IS-102 SEMINAR-06

You are cordially invited to participate in

Chris Freeman centenary Lecture series

Innovation Systems-102- Practical application of the IS-theory

SEMINAR-6

7th  JANUARY, 2022 | 01.00 PM LONDON TIME (GMT)

8 AM - New York | 10 AM – Brazil |2 pm - Denmark, France | 3 pm - South Africa | 4 PM - EAT | 6:30 PM - India | 9 PM China & Malaysia |10 PM - Tokyo

REGISTRATION IS MANDATORY: https://unu-edu.zoom.us/meeting/register/tJclcO6gpjkpGNOSHIGqHAKnea82iZlg55AD

PRESENTERS:

Patrícia Lopes[BRAZIL]: An analysis of the evolution of the fine wine sector in Vale dos Vinhedos/Brazil

Rodrigo Volmir Rezende [Brazil]: BRAZILIAN SCIENCE PARKS, An evaluation exercise of their effects on the municipalities

DISCUSSANTS:

Bengt Ake Lundvall | Carlo Pietrobelli | Swati Mehta | Veronica Robert

CHAIR: Rajesh GK

ZOOM REGN LINK: https://unu-edu.zoom.us/meeting/register/tJclcO6gpjkpGNOSHIGqHAKnea82iZlg55AD

Only Registered participants can attend the programme.

Meeting ID:  938 7788 2327

Passcode   : 623847

Registered participants who attend all lectures and respond to feedback form will receive a diploma signed by Bengt Ake Lundvall

MORE DETAILS & REGISTRATION: www.cris-is.org

Co organised by CRIS-IS.ORG, UNU-MERIT, CONCORDE, NIIM-CHINA and CICALICS

BIOGRAPHICAL NOTES

Patricia Rafaeli Lopes graduated in Business Administration from UFRGS, Post-Graduate in Business Management from PUCRS, Post-Graduate in Business Logistics from FA.RS, Master in Economics from Unisinos. Consultant for companies focused on remodeling management and structuring new businesses

Rodrigo Volmir Rezende has a PhD in Applied Economics by the Federal University of Bahia, Brazil (UFBA). My studies are related to economic development, regional economcis, policy evaluation and technological and Innovation progress. Nowadays, I am postdoctoral resarcher at Institute of Collective Health on the DSAIDS Project - that explore social determinantes conditions in the Brazilian hiv/aids epidemic.

Bengt Ake Lundvall is professor emeritus in economics at Department of Business and Management at Aalborg University. His research is organized around a broad set of issues related to innovation systems, and learning economies. Lundvall was Deputy Director for the Directorate of Science, Technology and Industry 1992-95 and he joined Tsinghua University, Beijing 2003-2006 as Special Term Professor. He has been engaged as advisor for international organisations including Unctad and The World Bank as well as for national governments in all parts of the world. He founded Globelics 2001 and he served as its coordinator until 2018. Since 1988, he has published more than 200 publications in the form of books, journal articles, and book chapters (see www.vbn.aau.dk). His two most cited works are:

Lundvall, B.-Å., (ed.) (2010), National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning. London, Anthem.

Lundvall, B.-Å. and Johnson, B. (1994), 'The Learning Economy', Journal of Industry Studies, Vol. 1, No. 2, pp. 23-42.

More about B-Å Lundvall

Carlo Pietrobelli

Swati Mehta is PhD. (Economics) Assistant Professor, Punjab School of Economics, Guru Nanak Dev University Amritsar (Punjab). She was Visiting Researcher (Mar-Aug’ 2019) at Intitute of Economic Research, Seoul National Univerity, Seoul, S. Korea. Area of research includes Innovation Systems, Global value chains, Economic Devlopment, Manufacturing Industries in developing economies. Member- Globelics.

Rajesh GK is a development practitioner and Civil Servant with the Government of India and an Adjuncy Fellow of Tshwane University of Technology, South Africa. A post graduate in Agricultural sciences, he holds an Mphil in Applied Economics from Jawaharlal Nehru University, India (Centre for Development Studies) and PhD from Gandhigram Rural University, India. His research interests include Innovation Systems and diffusion of agricultural technologies. He founded CRIS-IS.ORG, Association for South South Cooperation in Innovation Systems Transformation (ASSIST and Council for Nature Conservation and Environmental Protection (CONCEPT), and headed major projects such as drafting the Master Plan for developing silk indistry in North East India and performed the Life Cycle Analysis (LCA) of Indian-silk, with the Oxford University; findings of which formed the basis for 'Higg MSI for silk' developed by the Sustainable Apparel Coalition (SAC). Rajesh is closely associated with GlobeLics and AfricaLics and serves as a member of the Scientific Board of the latter.

Veronica Robert is fellow researcher at National Council of Technical and Scientific Research (CONICET) and at National University of San Martin (UNSAM), in Argentina. She obtained her Doctoral Degree at Buenos Aires University. Her thesis was awarded the Raúl Prebicsh national prize given oy by the Central Bank of Rep. Argentina. The main topic of her research is the relation between innovation, development and structural change.

Verónica Robert heads the Research Office of the Institute of Advance Studies in Social Science at UNSAM, and she is the Director of the Centre for Studies on Economics and Development at IDEAS-UNSAM. She has led five research projects and has participated in more than 20. She also has been a consultant for ECLAC, ILO and WB.

Since 2005, she has published more than 50 publications as books, journal articles, and book chapters

More about Veronica R.

ABSTRACTS

PAPER-1

An analysis of the evolution of the fine wine sector in Vale dos Vinhedos/Brazil: is there an ongoing catching-up process in the sector?

Patrícia Lopes

Master’s in economics.

Economics Graduate Program

Unisinos University (Brazil)

Janaina Ruffoni

Professor and Researcher at Economics Graduate Program

Unisinos University (Brazil)

** Based on a master's dissertation approved by the Economics Graduate Program of Unisinos University/Brazil and already published as an article in a Brazilian academic congress about agribusiness.

Abstract

The concept of catching up has been used in the economic literature to indicate the ability of a country to reduce gaps in income and productivity relative to leading countries in a short period. Laggard countries expect to grow faster than their leaders to achieve catching up. On this argument rests the idea that laggards, i.e., economically, and technologically lagging countries, have at their disposal already developed technologies and thus have the opportunity to reap benefits from international technological spillovers. (GIULIANI, MORRISON AND RABELLOTTI, 2011).

Mazzoleni and Nelson (2007) comment that an essential part of the economic development of countries behind the technological and economic frontiers involves learning and mastering ways of doing what is in use in the leading countries and thus "catching up". But this "catching up" does not mean simply copying. These leading countries' practices provide a model, and countries that catch up with the leaders build their own models through efforts to modify existing technologies to national conditions.

Giuliani, Morrison and Rabellotti (2011) explain that while many discussions on catching-up have been held in terms of countries, there is also a stream in the literature that analyses the catching-up of productive sectors. In a sectoral approach, Malerba and Mani (2009) dealt with the importance of analysing sectoral innovation systems and that discussions in this area are growing in studies on industrial and innovation economics. The authors pointed out that one of the reasons for this growth is that the sectoral systems approach considers a wide range of factors that affect innovation and production in a specific sector. One of these factors is the position of firms in terms of their learning capabilities that are the drivers of innovation and production. In addition, other factors such as demand, diverse actors, networks, and institutions also interfere in this innovation process.

In the search for innovation, the ability of organizations to learn and thus use their new skills is what can define their positioning in each sector and provide "technological leaps" for their development. To analyse the catching-up process, different types of capabilities need to be acquired and developed. Much more than engineering capabilities, those of absorption and innovation appear with a key role to adopt, adapt, and modify technologies (MALERBA AND NELSON, 2011).

The discussion of sectoral catching-up is important for analysing the existence of a technological gap and the possibility of pairing the practices of a productive sector with those adopted at the technological frontier. This analysis contributes to understanding the potential for sector development, as well as the possible obstacles that hinder its evolution. Thus, it is considered relevant to answer the following research question: is the current development process of the Vale dos Vinhedos sector in Rio Grande do Sul State characterized as a sectorial catching-up?

The relevance of studying the fine wine sector is, centrally, in the fact that it represents the production of high value-added goods of Brazilian agribusiness. Vale dos Vinhedos has been standing out regarding the production and commercialization of fine wines (considered premium quality products) and sparkling wines, with international recognition, therefore the interest in this sector and region. The fine wine sector of Vale dos Vinhedos is a region in the Rio Grande do Sul State (in the south of Brazil) and has high economic and social importance for the region. According to the Association of Producers of Fine Wines from Vale dos Vinhedos (APROVALE), the technological evolution of the last decades applied to the viticultural process has enabled the conquest of more demanding markets.

The importance of analysing the fine wine industry of Vale dos Vinhedos lies in the fact that this sector gives greater added value to the agribusiness of Rio Grande do Sul, which is still very much based on the production of commodities. The changes that have occurred since the opening of trade in the 1990s and the consequent entry of imported wines with competitive prices has caused this industry to move from a structure of family farming as a supplier of raw material, to companies focused on product quality, process improvement, and innovative business models. In this context, Vale dos Vinhedos has concentrated efforts for this change in the profile of wine production, including being the first Brazilian region to have quality certifications of its vineyards, with Indication of Origin (IP) and Denomination of Origin (DO). To analyse whether these changes have meant a change in the technological level and how the sector is currently behaving to verify whether a catching-up process is underway.

The research is exploratory with a qualitative approach. The study is qualitative and a historical perspective of the sector’s development is applied to the catching-up analysis. A number of nine (9) wineries and five (5) institutions from Vale dos Vinhedos, directly involved in the fine wine sector, were investigated. The type of sampling is non-probabilistic. Face-to-face field interviews were conducted between April and June 2019, with the application of a semi-structured research questionnaire. The average time for conducting the interviews was 50 minutes.

The nine (9) wineries participating in the field research were considered by APROVALE to be those with the greatest representativeness in terms of technological changes since the period of the 1990s when these began to occur. The list of interviewed wineries is listed below, with 9 companies from Vale dos Vinhedos. In total there are twenty-two (22) wineries registered and associated with APROVALE.

Besides the wineries from Vale dos Vinhedos, we chose to include in the interviews two other wineries, not located in the Valley, but with relevance in terms of technological evolution for the sector. These companies are Vinícola Luiz Argenta and Vinícola Casa Perini located in the cities of Farroupilha and Flores da Cunha, which are 27.6 and 63.5 kilometres away from Vale dos Vinhedos, respectively. The interviewees in the wineries were the winemakers, who worked exclusively for the wineries they represented.

In the group of institutions interviewed, three (3) of them are linked to the government, Brazilian Institute of Wine - IBRAVIN, Brazilian Agricultural Research Company - EMBRAPA Grape and Wine and Federal Institute of Rio Grande do Sul - IFRS. The other two (2) institutions interviewed work directly with the wineries, one of them is the Brazilian Association of Oenology - ABE and the other is APROVALE.

In the case of the institutions, the interviews were conducted with people who had knowledge of the research topic. The position of the interviewees was diverse, such as president, technical consultant, researcher, analyst, and coordinator.

For all interviews, verbal authorization for recording was obtained. This allowed for a later detailed description of the information obtained. Data analysis was done using the NVivo® system. The points analysed to discuss the catching up issue were technology, knowledge, market, management, institutions, and perception about the sector's transformation.

From the data analysis, it was possible to identify that the factors 'technology' and 'market' contain important elements for a conclusion regarding the occurrence of the sector catching up process.

As central results, we highlight the following:

1) the group of wineries in Vale dos Vinhedos went through a technological catching up in the period from 2005 to 2010, when there was a need for technological adaptation due to the changes that occurred in the market, after the entry of imported wines, requiring an update of the sector to compete with these new products.

2) currently it can be said that the sector is not undergoing a new technological catching up, since, according to the perception of the interviewed wineries and institutions, the sector of Vale dos Vinhedos is already technologically paired with productive processes considered frontier, and processes linked to viticulture and

3) it points to a possible new catching up when the sector faces a qualification of national demand, since this is the main market focus of the wineries studied. The issue is the challenge of increasing the per capita consumption of fine wines. There are efforts by firms and institutions for this to occur soon, such as: focus on the development of products that are easier to consume, development of wine tourism to promote the products of the region, recognition of their products in international competitions, and negotiations to reduce the tax burden.

In terms of the study's contribution, the following stand out:

1) the relevance of analysing the competitive conditions of a productive sector that has as its technological trajectory the offer of (increasingly) premium products; and

2) the importance of analysing the sector's trajectory, at the mesoeconomic level, which allows us to understand the roles of different players in the sector development process: firms of different sizes and behaviours, public and private institutions. In the case of the sector investigated, different players played important roles in the trajectory of the segment, indicating that collective and coordinated efforts are necessary for technological leaps to occur.

Finally, it is concluded that the industry today is faced with an important barrier on the demand side, the prejudice of national products by the Brazilian consumer, the need to increase the demand for wine in the country and, especially, to give competitiveness in terms of price for these products, with government actions in the industry, providing the reduction of the tax burden and making the domestic product more attractive when compared with imported fine wine, are the current barriers that need to be overcome. A 'demand-pull' is needed for the industry to move towards catching up.

PAPER-2

BRAZILIAN SCIENCE PARKS, An evaluation exercise of their effects on the municipalities

Rodrigo Volmir Rezende

Keywords: Science parks. Innovation. Policy evaluation. Simulation Analysis. Innovation System.

1. INTRODUCTION

Our research aimed to evaluate the Brazilian experience with science parks. Science parks are a weird object to economic analysis. Their use started at 1960s with Silicon Valley as inspiration of interaction between university and industry (Saxenian 1983). In the 1980s, with the Japanese experience with industrial policies (Fukugawa 2006), that applied Science and Technological Parks, the instrument became wide use for policymaker in order to promote technological progress.

With different frameworks and uses, science parks are a contradictory policy instrument. Oldest literature highlights the potentialities of integrate science, technology and production (e.g. Vedovello 1997). Not so older literature criticized these ideas and judge the parks as fantasy of progress (Bakouros, Mardas, and Varsakelis 2002). After the 2000s, new study designs brough back some expectations of this instrument under a different perspective (e.g. Lamperti, Mavilia, and Castellini 2017). The expected benefits are of two ways: on one side, the literature mentions the interaction potentialities; On the other side, the literature address the capacities of science parks to form more innovative and technological firms. The literature came from a systemic framework to a firm’s capacity one.

To explore the Brazilian experience, we adopt an evolutionary approach. We verify the historical constitution of Brazilian science parks where they need the action of several actors to materialize the project. With this context, we considered the comparison between firms inside and outside of science parks limited to what is going on. We hypothesize the Science Park should affect not just the firms inside them, but also the local Innovation System of the locality.

Under this hypothesis, we designed our study to explore if the Brazilian experience reflects it. Our method passes through three steps. The first was the historical perspective. We investigate the process of constitution and operationalization of active Brazilian Science parks. We identified three patterns: Federal policy, regional policy, and private initiatives. From this result, we identified the importance of a political capability (social capital) to get from the project to the operational phase.

The second step was an empirical exercise that applied a diff-diff method comparing municipalities with operational Science parks and municipalities with non-operational ones. We applied a principal component analysis to quantify a proxy for the local innovation system that works as a dependent variable in the diff-diff strategy. The result verified that operational Science parks are statistically different from non-operational ones in terms of this proxy for local innovation system.

In the third step, we try to generalize this result by an agent-based simulation. Using a Brazilian knowledge agent-based model, the Micro-Macro Model (MMM) from Dweck et al. (Dweck, Vianna, and Barbosa 2019), we characterized the model to represent Science parks. Looking at the aggregate macroeconomic variables, we specified some characteristics attributed to science parks in the literature.

2. METHODOLOGY

2.1 Historical Approach

The first is a historical perspective, a macro-narrative of the emergence of the Science Park in Brazil. We focused on the 12 operational parks according to Brazilian data information (BRASIL 2016), exploring the material about them available. Our goal was to understand their historical path to becoming operational.

2.2 Empirical Test

The second step of our research adopts a quantitative perspective. We apply the standard diff-diff strategy in order to verify if Brazilian science parks had some impact. Other “sub-steps” followed this step. The dependent variable in our study is the local Innovation System of each municipality with a Science Park. We built a dataset with 212 variables to compose the technological, production, and scientific systems present in each municipality. After that, we apply the same strategy of Cirillo et al. (2017) and Fagerberg and Shrolec (2008), whose applied a factor analysis to discuss National Innovation Systems. We identify as proxy for the local innovation system of each municipality the Principal Component of the dataset of the systems triad (                    ).

The diff-diff model considered comparable municipalities (by matching strategy) with operational (  ) and non-operational parks before and after their foundation (  ). The structural change is given by the combination of these variables   ).

2.3 Computational Simulation

The third step exercised extrapolation of results. Using a recognized agent-based model, the Micro-macro model, MMM (Dweck, Vianna, and Barbosa 2019) and implement some configurations based on the literature that could represent a Science Park in the model. We specified that selected firms would have incremental differences in terms of technological opportunities, R&D effort, and tax subsidies. We perform 200 simulations with seven combinations and a baseline with 200 firms, 20 of them randomly identified as “Science parks firms”.

3. RESULTS

3.1 Historical Narrative

Our results have the same three dimensions: the historical perspective, the empirical test, and the simulation exercise. From the historical perspective, analyzing the development paths of operational Brazilian Science parks, we identified three strategies or characteristics: The Federal Government push, the regional government push, and the private initiatives. The latter two are more characteristic in the South and Southeast regions. Traditionally more industrialized regions of the country, we notice the importance of a social capital in order to assemble the different necessary agents to operationalize a Science Park. The private strategy looks more focused in traditional share of costs with public entity, usually the municipality. The regional strategy looks more structured at the state government level and interacts with local productive arrangements perspective.

The federal push strategy rings the diffusion effort but is limited impact because of the lack of social capital identified in the more industrialized regions. In fact, this diffusion effort ends to happen more effectively in the large cities of other regions. As a consequence, we interpret these results as the role of this social capital for the operationalization of a Science Park — what it is different to the success of a Science Park.

3.2 Empirical test

The empirical step is the more challenging one. We estimate a proxy for local innovation systems of each municipality with a Science Park started after 1998. To identify comparable municipalities, we restrict the analysis to operational and implementation Science parks. After a matching strategy, we compute the principal component of 212 variables that result in our proxy for the local innovation system of each municipality.

The identification process restricted the municipalities to a set with south and southeast municipalities. We cannot generalize the results. We could make other approaches regarding to selection of variables and computation of the proxy.

We applied the statistical model to the three datasets available, with three specifications. Just the first, and less comparable, didn’t identify the statistical difference in municipalities with operational science parks. We can’t fully explore the sign of the structural change variable (Operational:Park). Both positive and negative sign are acceptable if we think there is no cardinal relation in an innovation system.

3.3 Agent-Based Simulation

The last step we introduced was an exploratory exercise. With different configurations, we explore the aggregated results for the economy. The average results are in the figures below. What we can see is that technological opportunities and R&D outperform the baseline scenario. An unexpected result is the subsides policy and its combinations that had performed lower than the baseline scenario.

CONCLUSIONS

In our study, we test if Brazilian science parks affect their local Innovation System, considering the municipality level. We identified a statistically significant difference of operational Science parks comparing to implementation ones. Reflecting the parks has a systemic dimensional that we could not ignore. With a simulation model, we confirm this idea of a systemic impact simulating in a macroeconomic ABM with characterization to simulate a Science Park. The results enforce the idea of systemic effects by the increasing of technological opportunities.

We understand the importance of these results goes beyond science parks, but target to innovation policies. From our historical analysis becomes clear the role of a social capital in the operationalization of science parks. What makes us think the local dominant players still appropriate the police benefits, without guarantee of diffusion of results into the society. The method isn’t closed. We can choose other variables to compose the proxy for local innovation and help to explore other results that don’t become clear in this general analysis.