The technological relationships between indigenous firms and foreign-owned MNCs in the European regions

It has been argued that the accumulation of technological competence is a path-dependent and context-specific process, being partly firm-specific and partly location-specific. MNCs spread the competence base of the firm, and acquire new technological assets or sources of competitive advantage. For their part indigenous firms benefit from local knowledge spillovers from MNCs, given the access of the latter to complementary streams of knowledge being developed in other locations. This paper examines how the particular corporate technological trajectories of multinational corporations (MNCs) have interacted with spatially-specific resources for the creation of new competence in some of the leading regions in Europe. Yet foreign investments, and the associated skills and capabilities that they bring, are arguably of crucial importance as a catalyst for local growth: learning curve advantages are mainly people- and institution-embodied and regional systems may substantially benefit from global corporations investing in innovation and local human capital. Although a break has thus occurred with the conventional economic approach - in which spatial factors shaping innovation were usually considered secondary (if not thoroughly negligible) - too little is still known about the regional scope with respect to the geographical location of innovatory capacity in the global economy. This is all the more relevant in the presence of an in-depth process of economic integration, as is the case of the EU, which arose from the need to define the problems, and the policies aimed at solving them, in terms of geographical location and centre/periphery economic convergence. We use data on the patents granted in the United States to large firms for inventions emanating from research facilities located in eight selected European countries (Belgium, France, Germany, Italy, the Netherlands, Sweden, Switzerland and the UK) over a 27 year period (1969-1995). The location-specific patent data is complemented through the use of other indicators such as the regional distribution of expenditure on basic scientific research, and the R&D expenditure personnel given by the EU database New-Cronos-Regio. The aim is to improve our understanding of some aspects of the effects of Innovation and Globalisation on Firms and Regions - i.e. technological spillovers - by examining the patterns of technological (by technological field of the largest firms) and production (by industry of the output of the largest firms) specialisation in each region. Differences between the two specialisation profiles may be indicative of technological diversification by industry, and hence potential technological overlaps between industries. These overlaps may be more pronounced in higher order centres, due to their greater technological breadth (which may show a greater technological diversification within the typical industry represented in the region, and not merely a greater span of industries). We then distinguish between intermediate centres (with significant levels of technologically focused activity) and lower order regions (backward regions, with little activity at all). The patterns of technological diversification of industries are then checked by examining which firms are responsible for a positive technological specialisation in the case of a region that lacks specialisation in the equivalent industrial category, and how this fits into the overall pattern of technological diversification of the firms in question.

Economic growth and internationalisation in the italian mezzogiorno: The emergence of "lights and shadows" in a european periphery

In the most recent years, the pattern of economic development of the Italian Mezzogiorno has given signs of a remarkable change in progress. Up to the beginning of the 1990s, the whole area was by and large characterised by a single macroeconomic model of income and employment, whose dynamics were strongly based upon State intervention. The end of the special public support for the Mezzogiorno in the early 1990s - as a consequence of the completion of the Single European Market in 1992 - was followed by a substantial lack of legislative tools for the support of less favoured areas. Since then, the Italian southern regions have gone through a worsening of their economic fundamentals, particularly with regard to income growth and unemployment. The main obstacles to economic convergence are well known and in the majority of cases they are rooted in the historical and socio-cultural background of southern Italy. Public inefficiency, lack of infrastructures, problems of public order, State-dependence, are all "classical diseases" of the southern regions as compared to the North and the Centre of the country. Moreover, all these factors couple with other specific aspects seriously curbing the economic performance of the area, among which: inadequate entrepreneurial culture, low technology potential and innovation propensity, scarce services to firms, weak attractiveness towards external resources (i.e., FDI), insufficient promotion of internationalisation processes, feeble linkages with global markets and networks. In the most recent years, however, manifest differentials in the economic development pattern have begun to rise also within the southern area, giving shape to what has been labeled "the emergence of more than one Mezzogiorno". On the other hand, the export performance of the South as a whole has shown striking signs of dynamism - although, even in this case, not at all uniformly spread across regions - triggering an intense debate on the necessity to implement a sound restructuring process of both manufacturing and service industries. By using a wide range of both economic and social indicators for the period 1985-1998 and adopting a high disaggregation of the Italian southern territory up to the level of province (NUTS3%29, this paper aims at showing that the economic geography of the Mezzogiorno is somehow more complicated than what used to be traditionally maintained, as strong economic and social differences exist also within the area. The statistical analysis, carried out by means of principal components and cluster analyses, intends also to provide some support to the fact that, in order to achieve faster growth and stronger convergence, two elements seem to be crucial: %0D 1) the development of local firms, particularly small and medium enterprises (SMEs); 2) the internationalisation of the overall southern economy through various modalities, to allow its participation in the European and global competitive bidding. Therefore, within the overall public strategy to support the internationalisation of the Italian national system, the need for specific tools and geographically-targeted policies may emerge as vital to avoid further marginalisation and increasing economic divergence of the South from both the rest of the country and the EU area.

The Dynamics of Export Specialisation in the Regions of the Italian Mezzogiorno: Persistence and Change

In the most recent years, the pattern of economic growth of the Italian Mezzogiorno has undergone a significant transformation. Up to the beginning of the 1990s, the whole area was by and large characterised by a single macroeconomic model of income and employment, whose dynamics were strongly based upon State intervention. By the early 1990s, the end of the special public support for the Mezzogiorno - as a consequence, to a large extent, of the completion of the Single European Market in 1992 - was only partially followed by appropriate legislative tools for the support of less favoured areas. Since then, the Italian southern regions as a whole have gone through a worsening of their economic fundamentals, particularly with regard to income growth and unemployment. At the same time, the differentials in the paths of socio-economic development within the southern area have been strengthening, confirming the existence of "many Mezzogiorni" previously noted by the specialised literature. Our current research line aims at providing the basis for devising a policy framework within which trying to identify new directions to untangle regional "vulnerability", with particular reference to the dramatic changes imposed by internationalisation and globalisation processes. The objective of the present paper is to investigate to what extent the evolution of export patterns and performance by Mezzogiorno province fits in the picture of intra-area growing differentiation. The combined significance of cumulativeness and gradual change in specialisation patterns is examined by testing the extent of continuity in the sectoral composition of trade specialisation profiles by province during the period 1985-2000. The export performance and the models of specialisation seem to bear out the view of "many Mezzogiorni" and show that peripheral regions and provinces have adopted rather distinct strategies to adjust to the rapidly increasing economic integration.income growth and unemployment, regional trade specialisation, Italy, export patterns

Related variety and regional growth in Italy

agglomeration economies, related variety, regional growth

Multinational enterprises in Germany have a greater level of local engagement and links to regional innovation systems than those in the UK.

How can multinational companies be successful and innovative in their operations abroad? Using case studies, Simona Iammarino finds that those multinational organisations that have less centralised structures tend to be more involved with regional innovation networks. Looking at successes in Germany, she argues for more policy initiatives aimed at supporting regional innovation, such as talent management and graduate retention schemes

The Evolution of Trade and Technological in the Italian regions

The deepening of the integration process with the acceleration of the Single European Market (SEM), the forthcoming adoption of a single currency together with the political plans of eastwards enlargement of the European Union (EU%29 rise problems of disparities and inequalities between and within member states. The existence of cross-border imbalances within the EU area and the relevance of the issue for a successful socio-economic integration have been widely pointed out by the literature. The convergence in GDP levels across the EU regions registered up to the 1970s slowed down in the 1980s and started to reverse in the early 1990s. The awareness of this phenomenon has promoted the flourishing of socio-economic investigations based on the region as a territorial unit of analysis in order to better understand local dynamics driving convergence/divergence processes. Amidst the more general globalisation trend, localised knowledge spillovers and geographical concentration of economic activity seem to underlie these processes. In fact, despite of the fast pace of technological change and the massive reduction of space and time constrains, geographical agglomeration matters more than ever before for the purpose of global competitiveness. If the geographical perspective has shifted from the national to the regional level in the investigation of growth differentials, it has also turned out that innovative capabilities account for a good deal in explaining inter-regional disparities. The latter seem to greatly depend upon local innovative capacities, without, however, disregarding economic-structural and institutional factors. Structural and innovative processes are closely connected and mutually reinforced by virtuous and vicious circles%2C characterising respectively “success stories” of rapid industrial and technological development and catching up, and “falling behind” models of insufficient structural change and lack of organisational flexibility and systemic interaction. Within the European arena, the heterogeneous socio-economic conditions of the Italian regions are a clear example of intra-border imbalances. In the Italian peninsula, the north-south gap, reflected in the distinction between most advanced and less favoured regions, calls for a better understanding of both structural and technological profiles of the regional sectoral systems. By providing further insight into the convergence/divergence processes of regional industrial systems in Italy, this paper will attempt to identify production and innovative potentials developed within each regional unit. The ultimate aim is to explain current leading and lagging-behind conditions as well as to focus on the developing trajectories of consolidation and redefinition of regional competitive positions. For this purpose, economic, technological and locational factors will be evaluated. As the heterogeneity of the Italian regional systems is far to be an exception in the EU, the results of this analysis and their policy implications may well be relevant to the domestic realities of other member states. Going into the details of the analysis, the paper tests the hypothesis of whether technology effort impacts on regional internationalisation (understood in terms of international trade) over time. In doing so, the evolution of sectoral trade specialisation is sketched in order to evaluate the trajectories of regional competitive patterns. The emphasis on the sectoral aspects shed some light on the knowledge exchange and learning underlying trade flows. Moreover, in order to evaluate the significance of cross-regional differences in this context, the investigation goes further by identifying regional profiles of production structure.

Regional variety and employment growth in Italian labour market areas: services versus manufacturing industries

This paper investigates the impact of regional sectoral diversity on regional employment growth in Italy over the period 1991-2001. Assuming that externalities may be stronger between industries selling similar products or sharing the same skills and technology (i.e. related industries), we analyze the role of different forms of sectoral variety at the Local Labour System (LLS) level. Our results show strong evidence of a general beneficial effect of a diversified sectoral structure but suggest also the need to differentiate the analysis between manufacturing and services. In particular, overall local employment growth seems to be favoured by the presence of a higher variety of related service industries, while no role is played by related variety in manufacturing. When looking at diversity externalities between macro-aggregates, the service industry is affected by related variety in manufacturing, while no evidence of externalities is found from tertiary sectors to manufacturing.related variety, knowledge spillovers, agglomeration economies, regional growth, Italy

Shaping the formation of university-industry research collaborations: what type of proximity does really matter?

Research collaborations between universities and industry (U-I) are considered to be one important channel of potential localised knowledge spillovers. These collaborations favour both intended and unintended flows of knowledge and facilitate learning processes between partners from different organisations. Despite the copious literature on localised knowledge spillovers, still little is known about the factors driving the formation of U-I research collaborations and, in particular, about the role that geographical proximity plays in the establishment of such relationships. Using collaborative research grants between universities and business firms awarded by the UK Engineering and Physical Sciences Research Council (EPSRC), in this paper we disentangle some of the conditions under which different kinds of proximity contribute to the formation of U-I research collaborations, focussing in particular on technological complementarity among the firms participating in such partnerships.university-industry research collaborations, proximity, geography, industrial clustering, technological complementarity

Labour productivity, ICT and regions: The revival of Italian “dualism”?

Among the reasons underlying the slow economic convergence of some regions towards the national and the European Union average, the strong gap in technological endowment and innovation capacity has been indicated as one of the most important factors. The requirements of the current ‘knowledge-based economy’ and the contribution of Information and Communication Technology (ICT) to socio-economic change are very likely to have a significant impact upon regional differentials in the European Union. So far, however, it is rather unclear whether the new paradigm will spur greater socio-economic cohesion or, on the contrary, stronger territorial polarisation. This paper looks at the distribution of ICT-producing small and medium enterprises in Italy, comparing structural variables – in particular spatial and sectoral dimensions - with labour productivity levels. Ultimately, the objective is to shed some light on the role that ICT-producing firms might play with respect to regional gaps in the Italian economy, traditionally characterised by geographical polarisation and imbalances which are among the most striking in the “Europe of regions”. The first result of our analysis (carried out by using experimental micro data) is that a linkage seems to emerge between high labour productivity and the IT industry. This is in line with the insights of the economic theory of technical change, suggesting that IT-producing sectors are those where gains in productivity are by far the most evident. As expected, the geographical location of firms accounts for a good deal when looking at labour productivity levels across sectors, casting some concern on the development perspectives of the Italian regional divide.regional development, Italy, Information and Communication Technology (ICT), small and medium enterprises, productivity

Global Investments and Regional Development Trajectories: the Missing Links. LEQS Discussion Paper No. 118/2016 October 2016

Regional economic development has been long conceptualised as a non-linear, interactive and socially embedded process: these features were traditionally regarded as spatially mediated and highly localised. However, unprecedentedly fast technological change coupled with the intensification of global economic integration processes has spurred the need to place regional development in a truly open and interdependent framework. Despite substantial progress made by the academic literature, rethinking regional development in this perspective still presents a number of challenges in terms of concepts, empirical evidence and policy approaches. Following an interdisciplinary assessment of how openness and connectivity – proxied by one particular of the many cross-border flows, i.e. global investments – interact with regional economic development trajectories, this paper presents a picture of the geography of foreign investments from and to the European regions and its change after the financial and economic crisis in 2008. This simple exercise allows us to shed some initial light on how the operationalisation of regional connectivity can improve our empirical understanding of the evolution of regional economies and the policy approach needed to support their reaction to change