A Matter of Perspective?

A Matter of Perspective? Some comments to the draft report from the project “In Search of Process Based Regional Policy” (PROB) Knut H. Sørensen Introductory remarks The PROB project has produced three case studies, one on biotechnology and regional development focusing on Turku, Finland, one on the development of an ICT cluster in the Jyväskylä region, Finland, and one on the Digital North Denmark Programme in the North Jutland region, Denmark. All three case studies make for interesting and thoughtprovoking reading and they seem to be competently done and well written. The idea of focusing on processes rather than the structural context of regional development is clearly a good one, but perhaps not quite as original as it may appear from the case study papers. The papers argue the importance of, in particular, locally available relevant knowledge, university-industry-local government collaboration and actors able to make things happen. In this way, the initiation, growth and stabilisation of focused networks is a sine qua non of regional development. However, the question remains to what extent regional government may nurture and manage such networks. Trailing the discovery in the early 1980s of Silicon Valley as the ultimate success story of regional development, a whole industry of efforts has attempted to identify the Silicon Valley recipe. A main set of such recipes focused on the idea of Science Parks, trying to emulate the role of Stanford University in the establishment of new high tech companies. But there have also been arguments pointing to particular cultural conditions, inter-company relations combining competition and collaboration, the high turnover of highly skilled labour, etc. No region has been able to copy the success of Silicon Valley on the same level. Some regions have been able to develop high tech industries through conscious efforts to learn from the Silicon Valley experience, others have not. To my knowledge, there is no uncontested explanation of these differences. It is my impression from all three case studies that the regions in question are influenced by the Silicon Valley experience, although no

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direct references are made to this in the papers. This is not meant as a critical comment, but rather to point to the massive influence of this experience. I believe that, when assessing efforts to build high tech programmes for regional development, we need to be reminded of where this idea originated. All too frequently, the Silicon Valley experience is used with a disregard for context, implying that this is the same kind of place as marginal regions, fir example in Europe, struggling to maintain their level of population. I have been asked to comment on the case studies with a particular emphasis on whether Norwegian research on high tech development programmes have made similar arguments and whether the pattern of development of Norwegian regions is similar to what has been observed from the analysis of Turku and Jyväskylä. In addition, I will make some general remarks about some challenges raised in this type of research, in particular when it is supposed to provide a basis for policy action.

Comparisons to the Norwegian scene To begin with, it should be noted that it is no straightforward matter to compare the Norwegian and the Finnish situation with regard to the role of high tech as the backbone of regional development strategies. First, there are differences in the understanding of what “regional” means. In the Norwegian context, regional policy is concerned with non-urban areas that are threatened by de-population. This means that, for example, Bergen or Trondheim or Stavanger would not be explicitly targeted as objects of regional policy. However, Bergen and Stavanger have hosted industrial networks that as early as the 1950s aimed to support industrial development in the region, although public support of these networks was weak. Arguably, no Norwegian local government has developed any clear, extensive local technology policy. The main effort has been to lobby to get investments from central government for infrastructure or to host national institutions. For example, in this way, Trondheim managed to become the location of the only technical university in Norway, making Norway the only known industrialised country to have a capital without a technical university. Second, Norway has a very different industrial structure from Finland, with much more emphasis on the production of raw materials, including oil and gas. Salmon farming is probably the most important growth industry in non-urban areas. While there is a growing ICT industry, Norway does not have the sort of ICT locomotive that Finland has with Nokia. On average, Norwegian industry is less R&D intensive because it produces raw materials rather than consumer goods or machinery.

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Third, Norway has been less concerned with the development of a strong innovation policy than Finland. Norwegian industrial policy has been dominated by financial instruments, rather than support of R&D investments. Industrial policy is also heavily influenced by liberal rhetoric and deregulation ideology, which does not facilitate the participation of local government in local innovation programmes. Probably the most influential concept in Norwegian research as well as in policy related to regional innovation is Michael Porter's idea about the importance of industrial clusters. This concept is also found in the PROB case studies, but the case studies do not make any extensive engagement with the cluster concept. Emphasis on networks, industrial as well as knowledge-based, is another similarity. However, Norwegian research has been more concerned with quantitative measures, like the large surveys made by the STEP group in Oslo. Also, Norwegian studies are more influenced by systems approaches like industrial districts or thinking in terms of strategic alliances. The PROB effort to apply actor network theory as a part of the theoretical and conceptual apparatus is not found in Norwegian studies of regional innovation. The PROB case studies of Turku and Jyväskylä describe two regions where successful attempts have been made to establish a strong local activity in the area of biotechnology and ICT, respectively. As far as I can see, no Norwegian regions have been developed in a similar way. Arguably, the Trondheim area could be compared to Jyväskylä, since both regions have succeeded in establishing a strong knowledge base in the ICT area. Trondheim, with the Norwegian University of Science and Technology (NTNU) and SINTEF, musters a very strong research network related to ICT. Moreover, a number of new companies have been started in the last 10-15 years, some of which have been reasonably successful. While it is commonly held that Trondheim has not yet reached the level of industrial growth that one should expect, given its R&D base, there is still substantial activity. A major difference between Trondheim and Jyväskylä seems to be in the relative level of engagement of local government. While the case study of Jyväskylä describes an active local government as a partner in setting up ICT innovation activities, local government in Trondheim has played a less active role. However, both NTNU and SINTEF have provided support for start-ups and have stepped up the level of support in the last couple of years. In addition, national programmes have played a major role.

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Probably, the main difference is simply that there is no Norwegian counterpart to Nokia that could set up activities in the Trondheim area. Traditional industry in Trondheim has been dismantled over the last couple of decades and there is really no company or cluster of companies that can play a similar role as an industrial locomotive for a local ICT industry. This provides a different industrial logic for the ICT start-ups in Trondheim than those in Jyväskylä and probably Turku as well. In order to survive, start-ups in Trondheim have had to grow by exporting their products, directly addressing an international market. There has been no serious establishment locally of multinationals, with the exception of the factory that Siemens has run in Trondheim for a long time. However, this factory produces electrotechnical equipment rather than electronics or ICT products. Thus, we may see a complex issue emerging, related to the relative importance of push and pull factors. My impression from the three PROB case studies is that they tend to emphasise push factors, probably since these are the factors that are most clearly open to influence through political measures, like R&D support, financial support for new high tech companies, network facilitating measures or the set-up of protected spaces for initial growth. However, pull factors are present in the accounts, and in my interpretation, these factors are more critical for success. No action within reach of a local or even central government has the same effect as heavy investments of large industrial companies with existing international links that facilitate sale of the goods. This is not to say that efforts by local or central government are not important. On the contrary, they may even be the keys to the kind of local investment of large companies that we observe in the Turku and Jyväskylä cases.

Some other issues While I like the three case studies provided by PROB, I also see some potentially important weaknesses. Some of these are discussed above and are related to fundamental problems with case studies of success stories: What do we mean by success, and is it possible to understand success in a way that transcends the understanding of participating actors? Thus, it would have been useful to have access also to a failure story. Analysing failure in such situations often focuses on the distribution of blame and the identification of incompetent actors. In success stories, incompetence may be hidden behind the success. In failure stories, incompetence may become an explanation too easily made use of.

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Arguably, there could be little difference between the actions and strategies of local government in the Turku and Jyväskylä cases and in less successful cases. I believe that knowledge is plentiful about how to go about facilitating high tech growth, which would tend to make public strategies quite standardised. Success may thus be a product of accident or a particular ability to get the right companies to establish local branches. This possibility is not sufficiently reflected in the case studies, which may imply that the policy advice that one tries to derive from the case studies is not that accurate. The idea of a process-based regional policy may still be a good and valid one, but it is sometimes quite difficult to see just what the critical processes are. Looking for critical processes, the processes that are more involved in producing success or failure, rather than trying to provide a kind of complete picture could have been an interesting alternative mode of analysis. Finally, I have some reservations about the theoretical arguments made in the three papers. First, I think that Castells’ ideas of a new economy and concepts like space of flows are used as if it were obvious that Castells provides the correct understanding of the phenomena in question. It would take too long to really assess the ideas, but in the context of regional policy it is important to make a critical note about assumptions that new ICT makes issues of geographical space less pertinent. Silicon Valley itself provides ample evidence that space in the physical meaning is still of great importance. A lot of time and money is spent on physical encounters, even if mediated encounters are very frequent. Electronic mediation seems to be unable to replace physical encounters, which creates problems when starting new businesses "in the middle of nowhere". Second, while I like the authors belief that there is great potential in using constructivist approaches like actor network theory, I feel that the way this is done in the case studies is problematic. A main reason for this is in the lack of concern for the semiotic nature of phenomena like technological development or networking. Action implies decisionmaking, which implies negotiations, which imply efforts at stabilisation and destabilisation of knowledge and points of view. There is probably a methodological difficulty here. To observe semiotics in action, one often needs access to data over time. The standard case study toolkit that seems to have been used in the PROB project, tends to make one focus more on structural features and ongoing arguments. Even if the case studies of PROB show a very skilled way of doing analysis, the actual observations and points made may not be as process-sensitive as one would have expected, given the goals of the project.

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First published in 2002 by Nordregio. PO Box 1658, SE-111 86 Stockholm, Sweden Tel. +46 8 463 54 00, fax: +46 8 463 54 01 e-mail: [email protected] website: www.nordregio.se

Nordic Perspectives on Process-Based Regional Development Policy. Editors Markku Sotarauta and Henrik Bruun. Stockholm: Nordregio 2002 (Nordregio Report 2002:3) ISSN 1403-2503 ISBN 91-89332-24-5

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Stockholm, Sweden 2002