompetitive technologies.


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essing and for the optimisation oflayer/coating propertiesTechnologies for manufacturing moreenvironmentally friendly supplies formachines 2,67 4,60 3,33 2,07 3,17 Technologies for achieving more effi-cient consumption of resources andmaterials 3,32 5,40 3,00 2,56 3,57 Recycling and waste managementtechnologies 4,12 4,04 2,96 2,60 3,43 Low-waste technologies for the manu-facturing, maintenance and repairs ofmachines and devices 4,20 4,47 3,67 3,93 4,07 Environmentally friendly technologiesfor manufacturing energy 4,65 4,77 3,73 3,05 4,05 Logistic systems in waste and energymanagement 2,10 3,40 1,50 1,50 2,13 Technical systems improving the safetyof facilities and technical processes 4,6 2,6 1,8 5,5 3,6 Monitoring and diagnosis of technicalprocesses and facilities

4,7 2,4 1,9 5,4 3,6

Systems increasing environmentalsafety

3,9 2,1 1,8 3,2 2,7

Source: On the basis: Rogut and Piasecki (2010)


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In summary, the studies and analyses which have been conducted so far do not afford clearrecommendations as to paths of innovation development or, in a broader sense, of techno-logical development in Polish regions (lock-in vs. path creation). In this context, some fun-damental issues crucial to constructing regional advantages need to be resolved. They include:(i) readiness to change the strategy for technological development; (ii) appropriate model of

technological learning; (iii) need to redefine clusters in the innovation policy and (iv) thescope of utilizastion of market mechanism in the innovation policy. These issues are dis-cussed at length in the subsequent section.

How to construct national advantage?

Radical or incremental innovation, or, are we ready to change the strategy for technological de-velopment?

Technology can be defined as the knowledge necessary to produce particular goods or ser-vices and/or attain some target results (products or process technologies) and all the organ-isational patterns under which these processes are conducted (organisational technologies).

The framework for the discussion on changing the technological development strategy6 con-sists of: the thesis on backwardness rent (Gerschenkron 1962, Landesmann, 2003), themodel of economic growth in an open economy (Fagerberg, Srholec i Knell 2007, see also:

Aghion and Hewitt 1998, Greiner 2005, Hagemann and Seiter 2003, Salvadori 2003, Zhang2005, and others) and the model of technological progress (The Word Bank 2008).

The backwardness rent thesis states that the technological gap between technology leaders(countries at the technological frontier) and late innovators (catching-up countries) is benefi-

cial for the latter ones, as it provides them with an opportunity to catch up with the technol-ogy leaders through the exploitation of their technologies (i.e. transfer of knowledge andtechnologies from technology leaders to late innovators). The rate of catching up (bridgingthe technological gap) is a function of the initial distance: the wider the gap, the faster the rateof catching up. However, there is a difference between the actual and the potential catchingup rates, which is a derivative of meeting the conditions determined in the model of growthin an open economy. These conditions are as follows: intensity of creation of new knowledge(technology) in the country, the potential for exploiting knowledge developed elsewhere, andgrowth in the capacity to exploit this knowledge, change in relative prices in common cur-rency, and growth of world demand weighted by the ratio between income elasticity for ex-ports and that of imports. As regards each of these factors, it is not their absolute but relative

values that are taken into account (compared with innovation leaders/major competitors).The first condition may be considered in the context of so-called technology competitiveness(which means the capacity to develop and commercialise more radical innovations), while thenext two conditions in the context of so-called capacity competitiveness (that is, technologicaland organisational competence, access to financial institutions and markets and their quality,as well as the quality and efficiency of the government and administration).

6 Where technology () is the idea set specifying all things that assist in creating economic value. This includesthe specifications of all outputs of goods and services (product technologies) and all the processes used to createthem (process technologies) and all forms in which production processes can be organised both on the shopfloor and in management (organisational technologies)" (Lipsey 2000, p. 6)


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On the other hand, according to the model of technological progress, technology (techno-logical progress) is at the same time the driving force and the result of economic growth. Thismeans that the degree of technological competitiveness of individual countries depends ontheir current wealth; thus a high potential for the creation and commercialisation of newtechnological knowledge (radical innovations) is primarily the domain of the richest countries.

This is the basis for defining two fundamental strategies for technological progress (Acemo-glu, Aghion and Zilibotti 2006, Ancarani 2009, Rodrik 2003, Vandenbussche, Aghion andMenhir 2004):

Investment-based strategy. This is a strategy based on the economic tradition advocating(strong) state interventionism as a fundamental development impulse for the less-developed economies and as a factor correcting market inefficiency. Innovativenessmeans here the capacity to absorb/adapt innovations developed by the innovationleaders (competence competitiveness). The main thrust of initiatives undertaken withinthis strategy includes promoting capital investments in domestic companies (sectors)

with a view to adapting already existing (foreign) technologies. The basic instruments of

promotion include direct state intervention including grants, subsidies, low-interestloans and other forms of direct support to business, the promotion of domestic leadersand support for and protection of the domestic market against foreign competitors.

Innovation-based strategy. Along with catching-up with the leader, the effectiveness of theinvestment strategy declines, because the increasing technological level of the domesticcompanies gives rise to demand for new instruments and qualifications as prerequisitesfor further technological progress. Under the new conditions, innovativeness begins tobe understood as the capacity to develop and implement own technologies superior tothe best technologies available in the market (radical innovations) rather than the capac-ity to absorb foreign technologies. Consequently, the innovation strategy becomesmore effective (through development of technological competitiveness) with the declin-ing role of the state, the growing position of the markets (as autonomous, efficientmechanisms of selection) and the focus on maximisation of innovation at the cost ofinvestment. This strategy promotes so-called creative destruction, with the leading posi-tion attained by new companies (especially in the field of high technologies and knowl-edge-based services), which forces other companies to enhance the intensity of theirinnovation (lest they be eliminated from the market), with the crucial role of the educa-tion system (and in particular of high-quality university education with a view to pro-ducing engineers, researchers and scientists) and with a market-based financial systemincluding a strong presence of venture capital.

The choice between investment and innovation strategies depends on the technological gap

between individual countries and technological leaders. As regards the catching-up countries,the investment strategy is the most effective. However, in the course of catching up with theleader, it should be smoothly replaced by the innovation strategy. Unfortunately, the oppositemost often happens, as institutional solutions and instruments implemented under the in-

vestment strategy tend to consolidate. Consequently, market unreliability becomes replaced bysystem unreliability (Lipsey and Carlow 2002). The system becomes inflexible and immune toreforms, thus widening the gap rather than bridging it (non-convergence trap).

History shows that the investment strategy worked well in Japan, Europe, and in particular inthe case of the so-called Asian tigers. In Europe, however, it is becoming self-evident thatthis strategy has lost its effectiveness. Europe cannot catch up with the United States and

Japan in respect of innovation and no longer maintains an innovative advantage over its newcompetitors the BRIC countries (Ancarani 2009, PRO INNO Europe 2010). This situation


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results from a late (or failed) shift from investment strategies focused on incremental innova-tion to innovation strategies focused on radical innovation.

A similar diagnosis is true of Poland, as proven by the lack of a fundamental change in theassessment of Polands international competitive position7 as well as by the declining effi-ciency of ongoing initiatives aimed to enhance innovativeness (Rogut 2008). Thus, time hascome to abandon the investment strategy (at least in the sectors which have been able to nar-row the technological gap) initiated in the early 1990s and shift to the innovation strategy,thus avoiding the non-convergence trap.

The above conclusion is further motivated by the fact that:

a high degree of innovativeness requires a balanced level of competence and techno-logical competitiveness (PRO INNO Europe 2010),

the pace of competence competitiveness convergence (the main pillar of the invest-ment strategy) is higher than the pace of technological competitiveness convergence(Fagerberg, Srholec and Knell 2007, The World Bank 2008). This is fuelled by the na-

ture of international technology transfer between leaders and catching-up countries(including Poland), which primarily involves obsolete technologies (Manic 2008). Thus,competence competitiveness no longer gives Poland a good competitive position (inthis respect Polands position becomes similar to other catching-up countries) or along-term growth rate.

Accordingly, it is difficult to accept the opinion that Poland should abandon its dreams ofgroundbreaking innovations and focus on fostering incremental innovations. In short, it isbetter to develop the already existing technologies than invest in technological revolutions(Bendyk 2009). Quite the opposite, Poland should pursue its dreams of groundbreaking inno-

vations. Moreover, Poland should fulfil these dreams on the understanding that this is possi-ble only in some niches (where Polands existing potential is sufficient) and seek success innew generic technologies which, unlike mature technologies, are still open to new competitors(Prez 2001).

Which model of technological learning?

The adoption of a new strategy involves the modification of the prevalent technological learn-ing model, i.e. the process of producing, acquiring, accumulating, implementing and diffusingthe latest scientific and technological knowledge together with economic, management andinstitutional knowledge. The quality and pace of this process depends on the learning capacityas well as on the environment in which it is taking place (i.e. opportunities). Various combina-

tions of these elements constitute six models on a continuum from strategies based on 'thelow road' to those based on the high road to technological restructuring, including tradition-alist slow learning, passive FDI-dependent, active FDI-dependent, autonomous, creative-isolated and creative-cooperative strategies (Table 5).

7 For example: Global competitiveness report (Schwab, Porter and Sachs 2002, Schwab et al. 2009), Globalentrepreneurship monitor (Bosma and Levie 2010, Reynolds et al. 2002) or Doing business (IFC 2009, The

World Bank/IFC 2006).


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Table 5: Models of technological learning

Models Characteristic

Traditionalist slow

learning

relying mostly on traditional technologies low S&T learning capacity minimal S&T learning opportunities low international competitiveness high risk of further economic marginalization most urgent need of international S&T assistance

Passive FDI-dependent

passively relying on FDI to bring in new technologies low S&T learning capacity no or week government technological strategy limited opportunities for technological learning high risk of losing in economic competition with poorer, lower-wage

countriesActive FDI-dependent

relatively high S&T learning capacity active government strategy aimed at building national human capital and

accelerating national technological learning from FDI active targeting of the most beneficial FDI much wider opportunities for technological learning from FDI lower risk of losing in economic competition with lower-wage but lower-

skill countries

Autonomous high S&T learning capacity and favorable international environment active government strategy aimed at building national human capital and

accelerating national technological learning via open sources, foreignconsultants, contract manufacturing, licensing, copying & re-engineering,own R&D, even outward FDI

minimal reliance on FDI or international S&T cooperation aspiring to compete with technological leaders

Creative-isolated high S&T learning capacity, but unfavorable international environmentor isolationism

limited opportunities for S&T learning from foreign sources aspiring to produce most of the needed technologies inside the country low international competitiveness of high-tech industries high risk of lagging further behind in technological and economic devel-

opmentCreative-cooperative capacity for both, generating and absorbing S&T knowledge among the

highest in the world global technological leadership in at least some niches of the global

economy active government S&T strategy directly linked to global competitiveness

strategy extensive R&D and efficient NIS active participation in and control over international S&T cooperation the fastest S&T learning

Source: On tha basis: Subbotic (2006), pp.10-11


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Based on the prior diagnosis, one could argue that the Polish model of technological learninghas been evolving from a passive FDI-dependent model towards an active FDI-dependentmodel. However, this evolution is insufficient to avoid the non-convergence trap (Manic2008, Soubbotic 2006). FDI plays a positive role but cannot ensure the growth-related bene-fits. The prerequisite for achieving maximum benefits from such investment includes the

preservation of the local industrial base and the promotion of ties between domestic compa-nies and foreign investors. Otherwise, a dichotomous industrial structure may develop, withan efficient fast-growing high-tech sector dominated by international companies on the onehand, and a considerably less competitive local industry on the other. This happens when theefficiency of the domestic manufacturers in the sectors where FDI is directed does not ex-ceed the efficiency of foreign competitors sufficiently to offset the advantage which the latterones may achieve due to the local wage rates. In such cases, domestic companies fall short ofinternational efficiency standards and lose (Buigues, Ilzkovitz i Lebrun, 1990, Porter 2001).

Thus, it is necessary to promptly develop the right conditions to foster further evolution to-wards the creative-cooperative model.

Clusters or (self-organising) networks which model of cooperation promotion?

Clusters are among the most popular instruments used for enhancing the innovativeness ofcompanies, sectors, regions and economies (OECD 2001, OECD 2007). Thus, cluster pro-motion is a crucial element of any innovation policy, with the two prevailing approaches be-ing the administrative-political model and the market-endogenous model. The models aredefined by two criteria (Figure 3):

The sources of initiatives (policymakers/public sector vs private sector) and funding(public vs private). They are of critical importance in the formation and development ofclusters. In this respect, cluster promotion may take the form of either a top-down or a

bottom-up approach. Top-down initiatives typically involve political initiatives and pub-lic programmes which intentionally stimulate, and at least for some time (co)finance thedevelopment of clusters. In contrast, bottom-up initiatives are undertaken by the pri-

vate sector (mainly companies), which implements, co-finances and coordinates them.

The relation to the cluster concept (regardless of the definition8). In this respect, clusterpromotion may take the form of explicit or implicit initiatives. In their intentions, as-sumptions, names, objectives, etc., explicit initiatives invoke the concept of the clusterand are primarily associated with top-down initiatives. On the other hand, implicit ini-tiatives are concentrated on accomplishing objectives typically pursued by clusters, but

8 The concept of the cluster remains unclear and leaves ample room for interpretation (Martin and Sunley 2001).Narrowly defined, a cluster denotes a geographical concentration of companies. In its advanced form, it alsoencompasses a wider range of external benefits resulting from mutual links of companies with their specialisedsuppliers and service providers, with other companies in related sectors as well as with other specialised institu-tions operating in different fields (Porter, 1998 and 2003). In such cases, clusters coincide with (sectoral) innova-tion systems (Adame-Sanchez and Escrig-Tena 2001, Asheim and Coenen 2004, Becattini et al. 2003, Breschiand Lissoni 2000, Mytelka and Farinelli 2000, Smith 2000) and encompass knowledge, skills, technologies, out-lays as well as actual and potential demand. The participants include individuals and a whole array of organisa-tions such as businesses, universities, R&D units, business support organisations, and public authorities, within

which unique learning processes, competences, organisational structures, beliefs, objectives and behavioursdevelop (Malerba 2004). The mutual influences of the system participants take place in the course of the proc-esses of communication, exchange, cooperation, and competition, shaped by system-specific institutions. Such asystem is subject to constant transformation inspired by the co-evolution of its elements, which is conducive toenhancing innovativeness.


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they focus on networking and cooperation and are associated with bottom-up initia-tives.

Figure 3: Cluster promotion

Source: On the basis of: Fromhold-Eisebith and Eisebith 2005

Practice shows that both models can be used to enhance innovativeness of the economy, butthe administrative-political model is more effective in the case of initiatives focused on thematerial base and localisation economies of a cluster, while the market-endogenous model is

more suitable for developing the non-material foundations of cooperation (community ofinterests, objectives, problems, etc.) and produces better results as regards the development offunctional links, intensification of cooperation and enhanced innovativeness of businesses(Fromhold-Eisebith and Eisebith 2005). Thus, the administrative-political model is more use-ful in investment strategies for technological development while the market-endogenousmodel is better suited to innovation strategies.

Polish cluster strategies seem to come close to the administrative-political model, and clustersare usually operationally defined in a narrow sense as groups of enterprises and possibly uni-

versities or R&D units which adopt a particular organisational and legal form and officiallydeclare the formation of a cluster. Clusters understood in this way may suffer from such nega-

tive consequences as lock-in or non-convergence trap, resulting from excessive cognitive,social, organisational and institutional proximity (Boschma 2005). Moreover, such an ap-proach may in future turn out to be a barrier to radical technological development, especiallyin respect of smaller companies which, just as their larger counterparts, have a capacity forradical innovations (Lee 2003, Malerba and Montobbio 2000, Poti and Basile 2000, Symeoni-dis 1996) but may find it difficult to efficiently manage the entire innovation process (which isusually the case) (European Commission 2004, Lee et al. 2010).

Therefore, as regards innovation strategies for technological development, what smaller com-panies need is not so much closed clusters as access to open innovation systems, includingR&D networks formed by a limited number of participants facing the same or similar prob-lems (Bresnahan, Gambardella and Saxenian 2001, Chesbrough 2006, Chesbrough, Van-

haverbeke and West 2006, Cooke 2005, Dahlander and Gann 2010, Lee et al. 2010, Spitho-ven, Clarysse and Knockaert 2010, van de Vrandea et al. 2009). The duration of such net-


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works is determined by the period necessary to find and implement desired solutions. Thenetwork gives rise to a variety of interrelationships between the participants which furtherdetermine the area of mutual adjustments between them (Corrocher and Fontana 2006,DETR 2000, DTI 2001, European Commission 2003, Hadjimanolis 2006, Heikkinen and

Thtinen 2006, National Commission on Entrepreneurship 2001, Sadler 2004, Slvell,

Lindqvist and Ketels 2003). This is typical of every network, regardless of whether it is geo-graphically concentrated or dispersed, homogeneous or heterogeneous in respect of businessactivity conducted by the participants, concentric (initiated by one of the participants) or so-cial (created as a result of actions, reactions and interactions undertaken by many prospectivenetwork participants who are in no position to dictate to others their conditions).

How much market in the innovation policy?

As a result of the spread of endogenous and evolutionary theories of economic growth, the1990s constitute a turning point in innovation policy making. It was then that the systemic

approach to innovation was developed (Acs and Varga 2002, Edquist 2005, Lundvall 1992,OECD 1997 and 2002a, Rotwell 1994). Furthermore, it was accompanied by policy reorienta-tion from the science policy (rooted in classical linear innovation models) to the technologi-cal policy to the current innovation policy, defined as a set of measures aimed at increasingthe quantity and efficiency of innovative, production and adaptation-oriented activities, and atimplementing new or upgraded products, processes and services (Cowan and van de Paal2000). It is the company and its innovative potential that constitute the foundations of thispolicy, which means that (i) the classical set of measures intended to support knowledgeproduction (i.e. research and development) should be augmented with activities designed todevelop the institutional environment to support companies in respect of adaptation and im-plementation of this knowledge (business support organizations) and (ii) a new approach

should be adopted with regard to the objective of the innovation policy and the role of thepublic authorities, which ought to provide and develop a friendly institutional environmentrather than engage in direct intervention (as it happened before) (Kuusi 1996, Navarro 2003,Qur 2004).

The above is concurrent with the consolidation of a new consensus, which is also observed inthe innovation policy9, focused on the market mechanism as a primary stimulator of techno-logical progress. Under the consensus, the government should first and foremost ensure sys-temic conditions necessary for the efficient operation of the markets.

However, at times markets fail10, providing a pretext for direct intervention by the govern-ment (Atkinson and Wial 2008, Dodgson et al. 2010). This, in turn, gives rise to a storm of

controversy (Jaffe, Newell and Stavins 2005) over direct support for research and development activities, i.e. knowledge and tech-

nology production and related technological infrastructure (such as data collectionand dissemination, training of scientists and engineers, etc.), and, in particular,

9 So called Washington Consensus (Kanbur 2004, Rodrik 2006, Williamson 1990 and 2000).

10 In the neoclassical tradition, market failure is understood as a situation where the market mechanism does notensure efficient allocation of resources (according to the definition offered by Paret). A typical example of suchfailure is the lack of funding for innovative enterprises because of their indivisibilities, inappropriability anduncertainty. (Arrow 1962). In evolutionary/structuralist-evolutionary tradition, however, market failure means,first of all inefficiency of the market mechanism in accomplishing a desired and attainable state (Lipsey 2000).


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over direct support for the adaptation and implementation of knowledge and technol-ogy.

What is the source of controversy over these innovation policy instruments?

As regards research and development activities, controversy primarily concerns rejecting thenotion that new knowledge is a pure public good. According to the latest consensus, knowl-edge is neither just another private good nor a pure public good (Fagerberg, Srholec andKnell 2007, Lipsey 2000). Therefore, neither the free market nor government intervention canguarantee economically efficient allocation of resources for innovation. The situation isslightly different with respect to adaptation and implementation, as in this case knowledgemost frequently becomes a private good. Consequently, an efficient market should ensureeconomically efficient allocation of resources for innovation. However, a complication arisesdue to external effects, characteristic of public goods, and occurring in particular at the earlystages of technological development (so-called dynamic increasing returns), which justifies the

need for some kind of intervention.

How to accommodate market failure in the structure of the innovation policy?

The above demonstrates that an effective innovation policy requires efficient market mecha-nisms as well as direct public interventions, but in proportions which would reflect the factthat different kinds of knowledge may be closer to a public good (and require direct interven-tion) or to a private good (and require efficient markets). The point of departure for the de-termination of these proportions may be a matrix of the sources and the nature of knowl-edge/innovations, where the former refers to the distinction between absorption of availableknowledge/technology and production of new knowledge/technology, while the latter refersto the distinction between incremental and radical innovation (Figure 4).

Figure 4: Principles of structuring innovation policy instruments for stimulating technological pro-gress

Source: Own work

For the operationalization of the first axis (continuum: absorption of available knowl-edge/technology to production of new knowledge/technology), traditional measures may be


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Table 6: Operationalization of the axis of nature of knowledge/innovation

Research and development difficulty index Index of innovativeness of particular

Level Description Category ofknowledge deficit

Description

1 A very low degree of difficulty is anticipated in achiev-ing R&D objectives concerning the system concept,as well as its performance, reliability and cost. Only asingle, short-duration technological approach isneeded to ensure a high probability of success in laterapplications.Probability of success 99%.

Technologicaluncertainty

Degree to which the developmenucts or production processes invocreation of new knowledge represubstantial challenge (the necessigage in the learning through resprocess). The greater the knowledtion demands are, the more radictions are. The need to create newedge within the firm can be measthrough indicators related to the the R&D required to develop the

tion.2 A moderate degree of difficulty should be anticipated

in achieving R&D objectives. A single technologicalapproach will probably be sufficient, but it may benecessary to develop an alternate approach in order toensure a high probability of success in later applica-tions.Probability of success 90%.

Technical inexpe-rience

Degree to which the developmenucts or production processes invouse of qualifications/competencerespect of operating new equipmare not available within the compnecessity to engage in the learnieducation, training and retrainingThe greater the need to acquire nedge (through education, traininging, and purchasing new equipmemore radical the innovations are.to acquire this type of new knowbe measured bye.g. the cost of hiployees with the skills necessary ffirm to develop the innovation, ttraining its employees connected


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oping the innovation, the cost ofmenting new technologies that thpany did not use before, etc.

3 A high degree of difficulty should be anticipated inachieving R&D objectives, and thus at least two tech-

nological approaches will probably be needed. Theseefforts should be conducted early enough to allow analternate system approach to be developed to ensure ahigh probability of success in later systems applica-tions.Probability of success 80%.

Business inexperi-ence

Degree to which the developmenucts or production processes invo

creation of new knowledge regarddevelopment of new business prathe development of organizationtions). The greater the need to acknowledge, the more radical the itions are. Business experience canured bye.g. the cost of changing oa new marketing strategy to commthe innovation, the cost of replacformer suppliers, etc.

4 A very high degree of difficulty should be anticipatedin achieving R&D objectives, so multiple technologi-cal approaches need to be pursued. These activitiesshould be conducted early enough to allow an alter-nate system concept to be developed to ensure a highprobability of success in later systems applications.Probability of success 50%.

5 The degree of difficulty that should be anticipated inachieving R&D objectives is so high that some basicresearch in key areas is necessary before a feasiblesystem concepts can be defined.Probability of success 20%.

Technology costs Degree to which the developmenucts or production processes invovestment in the acquisition of newment (the necessity to engage in ting through using process). Thethe costs of acquisition of knowlbodied in the equipment, the mothe innovations are.

Source: On the basis: Amara et al. (2004), Mankins (1998)


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The scope of activity and the development model of science-based companies depends on thelevel of technological readiness of particular fields of knowledge (see Table 2) and the degreeof R&D difficulty (Table 6). The scope of activity of engineering-based companies dependson the innovation level of particular technologies, as determined by analysis of the presenceof the four types of knowledge deficit: technological uncertainty, technical inexperience, busi-ness inexperience and implementation costs for the technology (Table 6). Therefore, the samerules of development support should apply to technology companies as to support for inno-

vative activities (see the section on accommodating market failure into the structure of theinnovation policy).

How much market failure in the low efficiency of Polish facilitating infrastructure?

Facilitating infrastructure is a term that refers to finances, technology transfer, consulting,training and other types of knowledge-intensive business services. In these areas, the sourceof market failure, and at the same time the reason for primary intervention is information

asymmetry13

. In time, however, as intervention unfolds, this justification gradually becomesless relevant (Storey 2008).

This is exactly the situation that can be currently observed in Poland, where the intentionaldevelopment of the support services markets (defined under the SME support policy andfinanced through public funding) began in the second half of the 1990s (Piasecki 2001) andhas not yet ended. It has been accompanied by the dynamic development of private compa-nies that provide similar services. This has led to an impressive increase in the quantity anddiversity of business support organisations (on the supply side) and in the demand for thoseservices (on the demand side). However, the efficiency of these markets has not risen signifi-cantly, especially in the information, training, advisory and consulting services sectors. This isproven bye.g. (Grabowski et al. 2003, Maik et al. 2010, Rogut and Piasecki 2008b):

a major divergence between the actual (low) and potential (high) demand for informa-tion, training, advisory and consulting services,

current offers poorly reflecting the needs of companies, especially in the area of special-ised and highly specialised services,

relatively low quality of services, measured in terms of their completeness, level of ad-justment to the needs/expectations, availability, lead time and the organisation of serviceprovision.

The above problems mainly affect the services/institutions which are fully or partially fi-

nanced by public funding. The services provided by commercial companies seem to do better.Similar conclusions were drawn in an expert report commissioned by the Minister of Econ-omy, which says that non-commercial organisations manage to survive only on subsidies,and not on money earned by providing services, and that this is an ineffective way of financ-ing innovations. It also seems that it would be much better to channel financial support di-rectly to companies (Sosnowska and obejko, 2007). Similar conclusions are also expressed inthe latest OECD review of SME and entrepreneurship issues and policies: It is difficult to

13 Due to high unreliability of innovation investments it is hard to assess, especially for the third parties (peopleor institutions from outside of the innovators circles), the economic potency of the given knowl-edge/technology. In the case of financial market (banks and credits) for financing of the (more) radical techno-logical (Bertoni and other authors. 2009, Clarysse, Degroof and Heirman 2003, European Commission 2000,Gansa and Stern 2003, Revest and Sapio 2009).


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see how the current policy approach to business support is contributing positively to the development of the market for consultancy services for SMEs throughout the country. It isalways important to assess the potential effects of policy interventions on the supply and de-mand side of the market and the current approach may have a crowding out effect on adviceand consultancy delivered through private sector institutions, rather than stimulating it (Pot-

ter and Proto 2010, p. 46).In summary, it should be said that the information, training, advisory and consulting servicesmarkets in Poland are still prone to failure, but now this is due to their persistent attachmentto the old instruments of support, which are inconsistent with the current situation and needs.

As a result, the original, classical market failure has turned into market spoilage, which fur-ther distorts the allocation of resources for innovation. The situation is no better in the sectorof technology transfer (Matusiak and Guliski 2010, Rogut 2007). An exception here is theinnovation financing sector, which is confirmed by the latest international comparisons (PROINNO Europa 2010, Schwab 2009).

To recapitulate, currently it is not market failure but systemic failure 14(Martin and Scott 2000,

PRO INNO Europe 2008b, Woolthuis, Lankhuizen and Gilsing 2005) that is responsible forthe low efficiency of Polish facilitating infrastructure15. Thus, a justification for public interventions would not be market failure but the necessity to reduce the deficit of relationsand/or linkages within innovation systems.

On the other hand, the excessive attachment to non-market instruments (grants and subsi-dies) in the innovation policy (see the advantages and drawbacks of the administrative-political system and the market-endogenous system in the promotion of network linkages) isone of the causes of the current fixation with investment strategies for technological devel-opment. That is why, it would be recommended to redefine the instruments of that part ofthe innovation policy which supports the development of innovation-facilitating infrastruc-ture in order to restore the leading role of the private sector, market mechanisms and sys-

temic solutions also in this area (see Figure 4).

What scope of uniformisation and centralisation of the innovation policy?

As it was said before, the beginnings of the systemic approach to innovation were connectedto the evolutionary theory of economic growth, which provided a stimulus for yet anotherrevision of the approach to the type of advantages critical to attaining success in the modern

world. The first revision had taken place in the mid-1970s and was related to a shift in thefocus from comparative advantages to competitive ones (Porter 1990 and 1998). Currently,construed advantages have come to attention, as they are based on the speed and effective-

ness of the learning process and achieved with the use of instruments applied simultaneouslyin several interconnected fields (Cooke and Leydesdorff 2006):

in the economy (regionalisation of economic development, integration of knowledgeproduction with commercialisation, open innovation systems, intelligent infrastructure,strong local and global networks),

in management (multi-level management of relations between a variety of stakeholders, astrong support policy for innovators, increased funding for research and development,

14 Hard and soft institutional failures, strong and weak network failure and capabilities failure.15 So called x-efficiency (and x-effectiveness) of innovations systems (Niosi 2002).


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political governance aiming at achieving a certain vision and at positioning local re-sources in the global space),

in the shaping of knowledge infrastructure (universities, R&D units, intermediary institu-tions, professional consulting, etc., and their role in creation and commercialisation ofknowledge and in increasing the absorptive capabilities of the economy),

in the shaping of socio-economic conditions (human capital, culture, social norms etc. which change the behaviour of people and institutions, as well as relations betweenthem).

However, learning processes occur in different regions and sectors at different speeds. Differ-ent regions may have different degrees of development potential16, while different sectorscould be catching up with the technology leaders at different rates. Thus regions and sectorsshould embrace innovation strategies for technological development at a different pace. Andthis justifies the broad use of both regional and sectoral innovation systems in the innovationpolicy (Barca 2000). Sectoral systems are additionally important due to the fact that in differ-ent sectors the nature of knowledge and the causes of market and systemic failure of the in-novation market may vary (Martin and Scott 2000).

The coexistence of national (OECD 1997 and 2002a, Santonen, Kaivooja and Suomala 2007),regional (Asheim and Coenen 2004, Cooke, Heidenreich and Braczyk 2004, Doloreux andParto 2004, Moulaert and Sekia 2003) and sectoral (Athey et al. 2007, Malerba 2003, Sotarauta2004) innovation systems within the innovation policy is reflected in international experience.

The system consists not only of a narrow set of institutions and organisations involved inresearch and development and in the commercialisation of technological innovations, but alsoof: (i) all institutions and organisations that shape the scope, pace and effectiveness of thelearning process; and (ii) relations between the system actors (Edquist 2001, Lundvall, 2007).In Poland, however, as it has been proven in practice in recent years, two approaches domi-

nate: centralist (Potter and Proto 2010) and uniformist (MG 2007). The former is reflected inthe weakness of regional innovation strategies and systems, the latter in resigning (in 2007)from the sectoral17 approach to the industrial policy.

Even though theNational Strategy for Regional Development(MRR 2010) stipulates:

the need to increase the importance of the regional level in stimulating the developmentprocesses and focusing on territoriality, but in describing support for the developmentof regions competitiveness18 the main stress is placed on the creation of competencecompetitiveness and technological competitiveness (important for the development ofproduction potential for new advanced knowledge) leaving the innovation strategies(defined and introduced centrally) and the effectiveness of the economy;

the necessity to distinguish between the territorial approach and the sectoral approach,as the latter may be burdened with the territorial deficit and with an integrated ap-proach to development processes.

16 Thus, the proposal for a polarising-diffusion model of development of Poland until 2030 (Boni 2009).

17 Sectoral instruments are retained only for strategic (energy and defence) and those undergoing restructuring(hard coal mining and the ship-building industry).

18 One of the three goals of the regional policy. The other two are: integrity (building territorial integrity andcounteracting the marginalization of problematic areas) and efficiency (fostering conditions for effective, effi-cient and partner-wise realisation of territory-oriented development activities).


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The above facts indicate the need for a systemic approach to the innovation policy and forcoordination of all the three systems of innovation: national, regional and sectoral. Guidanceon how to keep appropriate relations between them may be provided by the aforementionedmatrix of sources and kinds of knowledge/innovation (Figure 5).

Figure 5: The rules for coordination of national, regional and sectoral innovationsystems in the innovation policy

Source: Own work

Conclusions

The diagnosis of innovativeness of the Polish economy reveals a persisting technological gap.A simple extrapolation of the current trends paints a pessimistic scenario, where in the me-dium term (until 2020) and long term (until 2030) the economic structure will continue to bedominated by medium- and low-technology industries and not very knowledge-intensive ser-

vices. At the same time, the available forecast material is insufficient to produce definitiverecommendations with respect to future paths of technological development in Poland.However, it indicates a pressing need for an immediate review and restructuring of the socio-economic model and for a shift to new paradigms substantially enhancing the intensity of

R&D commercialization.Such a shift has been thought critical in Poland for a long time, and a number of measureshave already been undertaken to ensure an adequate environment to facilitate it, but so farthey have failed to fundamentally improve the picture. Therefore, the previously designedpaths for the development of constructed advantage remain relevant as they are focused onextensive changes in the structure of industrial production, saturation of the economy withmodern technologies, increased competitiveness of science, a greater role of research in eco-nomic development, prompt commercialization of R&D results, enhanced efficiency of pub-lic spending on R&D and innovative activity, increased effectiveness of innovation markets,and improved utilization of higher education potential (SRK 2006).

However, due to the budgetary stringency, which is anticipated to last until 2020 (as a conse-quence of the financial crisis, the implementation of sustainability and development plans,


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and aspirations to join the Euro zone), it should be assumed that the main sources of newfinancing of R&D and innovative activities will be the private sector and EU funds (structuralfunds and direct transfers in the form of framework programmes and other EU initiatives).

Therefore, emphasis should be placed on the generation of private outlays on development(through further reform of the science sector to reverse the current disadvantageous propor-

tions between the basic research-oriented and innovation-oriented segments as well as reviewof the structure of the financial instruments for innovation policy) and on full participation inthe ERA.

Moreover, given the new challenges posed by the BRIC countries (Brazil, Russia, India,China), as well as by other developing nations, it should be assumed that technological com-petitiveness is going to be the primary vehicle for a strong competitive position of Poland.

Thus, more attention should be paid to ensuring the right conditions for the generation ofradical, breakthrough innovations (by modification of the technological development strategy,of the technological model of learning and of the cooperation promotion model) as well as todeveloping a systemic approach to innovation.

At the same time, due to the relatively low efficiency of a number of ongoing measures forthe enhancement of innovativeness and competitiveness, the principles of evidence-basedpolicy should be followed more closely as regards defining and implementing developmentand innovation policies and a new approach to the development of infrastructure for innova-tion ought to be adopted.

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