The study was commissioned by the European commission, DG Enterprise within a Framework Contract coordinated by the Austrian Institute for Economic Research (Wifo)( co-ordinator:
Contact Dr Christian Rammer Department of Industrial Economics and International Management Centre for European Economic Research (ZEW) L 7, 1 D-68161 Mannheim
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
82 3. 3. 3. Conclusion on nanotechnology cluster benchmark between Germany and Japan...88 3. 3. 4. Factors influencing the future development of nanotechnology...
132 4. 3. 3. Conclusion on microelectronics cluster benchmark between France and Canada...139 4. 3. 4. Factors influencing the future development of microelectronics...
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.27 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
EN 1 INTRODUCTION 1. 1 Background Strengthening the innovative performance of the EU economy is a main goal of both the European commission and the governments of EU member states.
Fostering innovation demands a multidimensional approach that takes into account both the incentives for firms to innovate, the internal and external drivers and barriers for innovation,
including financing, skills, competition, regulation and public funding. Among the many factors that drive innovation, emerging new technologies have played always a key role in the history of innovation.
Common characteristics of KETS include a high demand for R&d, skills and capital expenditure, a multidisciplinary approach cutting across many technology areas, long time horizons between basic research results and implementable innovations, high multiplier effects and high spillovers to other emerging technologies,
it is critical for the EU economy to keep pace with the technological Chapter 1 List of Figures Figure 2-1:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
EN development in these KETS in order to benefit from their innovative potentials and spillovers to other sectors of the economy.
the performance of actors from Europe (both enterprises and public institutions) in producing new technology compared to the main competing regions (North america, East asia);
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
Although comparability of patent data is limited due to different economic values a patent may represent, different degrees of technological novelty and different degrees of actual applicability,
intermediaries (e g. technology centres, financing institutions) and other stakeholders (e g. from education, the broader public).
For each of the five KETS mentioned in the EU communication, we present a standard set of analyses in a separate chapter:
Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20 Figure 2-2:
and technical progress tremendously, leading to significantly higher levels of productivity and enabling radically new types of products and services.
they also offered more effective responses to societal challenges, e g. in health, communication or the environment,
though new technologies often were also raising new concerns on their potentially negative implications on safety, health and the environment as well as on ethical, legal and social issues.
From a macroeconomic perspective, KETS can raise an economy's level of productivity, allowing for higher percapita income and increase in wealth.
First, KETS offer opportunities for product and process innovation to many firms, particularly in manufacturing.
and raise the overall level of innovation activities in an economy (see Helpman, 1998; see also van Ark and Piatkowski, 2004, on the role of ICT,
which innovative opportunities of these technologies are explored and implemented. Being first in generating new scientific findings is no sufficient condition for generating economic returns from new technologies.
is to balance technological opportunities originating from research with the user needs, a cost-efficient production and the capabilities of business partners (suppliers, distributors,
suppliers and customers are clearly more important, as are internal sources. Figure 2-1: Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006 0 10 20 30 40 50 60 Internal sources
(R&d, marketing...External sources: Customers Suppliers Competitors Scientific journals Consultants Universities Public research institute manufacturing total R&d intensive industries Note:
Multiple sources per enterprise allowed. R&d intensive industries: NACE (rev. 1. 2) divisions 23-24,29-35.
Figures based on data from AT, BE, CY, CZ, EE, ES, FR, GR, HR, HU, LT, LU, NL, PL, PT, RO, SK, TR.
afford high investment and are likely to fail. Only large firms with high R&d budgets and laboratories or small, specialised and venture capital backed firms will be able to go this way.
Consequently, direct economic impacts of KETS in their early stages tend to be low. High macroeconomic effects of KETS result from their spread through the economy which can take considerable time.
A high rate of diffusion requires a low level of technological uncertainty and a low price.
Lowering prices for new technologies depend on the degree of competition and the ability to utilise economies of scale at various stages of production.
and the impulses from suppliers, competitors and customers are much more important than pure technology impulses.
Within a production function environment, positive productivity effects of KETS may be reflected by a higher rate of technical progress.
Within a sector-specific production function environment, KETS will most likely shift sector shares since output of sectors that produce KETS
sections of the economy simultaneously. A prominent example of an escalating technical progress in the recent past was information and communication technologies (ICTS.
ICTS have accelerated productivity growth in the 1990s considerably and widely. They account for almost 70 percent of total factor productivity growth in 1995-2001 (see Timmer and van Ark, 2005.
but also from ICT use by business partners (suppliers and customers) since ICTS have allowed to design external business processes more efficiently.
KETS that exert less significant network effects are likely to result in lower economy-wide productivity gains.
or cellular telephone communication (the technological principles have been discovered in the 1920s). For many new technologies, the most important applications are often out of sight in early stages of technology development.
1982) and from a fierce competition among technology producers who are seeking competitive advantages by customising new technologies to the needs of users.
Opening-up new markets can also help to unlock additional demand and new resources for production,
Economies that are able to open up new KET-based markets earlier than others could gain a temporary monopoly
These cumulative effects will also act as entry barriers to other economies and can secure a long term lead in a certain KET.
History provides many examples for such cumulative technological advantages of economies e g. the U s. in aircraft, space and defence technologies, Japan in microelectronic household applications,
KETS and Policy Provided that economy-wide productivity and wealth effects of KETS primarily depend on the speed and breadth of their diffusion,
it is important for the EU economy to keep pace with the technological development in KETS.
and industrial R&d projects to cluster initiatives, public awareness measures, standardisation, promotion of venture capital supply,
Nevertheless, advancing KETS may require joint efforts of European economies, particularly in the areas of regulation and standardisation.
which refers to the ability to sell goods under a competitive environment, i e. to prevail over competitors.
Although comparability of patent data is limited due to different economic values a patent may represent different degrees of technological novelty and different regulations of national patent offices, patent data are
Patents represent different economic values and different degrees of technological novelty. Though many efforts have been made to quantify the value of patents,
These patents are likely to represent higher economic values since these applications are more costly than applying just at a single national patent office.
The field of photonics relates to optical technology applications in the areas of lasers, lithography, optical measurement systems, microscopes, lenses, optical communication, digital photography, LEDS and OLEDS, displays
There is some overlap to micro-and nanoelectronics in the area of optical communication. Industrial biotechnology is more difficult to identify through IPC classes
Advanced materials as well as dvanced manufacturing technologies can virtually be employed for producing any kind of commodity. As a consequence, market potentials strongly depend on the underlying definition of a KET and
Most of these potential applications areas are derived from concepts driven by technological opportunities rather than the likely preferences of users.
and hardly any has considered systematically the impacts of the economic crisis, which further limits the accuracy of market forecasts.
5) Identifying the most important factors that influence future demand for new applications that emerge from a KET
and for different scenarios by differentiating between substitutive demand and additional demand. European Competitiveness in KETS ZEW and TNO EN 42error!
System and market failure framework Actors System & Market failures Consumers, end-users, lead-markets, public procurement (demand) Manufacturers, entrepreneurs, SME's, MNC's (supply
Regulative institutions (rules & regulations, policy, tax-incentives) Social institutions (norms, values, culture, social pressures) Institutions Competitive institutions (mimicking competitors, shareholder pressure
and know-how to enable innovation Market failures Barriers to entry/Market power blocking new entrants Externalities/Split incentives hampering investments in innovation Market structure Transparency/perfect information hampering the right
market functioning Quality of demand hampering the level of innovation Market demand Quantity of demand hampering the diffusion of innovation Source:
a right mix of collaboration as well as competition to stimulate innovation. Market characteristics should be right to enable actors to reap the benefits of their investments
and hence markets should not be blocked, prices should reflects costs, and demand should be big enough and of enough quality to support innovation.
Interactions between the different actors should be present and of sufficient quality to make the system work.
and capital that the cluster reaches its maturity phase as public funding and support looses importance compared to private sources.
and venture capital and a strong focus on a limited number of knowledge domains. European Competitiveness in KETS ZEW and TNO EN 46error!
and an entrepreneurial culture (linked with private financing opportunities). Advanced materials Wallonia's Plastiwin cluster:
as a result of the presence of the National Nuclear Institute that served as lead customer and knowledge accelerator.
substantiated by very low costs for investment in research and development as a result of tax breaks and incentives. Photonics Berlin-Brandenburg Germany:
More importantly, a vast variety of applications are currently in the stage of prototype and pre-market entry.
Examples for current and planned nanotechnology products by industry Industry Established nanoproducts Recent market launch Prototype stage Concept stage Chemicals-nanopowder-nanostructured active
In order to avoid such biases from the market environment, we evaluate technological dynamics in nanotechnology by looking at Chapter 3 Nanotechnology EN 57error!
North american applicants comprise to a significant extent young enterprises in the fields of biotechnology and nanotechnology, including a number of research companies. 4 This analysis is based on the full sample of 18,294 nanotechnology patents (EPO/PCT).
while a more detailed look at production opportunities and market demands for certain applications leads to less euphoric,
and presumably more realistic assessments of market potentials. Projections made in the early 2000s for the year 2010 (see Evolution Capital, 2001;
MRI, 2002) have proved to overestimate the actual development considerably. European Competitiveness in KETS ZEW and TNO EN 74error!
EN Furthermore, electronic and optic equipment, healthcare and life science, energy and environment, communication and computing, scientific tools and industrial manufacturing will be affected largely by this emerging technology (Miyazaki and Islam, 2007.
Private R&d investments amounts to only $1. 7 billion in Europe compared to $2. 7 billion in the US and $2. 8 billion in Asia (Luxresearch, 2009.
while R&d in Japan is to 2/3 financed through venture capital (see Figure 3-20).
http://hesa. etui-rehs. org/uk/dossiers/files/Nano-economics. pdf 3. 3. 1. Nanotechnology cluster Europe:
This opportunity is reflected in the high number of involved universities/research centres and interdisciplinary projects (more than 100.
major enterprises. Main corporate players in this area include Philips Gmbh, Thyssenkrupp Stainless AG and BASF coatings AG. 9 http://www. icn-project. org/fileadmin/ressourcen/Dokumente/3 ris/Regional profiles/NRW. pdf 10 http
A few large multinational enterprises act as anchor companies to stimulate economic growth while network organisations are in place to nurture academia-industry collaborations.
Overview of nanotechnology institutions in the NRW nanotechnology cluster network Networks Research centres University institutes SMES Large enterprises Finance Aachen 1 3 10
The Ministry for Education and Research also has strong patent laws in place to ensure that utilisation opportunities are realised. 12 Norms and values:
Furthermore, external communication and public relation of these 11 http://www. innovations-report. de/html/berichte/informationstechnologie/bericht-32232. html 12 http://www. bmbf
which seek for funding opportunities on a federal level. 15 A consortium of seven federal ministries developed a‘Nano-Initiative Action Plan 2010',
and mobilising public funding and private venture capital. 16 Regarding R&d investment from the government, Germany is the number one concerning public funding of nanotechnology in Europe,
the cluster attracted approximately €40 million of funding from the Sixth Framework Programme from the European commission. 19 Venture capital:
Venture capital is not easily available in Germany for nanotechnology research and development. In Germany, only one third of the total research funding stems from private sources,
/our-publications/germany-investment-magazine/vol-2008/vol-032008/cover-story1/size-isn-t everything3/?
. pdf 17 http://hesa. etui-rehs. org/uk/dossiers/files/Nano-economics. pdf 18 http://www. nanoforum. org/dateien/temp
Its goal is to create a competitive and dynamic R&d environment and to boost the knowledgeintensive industry on a national and international level.
There are a few large nanotechnology enterprises, such as Philips and BASF, which are located within the cluster network to stimulate economic growth.
This market structure of a scientific base with MNES acting as anchor companies offers start-ups a good opportunity to settle down on the interface between them in an intermediary role.
But the lack of business angels and venture capital makes it difficult to create academic spin-offs to commercialise scientific results.
Market demand: The nanotechnology cluster network in NRW consists of three geographically separated clusters, each with a different focus of nanotechnology (nanotech-IT, nanotech-biotech, European Competitiveness in KETS ZEW and TNO EN 82error!
Unknown document property name. EN nanotech-energy. This research specialisation makes it easier to get the major enterprises as lead customers
or to establish more applied research collaborations. Conclusion Although the cluster network in NRW is relatively young,
and six large enterprises present. In addition to this, six different networks and one venture capital firm accompany cluster activities.
The cluster is highly research-oriented with an excellence knowledge base, but it misses the market focus.
and engineering with market-oriented nanotechnology products, systems and services. Their main research focus covers nano sciences, new nano materials, nano devices, 24 http://hesa. etui-rehs. org/uk/dossiers/files
/Nano-economics. pdf Chapter 3 Nanotechnology EN 83error! Unknown document property name. EN and nano biochemicals. 25 The cluster established partnerships with local nanotechnology firms to create new businesses, also in other industries such as electronic devices, medical and biotechnology, textiles, mechatronics, and information technologies.
and provide space for nine universities, three research institutions and 43 industrial and venture companies.
and regions. 29 MEXT (education, culture, sports, science and technology) and METI (economy, trade and industry) are the main funding ministries,
METI (Japan's Ministry of economy, trade and industry) accompanies cluster development in two ways. There are divisions in place to support self-sustaining development of regional (cluster) economies (regional technology division, business environment promotion division),
and there are divisions to nurture technological development (research and development division, academia-industry cooperation promotion division). 31 On a local level, the Kyoto municipality is in charge of the cluster organisation
In addition to this, it stimulates university-industry collaborations by implementing business incubators and university-industry liaison facilities. 35 Venture capital:
Venture capital funding accounted for $2. 8 billion in 2004. Overall, Japan has an advantage over Europe and US regarding private funding.
This is an indication for their strong market orientation. 36 Venture capital was not always available in the past.
because there was a lack of entrepreneurship. Furthermore, large corporations got involved in several nanotechnologies stimulating the mass to follow this direction.
Finally, the growth of venture capital in the US also influenced the development of VC investment in Japan. 37 Interactions Scientists are supported by capital intensive equipment through spin-in operations,
and commercialisation of knowledge and creating spin-off venture business. 38 In addition to this, there are many informal links to other high-tech clusters, public sector programmes,
. org/uk/dossiers/files/Nano-economics. pdf 37 http://unit. aist. go. jp/nanotech/apnw/articles/library3/pdf/3-34. pdf
while the Innovation Park acts as an industrial incubator to stimulate business creation within the cluster
Because large amounts of venture capital are available, new nanotechnology start-ups can easily be established. In this way, entrepreneurs do not face the obstacle of finding sufficient financial resources,
The large share of private funding in Japan for nanotechnology is an indicator for the strong market demand
the Kyoto Environmental Nanotechnology Cluster has specific research topics involving‘conserving water environment',‘biodiesel through green sustainable methods'and‘pyroelectric infrared sensors'.
and customers also shows the cluster's strong market orientation. Conclusion The Kyoto nanotech cluster is a relatively young cluster,
There are also certain public divisions within the ministries of technology and economy that combine technological development with regional (cluster) development.
and by attracting venture capital to support academic spin-offs and nanotech start-ups. The combination of strong government support with large private funding is the second success factor of the Kyoto nanotech cluster. 40 http://hesa. etui-rehs. org/uk/dossiers
/files/Nano-economics. pdf 41 http://eco-pro. biz/ecopro2009/events/E1000. php? tp=1&id=10760 European Competitiveness in KETS ZEW and TNO EN 88error!
MEXT (Japan's Ministry of education, culture, sports, science and technology) and METI Japan's Ministry of economy, trade and industry) are the main funding ministries,
and R&d laboratories within the nanotech cluster. 3. 3. 3. Conclusion on nanotechnology cluster benchmark between Germany
i e. there is a lack of venture capital, business angels, etc. There is a strong focus on basic research and a lack of commercialisation activity. 42 http://hesa. etui-rehs. org/uk/dossiers/files/Nano-economics. pdf Chapter 3
Nanotechnology EN 89error! Unknown document property name. EN Kyoto, on the other hand, has a very strong private funding infrastructure,
with private funding consisting of 2/3 of all investments. The Japanese government has played an active role in promoting the VC market.
but also on commercialisation (through incubators and liaison activities), private funding and financial/tax incentives for start-ups and (re) location to create greater cluster density and hence critical mass.
and commercialisation) They act as lead customers for the smaller specialist companies in the cluster They provide the international connections for new knowledge inflows They are a platform for international marketing, sales and distribution In other words,
centres, 43 industrial and venture firms Classification Developing Developing Infrastructure Strong knowledge infrastructure: mainly publicly funded Good mix between large firms
but is not highly visible in the private economy. Lack of entrepreneurial spirit strong research focus Rules and regulations The Japanese government defines rules and regulations to optimise the alignment of cluster activities according to the overall strategy.
if the same government strategy would work in a more individualistic cultural environment. Public policy/funding/taxation Cluster dependent on public funding because of venture capital scarcity Germany nr. 1 for public funding of nanotech Harmonised funding schemes for transparency
and ease of access. Public and cluster platform support for startups en commercialisation Cluster platform initiated by MEXT (ministry) to support research and innovation.
incubators, and liaison Private funding strong point: 2/3 of funding from private sources. Chapter 3 Nanotechnology EN 91error!
EN Lack of business angels and venture capital Government has stimulated actively development of VC market Nanotechnology top-priority in national strategy Many agencies to support research
and commercialisation Tax incentives to stimulate investments and stimulate (re) location to cluster area Interactions Cluster platforms play important role in stimulating collaboration Platforms organised per city area:
focus on basic research Combination of excellent scientific research with commercialisation abilities Market demand 3 subclusters focus on:
biofuel and sensors Large companies play big role in funding new developments and acting as lead customers Market structure There are relative many small companies
EN Maybe the single most important barrier to developing new markets for nanotechnology products is to clearly identify the commercial opportunities that may result from new research findings.
but also demand considerable changes in producing and using these innovations and may induce concerns about long-term benefits (including environment,
healt and safety issues. As for all radical innovations, demand is highly uncertain and tends to be very low in the first years after an innovation has been introduced successfully to the market.
As a consequence, production costs are very high due to small output volumes whereas willingness to pay by users will be low due to uncertainty over the real benefits of the innovation.
a lack of scale economies and a lack of consumer acceptance (see Palmberg et al.,74ff;
As a consequence, firms need substantial external capital to finance product development. Many nanotechnology firms report a lack of public funding and a lack of venture capital as main barriers to commercialisation.
In addition to fiancial capital, human capital tends to be a restricting factor, too. Nanotechnology R&d and commercialisation requires skilled people with a background in a variety of disciplines and business practices.
The need for complex human capital makes nanotechnology particularly vulnerable to shortages in labour markets for qualified personnel.
A lack of skilled labout is therefore one of the highest ranked barriers in the nanotechnology industry.
A main issue in commercialising nanotechnology is the impacts of nanomaterials on environment health and safety (EHS.
while at the same time acknowledges the progress that nanotechnology innovations can have for the environment and health.
In 2005 to 2008, it is estimated that about €42 billion have been spent on nanotechnology R&d on a global scale. 51 percent of this investment was funded from government sources
since enterprise R&d surveys rarely collect data on R&d expenditure devoted to nanotechnology. Figure 3-25:
EN nanotechnology strategies that aim at coordinating various actors from public agencies, industry and science and provide a long-term view of the likely role of nanotechnology for economy and society.
It offers all federal agencies a locus for communication and collaboration. NNI also provides a vision of the long-term opportunities
and benefits of nanotechnlogy by producing Strategic Plans. The most recent one was published in December 2007
NNI promotes policy deliberation and, most importantly, coordinates federal R&d investment in nanotechnology. R&d investment by agencies under the NNI between 2001 and 2010 was $11. 9 billion.
More than 25 federal agencies participate in the initiative, including 13 agencies that provided R&d funding for nanotechnology.
So far, the highest investment under NNI (2001-2010) was made by the Department of Defence ($3. 4 billion), the National Science Foundation ($3. 3 billion), the Department of energy ($2. 1
federal investments of nanotechnology centres and infrastructure for nanotechnology research and education networks; and support the consideration of environmental,
Another area for wealth enhancing effects of nanotechnology is energy and environment. Nanotechnology could contribute to a more efficient and less harmful production of energy through advancing photovoltaics, wind energy generation and thermoelectric conversion systems.
But there is no doubt that demand for nanotechnology products will increase clearly above the total market expansion.
Under this environment future growth of this industry depends on a multitude of factors. The perhaps most important success factor is funding.
since huge amounts of capital is needed while technological and market risks are high and future returns not yet known.
Public funding as well as a viable venture capital industry is critical to overcome financial barriers. Another critical factor is to successfully link technological opportunities with user demand.
Many product developments in nanotechnology tend to be driven research, i e. focusing on exploring the potentials of new research results.
As for any newly emerging technology, potential impacts of nanotechnology on health, safety and the environment have been discussed widely.
Certainty about regulatory issues is also critical for nanotechnology producers to decide about investment and directions of future research.
Many nanotechnology firms complain about scarcity in skilled personnel (see Palmberg et al. 2009: 74ff. As a cross section technology that combines findings from various scientific disciplines and develops technologies that can be applied across many different industries,
skill demands are particularly high. Since education typically focuses on imparting knowledge from specific and established scientific or business fields,
transfer them into business models and develop new products and processes that leverage the potentials of nanotechnology while at the same time fit to the needs of customers in terms of performance and costs.
Doing this requires a close interaction between firms and public research including joint R&d activities.
venture capital funding as well as public support to R&d conducted by these firms is essential. Compared to other fields of technology such as biotechnology,
One reason is certainly the reluctance of the private venture capital business in recent years to provide large amounts of risk capital for these firms.
While biotechnology start-ups could profit from a generous venture capital industry in the 1990s the situation has changed.
Today private venture capital companies very carefully evaluate the business prospects of young firms and most often provide only limited funding, focussing on close-tomarket-introduction projects.
In order to advance the commercialisation of nanotechnology, huge investment in R&d, pilot plants and marketing are required.
In this situation, policy will have to compensate for this market failure in the financial market which results from a certain risk aversion and a rather short-term time horizon of the venture capital business.
Further policy actions should relate to providing a stable regulatory environment, particularly with respect to likely safety,
health and environment impacts of nanotechnology. Informing the general public about the prospects and potential dangers of nanotechnology and how one can deal with these is important to achieve a broad acceptance of nanotechnology.
and thus stimulate investment and demand. Since R&d in nanotechnology involves very long time horizons, stable networks among actors from industry,
which creates considerable investment requirements for the manufacturers (Fraunhofer CNT, 2008). In the following we will use the term microelectronics for simplification,
Microelectronic patenting is concentrated typically among a few applicants, mostly from the business and enterprise sector. Table 4-4 shows the list of top-ten patent applicants in the three regions.
EN they are particularly important for information and communication technology (ICT) equipment and embedded systems. In this respect, semiconductor production and shipments can be characterised as leading indicators of ICT product market trends.
During economic downturns production drops sharply but when the economy recovers, semiconductor production does so as well.
and mobile communication which is supported by strong consumer demand. Moreover, this trend is expected to be fuelled by higher semiconductor content per installed system
Owing to the recent economic downturn, sales had declined by 5. 9 percent in 2009. Regarding the market size in different world regions,
Regarding the short-term perspectives, the financial markets and economic crisis has impacted severely business and consumer confidence worldwide.
and investments indicating future (production) location. In terms of production output Asia is the largest geographical agglomeration with China accounting for 27 percent of production in 2007, South East asia and Australia for 15 percent, Japan for 13
This trend towards clustering of production in Asia is likely to continue with share of worldwide investment in microelectronics in Europe declining.
In 2007,10 percent of global investments of €28 billionin microelectronics were compared in Europe to 48 percent in Asia.
and market semiconductor components, primarily in advanced economies. At the same time, they rely on specialised manufacturers, so called semiconductor foundries, to make the products in locations with low labour costs, such as Asian countries (Mowery, et al,
For example the difference in business models focusing on continued miniaturisation versus a diversification of new functionalities makes a comparison along number of employees or levels of investment little meaningful.
focusing on the communications segment while in the last years shifting more and more to industrial applications.
representing half of the output (Innova, 2008). 44 Communications 38 percent, cards 20 percent, military and aeronautics (20 percent), automotive (20 percent) to home applications
LETI has created a collaborative research environment called Minatec bringing together researchers from its centre with partners from industry
and collaborative research environment. Furthermore, the Grenoble cluster also benefits from a strong research environment in the wider region
and the Rhône-alpes region enjoys easy access to major industrial hubs in northern and southern Europe (Innova,
The micro-and nanoelectronics activities have benefitted from substantial investment and partnership programmes between industrial firms and publicly funded laboratories in the semiconductor industry in France since the early 1990s.
Estimates vary between $3 and $8 billion making such investment for very few companies possible to finance.
-and nanotechnologies (Minatec) bringing together partners from industry, universities and research in a collaborative, open innovation environment.
Also the nanoelectronics field does not seem to pose new health risks with production contained in highly controlled environments
plays a critical role in enforcing the underlying research infrastructure trough public investments. Since the beginning of the 1990s, the semiconductor industry in France has benefited from significant investments and partnership programmes between industrial companies and public laboratories.
CEA-Leti being often the leader behind new initiatives and activities in the cluster is a public research centre.
with investments of around €193 million was financed for example half by local authorities. And also the Minalogic partnership brining together research partners from industry,
France subsidises the alliance between STMICROELECTRONICS NV, IBM Corp. and the CEA, commonly referred to as‘Crolles 3'.Total investments are expected to be around €3. 6 billion,
develops communication tools, and promotes the campus and cluster internationally. 50 Next to the cluster motors of interaction outlined above,
This creates an innovative environment that attracts scientists and firms globally to come and work at the Grenoble cluster.
Furthermore, with more than 50 percent design output the cluster is focused very much on a high value added segment (specific chips for specific clients that cannot be applied to different products) that allows to financing the costly infrastructure and environment.
Many high-tech firms are located at the Grenoble cluster for the research environment. While the cluster is very‘demand'driven customers are not directly co-located.
Instead Grenoble concentrates on one aspect of the value chain, namely micro-and nanoelectronics design,
with customers of end-products globally dispersed across several industries. While work in the past was focused on‘demand pull'activities such as improved mobile phone functionality,
the decisions for these functions were external to the cluster. Today idea labs at the cluster aim to develop solutions for the products of tomorrow (Innova, 2008). 4. 3. 2. Micro-and Nanoelectronics Canada:
EN not-for-profit national industry association that works to articulate a national strategy for the cluster.
The CMC, also a not-for-profit organisation, is dedicated to facilitating strategic alliances between the semiconductor industry
fuelled by public investments and research capabilities of the University of Toronto. By the 1990s, Ontario was a significant player in the global silicon chip business
These are the Communications Research Centre (CRC), which is the federal government's leading European Competitiveness in KETS ZEW and TNO EN 134error!
EN communications research facility (for details see introduction. The National Research Council (NRC) Institute for Information technology located in Ottawa and Atlantic Canada.
Venture capital While availability of capital for start-ups is an issue in Canada generally, the Ottawa microelectronics cluster does particularly well.
According to Ontario (2009) two-thirds of U s. venture capital investment in Canada goes to Ottawa tech firms.
EN One particularly important actor in the context of venture capital is the Ontario Centre of Excellence for Communications that has spun off about 25 companies in the period 2002-2007.
and helps move the results to market through existing companies or spin-off enterprises. It is confined hence not to microelectronics
that was a fledgling start-up initially supported with an investment of $50, 000 to create a partnership with researchers at the University of Ottawa.
000 through the Accelerator Investment Program. This helped Distil to attract a $700, 000 investment from Growthworks Canadian Fund.
Distil Interactive has received follow up funding of $2. 2 million by Growthworks in 2007 employing 25 people.
However, despite the comparatively good access to venture capital there are other barriers for start-ups perceived. Scott (2007) reports that the loss of the LSIP programme in Ontario left a large in early stage funding
and 2) interactions with actors of related economic activities. Several initiatives support collaborative research efforts between industry and academia and firms (as outlined in the financial support section.
Its strength is based on the national Communications Research Centre (CRC), two other NRC institutes and a number of universities.
They represent an important source of demand for many smaller firms. The first anchor firm being Nortel Networks,
EN Lastly, public procurement is identified as a means to promote economic development, innovation and investment in the microelectronics sector by the Ontario government (Ontario, 2007.
the cluster is in a state of re-vitalisation identifying new opportunities, aiming to found new centre's of excellence in:
However, they also provide stable employment for highly skilled people in the field that can take the risk to start own commercial ventures.
High quality labour supply, a commercial environment and a well functioning cluster are at least as important. Public procurement and lead markets No role of public procurement was identified.
However, in the plans for re-vitalisation of the microelectronics industry public procurement is named as a tool for development. 4. 3. 3. Conclusion on microelectronics cluster benchmark between France
Every $100 investment in R&d, comes at a net cost of $49 because of several national and regional tax incentives.
Significant numbers of and spin-offs creating a dynamic business environment; International linkages and visibility strengthening the competitive position of the cluster globally
EN procurement strategy in the case of microelectronics might look like as many applications target market segments with industrial customers (B2b.
research laboratories, universities/engineering schools Collaborative research environment stimulated by Minatech (industry-researchpublic triangle) Cluster also has an important joint semiconductor fabrication plant (Crolles2
Strong national investments in science and research. Support for research collaboration and commercialisation of research Canada has most favourable R&d tax scheme of Western economies ($49 costs for $100'R&d investment) Network
and collaborative research support 2/3 of US VC goes to Ottawa cluster Many spin-off of large research centres
and organises new research opportunities) Strong international exchange culture of researchers and students through general programmes (not technology specific).
and leading corporations Strong focus on design(>50 percent of output) Strong scientific basis Highly skilled labour force Generation of successful entrepreneurs is about to retire leaving a gap Market demand Research activities very
application oriented through central coordination of identification of market opportunities (Minalogic) Focus on semiconductor design activities,
to avoid direct competition with Asia (production focus). Global production networks with global demand. In the past strong focus on telecommunications equipment.
Cluster regeneration plans aim to focus on health care, automotive, broadband and multimedia Good access US market Ontario government aims to stimulate innovation and growth in microelectronics through public procurement.
and attract new MNES and venture capital Strong concentration of large MNES e g. Nortel hires 1/3 of all masters
These sectors, for example the information and communication technology sector, are generally characterised by increased technological sophistication
new generations of semiconductors typically require considerable investments into the semiconductor fabrication plants (fabs. While this would typically drive the fixed costs of production,
it has become standard industry logic that semiconductors are considered basically as commodity goods with rather low profit margins.
there are several opportunities for public support to ameliorate the conditions for microelectronics research, development and manufacturing in Europe.
that was established in northwestern Taiwan to create an environment conducive to high-tech research and development, production, work, life,
EN developing industrial technologies and helping private enterprises enhance their competitiveness with a focus on the field of IC.
More than 30,000 firms received services from ITRI. To sum up, microelectronics is a technology that critically relies on the interaction between academia and industry.
while at the same time providing access to qualified human capital and technologies. Contribution of microelectronics to social wealth The contributions of microelectronics to social wealth are manifold.
further miniaturisation will require considerable investments into plant technology. Europe's technological position The development of micro-and nanoelectronics is concentrated clearly on the three global regions Europe, North america and East asia.
but they are particularly important for information and communication technology (ICT) equipment and embedded systems. Semiconductor production is a highly cyclical industry.
During economic downturns production drops sharply but when the economy recovers semiconductor production does so as well.
and mobile communication which is supported by strong consumer demand. Moreover, this trend is expected to be fuelled by a higher semiconductor content per installed system,
despite their hightechnology content, almost reached commodity status which further requires that technical solutions to present physical limits be cost-efficient without raising high investment needs for the manufacturers.
At the same time, benefits from increasing miniaturisation need to warrant an added value for consumers in order for the industry to recoup costs.
transfer them into business models and develop new products and processes that leverage the potentials of micro-and nanoelectronics while at the same time fit to the needs of customers in terms of performance and costs.
Doing this requires a close interaction between firms and public research including joint R&d activities.
It is therefore all the more important to secure continuous research and development efforts even in times of economic downturn in order to stay fully operational and innovative when the economy catches up again.
Further policy actions should relate to providing a stable regulatory environment, particularly with respect to likely safety,
health and environment impacts of micro-and nanoelectronics. Chapter 5 Industrial Biotechnology EN 149error! Unknown document property name.
goods and services (OECD). Depending on the area of application subgroups are defined. The industrial biotechnology also called white biotechnology refers to industrial applications and uses microorganisms like moulds, yeasts or bacteria as well as enzymes in industrial processes to produce biochemicals, biomaterials and biofuels.
industrial biotechnology provides the opportunity to improve the quality of existing products and to develop completely new products
and partly by consumer demand as consumers increasingly request a smaller environmental footprint. But biotechnology must compete with alternative production technologies.
EN between €48 billion (Festel Capital, 2009) and €65 billion (Mckinsey, 2009. The lower of the two estimate is equivalent to about 3. 5 percent of the worldwide chemical sales (without pharmaceutical products
Festel Capital, 2009. Depending on the application the adoption of biotechnology varies significantly. In basic chemicals which accounts for 59 percent of chemical sales,
In active pharmaceutical ingredients the share of biotechnology sales equals 18.7 percent (Festel Capital, 2009.
In order to avoid such biases from the market environment, we evaluate technological dynamics by looking at patent applications by European, North american and East Asian applicants at their respective home patent office (EPO, USPTO and JPO, respectively).
For this purpose the most active applicants were assigned to one industrial or institutional sector based on their main economic activity.
Festel Capital, 2009. A more conservative estimate for biochemical sales is announced by Mckinsey (2009. They predicted an increase from €65 billion to €88 billion in 2012.
A potential downside of these high projections is that important investments into biotechnology might be diverted as a more realistic market assessment becomes apparent.
-90 Specialty USDA (2008) 5 87-110 300-340 Commodity USDA (2008) 0. 9 5-11 50-86 Base chemicals
(billion €) Festel Capital (2009) 12 34 113 25 Consumer che-Festel Capital 11 32 84 23 PROJECTIONS Chapter 5
EN micals (billion €)( 2009) Speciality chemicals (billion €) Festel Capital (2009) 15 38 73 17 Active pharmaceut. ingredients (billion
EURO) Festel Capital (2009) 10 31 70 21 Commercial amino acids BCC (2009) 1. 1 1. 3 3 Synthetic biology BCC
-183 483-614 Total (billion €) Mckinsey (2009) 65 88 Total (billion €) Festel Capital (2009) 48 135 340 22
and receives large investments (2004: €600 million. Figure 5-21: Actors in the Cambridge biotechnology cluster Source:
and were embedded in an environment of existing and established electronics and computing industries. The number of biotechnology companies grew steadily until the mid 1990s,
when international investments in high-tech industries also nurtured the biotechnology cluster in Cambridge. Through this, the Science Park was soon dominated by biotechnology companies
Commercial awareness of biotechnology during this period as well as a rapidly growing global economy investing venture capital in high-tech industries have spurred the cluster's growth.
This opened collaboration opportunities between technology specialists. Figure 5-24: The emergence of technology clusters in Cambridge over time Source:
EN access to UK's most successful bio-incubator, which is located on the Babraham Research Campus. The Cambridge biotechnology cluster has a good balance between academic institutions (e g.
Next to biotechnology, there are also strong research efforts in nanotechnology/materials and information technology, with many collaborative R&d projects in an interdisciplinary environment.
and services, including law firms, accounting firms, patent agents, consulting firms, and international banks, which contribute to the cluster's success (Barrel, 2004).
and world-class research base in the UK to attract investments in bioscience research. To do so, they support the development of new approaches and technologies,
Tax breaks and tax credits created through The Treasury are key policies and one of the most significant initiatives in stimulating investments in biotech.
SMES are entitled to tax breaks on their non-capital R&d expenditure over £10, 000 at 150 percent.
If the firm makes no taxable profit (which is the case for many biotechnology firms),
Cambridge university receives quite a large share of this budget (160 grants with a sum of £55 million in 2008) for its own biotechnology research and commercialisation activities in form of exploitation of research outcomes. 54 Venture capital:
The cluster has also access to financial resources at all investment stages, which has shown to be critical for growth.
The biotechnology cluster is served through the‘Great Eastern Investment Forum'and the‘Cambridge Angels'.'Next to their primary function of providing capital, these business angels offer professional advice, contacts,
and practical help. Another new angel initiative is the‘Cambridge Capital Group, 'which supports companies with linkages to university research with private investments.
Once the start-ups enter the global market, they are accompanied by the regional operating‘Cambridge Gateway 54 http://www. bbsrc. ac. uk/organisation/organisation-index. aspx European Competitiveness in KETS ZEW and TNO EN 180error!
EN Fund'in pursuing venture capital. Furthermore, venture capital is also available through the proximity to the large financial market in London.
For example, the Barclays bank dedicated large sums to the promising high-tech industry, with many smaller venture capitalists following this development (Page, 2003.
Interactions Companies in the region enjoy access to local suppliers of technical and professional services
but it did provided not subsidised services. Later on, when the biotechnology cluster was established already, it was (and still is supported by the East Region Biotechnology Initiative (ERBI),
national and international networking, supports successful growth on new and emerging ventures, and makes sure that the infrastructure enables a steady growth of the biotechnology community (Chiesa and Chiaroni, 2005).
which were and still are supported by number of incubators and Science Parks. Chapter 5 Industrial Biotechnology EN 181error!
and learning opportunities through collaboration activities. Therefore, Cambridge has established a well entrepreneurial culture with university spin-offs (dating back to the 1980s.
such as local venture capitalists and business angels, a range of supporting services with legal, patent, recruitment,
and biotechnology companies to sell products and services throughout Europe to all kind of different markets.
it combines top ranked research institutes, world class universities, intense commercial activity with small start-ups as well as multinational companies, incubators, company creators, science parks,
a range of professional advisers and services (including biotechnology associations), a culture that respects risks,
the industry is highly reliant on business angles and venture capital. This could result in a twin obstacle of market failure and absence of public support at one point in time (House of commons, 2003.
Tax breaks and tax credits created through The Treasury are key policies and one of the most significant initiatives in stimulating investments in biotech.
supported by a large scientific base (University of California in San francisco, Berkeley and Davis) and the accessibility of venture capital.
and 64 venture capital firms), connected by 243 local contractual ties. It is important to notice that no public intervention
But it was the availability of venture capital and other supportive institutional infrastructure which made the cluster successful in its early days.
Nowadays, the combination of public funding and venture capital nurtures the cluster development. In absolute figures, the biotechnology cluster raised more than $4 billion in capital,
including $600 million in venture financing (2006). 59 Institutions Rules and regulations: The activities in the Bay Area are supported also by US specific laws regarding the ownership of intellectual property,
which were clarified in the‘Bayh-Dhole University and Small Business Patent Act'(1980). This act promotes the commercialisation of scientific research by giving universities the rights on their patents,
The success of the Bay Area biotechnology cluster is built on a culture of entrepreneurship. Is assumption is bases on the relatively high rates of IPOS and new venture creation in this region.
Public policy and funding: Funding from the federal government level originates from the National institute of health and the National Science Foundation (NSF, $2. 2 billion in 2007), The US department of agriculture, NASA (office of life and microgravity sciences) and the US department of energy (office
Venture capital: Venture capital is available to support the commercialisation of scientific research and the transition of knowledge to the market.
There is a large number of local venture capitalists investing in biotechnology start-ups, accounting for 34 percent of all active venture capital firms in the United states (see Su and Hung, 2009).
Finally, there is one federal programme to support the foundation of biotechnology start-ups. The Small Business Innovation Research Program (SBIR) financially encourages university faculties to create commercial-oriented spin-offs of their research. 64 Interactions During the formation of the cluster,
venture capital became increasingly important, while at the same time the involvement of public research organisations (PROS) was shrinking.
In 1999, DBF-DBF connections outnumbered the other two types of ties (venture capital, PROS)( Owen-Smith and Powell, 2006.
and build the social capital of this area, which is one of the key success factors for this cluster (Su and Hung, 2009).
Bay Area main component ties by dyad DBF=dedicated biotechnology firm, VC=venture capital, PRO=public research institutes.
It offers the bioscience community networking opportunities, advocacy, group purchasing and access to organisations that support research, development and commercialisation of biotechnology products.
and market failures and drivers The cluster originated from a tight social network among biotechnology firms, venture capital and research institutions.
Unique to these clusters are sufficient financial resources for all investment stages, i e. there is no clear‘valley of death'.
In a similar vein, the maturity and success of the cluster has attracted all sorts of professional services to the area (think of specialist lawyers, brokers, marketing experts,
international IPR specialists) and complementary services and activities, giving the clusters the full dynamism and creative density of a full grown cluster.
where the primary cluster operations are supported by secondary services, which in turn reinforce cluster development by providing an healthy infrastructure to attract new biotechnology firms.
but did play a role as lead customers to give the cluster momentum. The recent development towards industrial biotechnology has gone not through such a well pronounced development yet.
also there many large firms acted as accelerators for growth by stimulating R&d, commercialisation, spin-offs and internationalisation of activities and knowledge transfer.
EN role in development Venture capital & commercialisation important to reach maturity Size 280 firms 25,000 people (incl. academics and supporting activity firms/organisations) 1400 live science firms,
annual exports are $2 billion Classification (Post-)mature (Post-)mature Infrastructure Cluster developed around world leading universities Availability of public and private research facilities Strong incubator:
and values/culture Culture of entrepreneurship Strong collaborative culture Public policy/funding/taxation No clear role public policy in promoting the cluster self originated Support in later stages
Tax credit on their non-capital R&d expenditure over £10, 000 at 150 percent; losses can be surrendered to the Exchequer in return for a cash payment of 24 percent of total,
eligible R&d spend No public policy involvement in creating the cluster Good availability of venture capital promotes commercialisation Availability of start-up support Tax-breaks/incentives:
strong position in research, development and commercialisation Strong scientific basis 170 university spin-offs (start-ups) Market demand Strategic position in European market Large companies
serve as lead customers and finance new developments Bay Area supplies world wide to pharmaceutical enterprises Market structure Good mix of small and large firms.
no policy result Big role for entrepreneurship, spin-offs and spin-offs Financing for all stages of development Source:
Industrial biotechnology provides the opportunity to improve the quality of existing products and to develop completely new products
Thus, the demand for sustainable solutions will be powerful driver for industrial biotechnology applications. But biotechnology must compete with alternative production technologies such as purely chemical processes.
and social implications and concerns such as the provision of sufficient land to satisfy food demand
Besides stimulating additional R&d investments in companies, sustainable networks of firms and scientific institutions should be established
The 7th framework programme of the EU directs their activity also in biotechnology. 67 A European knowledgebased bio-economy should be built by bringing together science
industry and other stakeholders. In addition, financial support for spin-offs from public research can help to enlarge the community of industrial biotechnology start-ups.
In particular it provides opportunities to achieve a sustainable development Industrial biotechnology can help to limit the consumption energy and scarce resources,
) Industrial biotechnology provides the opportunity to improve the quality of existing products and to develop completely new products
But there is no doubt that demand for products which involve industrial biotechnology will increase clearly above the total market expansion.
In addition, start-ups founded by scientists are regarded as important transmission media which allow transferring new scientific knowledge in economic activities
For the diffusion it is also essential that the products fit to the needs of customers in terms of (sustainable) performance and costs.
venture capital funding as well as public support to R&d conducted by these firms is essential. Small Chapter 5 Industrial Biotechnology EN 195error!
While in the 1990s a generous venture capital industry supported a variety of start-ups, today there is a shortfall in venture capital market.
Private venture capital companies very carefully evaluate the business prospects of young firms and most often provide only limited funding,
focussing on close to-market-introduction projects and not on early stage projects of biotechnology start-ups.
although industrial biotechnology requires lower investments and is less risky as, for instance, red biotechnology. This is attributed to the fact that industrial biotechnology mainly develops new processes for the production of already known chemicals (OECD 2009c.
and point out the chances of this field can improve the funding opportunities for industrial biotechnology firms.
Further policy actions should relate to providing a stable regulatory environment, particularly with respect to likely safety and health of industrial biotechnology.
The importance of Photonics can be seen from the multitude of application sectors where it is seen increasingly to be driving innovation (see Table 6-1). These sectors include information processing, communication, imaging, lighting, displays, manufacturing, life sciences and health care,
Information and Communication: Optical networks have opened the way to almost unlimited digital communication, building the very foundations of our Information Society.
The major highways of communication and information flow are based on optical technology. Photonics enables the processing, the storage, the transport and the visualisation of the huge masses of data.
Information and knowledge are becoming our most valuable commodities unlimited access to which is becoming arguably the most significant driver of productivity and competitiveness.
Systems for Optical Communications Meas. Systems for Other Applications Medical Technology and Life science Lenses for Eyeglasses and Contact lenses Laser Systems for Medical Therapy and Cosmetics Endoscope Systems Microscopes and Surgical Microscopes Medical
Pharmac. & Biotech R&d Optical Communications Optical Networking Systems Components for Optical Networking Systems IT:
optics created the technological environment for optical communication (Jahns, 2001). The next innovation boost in this field will come from mastering the manipulation of the elementary particles of nature,
Photonics holds a huge potential not only for new and even better forms of communications and entertainment but also in many other applications, including manufacturing,
and a whole range of sensors for chemicals, biological materials and in the environment. Ultimately, photonics even promises to completely replace microelectronics as the technology that computers use to‘think'(optical computing), leading to a huge increase in performance (EC, 2008a.
EN Solar energy 4%Flat panel displays Lighting 26%8%Information technology 21%Optical communications 5%Midecal tech. & life science 8%Measurement & automated
) 11.6 23 7 Medical Technology & Life science BMBF (2007) 18.6 38.8 8 Optical Communication BMBF (2007) 12 31 10 Information Techn
however, seems still to be located in the so-called advanced economies. Within Europe for example, Germany accounts for 39 percent of European production volume, followed by France and the UK (12 percent each), The netherlands (10 percent) and Italy (8 percent)( Optech, 2007.
EN Venture capital: No coordinated venture capital activities are known to exist at the Optecbb cluster. However, Sydow et al.
2007) also report no start-up support at comparable international clusters. Interactions Interactions play a critical role in cluster success. The Optecbb initiative is primarily a cluster network initiative with a formal cluster platform.
) In terms of demand photonics is a global industry, with small firms highly specialised, able to capture large shares of global market segments.
provide economic stability and strong international research links. Instead, this role is filled in part by larger public research institutes.
Also no venture capital activity is reported in at the 78 Even the limited number of cases engaged within this study is sufficient to demonstrate that,
the City of Québec area has been a leader in photonic market applications, from instrumentation to imagery, vision systems, optical communications and high-performance fibre optics.
Also the fact that competition in the sector is global provides incentive for local actors to work together (Northern lights
According to the Quebec's Photonics Network the R&d fiscal assistance system results in net cost of $49 for every $100 R&d investment.
Furthermore, the research environment is given also attractive the low turnover rate of research specialists and competitive salary levels.
loan guarantees or non-repayable contributions for innovative product development (IQ, no date) Venture capital: Quebec has access to the highest concentration of venture capital in Canada (QPN, 2010.
Innovatech Québec-Chaudière-Appalaches is particularly active in the optics/photonics industry. Also the National Optics institutes plays an important role in this context having generated 20 spin-offs over the last years.
While start-up capital is abundant, Chapter 6 Photonics EN 229error! Unknown document property name. EN the region suffers from the lack of venture capital firms with the level of capital required to insure the development of firms (Ouimet, 2004.
Interactions The Quebec Photonics Network is a formal cluster organisation that acts as an information hub between the cluster and the outside world.
Market failures and drivers for growth The photonics industry in Quebec is characterised by small and medium-size firms thriving on a strong research community and a high quality local business environment.
On the other hand very few customers of European Competitiveness in KETS ZEW and TNO EN 230error! Unknown document property name.
But this does not mean that firms do not rely on the exchange of ideas, information and knowledge with customers for innovation.
On the contrary photonics firms spend long periods of time with customers (6 to 12 months) to develop customer fit solutions.
a dynamic business environment and a strong commitment from governments to support the industry, and the proximity to key markets in the US
Also the small size of firms and their limited availability of capital is a potential barrier to growth and innovation.
A particular strength of the Quebec cluster is its dynamic business environment and proximity to key markets in the US and Canada.
provide economic stability and strong international research links. Instead, this role in case of Optecbb is filled in part by larger public research institutes.
Also no venture capital activity is reported in at the Optecbb cluster. Public policy, funding and tax incentives Both clusters have received considerable support from national and regional governments for a cluster platform, public R&d infrastructure and collaboration.
Also the Quebec region attracts the highest concentration of US venture capital in Canada. At the Optecbb no venture capital activities are reported.
Next to the provision of a strong public research infrastructure specific policy tools differ. Canada uses predominantly R&d tax incentives to attract
but Brandenburg has favourable tax regime for regional development No venture capital scheme in place Strong role through:
Favourable loans available from Investissement Quebec Funding available for collaboration High level of Venture capital (lack though for firm growth) Interactions High level of interaction:
belong to international top Market demand Lack of lead-firm (s) Strong interaction with customers No local lead customer
this is a weakness as large lead buyers lack for demand, internationalisation and commercialisation Market dominated by SMES Focus internationally Sourcing locally selling internationally Cluster features Very strong knowledge‘ecosystem'with spillovers Generous funding of platform Very high growth rate
In Europe, the European commission treats photonics as a key technology for the economy of the 21st century because it impacts on many important European industries, such as telecommunication, lighting, environment, health care and life sciences, safety
Political support will particularly be needed in providing the necessary research environment capable of accelerating photonics research,
increasing public and private R&d investments and ensuring the mobilisation of the critical mass of European Competitiveness in KETS ZEW and TNO EN 234error!
This is true for the sectors of lighting, production technology, communications, and defence photonics (Photonics21, 2007b).
Photonic markets today mainly refer to lighting, measurement and automated vision, production technology, medical technology and life science, optical communication, optical components and systems, solar energy, and information technology.
But there is no doubt that demand for photonic products will increase clearly above the total market expansion.
as most other KETS, contribute to economic growth through two ways. On the other hand, photonics applications can help to increase the efficiency of production processes in various industries by enabling more advanced production technologies (e g. in the fields of measuring
thus stimulating additional demand and contributing to net growth. Many new applications in photonics are expected to substitute other technologies.
Success factors, market and system failures The field of photonics profits from a large and diversified industrial base with a large number of successful enterprises committed to R&d and innovation in photonics.
and other industries with new technological opportunities from photonics and to sustain sectoral clusters that incorporate new technologies from photonics,
lies in the improved performance they offer (particularly) in very demanding environments (e g. in terms of temperature, humidity) or for very demanding processes (e g. in terms of capacitance, miniaturisation).
EN comprise structural materials for extreme environments, functional materials for extreme environments, energy efficient materials, electromagnetic materials.
also emanating into service sectors such as health, software, architecture and construction, telecommunication and engineering services.
recycling etc and may involve high investment by users. The latter fact often delays a rapid diffusion of new materials.
The most important application areas for new advanced materials are currently semiconductors, automotive and aircraft, energy and environment, medicine and health, construction and housing,
In order to avoid such biases from the market environment, we evaluate technological dynamics in advanced materials by looking at patent applications by European, North american and East Asian applicants at their respective home patent office (EPO, USPTO and JPO, respectively).
Similarly, most patents in the field of energy-efficient materials have been applied by enterprises from the chemical industry
Each wave brought new technological opportunities that have been picked up by existing companies but which also gave room for new entrants.
This figure does not take into account the economic crisis from 2008/09 and is therefore likely to be overrated.
This is somewhat more than the expected mid-term real growth of the world economy (between 4 and 5 percent)
In the economics of materials, newly introduced materials often reach their maximum penetration rate only after 40 to 50 years after market introduction (see Moskowitz, 2009.
One important determinant is the length of investment and product cycles in the industries that use advanced materials.
Long investment and product cycles imply long amortisation periods. In order to avoid canibalisation, new investment and new products tend to be introduced only when past investment
and old products have reached their maturity stage. Another determinant for the speed of diffusion is need the for specific investment and adaptation of production facilities in order to use new materials in production.
If these are fixed high costs of introducing new materials will be high and increase opportunity costs of introducing advanced materials.
European Competitiveness in KETS ZEW and TNO EN 266error! Unknown document property name. EN Another major determinant is the price-cost advantage of new materials over established ones.
which is characterised by long product and investment cycles. Substituting traditional materials such as polymers based on crude oil by biomaterials demands new investment while offering little price-cost advantages.
Consequently, diffusion of these advanced materials is expected to take significantly longer than for organic polymer electronics
New materials substitute existing ones which takes a long time due to high investment needed both by producers of materials and users.
89 2007 1. 2 2012 5. 2 environment Freedonia (2008) Nanomaterials 1 2006 4. 2 2011 33 semiconductors Freedonia (2007
(2008) Engineering ceramics 4 2006 5. 8 2011 6. 5 machinery, automotive, environment Materials Technology Publications (2007) Powder metallurgy 21 2006
, photoresist chemicals, wet chemicals BCC (2006 Compound semiconductor materials 14.44 2006 33.7 2012 15 wireless electronic devices, optical data storage, fiber optics communications, illumination
environment (mid-term market volume of €12 billion, e g. polymers and smart packaging), health (e g. tissue engineering),
However, a recent report from the Europe Innova Sectoral Innovation watch has alerted that advanced materials are an area where Europe has invested under (in terms of venture capital) compared to mainstream innovation areas (e g. energy generation and infrastructure)( Europe
Wallonia's Plastiwin cluster Introduction The manufacturing industry in Wallonia represented 24 percent of the value added of the regional economy in 2006 (the rest corresponds to services)( Biatour et al.
This traditional sector is the second largest industrial employer and an important driver of economic growth in the region (ECRN,
engaging in manufacturing, processing, services, engineering, design, retailing and recycling. In addition, a handful of companies and industry 83 In a strict sense, Plastiwin would not constitute a geographical cluster (according to Porter.
There is also a network of business incubators or shared infrastructures located in Universities and/or Science Parks to facilitate start-up companies.
Public policy The Walloon government decided to address the critical situation of international competition and saturation of its old industrial structure by launching, in August 2005,
an action plan aiming to reinvigorate the regional economy. The government presented its objectives in a document entitled‘Priority actions for the future of Wallonia'subsequently called the new‘Marshall Plan Wallon'with a budget of €992, 5 m (Gouvernement Région Wallonne, 2005a,
b). This plan aims to boost investment in firms by: facilitating access to investment Chapter 7 Advanced Materials EN 273error!
Unknown document property name. EN grants; reducing tax for firms; developing industrial research and partnerships between universities and firms;
and developing and improving access to vocational training. 86 As a result of the implementation of the new Walloon industrial policy, there is now a specific promotion of investment package for attracting new firms to the Plastiwin cluster.
The Société Régionale d'Investissement de Wallonie91, SRIW and Sowalfin92 are the most prominent regional investment agencies.
There is a wide variety of funding opportunities from the European, national and regional agencies aimed at technology development, basic research,
and collaborative high tech ventures. In addition, there are a number of local investment companies and there are several sources of private funding,
loans and seed capital specially aimed at SMES. 93 There is a considerable presence of well established angel and venture investors and holding groups in the Walloon region.
Walloon and Belgium venture capital firms are represented by the Belgian Venturing Association (BVA. Recent federal legislation introduced PRIVAK (Private Equity Investment Fund-Investment in non-traded companies),
which encourages private investors to invest in non-traded venture capital, while benefiting from a tax-free status. Business angels provide start-ups with risk capital and coaching,
and Be Angel is an investment structure which includes 25 business angels that help entrepreneurs to develop new businesses. 94 86 http://www. eurofound. europa. eu/eiro/2009/05/articles/be0905019i. htm 87
http://www. investinwallonia. be/ofi-belgium/investir-en-wallonie/environnement-des-affaires/acces-aux-capitaux. php 88 http://www. investinwallonia. be/ofi
and staff training and consultancy services, support with export plans, and promotion of renewable energy use and environment initiative.
As noted above, the Wallonia government defined economic redevelopment areas (competitiveness hubs) which now receive special tax incentives for existing economic activities in those communities
and any future activities such measures may attract. Current investment grants may be increased by 25 percent or even 40 percent for these areas.
In addition to fiscal incentives the Wallonia Government has taken a number of tax-related measures aiming to making Wallonia the least taxed region in both Europe and Belgium, through the suppression of tax on energy, exemption of real estate tax for a maximum of five
and Liège with the support of private investors96 The firm received seed funding and venture capital to prove the commercial viability of carbon nanotubes and nanopowders for flat screens applications (Eco-innovation Futures
confirming high market demand, but the share of advanced materials in this (advanced polymers, biomaterials, and composites) is unknown.
but also providing risk capital needed for entrepreneurship and business creation. As a result of the implementation of the new Walloon industrial policy, there is now a specific promotion of investment package for attracting new firms to the Plastiwin cluster.
European and regional) public funding has proven to be effective for the development of highly innovative firms (e g.
and the availability of (investment) support measures seems to be creating ideal conditions of tax-related measures aiming to making Wallonia the least taxed region in both Europe and Belgium, through the suppression of tax on energy, exemption of real estate
and will serve as lead customers (e g. Solvay. That lead markets are difficult to identify is not surprising as the products sell internationally (75 percent)
Changsha material cluster Introduction Changsha, capital of Hunan province, is located in south-central China. The origin of the Changsha cluster as a high-tech base was developed first since 1989 for the machinery sector,
Industry and Information technology and Science and Technology jointly announced in December 2007 their ambition to make Changsha the outsourcing services centre of China (KPMG, 2009).
In order to encourage the development of the services sector, the Changsha regional government has set up an ad hoc number of outsourcing conglomerations
Advanced material (and intelligent) manufacturing is one of the eight key areas for economic development for the Chinese government for the modernisation of their economy by 2050.
In 2008, the city's economy grew at an annual rate of 15.1 percent and had a GDP per capita of about $6, 700.
The constructions of several platforms (information technology, services and financing) have achieved remarkable results. The number of professional technology intermediary agents has increased as well as the number of science and technology business incubators (Liu, 2007.
Changsha is one of the key higher education and research bases in China. There are many new and well established universities.
Changsha universities also promote entrepreneurship and new business development (through incubators), assist in technology transfer,
with more than 100 SMES created by around 250 young talents), the Hunan Xinjinrong Technical Incubator and the Oak Garden Enterprise Business Incubation Service.
and resources needed for supporting innovation and business development (e g. science parks, industrial parks, and incubators).
Secondly, it has enabled foreign direct investment at the time it has promoted closer and more effective industrial and technological links with neighbouring countries for supporting technology transfer, capabilities and skills development and access to global markets.
Other entities of the financial system include the China Investment Corporation (CIC) and the China International Capital Corporation
(whose seed capital was provided by Morgan stanley back in 1995), the latter providing additional funding. The role of large Banks is particularly relevant,
and senior management often includes a senior manager known as‘Head of discipline'who represents the Communist party (Economist, 2010).
Private equity capital is provided by firms and at the local level there are also Venture capital providers.
Large leading machinery firms had no finance difficulties for its continuous development, also thanks to close links with the government supportive of the cluster's development.
But as to the whole cluster, some other firms are short of capital because of inadequate finance channels (Li and Ya-Qing
) Interactions Relationships in China are of a specific nature due to the many changes the country has gone through over the past hundred years from a centrally planned economy (until 1978), the reform period (1978-2000) and after that the opening of the economy
However, all needs to be considered in the light of international competition as well. The growth and the development of cluster will also largely be determined by the relative production costs of China versus other parts of the world.
The role of SMES should be considered more favourable in Belgium though as the smaller firms in China have a lesser position in the economy,
Both clusters do facilitate the development of start-up companies though through a network of business incubators and shared infrastructures.
Finally, there is a considerable presence of well established angel and venture investors in both locations.
the Plastiwin initiative as a separate cluster organisation is in charge of cluster coordination, internal and external relationships and building collaboration opportunities.
They are mentioned not explicitly as playing a role as anchor firm though, nor as lead customers.
EN The companies do serve as lead customers though. They are large buyers with high quality demands that will increase the level of quality and capacities of its supplying firms.
This will be beneficial for the clusters'development. Table 7-8: Summary of findings from advanced materials cluster comparison Plastiwin cluster, Belgium Changsha material cluster, China History Dates back to establishment Solvay 1861 2007
and start-up support through incubators and shared infrastructure (e g. labs) ) Active regional development agencies Finance Financial support from European
represent strong innovation skills Market demand 75 percent of output is for export Fast growing cluster with strong export European Competitiveness in KETS ZEW and TNO EN 286error!
what is advanced percentage of material in total output cluster product such as advanced batteries International demand through relative low production
Society's demand of advanced materials included in new technologies, products and services is affected by a variety of factors
and is influenced by development s in many other technologies (especially other KETS) and industries, as mentioned before.
Sustainable solutions improving environmental saving technologies is expected to be a powerful demand of advanced materials.
Nickel-titanium alloy) open many opportunities to improve the convenience and to extend the durability of implants, stents and prostheses.
biotechnology and photonics-the opportunities for new applications will rise. Additionally, it is evident, that the appropriation of new and advanced materials focuses on central needs of the society
Matech induced with a funding of €530 million a total mount of investment of almost €1 billion within the time period 1994 to 2003.
Such improvements can result in a wider applicability of materials in very demanding environments (e g. in terms of temperature and humidity),
Within Europe, Germany is the single most important location for producing new materials technology (42 percent of all inventors of advanced materials patents) though smaller European economies were able to increase their patent output in recent
The most important application areas for new advanced materials are currently semiconductors, automotive and aircraft, energy and environment, medicine and health, construction and housing,
and reflect that most advanced materials are diffuse slowly because of high opportunity costs in substituting established by new materials
or enable new products with superior characteristics that generate additional demand. These user industries include electronics, medical instruments and health services, automotive, energy production and distribution, construction, textiles and clothing,
and various material processing industries. The manufacturers of these advanced materials are less likely to experience net growth as new materials typically substitute established ones.
telecommunication and engineering services, contributing to both product and process innovation. Like other general purpose technologies,
thus likely to result in opening-up more and more fields of application, generating a positive feedback in the demand for the respective material.
Product regulation typically demands time-consuming procedures for each field of application until new materials are approved for commercial use in the respective application area.
recycling etc. and may involve high investment by users. Policy options Developing and commercialising advances in material technology is by and large the business of a large number ob enterprises engaged in various sectors of processing raw materials
and producing more complex materials as inputs for other manufacturing industries. Since material development is one of the most longstanding industrial activities and most critical to all manufacturing sectors,
requirements of end product producers and other users down the value added (e g. automotive or semiconductor industry), process technology knowledge from equipment producers (e g. machinery and instruments industry) and demands of regulatory bodies
which have to guarantee that new materials do not harm health or the environment. In this situation
While regulations have to be strict in terms of protection negative impacts on safety, health and environment,
which can afford the high investment needed. For upcoming fields in material technologies, young firms could play an important role, too.
and SMES either through grants for R&d projects or venture capital is critical for a vital small business sector in this KET.
This limits the opportunities to deploy identical technology in many different companies. For some manufacturing industries, no external AMT providers exist,
First of all, investment costs are high, and they are combined with uncertainty over the advantages of new generations of manufacturing technologies
(i e. degree of cost savings and other efficiency gains unclear at the time of investment).
Adjusting and using AMT also requires in-house capabilities for dealing with new technologies (skills of workers, coordination among departments, integration of suppliers and customers.
which is driven an industry platform comprising the main stakeholders in robotics in Europe. EUROP was established in 2004
which is characterised by robots as ubiquitous helpers improving the quality of life by delivering efficient services.
In this respect, it turns out that the average CAGR is estimated with about 7 percent which signals an overall highly interesting market in terms of growth opportunities.
At the same time, technology adoption can be expected to increase in the future because of the need to produce even more cost efficiently and in an environment friendly way.
these platform technologies potentially offer substantial economic opportunities. Public support can specifically facilitate the further development and adoption of these platform technologies through initiatives like grants for collaborative R&d
support for knowledge transfer networks as well as for collaboration between small and medium sized enterprises and large enterprises.
Costs for investment into AMT are high, and they are combined with uncertainty over the advantages of new generations of manufacturing technologies
(i e. degree of cost savings and other efficiency gains unclear at the time of investment).
Adjusting and using AMT also requires in-house capabilities for dealing with new technologies (skills of workers, coordination among departments, integration of suppliers and customers.
Tentative estimates for the total market of AMT arrive at global sales (prior to the economic crisis of 2009) of more than 150 billion.
which signals an overall interesting market in terms of growth opportunities. The highest growth rate is found in the machine vision subfield,
A key success factor for technological advance in manufacturing technologies is to combine new technological opportunities emerging from different fields of technology (including most other KETS covered in this report, particularly microelectronics, photonics and advanced materials,
Another main success factor is to balance userspecific requirements with new technological opportunities yet out of sight of users.
(i e. degree of cost savings and other efficiency gains unclear at the time of investment);
high investment cost may exceed the available internal funds of users, particularly for SMES, while external financing through loans can be difficult
in-house capabilities for dealing with new technologies-skills of workers, coordination among departments, integration of suppliers and customers-may be missing
to stress the critical role of human capital in upgrading technology successfully and to stimulate cooperation and mutual learning among SMES.
of venture capital; health, environment and safety concerns achieving substantial decrease in unit costs environment and ethic concerns, price-cost advantages over traditional chemicals mastering complex technology long product cycles adoption barriers at the side of potential users Role of public funding for R&d very
high low medium high low low Role of public policy for stimulating demand low no high low no low Significance of health, environment,
safety concerns high low medium low low low Source: ZEW compilation. Patenting in KETS is driven by different groups of actors.
In these three KETS, a few large enterprises dominate patenting. KETS are very much related to the chemical and electronics industry.
Though one cannot simply add market size of individual KETS to get a total volume of demand for KETS as several KETS overlap to some extent,
More importantly, demand for KETS is expected to increase at rates above the average expansion rate of world markets for most KETS.
which is expected about the medium-term growth of global demand for goods and services). The differences in expected future growth of KET demand reflect differences in the underlying factors that drive market potentials of KETS.
In nanotechnology, funding (particularly availabiltiy of venture capital) is an important driver, as well as health, environment and safety concerns.
In microelectronics, being a more mature industry, main challenges refer to combining higher performance of ne microelectronic technologies with a substantial decrease in unit costs.
and intergrating various technologies into complex products is a therefore a main challenge which demands high investment in R&d and cooperation of actors with different industrial and disciplinary background.
and often high investment needed to adopt new materials. In advanced manufacturing technologies the situation is quite similar,
As many users of more advanced process technology are small manufacturing firms, specific barriers to technology adoption by SMES (lack of external capital, lack of specific skills, uncertainty
Governments'role in advancing KETS differs with respect to the role of public funding for conducting R&d, the role of public policy for stimulating demand (e g. through public procurement, taxes or regulation),
and the role of environment, health and safety issues. Governments tend to be important players in nanotechnology
Their role tends to be focused more on providing a favourable environment for industry, including to maintain a strong industrial base as a key starting point for developing and commercialising new technologies.
our cluster benchmark has given us some more specific insight about how KETS develop and flourish in certain regions.
or industrial excellence Finding protagonists to champion cluster development Support collaboration Tax measures and public funding to create favourable business environment
-and venture capital often helps early start-up, and the market will pick up the technologies that have (partly) proven themselves in the market,
large investments are needed often still for the phase in between the applied research and commercial application.
requires large investments in proto-typing, testing, and the scaling up of production facilities. These activities are covered usually not by policy interventions as the market is to pick up technologies at that stage.
They for example set up venture capital schemes or make sure private actors provide seed capital. They do not shy away from interfering into the market
if such lessons could be transferred to European economies as we do not have a tradition of more central planning,
which general tax measures and stimulation of entrepreneurship play a crucial role, and Europe seems to focus more on the stimulation of basic research and R&d collaboration.
provide intermediary services etc. Next to that, the external links should be encouraged to prevent becoming an‘in-crowd'club that misses out of important external developments.
second that the technologies are intermediary products that do not have a direct demand, and third, that KETS have so many applications (one technology
In nearly all clusters lead firms played an important role to create critical mass and funding opportunities
and entrepreneurship in general can be stimulated with incubator firms, business angels, seed-and venture capital. Some clusters also provide business parks
and incubator centres to support these activities. An entrepreneurial spirit in the area is also important
The more hierarchical structures that characterise their economies can form an obstacle for innovation as these lack the trust
Market demand can be distorted due to insufficient transparency or inefficient pricing mechanism due, for instance, to the inability to include negative externalities in prices.
which requires large investments in proto-typing, testing, and the scaling up of production facilities is often difficult to fund.
since they do not allow for leveraging scale economies. Small firms need open markets to develop.
or innovations should be forced into competition. Barriers to entry can be lowered by providing joint facilities
lowering the costs of start-ups and stimulating entrepreneurship (Den Hertog et al. 2001). ) In the European clusters investigated,
Also, Europe seems relatively weak in promoting entrepreneurship compared to for instance the USA and Canada where culture, market openness
Demand Whereas successful KET clusters are often characterised by a strong market focus, less successful ones tend to have a primary orientation on research.
it is observed that investments in higher education in Europe have deteriorated over the last decades, leading to a lower number of graduates and researchers in some fields of natural sciences.
when compared to the efforts of emerging economies (such as China, India and may southeast Asian countries) to catch up with Western economies in education levels.
System failures that hinder KET development System failures relate to those factors in the system that hinder innovation (Klein Woolthuis, 2010.
entrepreneurship clearly seems to thrive more in those countries where these policy measures are paired with an entrepreneurial culture.
The presence of funding for entrepreneurial ventures forms the material appreciation of this. Marketing capabilities A focus on entrepreneurship is linked often to a focus on commercialising innovations.
An invention is not an innovation unless adopted and diffused. In the non-European clusters analysed, the attention for,
Lead markets tend to develop through an interaction of various supportive demand-side factors, including anticipatory demand, international orientation of users, intense competition,
and a price advantage over alternative technological solutions. Lead markets are often different from those regions where a certain new technology first has been developed.
In nearly all clusters lead firms played an important role to create critical mass and funding opportunities, international connections and distribution channels.
This underscores the importance given to technology development as a basis for economic growth. European countries tend to emphasise the funding of (basic) research and industry-science collaboration
though they also provide supportive infrastructures such as incubators and joint research facilities. Almost all EU countries have at least one cluster programme in place (Furre, 2008.
Europe tends to be relatively weak though in funding the later stages of technology development as good developed private funding structures are underdeveloped (e g. venture capital, business angels.
and incentives, creating an attractive climate for investments in high growth areas (clusters), R&d subsidies and stimuli for scaling up and commercialisation.
Next to technology stimulation, government funding was observed to be used to stimulate entrepreneurship through good funding infrastructures and availability of incubators and business parks.
In all KETS, Europe is confronted with an increasing competition from East asia which caught up significantly in the past decade whereas North america tends to show decreasing shares in global technology output.
as is the role of regulation, funding of innovation through venture capital, and the urgent need of high qualified personnel.
High knowledge spillovers and a substantial degree of technological uncertainty which could prevent private R&d investment are tackled by public R&d funding schemes as well as cluster and network initiatives.
The need for large fixed investment in specific R&d Chapter 9 Summary and Conclusions EN 347error!
In addition, KETS are subject to financial market failures arising from high technological uncertainty, long time horizons between R&d investment and potential economic returns,
while public funding and venture capital are important sources to complement (limited) internal funds of actors engaged in KET-related R&d.
Some KETS need to pay particular attention to health, environment and safety issues. Nanotechnology, industrial biotechnology and advanced materials are to be named here.
and many higher education institutions are prepared not to offer curricula that meet the specific demands of KETS.
What is more, career opportunities of cross-disciplinary studies are unclear to many students (e g . because commercial applications and thus job opportunities in KETS have yet to evolve),
resulting in low perceived attractiveness of such studies and a low number of students. European Competitiveness in KETS ZEW and TNO EN 348error!
High investment costs for applying KETS may exceed the available internal funds of users, particularly for SMES,
A mix of generic measures and KET specific interventions is most promising to accelerate the development, diffusion and use of KETS and their impacts on the wider economy:
-Although KETS are characterised by particularly high investment in R&d and high technological and market risks,
including a culture of entrepreneurship and risk taking, can be important activities, as well as a favourable financial environment, including tax incentives for R&d and investment in new technologies.
-Linked to R&d project funding, policy should encourage actors in KETS to build up networks for joint technology development,
-A vital venture capital market is important for commercialising research results in KETS through university spin-offs and other types of start-ups.
Above all, venture capital needs a supportive regulatory environment. When private venture capital markets in Europe are not fully capable of providing sufficient funds for start-up and early stage financing,
public programmes may have to fill these gaps. -Addressing barriers in adopting new technologies is another important policy task.
-Balancing health, environment, safety issues on the one hand and innovation incentives on the other are a main challenge for regulation in the area of KETS.
Involving all main stakeholders and focusing on legislation that is flexible enough to adjust to technological progress within each KET is a promising approach.
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