Poles of Excellence

What makes an ICT hotspot? Take a look at Munich, London, Paris or smaller cities such as Darmstadt that are identified in The Atlas of ICT Activity in Europe.¹ This atlas and a series of reports show where digital technologies thrive and examine the factors contributing to this success.

A 2009 European Commission (EC) communication entitled ‘A strategy for ICT R&D and innovation in Europe: Raising the game’ proposed reinforcing Europe’s industrial and technology leadership in ICT. Building on Europe’s assets, in particular its many ICT industrial clusters, the strategy seeks to step up the effort in ICT research and development and innovation (R&D&I). This strategy was confirmed in the later Digital Agenda for Europe.

In this context, in collaboration between the EC’s Connect directorate and the JRC Institute for Prospective Technological Studies, the European ICT Poles of Excellence (EIPE) research project was set up to investigate the issues of growth, jobs and innovation. The EIPE results are presented in a series of reports from a set of studies that attempt to identify ICT R&D&I-related ‘agglomeration’ economies that would meet world-level excellence, and to identify signals that would indicate the dynamics of a changing ICT-related economic geography in Europe. Both of those processes are built on a set of criteria leading to measurable indicators.

The EIPE studies have the following objectives:

• Define what European ICT poles of world-class excellence are, their salient characteristics and the corresponding quantitative indicators
• Develop a quantitative methodology for the identification and analysis of existing EIPEs
• Map ICT activity in Europe and identify EIPEs
• Analyse in detail the characteristics of selected EIPEs
• Formulate policy implications with respect to maintaining and developing EIPEs.

The series of reports offer a snapshot of the performance of regions that are identified as the main locations of ICT activity in Europe. It is meant to provide a comprehensive picture of how ICT activity is distributed across Europe and where the main locations are. This information is expected to give a better overview of the European ICT landscape. To provide dynamic access to the information gathered within the EIPE project, there is a web visualisation tool showing the scores in all regions analysed.

STARTING POINTS

The research started with an apparently naive question: what and where are the European ICT poles of world-class excellence? The answer is rooted in a comprehensive review of scientific literature on spatial concentration of economic activities, and more recently of the knowledge-intensive and ICT-related activities, at local and at global level. The outcome of this review was the following definition of an EIPE: “European ICT poles of excellence are geographical agglomerations of best-performing ICT R&D, innovation and production activities, located in the European Union, playing a central role in global international networks.”

The definition of EIPE and the methodology for their identification recognise that ICT R&D&I activities are interlinked with ICT business activity. This is to say that, for an EIPE, none of those activities is likely to exist in vacuum, but instead they are embedded in common spatially agglomerated industrial and business activity, supporting fundamental inventive activity. There is a mutual interdependency between R&D, innovation and business activities, which implies that these are often colocated.

This justifies the fact that the EIPE study focused on observing these three activities, and three characteristics of those activities, agglomeration, internationalisation and networking.

Following the above definition, an empirical framework was elaborated to identify poles of excellence and to map the European ICT landscape. A list of indicators has been compiled for the project, which were then aggregated into one EIPE composite indicator, and the study distinguishes three main types of region according to the intensity of ICT activity:

• 1st tier region, scoring between 81 and 100 on the composite indicator
• 2nd tier region, ie. scoring between 61 and 80
• 3rd tier region, between 41 and 60.

MAPPING ICT ACTIVITY IN EUROPE

The results of this exercise reveals that only a small number of EU regions or cities demonstrate intensive ICT innovative activity – only 34 EU areas score above 41 points on the composite indicator. This indicates that there is a large concentration in few places of total EU ICT activity. Such concentration is observable on all indicators.

Only three regions score above 80 in the composite indicator and so can be considered 1st tier European ICT poles of excellence. They are Munich (100 points), Inner London East (97) and Paris (95). The research also identified eight 2nd tier regions and 23 3rd tier regions. Together those 34 regions/cities participate in a networked ecosystem made up of strong hubs in the global ICT innovation system and a multifaceted periphery with local and global links.

The ranking appears stable, as many top-ranked EIPEs are rooted in historical assets, and appear also in other rankings on a regular basis. The ranking reflects the slow building up of (local) economies resulting in balanced scores on all activities.

In addition to strong concentration of ICT activity in a small number of regions, larger areas of intensive ICT innovative activities, sometimes including a 1st tier region, are made up of several regions belonging to the same neighbourhood. Thus, these results provide strong evidence of concentration of ICT activity, which is likely to result from the existence of strong agglomeration forces that shape the ICT landscape. This is consistent with the theory of agglomeration.

To provide detailed profiles of selected locations of intensive ICT activity, an additional case study analysis of selected locations was done.2 Regions that were analysed are Inner London East, Paris, Darmstadt, Dublin and Copenhagen. The regions are highly diverse as regards their size (eg. population, area), their status (eg. global cities, capital cities, regional capital cities), their institutions and their general or dedicated policies (eg. at national, regional and local level). The local industrial composition varies, favouring the development of ICT activity in close relation to specific vertical sectors. This in turn contributes to the diversity in specialisation, each region having one or several specific strengths.

Internationalisation of each activity follows different patterns, with each region having a different portfolio of partners: some show more local orientation (within the EU), while others have far reaching connections (US and Asia). So each region has different network structures for activities, locations, etc.

Not all regions share a neighbourhood with one or several similarly ranked regions. Proximity is unevenly distributed and some regions are more isolated than others. Besides and despite concentration, there is diversity in activities, and national patterns appear (eg. Germany is distributed, France centralised).

But EIPEs display some common characteristics: concentration/agglomeration, some forms of proximity with neighbouring regions, global reach for knowledge and business, structured networking capacity, an ICT activity with close relation to other vertical sectors, and a balanced presence of the three pillars (R&D, innovation and business).

In all cases, the EIPE score results from longstanding ‘effort’. Indeed, the current assets of each region appear to be rooted deep in time, with their current activities and profile resulting from a history of several decades by industrial structure, policy decisions, institutional settings, migration and education outcomes, etc.

Among these commonalities, the concentration usually observed from a geographical perspective is also observable in the activities of public and private organisations, their activities and their financing. All regions have global reach, with intense cross-border activities in ICT R&D, innovation and business and have gained an enviable hub position in a usually very complex web of network connections.

To sum up, the mapping, consequent ranking of the EIPEs and the in-depth analysis of selected EIPEs show:

A strong concentration in a few places and a few countries in terms of location, actors, activities and performance

Intense cross-border R&D, innovation and business; intensive internationalisation of all types of activity

A complex web of connections with different network structures emerging for activities and
locations.

THE EPICENTRES OF EU ICT INNOVATION: MUNICH, LONDON AND PARIS

Munich, London (Inner London East), and Paris are the prime poles of excellence. These cities are the epicentres of EU ICT innovative activities, which in turn extend beyond their local boundaries, as they network globally. These top EIPEs display a balanced active presence in all activities, ie. ICT R&D, innovation and business, and in all three characteristics. Not surprisingly the three large EU economies (Germany, France and UK) make up the first tier within a broader group of 12 western EU member states.

One can note the marked absence of Eastern European countries. However, the lower tiers of ICT poles point to potential complementarity and the possibility of moving away from the traditional ‘blue banana’ European urban corridor.

Munich has first position in ICT R&D networking, ahead of Paris, Madrid and Athens as its research organisations are connected to 556 (73%) regions present in the entire network. Munich scores particularly highly on outward internationalisation of ICT R&D, mainly due to the presence of large companies such as Siemens and Infineon, which control a large portion of ICT R&D activity.

The countries with which Munich maintains the strongest R&D links include the US, China, Japan, Switzerland and the UK.

Paris is particularly strong in ICT R&D and innovation and less strong in business activities. Paris also has a large number of connections with other regions. And Inner London East is particularly strong in ICT business activities, confirming that London is one of the key places in Europe and in the world to ‘do business’.

“The poles of excellence are important if not essential to ICT activity in Europe.”

CONCLUSION AND POLICY RE COMMENDATIONS

The project creates a new perspective on ICT innovative activities in Europe, which does host several ‘silicon valleys’ and occupies a justified role in world-class ICT, as an EIPE is a world-level hub. Like many other such rankings, the indicators point to long-term stability and slow change. There is no recipe for an EIPE and they are not the only solution for regional growth.

The research also shows it is feasible to observe ICT activity at a fine level with statistical data as initial input. In terms of interpretation, the tool says ‘what’ but not ‘how’ and ‘why’, and it does not point to specific technologies.

Scientific literature and local stakeholders usually claim that the emergence of poles of excellence is not a matter of policymaking, but of business, including the existence of one or several vertical markets to serve. Does this mean that policy has nothing to offer ICT poles of excellence? This conclusion would fall short. First, the poles of excellence are important if not essential parts of ICT activity in Europe. And paradoxically, these world-class locations usually receive national and local acknowledgement and support, but not that much at the European level.

The 1st and 2nd tier locations deserve some policy nurturing at European level, to:

• Acquire a much deeper knowledge of each EIPE’s performance, profile and dynamics
• Foment public acknowledgement of their high level of excellence
• Include EIPEs in ICT-related growth strategies
• Provide business conditions such as those related to human resources and mobility
• Give priority to global reach and networking
• Put in place supportive demand-side policies.

This range of policies must be tailored to the specific characteristics of each EIPE, while acknowledging and supporting a European ICT poles of excellence vision, mainly justified by the efficiency benefits expected from agglomeration and the role of global hubs.