entrepreneurship

European Competitiveness in Key Enabling Technology_2010.pdf.txt

was commissioned by the European commission, DG Enterprise within a Framework Contract coordinated by the Austrian Institute for Economic Research (Wifo)( co-ordinator

Department of Industrial Economics and International Management Centre for European Economic Research (ZEW L 7, 1

Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20

3. 3. 3. Conclusion on nanotechnology cluster benchmark between Germany and Japan...88 3. 3. 4. Factors influencing the future development of nanotechnology...

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

Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.27

Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20

Strengthening the innovative performance of the EU economy is a main goal of both the

demands a multidimensional approach that takes into account both the incentives for firms to innovate, the internal and external drivers and barriers for innovation, and the framework

conditions conducive to innovation, including financing, skills, competition, regulation and public funding Among the many factors that drive innovation, emerging new technologies have always

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

on a global level, it is critical for the EU economy to keep pace with the technological

Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20

to other sectors of the economy. Although new knowledge emerging in these technology areas may be acquired from sources outside the EU,

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

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

technology centres, financing institutions) and other stakeholders (e g. from education, the broader public The report is organised along KETS.

communication, we present a standard set of analyses in a separate chapter definition and state of technology

Information sources for innovation (per cent of innovative enterprises citing the respective source as highly important), 2004-2006.20

productivity and enabling radically new types of products and services. Such path-breaking technologies may be termed"key enabling technologies"(KETS.

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 This report focuses on new technologies that are likely to serve as KETS today and in the

First, KETS offer opportunities for product and process innovation to many firms, particularly in manufacturing.

activities in an economy (see Helpman, 1998; see also van Ark and Piatkowski, 2004, on the

and on the rate at which innovative opportunities of these technologies are explored and implemented. Being first in generating new scientific findings is no sufficient condition for

is to balance technological opportunities originating from research with the user needs, a cost-efficient production and the capabilities

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

Customers Suppliers Competitors Scientific journals Consultants Universities Public research institute manufacturing total R&d intensive industries

Multiple sources per enterprise allowed. R&d intensive industries: NACE (rev. 1. 2) divisions 23-24,29-35

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.

result from their spread through the economy which can take considerable time. A high rate of

technologies depend on the degree of competition and the ability to utilise economies of scale at various stages of production.

impulses from suppliers, competitors and customers are much more important than pure technology impulses KETS and Productivity

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

particularly when the use of KETS affect many 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

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 ICTS also have shown, however, that there may be substantial time lags between the invention and first application of a new KET,

computer was invented in the 1940s) or cellular telephone communication (the technological principles have been discovered in the 1920s.

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

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, or Germany in mechanical engineering.

Provided that economy-wide productivity and wealth effects of KETS primarily depend on the speed and breadth of their diffusion, the issue of technological competitiveness could be

it is important for the EU economy to keep pace with the technological development in KETS.

to cluster initiatives, public awareness measures, standardisation, promotion of venture capital supply, and education and training activities (see OECD, 2009c).

Nevertheless, advancing KETS may require joint efforts of European economies, particularly in the areas of regulation and standardisation.

sell goods under a competitive environment, i e. to prevail over competitors Analysing technological competitiveness in emerging technologies is anything but

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

Patents represent different economic values and different degrees of technological novelty Though many efforts have been made to quantify the value of patents, e g. through

These patents are likely to represent higher economic values since these applications are more costly than applying just at a single national patent office

lithography, optical measurement systems, microscopes, lenses, optical communication digital photography, LEDS and OLEDS, displays and solar cells.

area of optical communication Industrial biotechnology is more difficult to identify through IPC classes since many classes

commodity. As a consequence, market potentials strongly depend on the underlying definition of a KET and which sections of a value added chain are considered.

technological opportunities rather than the likely preferences of users. Market acceptance of these concepts is largely unknown

2009, 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

scenarios by differentiating between substitutive demand and additional demand European Competitiveness in KETS ZEW and TNO

competitors, shareholder pressure Strong network failure, closed group think hinders innovation Interaction Weak network failure, lack of connections for

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: Klein Woolthuis (2010

The framework helps to analyse the barriers and drivers within a KET area that affect the

staff, 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

involvement and venture capital and a strong focus on a limited number of knowledge domains European Competitiveness in KETS ZEW and TNO

opportunities Advanced materials Walloniaâ€ s Plastiwin cluster: This cluster brings together chemical manufacturers along the

National Nuclear Institute that served as lead customer and knowledge accelerator. The cluster developed by carefully planned public policy and funding,

substantiated by very low costs for investment in research and development as a result of tax breaks and incentives Photonics Berlin-Brandenburg â€ Germany:

applications are currently in the stage of prototype and pre-market entry. Table 3-1 presents

Recent market launch Prototype stage Concept stage Chemicals-nanopowder -nanostructured active agents -nanodispersions -carbon nanotubes

market environment, we evaluate technological dynamics in nanotechnology by looking at Chapter 3 Nanotechnology EN 57error!

applicants comprise to a significant extent young enterprises in the fields of biotechnology and nanotechnology, including a number of research companies

nanotechnology, while a more detailed look at production opportunities and market demands for certain applications leads to less euphoric,

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

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:

opportunity is reflected in the high number of involved universities/research centres and interdisciplinary projects (more than 100.

four research centres, six networks, 16 SMES and six major enterprises. Main corporate players in this area include Philips Gmbh, Thyssenkrupp Stainless AG and BASF coatings

multinational enterprises act as anchor companies to stimulate economic growth, while network organisations are in place to nurture academia-industry collaborations

enterprises Finance Aachen 1 3 10 6 2 0 Muenster 3 1 7 8 1 1

to ensure that utilisation opportunities are realised. 12 Norms and values: Because of the very nature of nanotechnology and its environmental

Furthermore, external communication and public relation of these 11 http://www. innovations-report. de/html/berichte/informationstechnologie/bericht-32232. html

for universities and nanotechnology firms which seek for funding opportunities on a federal level. 15 A consortium of seven federal ministries developed a â€ Nano-Initiative â€ Action Plan

venture capital. 16 Regarding R&d investment from the government, Germany is the number one concerning public funding of nanotechnology in Europe, followed by France and the United kingdom. 17

From 1998 to 2004, the volume of funded joint projects in nanotechnology quadrupled to about 120 million Euro. 18 Concerning the NRW nanotechnology cluster, it received over â 9

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, compared to 54 percent in the US and almost two thirds in Japan

http://www. gtai. com/homepage/info-service/publications/our-publications/germany-investment-magazine/vol-2008/vol

http://hesa. etui-rehs. org/uk/dossiers/files/Nano-economics. pdf 18 http://www. nanoforum. org/dateien/temp/European percent20nanotechnology percent20infrastructures percent20and

goal is to create a competitive and dynamic R&d environment and to boost the knowledge

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, efforts in nanotechnology R&d have been made for years by individual university institutions and nanotechnology

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.

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

and 43 industrial and venture companies. The core organisation of the cluster is ASTEMRI Advanced Software Technology & Mechatronics Research Institute of Kyoto.

and technology) and METI (economy, trade and industry) are the main funding ministries and JSPS (Japan Society for the Promotion of Science), JST (Japan Science and Technology

METI (Japanâ€ s Ministry of economy, trade and industry) accompanies cluster development in two ways.

cluster) economies (regional technology division, business environment promotion division and there are divisions to nurture technological development (research and development

business incubators and university-industry liaison facilities. 35 Venture capital: In Japan, R&d in nanotechnology is supported also largely by private

funding. Venture capital funding accounted for $2. 8 billion in 2004. Overall, Japan has an advantage over Europe and US regarding private funding.

Almost two thirds of the total funding originates from private sources. This is an indication for their strong market

orientation. 36 Venture capital was not always available in the past. In the early 2000s, the Japanese government started to create programmes

because there was a lack of entrepreneurship. Furthermore, large corporations got involved in several nanotechnologies, stimulating the mass to follow this

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, which allows them to share high-tech equipment in the Nano-Fabrication Center.

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, and private sector

http://hesa. etui-rehs. 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 and thus achieves a smooth transition to market

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

market demand, since these funds aim on supporting academic spin-offs and nanotechnology start-ups, which contributes to the economic success of the cluster by transforming research

special (niche) markets and customers also shows the clusterâ€ s strong market orientation Conclusion The Kyoto nanotech cluster is a relatively young cluster,

ministries of technology and economy that combine technological development with regional cluster) development. This synergy could be seen as one of the success factors of this cluster

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

http://hesa. etui-rehs. org/uk/dossiers/files/Nano-economics. pdf 41 http://eco-pro. biz/ecopro2009/events/E1000. php?

economy, trade and industry) are the main funding ministries, which initiated several governmental organisations to promote research programmes.

3. 3. 3. Conclusion on nanotechnology cluster benchmark between Germany and Japan Strengths and weaknesses

there is a lack of venture capital, business angels, etc There is a strong focus on basic research and a lack of commercialisation activity

http://hesa. etui-rehs. org/uk/dossiers/files/Nano-economics. pdf Chapter 3 Nanotechnology EN 89error!

funding consisting of 2/3 of all investments. The Japanese government has played an active role in promoting the VC market.

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

They act as lead customers for the smaller specialist companies in the cluster They provide the international connections for new knowledge inflows

industrial and venture firms Classification Developing Developing Infrastructure Strong knowledge infrastructure: mainly publicly funded Good mix between large firms and academia

highly visible in the private economy Lack of entrepreneurial spirit, strong research focus Rules and regulations

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

incubators, and liaison Private funding strong point: 2/3 of funding from private sources Chapter 3 Nanotechnology

Lack of business angels and venture capital Government has stimulated actively development of VC market Nanotechnology top-priority in national

Tax incentives to stimulate investments and stimulate (re) location to cluster area Interactions Cluster platforms play important role in

customers Market structure There are relative many small companies which is a potential weakness Cluster open to new start-ups but relative

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

successfully introduced 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

nanotechnology-based innovations complain about high costs, a lack of scale economies and a lack of consumer acceptance (see Palmberg et al.

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

environment, health and safety (EHS. There is a widespread concern of potential negative effects from nanostructures on the human organism as well as on other creatures.

that nanotechnology innovations can have for the environment and health. An open dialogue between governments, industry, research

51 percent of this investment was funded from government sources while only 49 percent came from private sources,

nanotechnology R&d is extremely difficult since enterprise R&d surveys rarely collect data on R&d expenditure devoted to nanotechnology

economy and society. The most prominent example is the U s. National Nanotechnology Initiative (NNI; see Box below.

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 and defines four goals

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.

the highest investment under NNI (2001-2010) was made by the Department of Defence ($3. 4 billion), the

and Human Services (incl. the National institutes of health, $1. 8 billion. The Department of commerce (incl. the National Institute of Standards and Technology) which mostly funds more application oriented, civil R&d, invested

federal investments of nanotechnology centres and infrastructure for nanotechnology research and education networks; and support the consideration of

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

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.

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.

and the environment have been discussed widely. Commercialising nanotechnology products European Competitiveness in KETS ZEW and TNO

critical for nanotechnology producers to decide about investment and directions of future research Nanotechnology is promoted currently by many governments.

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

skill demands are particularly high. Since education typically focuses on imparting knowledge from specific and established scientific or business fields, people who integrate skills from

research findings, 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.

dynamic sector of nanotechnology companies, venture capital funding as well as public support to R&d conducted by these firms is essential.

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.

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,

huge investment in R&d, pilot plants and marketing are required. Today, only large companies can shoulder the needed long-term financial commitment, resulting in a low share

venture capital business. A promising starting point for public policy in Europe can be start -ups form public research.

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

impacts of nanotechnology and thus stimulate investment and demand Since R&d in nanotechnology involves very long time horizons, stable networks among

which creates considerable investment requirements for the manufacturers (Fraunhofer CNT, 2008 In the following we will use the term â€oemicroelectronicsâ€ for simplification, though this term

business and enterprise sector. Table 4-4 shows the list of top-ten patent applicants in the

they are particularly important for information and communication technology (ICT equipment and embedded systems. In this respect, semiconductor production and shipments

During economic downturns production drops sharply but when the economy recovers, semiconductor production does so as well.

Nevertheless, long-term growth prospects are given very positive the general societal trend towards digital appliances, media,

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, leading to a â€oedigital upgradingâ€ of the economic and social infrastructure.

Owing to the recent economic downturn, sales had declined by 5. 9 percent in 2009 Regarding the market size in different world regions,

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

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 â 28 billionin microelectronics were compared in Europe to 48 percent in Asia.

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

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. However, one shared commonality across clusters is the excellence of their applied research (Collet, 2007.

broad field of applications44, focusing on the communications segment while in the last years shifting more and more to industrial applications.

Communications 38 percent, cards 20 percent, military and aeronautics (20 percent), automotive (20 percent) to home

environment called Minatec bringing together researchers from its centre with partners from industry and university located on the central campus. 18 joint laboratories have been setup

excellence in its field with a very interdisciplinary and collaborative research environment Furthermore, the Grenoble cluster also benefits from a strong research environment in the

wider region and the Rhã'ne-Alpes region enjoys easy access to major industrial hubs in

from substantial investment and partnership programmes between industrial firms and publicly funded laboratories in the semiconductor industry in France since the early 1990s

and $8 billion making such investment for very few companies possible to finance. But also costs for designing system-on

universities and research in a collaborative, open innovation environment. This impressively shows the historic development of the cluster not only showing a high concentration of actors

highly controlled environments and output comprising solid electronic components. However recycling of electronic goods is regulated increasingly with electronics waste representing an

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.

of the examples of new LETI initiatives, with investments of around â 193 million was for

Total investments are expected to be around â 3. 6 billion, with national and local government funding exceeding â 500

develops communication tools, and promotes the campus and cluster internationally. 50 Next to the cluster motors of interaction

This creates an innovative environment that attracts scientists and firms globally to come and work at the Grenoble cluster.

and environment Market failures and drivers for growth Market structure The cluster is research focused

Market demand The Grenoble cluster is focused very market in its activities and has identified a market niche

Many high-tech firms are located at the Grenoble cluster for the research environment. While the cluster is very â€ demandâ€ 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 â€ demand pullâ€ activities such as improved mobile phone functionality, the

decisions for these functions were external to the cluster. Today, â€oeidea labsâ€ at the cluster aim

not-for-profit national industry association that works to articulate a national strategy for the

The CMC, also a not-for-profit organisation, is dedicated to facilitating strategic alliances between the semiconductor industry and Canadian universities and educational

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, with several

Communications Research Centre (CRC), which is the federal governmentâ€ s leading European Competitiveness in KETS ZEW and TNO

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.

This is also supported with examples from Wolfe (2002) who describes the takeover of Skystone System by Cisco

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. The Centre co-invests in R&d and commercialisation for leading-edge technologies and helps move the results to market through existing companies or spin-off enterprises.

It is hence not confined to microelectronics and also plays a role in developing new activities.

investment of $50, 000 to create a partnership with researchers at the University of Ottawa

After promising results Distil was supported further with $250, 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.

The Centre is funded through the Ministry of Research and Innovation. Staff expertise and experience have produced a consistent track

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

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

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, but in the meantime these

innovation and investment in the microelectronics sector by the Ontario government (Ontario 2007 Conclusion The Ontario,

opportunities, aiming to found new centreâ€ s of excellence in: 1) health care technology, 2 automotive, 3) broadband and 4) multimedia applications

take the risk to start own commercial ventures. Secondly, the culture of the people in the

commercial environment and a well functioning cluster are at least as important Public procurement and lead markets

4. 3. 3. Conclusion on microelectronics cluster benchmark between France and Canada Strengths and weaknesses

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

target market segments with industrial customers (B2b Table 4-6: Summary of findings from microelectronics cluster comparison

Collaborative research environment stimulated by Minatech (industry-research -public triangle Cluster also has an important joint

Strong national investments in science and research Support for research collaboration and commercialisation of research

scheme of Western economies ($49 costs for $100 Â'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

research opportunities Strong international exchange culture of researchers and students through general programmes (not technology specific

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 multi

new MNES and venture capital Strong concentration of large MNES e g Nortel hires 1/3 of all masters and Phds in

These sectors, for example the information and communication technology sector, are generally characterised by increased technological sophistication which

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

basically considered as commodity goods with rather low profit margins. As a consequence semiconductor manufacturers are typically reluctant to invest into new plants

opportunities for public support to ameliorate the conditions for microelectronics research development and manufacturing in Europe.

-western Taiwan to create an environment conducive to high-tech research and development production, work, life, and entertainment,

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

time providing access to qualified human capital and technologies Contribution of microelectronics to social wealth

further miniaturisation will require considerable investments into plant technology Europeâ€ s technological position The development of micro-and nanoelectronics is concentrated clearly on the three global

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.

communication which is supported by strong consumer demand. Moreover, this trend is expected to be fuelled by a higher semiconductor content per installed system, leading to a

-technology 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

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.

development efforts even in times of economic downturn in order to stay fully operational and innovative when the economy catches up again.

Policy should therefore be concerned with the smoothing of growth cycles as far as research and development activities are concerned

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. EN 5 INDUSTRIAL BIOTECHNOLOGY 5. 1 Definition and State of Technology

or parts, products and models thereof â€ to produce knowledge, goods and services (OECD Depending on the area of application subgroups are defined.

Nevertheless, industrial biotechnology provides the opportunity to improve the quality of existing products and to develop completely new products which

This shift is driven partly by governmental regulation and partly by consumer demand as consumers increasingly request a smaller environmental footprint.

between â 48 billion (Festel Capital, 2009) and â 65 billion (Mckinsey, 2009. The lower of

Festel Capital 2009). ) Depending on the application the adoption of biotechnology varies significantly. In basic chemicals â€ which accounts for 59 percent of chemical sales,

equals 18.7 percent (Festel Capital, 2009. Biotechnology-based polymers are the most important biomaterials and are produced in substantial quantities â€ estimations range from

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

assigned to one industrial or institutional sector based on their main economic activity. In Europe and East asia, applicants from the chemical industry clearly dominate, while in North

Festel Capital, 2009. A more conservative estimate for biochemical sales is announced by Mckinsey (2009.

potential downside of these high projections is that important investments into biotechnology might be diverted as a more realistic market assessment becomes apparent.

Commodity USDA (2008) 0. 9 5-11 50-86 Base chemicals billion â Festel Capital

2009 12 34 113 25 Consumer che-Festel Capital 11 32 84 23 PROJECTIONS Chapter 5 Industrial Biotechnology

EN 173error! Unknown document property name. EN micals (billion â)( 2009 Speciality che -micals (billion â

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 (2009) 0. 08 1. 6 82

Total (billion â) Festel Capital 2009 48 135 340 22 Enzymes for industrial application Total BCC (2008) 2. 1 2. 7 4

receives large investments (2004: â 600 million Figure 5-21: Actors in the Cambridge biotechnology cluster

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

during this period as well as a rapidly growing global economy investing venture capital in high-tech industries have spurred the clusterâ€ s growth.

opened collaboration opportunities between technology specialists Figure 5-24: The emergence of technology clusters in Cambridge over time

access to UKÂ€ s most successful bio-incubator, which is located on the Babraham Research Campus

collaborative R&d projects in an interdisciplinary environment. Finally, there is also a growing number in supporting companies and services, including law firms, accounting firms

patent agents, consulting firms, and international banks, which contribute to the clusterâ€ s success (Barrel, 2004

and world-class research base in the UK to attract investments in bioscience research. To do

are key policies and one of the most significant initiatives in stimulating investments in biotech.

their non-capital R&d expenditure over Â£10, 000 at 150 percent. If the firm makes no taxable

profit (which is the case for many biotechnology firms), losses can be surrendered to the Exchequer in return for a cash payment of 24 percent of total eligible R&d spend.

Venture capital: The cluster has also access to financial resources at all investment stages which has shown to be critical for growth.

The business angel network in Cambridge is one of the most active in Europe (Walker, 2005.

â€ Great Eastern Investment Forumâ€ and the â€ Cambridge Angelsâ€. Next to their primary function of providing capital, these business angels offer professional advice, contacts, and

practical help. Another new angel initiative is the â€ Cambridge Capital Groupâ€, 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 â€ Cambridge Gateway

Fundâ€ 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

Companies in the region enjoy access to local suppliers of technical and professional services and this has created a regional supply chain that is unrivalled in Europe.

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

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

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

supporting services with legal, patent, recruitment, and property advisers, and regional biotechnology associations. Finally, they want to associate the new company with the image

Market demand Next to the relatively easy access to financial resources and markets in London, other high

and biotechnology companies to sell products and services throughout Europe to all kind of different markets.

multinational companies, incubators, company creators, science parks, a range of professional advisers and services (including biotechnology associations), a culture that respects risks, and

last but not least a strategic location close Londonâ€ s large financial market, providing access to venture capitalists and business angel networks

venture capital. This could result in a twin obstacle of market failure and absence of public

one of the most significant initiatives in stimulating investments in biotech. It boosts R&d activity on a national scale up to 10 percent in the long-term

accessibility of venture capital. Genentech, founded 1976 in San francisco, was the first biotechnology company in the world.

and 64 venture capital firms), connected by 243 local contractual ties. It is important to notice that no public intervention or any centralised

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

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

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.

venture capital became increasingly important, while at the same time the involvement of public research organisations (PROS) was shrinking.

two types of ties (venture capital, PROS)( Owen-Smith and Powell, 2006. These collaborative partnerships create strong network ties

and build the social capital of this area which is one of the key success factors for this cluster (Su and Hung, 2009

DBF=dedicated biotechnology firm, VC=venture capital, PRO=public research institutes Source: Owen-Smith and Powell (2004: 33

To support the interaction between biotechnology companies, research institutes, venture capitalist, etc. the Baybio bioscience association was found.

community networking opportunities, advocacy, group purchasing and access to organisations that support research, development and commercialisation of biotechnology products

Market demand The biotechnology cluster in the Bay Area is market-oriented and a hub of biotechnology and

The cluster originated from a tight social network among biotechnology firms, venture capital and research institutions. Now, the direct links between DBFS are building the main network

financial resources for all investment stages, i e. there is no clear â€ valley of deathâ€. This can

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. This dynamism created a virtuous circle, 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

play a role as lead customers to give the cluster momentum. The recent development towards

also there many large firms acted as accelerators for growth by stimulating R&d, commercialisation, spin-offs and internationalisation of

Venture capital & commercialisation important to reach maturity Size 280 firms 25,000 people (incl. academics and

Strong incubator: Babraham Research Campus ERBI: private cluster platform Strong knowledge infrastructure with large universities close by

Culture of entrepreneurship Strong collaborative culture Public policy /funding /taxation No clear role public policy in promoting the

Tax credit on their non-capital R&d expenditure over Â£10, 000 at 150 percent losses can be surrendered to the Exchequer

Good availability of venture capital ï commercialisation Availability of start-up support Tax-breaks/incentives: biotechnology firms are exempt from paying payroll taxes for up

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 Start-ups and spin-offs Market open for new entrants

Big role for entrepreneurship, spin-offs and spin-offs Financing for all stages of development Source: TNO compilation

the opportunity to improve the quality of existing products and to develop completely new products which cannot be produced by traditional synthetic methods and processes.

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

demand and negative impacts of biotechnological inputs must be addressed The role of public support Universities and public research organisations play a very prominent role in industrial

Besides stimulating additional R&d investments in companies sustainable networks of firms and scientific institutions should be established in order to

-based 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 the US funds of the Small Business Innovation Research Program (SBIR) provide critical seed money to new business innovators

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 which

But there is no doubt that demand for products which involve industrial biotechnology will increase clearly above the total market

transmission media which allow transferring new scientific knowledge in economic activities and thus introducing new biotechnological products and methods on the market.

products fit to the needs of customers in terms of (sustainable) performance and costs In order to establish a dynamic sector of industrial biotechnology companies, venture capital

funding as well as public support to R&d conducted by these firms is essential. Small Chapter 5 Industrial Biotechnology

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.

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

chances of this field can improve the funding opportunities for industrial biotechnology firms In Europe 78 percent of biotechnology SMES faced problems to raise funds to continue

Further policy actions should relate to providing a stable regulatory environment, particularly with respect to likely safety and health of industrial biotechnology.

in order to satisfy food demand in order to relieve public worries European Competitiveness in KETS ZEW and TNO

communication, imaging, lighting, displays, manufacturing, life sciences and health care, and safety and security (EC, 2008a Information and Communication:

Optical networks have opened the way to almost unlimited digital communication, building the very foundations of our Information Society.

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

Information and knowledge are becoming our most valuable commodities â€ unlimited access to which is becoming arguably the most significant driver of productivity and

Systems for Optical Communications Meas. Systems for Other Applications Medical Technology and Life Science Lenses for Eyeglasses and Contact lenses

Optical Communications Optical Networking Systems Components for Optical Networking Systems IT: Consumer Electronics Office Automation, Printing

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

of communications and entertainment but also in many other applications, including manufacturing, medicine, displays, 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 â€ thinkâ€ (optical computing), leading

%Optical communications 5 %Midecal tech. & life science 8 %Measurement & automated vision 8 %Production technology

Communication BMBF (2007) 12 31 10 Information Techn. & Printing BMBF (2007) 47.7 88 6

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

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

) 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

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, within one (high-tech

The cluster is represented by the â€ Quebec Photonic Networkâ€, a non-for-profit organisation with mandate to accelerate the advancement of the Optics-Photonics industry in the Province

systems, optical communications and high-performance fibre optics While photonics activities in the province of Quebec have a long tradition,

that competition in the sector is global provides incentive for local actors to work together

assistance system results in net cost of $49 for every $100 R&d investment. But also in terms

Furthermore, the research environment is given also attractive the low turnover rate of research specialists and competitive salary levels.

Venture capital: Quebec has access to the highest concentration of venture capital in Canada QPN, 2010. Innovatech Quã bec-Chaudiã re-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

on a strong research community and a high quality local business environment. They largely source their inputs regionally with 63 percent of the firms buying more than 50 percent of

On the other hand very few customers of European Competitiveness in KETS ZEW and TNO EN 230error! Unknown document property name.

customers for innovation. On the contrary photonics firms spend long periods of time with customers (6 to 12 months) to develop customer fit solutions.

Ouimet, 2004 Conclusion While photonics activities in the province of Quebec have a long tradition,

a dynamic business environment and a strong commitment from governments to support the industry, and

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

Also no venture capital activity is reported in at the Optecbb cluster Public policy, funding and tax incentives

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

No venture capital scheme in place Strong role through Tax legislation Support from regional development agency Availability of public knowledge infra

High level of Venture capital (lack though for firm growth Interactions High level of interaction: formal and

Market demand Lack of lead-firm (s) Strong interaction with customers No local lead customer or firm

Commission treats photonics as a key technology for the economy of the 21st century because

environment, health care and life sciences, safety and security. In keeping with its greater importance for Europe, Photonics has been given a higher profile in the Seventh Framework

environment capable of accelerating photonics research, enhancing cooperation, 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! Unknown document property name. EN resources.

communications, and defence photonics (Photonics21, 2007b. Production capabilities allow for an application of newly developed technologies and as a result facilitate experimental

communication, optical components and systems, solar energy, and information technology The current global market size is about â 200 billion

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

thus stimulating additional demand and contributing to net growth Many new applications in photonics are expected to substitute other technologies.

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.

Photonics is also a well-established field of research at universities and public research centres.

opportunities from photonics and to sustain sectoral clusters that incorporate new technologies from photonics, a strong photonics industry in Europe is indispensable

demanding environments (e g. in terms of temperature, humidity) or for very demanding processes (e g. in terms of capacitance, miniaturisation.

comprise structural materials for extreme environments, functional materials for extreme environments, energy efficient materials, electromagnetic materials

Advanced materials are a special kind of general purpose technology. Like other general purpose technologies, advanced materials can be applied widely across industries, also

telecommunication and engineering services. Advanced materials contribute to more efficient production processes and trigger new product development.

investment by users. The latter fact often delays a rapid diffusion of new materials Another peculiarity advanced materials is the broad spectrum of scientific disciplines and

are currently semiconductors, automotive and aircraft, energy and environment, medicine and health, construction and housing,

market environment, we evaluate technological dynamics in advanced materials by looking at patent applications by European, North american and East Asian applicants at their

in the field of energy-efficient materials have been applied by enterprises from the chemical industry while technologically these patents are related to a substantial part to the metals

brought new technological opportunities that have been picked up by existing companies but which also gave room for new entrants.

expected mid-term real growth of the world economy (between 4 and 5 percent) which is

In the economics of materials, newly introduced materials often reach their maximum penetration rate only after

determinant is the length of investment and product cycles in the industries that use advanced

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

chemical industry 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 which are used in the electronics industry, an industry with short life cycles. What is more, organic polymer electronics promise significant increases in performance

takes a long time due to high investment needed both by producers of materials and users Table 7-6:

89 2007 1. 2 2012 5. 2 environment Freedonia (2008 Nanomaterials 1 2006 4. 2 2011 33 semiconductors Freedonia (2007

environment Materials Technology Publications (2007 Powder metallurgy 21 2006 30 2012 5 machinery, instruments automotive Materials

communications, illumination solar cells BCC (2008 Optical coatings 5 2008 5. 7 2015 2 electronics, defence/security

batteries), environment (mid-term market volume of â 12 billion, e g. polymers and smart packaging), health (e g. tissue engineering),

Europe has invested under (in terms of venture capital) compared to mainstream innovation areas (e g. energy generation and infrastructure)( Europe Innova, 2010

regional economy in 2006 (the rest corresponds to services)( Biatour et al. 2010). ) From there the chemical industry represents a share of about 25 percent in relation to the whole industry

industrial employer and an important driver of economic growth in the region (ECRN, 2010 82 We only consider those clusters in Europe with high focus

engaging in manufacturing, processing, services engineering, design, retailing and recycling. In addition, a handful of companies and industry

There is also a network of business incubators or shared infrastructures located in Universities and/or Science Parks to facilitate start-up companies.

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 â€ Priority actions for the future of Walloniaâ€ â€ subsequently called the new

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;

promotion of investment package for attracting new firms to the Plastiwin cluster. Among the measures for supporting this policy is the preferential access to risk funding (through SRIW

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-belgium/10-reasons-invest-wallonia. php 89 http://www. investinwallonia. be/ofi-belgium/investir-en-wallonie/opportunites-affaires/chimie-siderurgie-verre-textile. php

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.

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

and venture capital to prove the commercial viability of carbon nanotubes and nanopowders for flat screens applications (Eco-innovation Futures TNO, 2010.

Market demand The chemical sector in Wallonia â€ in which the Plastiwin cluster is embedded-is highly

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.

entrepreneurship should be promoted to a higher scale. The chemical-plastics industry traditionally spends a large share of in-house R&d paid with own funding, but the endevours

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

customers (e g. Solvay. That lead markets are difficult to identify is not surprising as the

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

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

development for the Chinese government for the modernisation of their economy by 2050. By 2020 the goal is to get breakthrough developments in advanced materials,

economy grew at an annual rate of 15.1 percent and had a GDP per capita of about $6, 700.

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.

promote entrepreneurship and new business development (through incubators), assist in technology transfer, and spin-off companies which are established in the university industrial

entrepreneurship of returning students, young Phds and post-docs, with more than 100 SMES created by around 250 young talents), the Hunan Xinjinrong Technical Incubator and the Oak

Garden Enterprise Business Incubation Service. In addition, the cluster also has intermediary 100 http://www. cshtz. gov. cn/webkey/index. do?

templet=Eindustrystructure&id=3483 101 http://www. csinvest. gov. cn/jjcs fwwb. asp European Competitiveness in KETS ZEW and TNO

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. Thirdly, an explicit policy of industrial development through clusters (Sigurson

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, since around 102 Albeit these Banks are not explicitly run by the Government,

Economist, 2010 Chapter 7 Advanced Materials EN 281error! Unknown document property name. EN fourth fifths of the assets in the Chinese banking system is controlled by 17 institutions (from

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 clusterâ€ s development. But as

to the whole cluster, some other firms are short of capital because of inadequate finance channels (Li and Ya-Qing, 2006

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 (Liu and White, 2001

The differences in the type of interaction in the command era versus in the transition era are

Market demand The advanced materials cluster is oriented to the development and production of new materials related to advanced batteries.

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

firms in China have a lesser position in the economy, giving them less power and hence less

business incubators and shared infrastructures. In addition to this, both countries provide a large number of different tax incentives for start-ups, regional development and technology

Finally, there is a considerable presence of well established angel and venture investors in both locations

external relationships and building collaboration opportunities. Furthermore, the Belgian government plays no major role, except of providing public funding for research and

playing a role as anchor firm though, nor as lead customers. The reason why we do not

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 clustersâ€ development Table 7-8: Summary of findings from advanced materials cluster comparison

incubators and shared infrastructure (e g labs Active regional development agencies Finance Financial support from European, national

International demand through relative low production and labour costs in China Market structure 70 percent SMEÂ€ s

Societyâ€ 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

solutions improving environmental saving technologies is expected to be a powerful demand of advanced materials Chapter 7 Advanced Materials

opportunities to improve the convenience and to extend the durability of implants, stents and prostheses.

other KETS-such as nanoelectronics, biotechnology and photonics-the opportunities for new applications will rise. Additionally, it is evident, that the appropriation of new and advanced

investment of almost â 1 billion within the time period 1994 to 2003. A long term framework

applicability of materials in very demanding environments (e g. in terms of temperature and humidity), in allowing more demanding processing of materials (e g. in terms of capacitance

patents) though smaller European economies were able to increase their patent output in recent years substantially

environment, medicine and health, construction and housing, and various process technologies (including mechanical engineering and automation, packaging and logistics

slowly because of high opportunity costs in substituting established by new materials and often rather low price-cost advantages of more advanced materials.

These user industries include electronics, medical instruments and health services automotive, energy production and distribution, construction, textiles and clothing, and

demand for nanomaterials will most likely give ground for new producers and additional production facilities.

services, contributing to both product and process innovation. Like other general purpose technologies, the diffusion of advanced materials generates network and learning effects

a positive feedback in the demand for the respective material Advanced materials are characterised by an extreme variety of individual products and

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.

machinery and instruments industry) and demands of regulatory bodies and other public authorities which have to guarantee that new materials do not harm health or the environment

In this situation, public policy can support the advance in material technologies through various activities Linking public research

in terms of protection negative impacts on safety, health and environment, they should specify technical requirements to materials and processes early and with a long-term view

which can afford the high investment needed. For upcoming fields in material technologies, young firms could play an important role, too

either through grants for R&d projects or venture capital is critical for a vital small business sector in this KET.

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

investment). ) Moreover, there is considerable need for tailor-made adjustments, which are costly. Adjusting and using AMT also requires in-house capabilities for dealing with new

customers). ) Adjustments to AMT may as a result lead to adjustments to the product produced

platform comprising the main stakeholders in robotics in Europe. EUROP was established in 2004 and aims at strengthening Europeâ€ s competitiveness in robotics R&d and global

quality of life by delivering efficient services. In the industrial application, robots are expected to combat the expected shortage of 6 million skilled labourers by 2020.

signals an overall highly interesting market in terms of growth opportunities. The highest growth rate is found in the machine vision subfield,

efficiently and in an environment friendly way The role of public support Public support of AMT should particularly be centred on three policy fields.

opportunities. Public support can specifically facilitate the further development and adoption of these platform technologies through initiatives like grants for collaborative R&d, support

enterprises and large enterprises Contribution of AMT to social wealth There are several potential contributions of AMT to social wealth.

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. Moreover, costly tailor-made adjustments are necessary.

integration of suppliers and customers Europeâ€ s technological position Developing AMT is concentrated highly on the three global regions Europe, North america

arrive at global sales (prior to the economic crisis of 2009) of more than 150 billion When growth in the different subfields is analysed, the compound annual growth rate ranges

growth opportunities. The highest growth rate is found in the machine vision subfield followed by pharmacy automation and continuous monitoring.

manufacturing technologies is to combine new technological opportunities emerging from different fields of technology (including most other KETS covered in this report, particularly

-specific requirements with new technological opportunities yet out of sight of users A main barrier for commercialising AMT is potential users that hesitate to adopt new

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 if the technology is completely new and no experience over the likely returns are available to banks

among departments, integration of suppliers and customers-may be missing and cannot be built up in short term

critical role of human capital in upgrading technology successfully and to stimulate co -operation and mutual learning among SMES.

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. Public research is a main source for

In these three KETS, a few large enterprises dominate patenting. KETS are related very much to the chemical and electronics industry

cannot simply add market size of individual KETS to get a total volume of demand for KETS

percent, 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 Future technological and commercial success of KETS depends on a large variety of factors

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

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

external capital, lack of specific skills, uncertainty of price-cost advantages over the life cycle of new technologies) matter

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 and industrial biotechnology

more focused on providing a favourable environment for industry, including to maintain a strong industrial base as a key starting point for developing and commercialising new

benchmark has given us some more specific insight about how KETS develop and flourish in certain regions.

environment and attract new entrants Funding of research and collaboration Establishment of cluster platform Public policy

-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.

as scaling up, requires large investments in proto-typing, testing, and the scaling up of

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

lessons could be transferred to European economies as we do not have a tradition of more

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

intermediary services etc. Next to that, the external links should be encouraged to prevent becoming an â€ in-crowdâ€ club that misses out of important external developments.

products that do not have a direct demand, and third, that KETS have so many applications

opportunities, international connections and distribution channels. Next to that, some clusters have developed strongly thanks to the spin-offs of large companies that were present at an

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

but will be difficult to encourage with government policy (e g Anglo-saxon countries will naturally harbor more entrepreneurs than more centrally planned

attractive to technology driven firms, they also encourage funding actors (like venture capitalists) to come

The more hierarchical structures that characterise their economies can form an obstacle for innovation as these lack the trust and openness for open knowledge exchange

Market demand can be distorted due to insufficient transparency or inefficient pricing mechanism due, for instance, to the inability to include

investments in proto-typing, testing, and the scaling up of production facilities is often difficult to fund.

they do not allow for leveraging scale economies Small firms need open markets to develop. Dominant firms that are blocking the market for

new entrants or innovations should be forced into competition. Barriers to entry can be lowered by providing joint facilities,

entrepreneurship (Den Hertog et al. 2001). ) In the European clusters investigated, the market structures often lacked large players that could have the power to develop a KET into

Europe seems relatively weak in promoting entrepreneurship compared to for instance the USA and Canada where culture, market openness

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

when compared to the efforts of emerging economies (such as China, India and may south -east 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

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.

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

firms played an important role to create critical mass and funding opportunities, international connections and distribution channels.

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.

developed private funding structures are underdeveloped (e g. venture capital, business angels Asian countries combine research and development funding with clear policy guidance in

breaks and incentives, creating an attractive climate for investments in high growth areas clusters), R&d subsidies and stimuli for scaling up and commercialisation.

was observed to be used to stimulate entrepreneurship through good funding infrastructures and availability of incubators and business parks

European Competitiveness in KETS ZEW and TNO EN 346error! Unknown document property name. EN 9. 4 Generic Policy Conclusions

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

role of regulation, funding of innovation through venture capital, and the urgent need of high qualified personnel

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!

uncertainty, long time horizons between R&d investment and potential economic returns, and high information asymmetries over the prospects and risks of KET-related R&d activities.

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

prepared 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! Unknown document property name. EN Linked to the cross-disciplinary nature of KETS, technological advance often depends on the

High investment costs for applying KETS may exceed the available internal funds of users, particularly for SMES,

-skills of workers, coordination among departments, integration of suppliers and customers -may be missing and cannot be built up in short term.

on the wider economy -KETS are strongly research driven. Maintaining a strong research base is thus essential

-Although KETS are characterised by particularly high investment in R&d and high technological and market risks, a generally favourable framework for innovation and

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, particularly in those areas of KETS that require a high degree of cross-disciplinary and cross-technology fertilisation.

-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

Innovation policy has gained also extensive experience in promoting the rapid and broad diffusion of certain KETS such as advanced manufacturing technologies.

-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.

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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