Innovation and the Wealth of Regions

The world is awash with reports that rank the competitiveness of nations in the global economy. These reports are compiled by purveyors based on the myth that nation states have unique technological capabilities that help them to compete globally.

Contrary to this techno-nationalism, it is regions that possess specialized competencies embedded in enterprises that compete on the global scenes. Nation states are an important statistical indicator of regional capabilities, but they do not in themselves determine how such place-based capabilities are deployed.

Many phrases ranging from “clusters” to “regional innovation systems” have been used to define such geographically focused agglomerations of competence. It is these agglomerations that should be the focus of public policy, not generic views about national competitiveness.

The idea of regional innovation systems appears to be a unifying policy theme irrespective of the level of technological competence or state of industrial development. The concept is relevant for emerging nations as well as for industrialized countries.

For example, the 15^th summit of the heads of state of the 19-member Common Market for Eastern and Southern Africa (COMESA) meeting in Malawi in 2011 agreed to establish “science, technology and innovation parks, and priority industry clusters.”

African countries are charting a path that has recently been followed by other nations and can learn from their experiences in fostering regional innovation systems. Industrialized countries have well-established regions with a long history of technological development. But they also have regions that have lagged behind and are in the early stages of fostering their competitive capabilities.

Denmark offers such contrasting regional capabilities. On the upper end of the regional competitive ladder, the country hosts Medicon Valley, which extends into Sweden via Øresund Bridge. The region is one of the leading life science clusters in Europe, hosting nearly 499 enterprises, 10 universities, 32 hospitals, 7 life science parks and 6 incubators (of which 3 are devoted to life sciences).

Medicon Valley draws its expertise from leading research and learning centers such as the University of Copenhagen, Technical University of Denmark, Lund University (Sweden), and Malmö University (Sweden). Innovation in the region dates back to the late 1880s when pioneering work at Carlsberg Breweries in Copenhagen laid the foundation for advances in the life sciences. This was complemented by fundamental research in the biological and medical sciences carried out in universities in the region.

For nearly a century the region has been the home of leading research-intensive firms such as AstraZeneca, H. Lundbeck, LEO Pharma, and Novo Nordisk. The presence of such industry leaders has attracted other firms that supply complementary products and services, thereby making it a vibrant regional innovation system.

Inspired by such advances, Denmark launched the Welfare Tech Region in 2010 in its southern region. The aim of this initiative is to “create a welfare industry that ensures growth and jobs in the private corporate sector” while having “beneficial impact on the services provided in the social and health care sectors.”

The focus of the region is to establish “a market driven cluster for healthcare and homecare in Denmark.” Its members include private firms, public organizations, and research and educational institutions such as the University of Southern Denmark.

The Welfare Tech Region seeks to leverage the latest developments in information technology, telemedicine, and robotics. Deliberate efforts will be needed to build the world-class engineering and medical research institutions necessary to support the growth of competitive healthcare and homecare industries.

Another emerging Danish initiative is the recent creation of the Agro Food Park in Aarhus. The park was initiated by a wide range of food technology and consulting firms with the support of the Aarhus Municipality. The park is located in the Skejby area, which is the home of major international firms such as Aarhus Karlshamn, Arla Foods, Danisco, and Danish Crown.

Many developing countries around the world have similar initiatives at different stages of development. The challenge, however, lies in building the necessary competence needed to nurture them and enable them to be globally competitive.

To address this challenge, Harvard Kennedy School’s executive program on Innovation for Economic Development will focus its 2012 sessions on equipping participants with the capacity to design and manage regional innovation systems.

The program will outline the key elements of regional innovation systems, examine strategies for fostering interactions between different critical actors, and identify strategies for managing entrepreneurial ecosystems. It will focus on the role of medical innovation in lowering the cost of healthcare.

This year’s program will include a prominent team of regional innovation managers from Denmark. Other participants will come from countries as diverse as Brazil, Canada, Greece, India, Iraq, Italy, Kazakhstan, Kenya, Malaysia, Mexico, Nigeria, Poland, Saudi Arabia, Tanzania and the United States.

The program will draw from a wide range of case studies from around the world in building industrial clusters, science parks, and entrepreneurial ecosystems. In addition, it will also report on recent experiences to help Oman and Lagos State (Nigeria) set up innovation institutions.

The faculty will include internationally recognized experts in innovation systems as well as practitioners with decades of experience in managing the incubation of technology-based enterprises. It will also include innovators working on designing next-generation therapies, medical devices, and diagnostic tools.

This is just one of many programs aimed at helping leaders and managers find ways to foster regional competitiveness through innovation. Ultimately, the effectiveness of their efforts will depend on how well they can use institutions such as the Danish Cluster Academy to learn from other efforts around the world.

Denmark has a long tradition of user-driven innovation. Key users such as nurses have been a driving force in the creativity and global competitiveness of firms such as Coloplast. These strategies could be strengthened by entrepreneurial universities that involve students in fostering strong links between research and the productive sectors.

Healthcare remains one of the greatest challenges facing the global community today irrespective of a country’s level of economic development. Many of the innovations being introduced in industrialized countries to deal with labor shortages—such as homecare robots—could find new applications in developing countries.

For example, such technologies could help to shift much of the post-surgery recovery from hospitals to nursing homes. But more important, such technologies could help African countries leapfrog to healthcare systems that tap into advances such as telemedicine.

Many of these technologies have been carefully documented in The Creative Destruction of Medicine by Eric Topol. There are great prospects of adopting such technologies in African countries, especially by building on the rapidly expanding broadband infrastructure and mobile communication.

Africa’s interest in building technology parks and industrial clusters could focus on the convergence of information technology and medicine. In this respect, existing and planned hospitals could serve as important focal points in the development of regional innovation systems.

Such an approach would also help African countries redefine their foreign policies by focusing on the role of science and technology in diplomatic relations. Medical diplomacy is already a vibrant area of international cooperation. This is illustrated by the role of Cuba in medical training around the world as well as China’s cruise medicine.

The nascent status of healthcare clusters in countries such as Denmark offers a unique opportunity for designing new global partnerships that reflect the significant role that innovation plays in improving the human condition.

Recognizing the importance of regions as centers of innovation and competitiveness is one thing. Having national governments that support the emergence and dynamic growth in regions will become one of the most urgent policy challenges in the coming decades. If they succeed in this new endeavor they will help to write new chapters for what Adam Smith would now call “The Wealth of Regions.”