European Trend Chart on Innovation

Transcription

1 European Trend Chart on Innovation Annual Innovation Policy Trends and Appraisal Report Italy 2006 European Commission Enterprise Directorate-General A publication from the Innovation/SMEs Programme

2 Innovation is a priority of all Member States and of the European Commission. Throughout Europe, hundreds of policy measures and support schemes aimed at innovation have been implemented or are under preparation. The diversity of these measures and schemes reflects the diversity of the framework conditions, cultural preferences and political priorities in the Member States. The First Action Plan for Innovation in Europe, launched by the European Commission in 1996, provided for the first time a common analytical and political framework for innovation policy in Europe. Building upon the Action Plan, the Trend Chart on Innovation in Europe is a practical tool for innovation organisation and scheme managers in Europe. Run by the Innovation Policy Directorate of DG Enterprise and Industry, it pursues the collection, regular updating and analysis of information on innovation policies at national and European level. The Trend Chart serves the open policy co-ordination approach laid down by the Lisbon Council in March It supports organisation and scheme managers in Europe with summarised and concise information and statistics on innovation policies, performances and trends in the European Union (EU). It is also a European forum for benchmarking and the exchange of good practices in the area of innovation policy. The Trend Chart products The Trend Chart on Innovation has been running since January It now tracks innovation policy developments in all 25 EU Member States, plus Bulgaria, Iceland, Israel, Liechtenstein, Norway, Romania, Switzerland and Turkey. It also provides a policy monitoring service for three other non- European zones: NAFTA/Brazil, Asia and the MEDA countries. The Trend Chart website ( provides access to the following services and publications, as they become available: a database of innovation policy measures across 33 European countries; a news service and related innovation policy information database; a who is who of agencies and government departments involved in innovation; annual policy monitoring reports for all countries and zones covered; background material for four annual policy benchmarking workshops; the European Innovation Scoreboard and other statistical reports; an annual synthesis report bringing together key of the Trend Chart. The present report was prepared by Aleardo Furlani (a.furlani@innova-eu.net); Antonella Vulcano (a.vulcano@innova-eu.net) and Rebeca Lucas (r.lucas@innova-eu.net). The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Member States or the European Commission. This document has been prepared within the framework of an initiative of the European Commission s Enterprise and Industry Directorate-General, Innovation Policy Development Unit. Official responsible: Christophe Guichard (Christophe.guichard@cec.eu.int). Copyright of the document belongs to the European Commission. Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear.

3 CONTENTS Executive Summary The Innovation governance system Overview of the innovation system The national innovation system National innovation policy making and delivery structures Governance of regional innovation systems Appraisal of the governance system Policy making and evaluation practices Policy benchmarking and transnational learning Overall appraisal and SWOT of innovation governance Developments in Innovation policy Overview of trends in performance and policy Recent trends in innovation performance and competitiveness Objectives and targets of innovation policy Key developments in innovation policy measures How well does policy meet the innovation challenges? Policy responses to identified challenges The Lisbon National Reform Programme (NRP) and innovation: an appraisal What lessons can be drawn from policy implementation? Lessons from the evaluation of innovation policy measures Review of good practice Annex 1: Overview of innovation policy documents Annex 2: Overview of innovation policy measures Annex 3: European Innovations Scoreboard: country pages Annex 4: Sources of further information Exhibits Exhibit 1: Selected key organisations within the National Innovation System Exhibit 2: organisational chart of the innovation governance system Exhibit 3: regional governance of innovation policy matters Exhibit 4: Overall appraisal of policy making and evaluation practice Exhibit 5:Overall appraisal of policy benchmarking and learning initiatives Exhibit 6: Innovation governance SWOT overview Exhibit 7: Comparable indicators of economic performance Exhibit 8: main innovation policy challenges Exhibit 9 : national innovation policy objectives Exhibit 10 : New Innovation Policy Measures over the last 12 months Exhibit 11 : innovation challenges and policy responses Exhibit 12: innovation challenges, policy responses and impact Exhibit 13: Policy Measures relevant to Lisbon guidelines n 8 and Exhibit 14 : summary of good practice cases in Italy... 55

4 Executive Summary 1. Introduction: innovation performance and policy objectives Over the last decade Italy s economic growth has slowed and come to a halt, independently of the world economic cycle. It has been held back by the structural problems that reduce the ability of Italy s productive system to take advantage of the opportunities inherent in the new patterns of world trade and of the innovative technologies that have spread throughout the world. The first few months of 2006 showed a slow recovery of the Italian economy. The qualitative cyclical indicators appear more favourable, signalling a strengthening climate of confidence among both firms and households. On the whole, very short-term statistical forecasting models suggest a return to positive GDP growth during the first semester of 2006 and improvements of some economic indicators compared with the low performance of the previous year. In fact, in 2005, the Italian economy stagnated with weak signs of recovery and the growth gap with respect to other eurozone countries widened. Low household spending, investment reduction and stable exports have contributed to the stagnation. The export situation is a clear sign of the country s structural difficulty to adapt to the new technological and competitive context. According to the diagnosis endorsed by the majority of observers, the country s prolonged social and productive stagnation is explained by the following factors: (i) insufficient business innovation in terms of processes, products and organisational innovation; (ii) inadequate average level of skills and know-how among the adult and the young population that affects workers productivity; (iii) an inefficient capital market; (iv) an insufficient quality and availability of several collective services often supplied with an inadequate cost/quality ratio offer. Between 1995 and 2004, Italian GDP grew by 1.6% per year on average, while growth in the eurozone reached an average of 2%. The lack of any growth at all in 2005 has further widened the growth gap with respect to the other leading EU countries. In spite of low growth, robust job creation in recent years has contributed to a fall in the unemployment rate to less than 8% in Although the gap is narrowing, the unemployment rate is still high compared to the OECD average and the employment ratio remains relatively low (57.4%), especially for females and senior workers, and far below the Lisbon target (70% by 2010). Inflation is still high (2.2% in 2005) and the gap to the EU average in consumer price inflation is expected to widen in Italy has a very large public debt that still exceeds 100% of GDP (the estimate for 2006 is 107.4%). Italian SMEs are characterised by a high degree of dynamics, however, as far as innovation indicators are concerned (business R&D expenditure; S&E graduates; tertiary education; lifelong learning; early stage venture capital; EPO and USPTO patents), Italy is still behind its main European partners, as shown by the Summary Innovation Index for European countries in which Italy has been ranked in 17 th place for the past three years. It has to be noted that, in spite of an overall deficient performance, the country performs better on indicators for non-technical changes (i.e. changed organisational structures and innovation generating significant changes/improvements in aesthetic appearance and industrial design). Several structural and cyclical factors differentiate the Italian economic system from its main international partners and they strongly influence the diffusion of innovation patterns and high-tech systems. These are: (i) a predominance of SMEs, which affects R&D expenditure, innovation enhancement and human capital improvement, (ii) the perception of innovation by SMEs as a modernisation process rather than as a strategic activity, (iii) an uneven distribution of economic activity and ICT infrastructure, (iv) low levels of technical education, (v) a limited propensity to patent applications, (vi) a shortage of finance and need for a more dynamic venture capital market. Furthermore, the majority of SMEs do not carry out formal R&D activities, but their innovative processes are strictly linked to their capacity of learning-by-doing. The innovation carried out by these enterprises is not properly recorded in the statistics since statistical data on innovation records only the more formal innovative activities (e.g. patents registration). In the light of this context, the main innovation policy objectives at national and regional level can be summarised as follows: (i) increase R&D spending (3% of GDP); (ii) increase business expenditure on R&D (66% of R&D spending), (iii) increase the use of digital technologies by SMEs, (iv) increase the digitalisation of the public administration; (v) increase/improve the educational attainment of the 1

5 population; and (vi) increase the networking and the interactions among the main players of the innovation system (the much quoted sentence fare sistema ). 2. Major innovation challenges and policy responses Challenge 1: Creation of an environment favourable to innovation, specially for SMEs The creation of an environment favourable to innovation, especially for SMEs is a key challenge for the country and it is where Italy s most obvious shortfall is found. It is a strategic priority since the lack of innovation is one of the reasons for the drop in competitiveness of the Italian system. It is also important to bear in mind that the key challenge specifically addresses SMEs and not larger firms as the former make up more than 98% of the Italian industrial fabric. Furthermore, it is also important to bear in mind that the country is specialised in mature/traditional sectors rather than in high-tech ones. Therefore the challenge is to promote innovation within the bulk of the Italian industry. The Italian government is aware of this situation and has launched several measures to address this challenge. However, when it comes to the practical aspects, the public instruments currently available to support innovation seem, in many cases, more suitable for larger enterprises. Actually, the administrative/bureaucratic burden in terms of eligibility, access conditions, delays in the publication of calls, evaluation of proposals and the effective provision of funds to the beneficiaries together with the uncertain continuity of measures often discourage the use of these instruments by SMEs. In addition, the latest reform of the public incentive system, rather than favouring, penalises SMEs in the access to credit. Furthermore, changes in legislation (e.g. increases and decreases in the tax on patents registration) certainly do not contribute to the creation of a confident climate. Finally, interesting measures that could have a positive impact - notwithstanding their somewhat limited budget - (e.g. high-tech fund for SMEs) restrict their application to selected high-tech sectors instead of covering all sectors. Likewise, the Italian National Reform Programme PICO - recognises the need to boost innovation and technology transfer but the majority of the actions proposed focus on the development of strategic, high-tech sectors. To cite an example, one of the NRP s key actions is the development of 12 strategic research programmes in specific areas, but only two (advanced materials-ceramics and food and agriculture) refer to traditional sectors, which is where most of the Italian SMEs operate. The same applies to another initiative related to the creation of 12 dedicated laboratories in key sectors, where only one focuses on applications in the food and agriculture, tourism and cultural heritage sectors. It can be seen that the country has opted for the development and support of hightech sectors, which is, without a doubt, a sound strategy for development but, at the same time, the government should not forget to implement initiatives aimed at the reinforcement of traditional sectors of the made in Italy segment (that have enjoyed a privileged position in the past) and sectors where Italy has a competitive advantage (e.g. tourism, cultural heritage) that could be re-launched and modernised by fostering innovation and by the introduction/application of the latest technologies developed in other sectors. Challenge 2: Improving innovation financing (banking system and venture capital), especially for SMEs The limited access pf SMEs to funding is another key challenge for the Italian system as increasing global competition calls for investments in innovation. Shortage of finance has been recognised as one of the main factors that hinder innovation and Italy is particularly badly placed in this field. Until very recently the theme of finance for innovation has been largely neglected. The Italian capital market is inefficient, slowing down the growth of companies through the introduction of third-party capital. The reform of the banking system and the reform of the public incentive system which foresees an active participation of private banks in the system of access to credit - have not yet led to an increased capacity to establish adequate bank-business relationships, thus hindering innovation capacity and the growth of SMEs. In the Italian financial system, which is closely associated with the banking sector, steps must be taken to re-draw the rules these institutions apply to assess the viability of innovative projects, in order to combine the current rating methods based on financial and balance sheet performance with forms of technological rating; this would allow greater scope for solutions in which banks become shareholders in innovative firms and to increase the popularity of venture capital. Venture capital is another area where Italy is performing badly. Despite the launch of the high-tech fund for SMEs in 2005 (expected to start functioning in the following months) and despite several initiatives at regional level ( Early stage fund in Tuscany, Ingenium in Emilia Romagna, Next in Lombardy, etc.) the venture capital market in Italy still has a long way to go. The National Reform Programme PICO cites the role of venture capital for entrepreneurship and recalls the fund for 2

6 investment in risk capital of high-tech enterprises but it does not introduce any changes to the current situation. The theme of finance for innovation, although present in the current debate, is still often overlooked in the national policy agenda in practical terms and effective measures responding to the challenge are missing. Challenge 3: Improving educational attainment & skills of the population The inadequate average level of skills and know-how of both the adult population and Italy s young people diminishes the capacity to find jobs, as well as the contribution of workers to the production process, and the capacity of business operators to conceptualise their production intuitions and establish a fruitful relationship with the fields of science and research. Al of this is a strong hindrance to innovation. Reforms in the education system are being implemented, albeit slowly. The draft of the document Strategic Framework for regional policy places the improvement and valorisation of human resources as the first of the ten priorities outlined. A chapter of the National Reform Programme is also dedicated to strengthening education and training of human capital and contains a wide-ranging action plan to support the reform of both the educational and vocational training systems as well as the university system. Some of these measures have already been implemented or will be implemented in the future. Unfortunately, clear indication of timetables, quantitative targets, monitoring and evaluation practices is missing. The total amount set aside during the period to implement the measures and projects to improve education is 1.5 billion (3.2% of the total PICO budget), which, again, may suggest that there is no proper match between the actions proposed and the resources allocated. Summary table: innovation challenges, policy responses and impact Challenge Relevance of Evidence of impact policy response 1. Creation of an environment favourable to innovation, specially for 3 2 SMEs 2. Improving Innovation financing (banking system and venture 2 3 capital), specially for SMEs 3. Improving education attainment & skills of the population 3 3 Policy response ranking scored from 1 to 5 : 1 No specific measures addressing the challenge (possibly a debate but no evidence of any real policy development); 2 Policy development under way to respond to challenge (policy debate or design launched, e.g. announced in National Lisbon Reform Plan, etc.); 3 Specific measures existing for some time but insufficient to respond fully to challenge; 4 Existing measure plus one or more newly launched measures (during last 18 months) 5 A comprehensive set of measures which potentially responds fully to the challenge. Evidence of impact scored from 1 to 5: 1 trend for indicators has worsened since measure(s) introduced, 2 no observable change in trend since measure(s) introduced, 3 too early to appraise (measures introduced in last 24 months), 4) trend for indicators has improved since measure(s) introduced, 5 Evaluation or study indicates measure(s) has clearly contributed to improving performance of country. 3. Innovation governance and policy trends 3.1 Innovation governance: key changes and issues The major developments in the Italian innovation governance system are linked to: (i) the change of government: the centre-left coalition led by Romano Prodi won the general elections on April 9-10 and ousted the previous centre-right Berlusconi government. On May 17 th 2006 the new government and its new ministers were was officially appointed. As this report was been completed at a time of electoral transition, it cannot take account of the changes that the new government will put on the agenda. The policy orientations and priorities regarding innovation and R&D together with the definition of responsibilities, roles and competences of the new ministers will take place in the next months. However, the government has already introduced some changes in the ministerial responsibilities for innovation and R&D: the Ministry for Innovation and Technologies (MIT) has been replaced by the Ministry for public Function and Innovation; the Ministry for Productive Activities (MAP) has become the Ministry for Economic Development and the Ministry of Education, Research and Universities (MIUR) will be split into two ministries, the Ministry of Education and the Ministry of Universities and Research. (ii) the reform of the public incentives system, which foresees the transition from capital subsidies to a system which hinges on risk-taking by banks should make the incentives more effective, improve relations between banks and companies and allow efforts to be concentrated on research and innovation. 3

7 (iii) the creation of a national agency (Agenzia per la diffusione delle Tecnologie per l Innovazione) to foster the competitiveness of the SMEs and of the industrial districts through the diffusion of the new technologies, while promoting the integration between the research and the industrial worlds. To be effective, this agency should be the catalyst of political and financial action to promote innovation measures. The three main issues that arise from the SWOT analysis of the Italian governance system are: 1. A large number of players and fragmented system lacking coordination The Italian policy making system involves a large number of entities and it is also quite fragmented. Low levels of coordination have characterised the whole system in the past and many measures and initiatives in favour of research and innovation have overlapped. There is a clear need to overcome cultural and operational barriers to public-private cooperation. A more structured and better coordinated strategy is required at national, regional and local level building on promising initiatives already taken by the government in this field such as the industrial and technology districts, the publicprivate joint-labs created in strategic sectors to sustain new high-tech industries, the law reforms, the re-organisation of some incentives measures, the devolution reform, etc. Efforts are being made by the government to overcome the existing barriers and to improve the whole coordination system. 2. Lack of evaluation culture to sustain the policy making process Evaluation is a key weakness in the policy implementation process. Most evaluation exercises are limited to monitoring or auditing. Proper evaluations that systematically assess the results and provide feedback for policy making are the exception. This deficiency has been mentioned in several policy documents and debates as a critical point of the Italian system but, despite the fact that government officials claim that efforts are being directed to tackle this problem, the situation has not changed significantly. 3. No long-term view on policy making and public operators inclined to adopt a strategic management approach to R&D Public operators should be stimulated to adopt a strategic management approach to R&D, going beyond a specific sector/activity and better integrating policies into the wider national system. In R&D policy planning, more emphasis should be put on the diffusion and transfer of results, favouring initiatives that stimulate cooperation among universities/public research and industry to allow a more effective exploitation of results in the market. Research and innovation policy intervention has so far been characterised by a strong fragmentation of instruments and measures that are often conceived as short-term or even una-tantum 1 initiatives. The key priority for the innovation policy is to have a strategic vision, both at national and regional level, and a clear perspective to ensure long-term planning and long-standing impact results. 3.2 Trends in innovation policies The public support system for R&D and innovation is based on a funding scheme of direct aids to enterprises. The system is articulated into a large number of measures adopted at national and regional level. In recent years the role of regional policies has increased, especially in less favoured areas, mainly as support to innovation and technology transfer initiatives. The current policy mix has not undergone substantial changes, but several significant modifications have been made, including a reform of the public incentive system that introduces a new financing mix and the participation of private banks. A similar approach had already been taken previously at the occasion of the reform of the Fund for Technological Innovation (FIT, law 46/82) and consequently to the calls that were launched recently to sustain technological innovation in enterprises. Another relevant change is the reform of measure 488/92. The changes concentrate on rendering beneficiary companies and the involved banks more responsible for and committed to the investment plan and the project implementation. The financing mix has changed (grants are, in part, replaced by credits at low interest rates and credits at market interest rates, to be given by the private banks, are foreseen for each funded project). Moreover, a more rigorous selection process is foreseen to finance projects that are feasible at technical, economic and financial level. An innovation indicator, aimed to measure the 1 One-off measures or measures with limited duration: e.g. Tecno-Tremonti measure applicable only for one year (2004) 4

8 capability of companies to propose innovative projects has been introduced to assess project effectiveness. Government s policy regarding innovation and R&D has focused on three main lines of action: (i) the concentration of (scarce) resources on specific technology areas; (ii) the creation of clusters (favouring the aggregation of SMEs to overcome disadvantages linked to their size but also fostering publicprivate cooperation) and (iii) the promotion of technology transfer. Accordingly, recent policy measures are in line with these directions. The measures Incentives for medium and high-tech enterprises (IT 69) and Priority Technology Areas (IT 66) are the result of the government s strategy to design specific instruments for, and concentrate the aid on, key specific sectors of interest for the national economy. In addition, the creation of High Technology Poles (IT 65) and the launch of 12 National Strategic Research Programmes (IT 68) will favour the formation of clusters of enterprises, research centres, universities, in high-tech sectors, whereas the measure on Industrial Liaison Offices (IT 71) is aimed to facilitate the transfer of technology and the commercialisation of research results. 4. Conclusion: future actions and opportunities for policy learning Italian SMEs are dynamic but they must realise that to in order to conquer new markets and to become more competitive they need to make a greater commitment to innovation and to developing and investing in technological innovation. Furthermore, in order to ensure that they contribute to the growth of the Italian economy, innovation must be nurtured and strengthened through a more focused support system and policy interventions. A number of issues are considered relevant for future policy implementation with regard to the current state of the innovation system in Italy: the closure of the existing gap between university and industry to allow for a more effective exploitation of the research results and technology diffusion; and the facilitation of the scientific and technological knowledge sharing and exchange. Against this background, three main future actions can be suggested: 1. The current legislative framework and policy mix in favour of innovation, is not well defined, it is incoherent and inappropriately communicated A more centralised coordination is required to harmonise the fragmented mix of initiatives, programmes and measures focusing on the innovation issue. An Innovation Coordination Entity acting as a facilitator of R&D efforts at different levels (including programmes, measures, responsible managers and financial resources) and dealing with strategic tasks (such as: monitoring research duplication, providing policy advice to the government, giving research consultancy advice to R&D centres, developing measurable output targets against which to judge centre performance and fostering long-term links with overseas institutions) could be a valuable solution to address the country s weaknesses and represent a transversal body to ensure constant interactions among the different actors involved in the R&D and innovation policy making process. The Innovation Coordination Entity could be the planned national agency. However, this does not necessarily mean that there will be a new organisation: the entity could also be an existing body with a new, specific mandate. 2. Knowledge and technology transfer processes should be promoted through: (i) a new university performance evaluation system aimed at rewarding the universities as generators of patents and spinoffs and not only education; (ii) automatic fiscal incentives aimed at facilitating patent filing and acquisition by SMEs; (iii) financial and consulting support aimed at the further enhancement of the Industrial Liaison Offices (ILOs) which currently operate in Italian universities. 3. Researcher mobility should be favoured to allow researchers to move from scientific centres to industries to allow continuous scientific knowledge-sharing and exchange. Appropriate measures and automatic incentives should be introduced, or extended, to encourage the mobility of highly skilled scientific human resources who can bring added value expertise to enterprises, thus allowing the valorisation of the skills of researchers and increasing the internal technological competencies of companies (the already existing measure on tax incentives for non-residential researchers, for example, could be extended to residential young scientists). 5

9 1 The Innovation governance system 1.1 Overview of the innovation system The national innovation system Both in terms of policy making players and public-private innovation intermediaries, the Italian national innovation system (NIS), is characterised by a large number of entities and a high level of fragmentation. Low levels of coordination and cultural barriers to public-private cooperation have characterised the whole innovation system in the past, mainly affected by the lack of links and interactions between the main NIS players (universities, public research centres and industry). The design of R&D and innovation policies in Italy is largely determined at government level, where the main priorities are identified. In recent years, consultation with stakeholders was a more regular feature and there is a continuing trend towards more stakeholder involvement. The institutions and organisations determining and shaping the innovation system in Italy can be grouped into the following six categories: government and legislative bodies; universities and knowledge institutes; public innovation agencies; private sector organisations; industrial research centres and innovation intermediaries and financial institutions. 1) government and legislative bodies The central institutional point of reference for Italy s innovation system lies in three ministries: The Ministry of Education, University and Research (hereafter MIUR 2 ), which is in charge of determining R&D and higher education policy, developing plans for universities and scientific institutions, promoting scientific and technological research and forging international ties, especially in consultation with representative bodies of other EU member states. The MIUR also supervises a large number of research organisations (e.g. CNR 3 - National Research Council). The Ministry of Productive Activities (MAP 4 ), which promotes strategic industrial research and also oversees the research carried out by specialised agencies (e.g. ENEA 5 - National Agency for New Technologies, Energy and Environment). The Ministry for Innovation and Technology (MIT 6 ) - established in is in charge of stimulating, co-ordinating and directing government actions related to the development of ICT in the country. The ministry is supported by the Department of Innovation and Technology (DIT) whose mission is to coordinate policies directed to the development of the information society and those related to the application and access of information and communication technologies for the public administration, the citizens and the enterprise sector. The Ministry of Economy and Finance (MEF 7 ) plays a key role in the R&D and innovation system since it is the body in charge of drafting the Financial Law ( La Finanziaria ) and the Economic and Financial Planning Document (DPEF) 8 which is passed every three years by the Parliament. The document contains the major strategic guidelines for scientific research and technology and the amount of financial resourced devoted to R&D. 2 Ministero dell Istruzione dell Università e della Ricerca (MIUR) 3 Consiglio Nazionale delle Ricerche 4 Ministero delle Attività Produttive (MAP) 5 Ente per le nuove tecnologie, l energia e l ambiente 6 Ministero per l innovazione e le tecnologie 7 Ministero dell Economia e delle Finanze 8 Documento di Programmazione Economico Finanziaria 6

10 Other ministries involved in innovation are the Ministry of Environment and the Ministry of Health. The main S&T organisations coordinated by these Ministries are the Agency for Environmental Protection and Technical Services (APAT 9 ) and the National Institute of Health (ISS 10 ) respectively. In addition to these ministries, another important organisation of the Italian innovation system is the Inter-ministerial Committee for Economic Planning (CIPE) 11, a high-level committee in charge of coordinating and planning the national economic policy and responsible for the approval of the National Research Plan (PNR 12 ) together with the coordination of other research activities and the allocation of funds (see next section for more details). 2) Universities and Knowledge institutes (R&D and education bodies) The Italian University system consists of 77 Universities distributed across the country. Since the last decade the number of Italian university students has increased rapidly but Italy still lags behind other EU countries as far as the percentage of the population holding a higher education qualification is concerned. An important weakness that has been often mentioned is that the Italian system is selfreferential and has no real or systematic liaison with the needs of society and of production world. Several steps have been taken by the government in order to deal with this issue. CRUI - Conferenza dei Rettori delle Università Italiane (Association of the Rectors of Italian Universities). CRUI pursues the following objectives: Collecting the views/needs/opinions of the university system members Guiding the choices of decision-makers through the presentation of views and assessments Implementing every project as part of a process relating to the system as a whole Managing innovative initiatives and services Co-ordinating universities at a national and European level Collaborating with the various actors of the university system Public research institutes: the bulk of government-sponsored scientific and technical research in Italy is delivered through two government agencies: CNR-National Research Council and ENEA- National Agency for new Technologies, Energy and the Environment. CNR National Research Council The CNR was set up in 1923 and has been supervised by the MIUR since Nowadays, the CNR has over 100 research institutes and centres (most of which are closely connected to Universities) all over Italy. CNR s main objectives are to: support scientific and technological research (basic and mission-oriented) through its research establishments and the financing of research carried out by scientific institutes and individual researchers; transfer research results to industry, services and government; provide advice to the government; grant scholarships for training in research. CNR was in charge of the co-ordination and the support of public R&D in Italy for a long time (from 1923 to 1989). In the 1990s its co-ordination function was progressively moved to the Ministry of Education, Universities and Research. The CNR is currently under reform, as prescribed by the legislative decree no.127of 04/06/2003, intended to reorganise and restructure the centre. The reform, initiated in 2003, is re-defining the objectives, the activities and the whole organisation in order to optimise the allocation of resources; simplify the programming and management of research activities as well as of the administrative procedures; promote international joint collaborations, valorise the research results, strengthen the links with the productive system and with Universities and evaluate the research results. The CNR is mainly funded by the Italian government, but also receives funds from the European Commission and other national and international organisations through their participation to public R&D projects calls. 9 Agenzia per la Protezione dell Ambiente e per I Servizi Tecnici (APAT) 10 Istituto Superiore di Sanità (ISS) 11 CIPE: Comitato Interministeriale per la Promozione Economica 12 PNR: Programma Nazionale della Ricerca. 7

11 ENEA-National Agency for new Technologies, Energy and the Environment ENEA directly engages in a wide range of research projects, with special emphasis on alternative energy, the environment and biotechnology. ENEA s primary mandate is to conduct applied research, which can then be transferred to Italian industry. It also conducts contract research in some areas (such as material testing) for Italian and foreign organisations. ENEA also promotes and participates in research consortia at both the national and international levels and it owns shares in a number of hightechnology companies. The major foci of research activity in these consortia and companies are on renewable energy, environmental protection and agro-biotech. ENEA also provides training and technical support to SMEs and start-up companies. As CNR, ENEA is mainly funded by the Italian government, but it also receives funds from the European Commission and other national and international organisations through participation to public R&D project calls. Other public agencies that perform high-level research are the Italian Space Agency - ASI, the Italian Aerospace Research Centre-CIRA, and the National Institute for Nuclear Physics - INFN. The Italian Institute of Technology (IIT) based in Genoa was established in 2004 by the Ministry of Education, Universities and Research and the Ministry of Economy and Finance as a Foundation with the aim to become an international centre of excellence for scientific research in advanced technology, as part of the process of reform that the government is undertaking for the modernisation of the national scientific and technological system. The innovative aspects that characterise the IIT are: Mission: to favour the transition of the economic system towards productions with higher technological content and added value, as well as the collaboration among groups of excellence that operate in universities and public research centres and the productive system of the country; Activities: to concentrate on the following sectors: systems of production (microelectronics, new materials, ICT) health and biotechnologies; Public-private: the juridical nature of the IIT favours the promotion of collaborations between public and private research; Board: the direction of this initiative is entrusted to qualified members of the scientific, economic, industrial and financial Italian and international world. IIT draws funding from contributions of the central government budget and from public and private donors. The initial contribution of the central government budget amounted to 50 million for 2004 and 100 millions for each year thereafter, from 2005 to The 2006 Financial Law has confirmed the allocation of resources to the IIT as follows: 80 million/year for the years 2006, 2007 and 2008 and 100 million for Private research centres: besides the public research institutes, the major industrial groups (Fiat, Pirelli, Telecom Italia, Finmeccanica, Enel, STM, Bracco etc) have also set up their own research infrastructures. 3) public Innovation Agencies / Organisations The following institutions can be considered as public innovation agencies or organisations: The Italian Patent Office which is a separate department of the Ministry of Productive Activities and is in charge of regulating Industrial Property issues. IPI- Institute for Industrial Promotion IPI is a Development Agency controlled by the Ministry of Productive Activities, which is involved in the following activities: Industrial policies: provision of technical advice in the definition and implementation of industrial and commercial policies; Incentive instruments and policies: provision of technical advice in activities concerning European Union co-funded programmes; technical advice in the field of support measures; training of experts working in the field of SMEs support measures; Technology transfer networks: offer technical support for the implementation of a network of intermediaries in the Italian production system. They act in the area of technology transfer to the benefit of SMEs and work to promote and implement international network systems for national and regional networks for technology transfer. 8

12 Multilateral and bilateral international cooperation efforts: give support and technical advice to the administrations in the field of consultation, design and implementation of multilateral cooperation programmes and initiatives promoted by the EU, OECD, UN and other international organisations; technical assistance to the governments of partner countries in the planning and realisation of industrial development programmes as well as technical advice to the Regions in the design and implementation of industrial cooperation programmes. Sviluppo Italia, is the national agency for enterprise and inward investment development. It has three main lines of action: inward investment development; business creation and development and support to the public administration. In order to achieve its aims, Sviluppo Italia acts as a manager and comanager with public duties, and as a promoter operating on the market with its own assets. To this end, it makes use of an integrated system of instruments, both regulatory and financial, that can be combined in all areas of intervention. Agitec, the service agency designed to help businesses make investments in innovative technology, established by Mediocredito Centrale, ENEA, Unioncamere, and IPI (Institute for Industrial Promotion), with the backing of the former Ministry of Industry (nowadays Ministry of Productive Activities), has been discontinued as from June At regional level, the relevant organisations are the Regional Innovation Agencies and the Regional Competence Centres (RCC). The latter have been established by the Department for Public Administration (DPA) and the Department for Innovation and Technology (DIT) to facilitate and accelerate the development of e-government and the information society at regional level. A novelty of this year s Financial Law (Finanziaria 2006) is the creation of a national agency for the dissemination of technologies for innovation (Agenzia per la diffusione delle Tecnologie per l Innovazione). The mission of the agency (which is monitored by the Presidency of the Council of Ministries) will be to foster the competitiveness of the SMEs and of industrial districts by spreading new technologies, while also promoting the integration between the research and the industrial worlds. 4) Private sector organisations and entrepreneurship promotion This category encompasses the main Italian associations such as Confindustria (the leading organisation representing the manufacturing and service industries) and Unioncamere (the Federation of Italian Chambers of Commerce, Industry, Crafts and Agriculture). 5) Industrial research centres and innovation intermediaries AIRI, the Italian Association for Industrial Research promotes industrial research and the cooperation between companies and public research institutions. AIRI s members are primarily public and private manufacturing companies carrying out R&D, but also include public research centres, industrial associations and financial organisations which are directly or indirectly concerned with industrial research. Industrial Experimental Stations Industrial Experimental Stations are organisations supporting the competitiveness of enterprises in close collaboration with the productive sectors of reference. Activities include laboratory analysis and controls as well as R&D, certification, consulting and training. The Experimental Stations also promote technical-scientific dissemination and are involved in technical legislative activities. The first Experimental Stations were set up over a hundred years ago. Today, there are eight stations operating in the following sectors: oil and fat industries ( food preserving industry ( leather industry; essential citrus oils; fuels ( paper ( silk ( and glass ( Industrial Districts The concept of industrial districts is the main form of company clustering in Italy. Currently, there are 200 industrial districts employing two million people and accounting for one-third of the total exports. This model has been very successful for the Italian economy and has been widely documented in the literature. It is worth stressing the existence and the strong performance of the web of successful SMEs located within industrial districts. These are mostly concentrated in the traditional productive 9

13 sectors and their success is not based on formal R&D activities, but on a continuous learning processes. Their innovative processes are strictly linked to their capacity of learning by doing, in addition to their ability to establish and maintain good relationships with their suppliers, customers and, in certain instances, also with their competitors. However, due to the fact that international statistics data on innovation focus mostly on formal innovative activities, the Italian innovative capacity tends to be undervalued considerably. Technology Districts Twenty-four technology districts have been promoted in key strategic areas (23 approved, 1 pending): Wireless applications (Piedmont), Molecular biomedicine (Friuli Venezia Giulia), Biotechnologies (Lombardy), ICT (Lombardy), Advanced materials (Lombardy), Polymeric materials and compounds (Campania), Mechatronics (Emilia Romagna), Microelectronics (Sicily), Nanotechnologies (Veneto), Integrated smart systems (Liguria), Aerospace technologies (Lazio), Renewable energy and environmental technologies (Trentino), ICT & security (Toscana), Food security and quality (Abruzzo), Agro-industry (Molise), Agro-industry (Puglia), High-tech (Puglia), Innovative technologies for seismic risks (Basilicata), Logistics (Calabria), Cultural heritage (Calabria), Bio-medical and health technologies (Sardegna), Naval transportation (Sicily), Sustainable bio-agro and fishery (Sicily), Nanomicro technologies and special materials (Umbria). Out of the 24 technology districts, 3 have already completed the formal procedures to actuate (ICT & security (Toscana); Renewable energy and environmental technologies (Trentino) and Agro-industry (Molise). There is a growing number of Science and Technology Parks in Italy which carry out activities, such as R&D, incubation, technology brokerage and innovation support. The Association of Italian Science and Technology Parks (APSTI), founded in 1989, now has 30 parks throughout the country. The structures supporting the creation of innovative enterprises or their modernisation are either incubators or other business support organisations such as Business Innovation Centres (BICs) and the Integrated Centres for Entrepreneurship Development (CISI). The incubators operating in Italy are both privately and publicly financed. The main aim of publicly funded incubators is fostering local development as well as supporting specific productive sectors. Privately financed incubators are profit-oriented and provide access to venture capital. A great number of incubators are located in the North of the country and are hosted by Science Parks. The BIC and CISI networks cover the whole country and are particularly active in the Southern Regions, supporting the development of local economic systems. The seven Innovation Relay Centres, located throughout Italy, support innovation and trans-national technology transfer. The Italian Network for the Dissemination of Innovation and Technology Transfer (RIDITT), launched in 2003 and managed by IPI, aims to enhance technological skills and available resources in industrial innovation and to foster integration processes between private and public operators of the innovation national system. The RIDITT network provides the operators (companies, Universities, research centres; Science and Technology Parks, policymakers at regional and national level) with information, training and technical assistance services (see portal Furthermore, RIDITT provides services aimed at encouraging internationalisation of innovation centres also via the International Association INSME (International Network for SMEs, 6) Financial system The financial system supporting R&D and Innovation in Italy is made up of the Italian Business Angels Network 13 (IBAN), the Italian Venture Capital and Private Equity Association 14 (AIFI) and a series of private banks and financial intermediaries that offer funding to finance R&D and innovative projects. The private bank San Paolo-IMI (together with the European Investment Bank) has set up a fund of 250 million to finance R&D activities, which is expected to increase in volume in future. In the same line, the agreement signed in 2004 between Banca Intesa and the EIB for a 400 million fund has given Italian SMEs an opportunity to obtain credit financing for innovative and R&D projects at 13 The consolidation of business angels networks in Italy since 1999 has been a particularly encouraging development, with at present 12 networks (BAN) in operation. 14 According to AIFI s data, the Italian private equity and venture capital market is not in line, unfortunately, with the general development trend that distinguished the sector in other European countries such as France, Germany and Spain. However, considering the current activity of the Italian players, investments are expected to increase starting from the beginning of