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Research analyzes how development clusters are born

According to researchers, by strength of its diversified economy and research funding structure, the Brazilian State of São Paulo meets the conditions of cross-bordering European clusters of entrepreneurship and innovation.

Fundação de Amparo à Pesquisa do Estado de São Paulo

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IMAGE: According to researchers, by strength of its diversified economy and research funding structure, the Brazilian State of São Paulo meets the conditions of cross-bordering European clusters of entrepreneurship and innovation... view more 

Credit: São Paulo Research Foundation (FAPESP)

Concentrations of advanced higher-education and research institutions and highly innovative firms have become one of the most important variables in the formulation of public policies and in the strategies of development agencies and research funding organizations.

Grasping at why certain places may draw more companies or foster business more efficiently than others is key for understanding the concepts of "Entrepreneurship" and "Geography of Innovation" -- whose names were borrowed to christen the International Symposium promoted by the São Paulo Research Foundation (FAPESP), in São Paulo, Brazil, which gathered researchers from Brazil, the Americas, Europe and Asia.

"In the early twentieth century, British economist Alfred Marshall (1842-1924) talked about the importance of agglomerations of industry", stated economist Nicholas Vonortas, who coordinated the symposium in July. "What has changed since then is that our interest has shifted from manufacturers to clusters of technology- and knowledge-intensive firms. These are what really matters now."

Vonortas is a professor of economics and international affairs at George Washington University. He also conducts the project "Innovation systems, strategies and policies" at the University of Campinas - UNICAMP, in whose scope the symposium was promoted. The project is supported by the São Paulo Research Foundation FAPESP through its São Paulo Excellence Chair (SPEC) program.

As illustrated by the economic landscape of Brazilian cities like Campinas and São José dos Campos, in the State of São Paulo, the formation of an entrepreneurial ecosystem generates the condition in which firms "tend to benefit from each others' presence in the same area", as Ron Boschma puts it - Boschma is Full Professor of Regional Economics at the University of Utrecht in the Netherlands and a professor of innovation studies at the University of Stavanger in Norway.

"The scenarios outlined show you can't simply start from scratch," Boschma said. "You have to identify capabilities and opportunities, which you can explore, use and diversify to arrive at new solutions."

According to Boschma, São Paulo State has a highly diversified economy and offers many opportunities for knowledge-intensive entrepreneurs to make new combinations.

"The main message is that knowledge-intensive firms in the São Paulo region should connect," he said. "Complementarity can optimize resources.

The existing capabilities can be mapped so that knowledge-intensive firms can target them in the context of development programs and partnerships that foster these links and expand their competencies."

Vonortas called the attention for vital economic regions that spill over the borders between countries or between provinces, something which is inevitable in a country the size of Brazil. He illustrated his point citing the wealthy economic belts bypassing the borderlines between São Paulo, Rio de Janeiro, and Minas Gerais states, in southwestern Brazil.

Notwithstanding the regulatory and legal challenges brought forth by such phenomena, Michael Stampfer, the managing director of the Vienna Science & Technology Fund (WWTF), said that cross-border developing zones can be traced by a group of factors that can be found in each of the federative entities. "Depends on how technologically advanced they are, how innovation is valued in the society, where they are on a certain development path toward high technology and the international value chains", he told.

In his presentation, Stampfer compared the innovation potential of Centrope, an incipient European cross-border region comprising parts of Austria, Slovakia, Hungary and the Czech Republic, with Vienna as its hub, and four already-consolidated cross-border regions: Øresund (parts of Denmark and Sweden), Elat (parts of the Netherlands, Belgium and Germany), TMO (parts of France, Switzerland and Germany), and IBK (parts of Germany, Switzerland and Austria).

As Centrope's main weaknesses, he noted a lack of leading high-tech universities; areas that copy, rather than create, innovations; a brain drain from Slovakia, Hungary and the Czech Republic to the world's most developed centers; and low student mobility within the region.

Leaving aside the contrast in size and despite many geographical, historical, cultural and other differences, the diagnostic model presented by Stampfer could be highly useful in comparative surveys of the potential of Brazilian regions or cross-border regions between South American countries.

Support for innovative small and medium enterprises

The development policies in place and the results accumulated over the years are other important variables. A good example is innovation research by small and medium enterprises (SMEs), supported by funding programs such as Small Business Innovation Research (SBIR) in the US.

Approaches of this kind were discussed by a panel comprising specialists from Austria, Brazil, South Korea and Russia. FAPESP has a lengthy track record in this field, mainly through its own Small Business Innovative Research Program (PIPE), which was launched in 1997.

Sérgio Robles Reis de Queiroz, a professor in UNICAMP's Department of Science & Technology Policy (DPCT) and a member of FAPESP's Innovation Research Panel, took stock of PIPE, which is commemorating its 20th anniversary in 2017. "Some 1,800 projects have been approved, and more than 1,100 SMEs have received support to date, with non-repayable grants of over R$1.2 million per project," he said.

PIPE's impact on the labor market has been significant, he added: it has increased the number of people in paid work by 30% in direct terms and by 41% if including contractors, outsourced services, and associated activities. He summed up the program's economic impact as a return of six to one on FAPESP's investments.

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