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Version: Final Date: 16 April 2012 Regional Innovation Monitor

Regional Innovation Report ()

To the European Commission Enterprise and Industry Directorate-General Directorate D – Industrial Innovation and Mobility Industries

Andrea Ciffolilli

Ismeri Europa Srl

www.technopolis-group.com PREFACE

The Regional Innovation Monitor (RIM)1 is an initiative of the European Commission's Directorate General for Enterprise and Industry, which has the objective to describe and analyse innovation trends across EU . RIM analysis is based on methodologies developed in the context of the INNO-Policy Trendchart, which covers innovation at national level as part of the PRO INNO Europe initiative. The overarching objective of this project is to enhance the competitiveness of European regions through increasing the effectiveness of their innovation policies and strategies. The specific objective of the RIM is to enhance the scope and quality of policy assessment by providing policy-makers, other innovation stakeholders with the analytical framework and tools for evaluating the strengths and weaknesses of regional policies and regional innovation systems. RIM covers EU-20 Member States: Austria, Belgium, Bulgaria, the Czech , Denmark, , France, Germany, Greece, Hungary, Ireland, , the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom. This means that RIM will not concentrate on Member States where the Nomenclature of territorial units for statistics NUTS 1 and 2 levels are identical with the entire (Estonia, Latvia, and Lithuania), Malta which only has NUTS 3 regions, Slovenia which has a national innovation policy or Cyprus and Luxembourg which are without NUTS regions. The main aim of 50 regional reports is to provide a description and analysis of contemporary developments of regional innovation policy, taking into account the specific context of the as well as general trends. All regional innovation reports are produced in a standardised way using a common methodological and conceptual framework, in order to allow for horizontal analysis, with a view to preparing the Annual EU Regional Innovation Monitor reports. European Commission official responsible for the project is Alberto Licciardello ([email protected]). The present report was prepared by Andrea Ciffolilli ([email protected]). The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Member States or the European Commission. Copyright of the document belongs to the European Commission. Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear.

1 http://www.rim-europa.eu

Table of Contents

1.1 Recent trends in regional economic performance 1 1.2 Identified challenges 3 1.3 Degree of institutional autonomy 5 2.1 Institutional-set up, co-ordination and implementation mechanisms 5 2.2 Availability and use of policy intelligence tools 9 2.3 Key challenges and opportunities 9 3.1 The regional innovation policy mix 11 3.2 Appraisal of regional innovation policies 17 3.3 Good practice case 19 3.4 Portfolio of innovation support measures 21 3.5 Towards smart specialisation policies 23 3.6 Possible future orientations and opportunities 24

Appendices Appendix A Bibliography...... 26 Appendix B Stakeholders consulted...... 27 Appendix C RIM Repository information ...... 28 Appendix D Statistical data ...... 29

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Figures Figure 1-1 Economic and innovation performance indicators...... 3 Figure 3-1 TreC: a scheme of the tool ...... 20 Figure 3-2 TreC: an example of a concrete application of the tool ...... 21

Tables Table 3-1 Overview of the regional innovation policy mix...... 11 Table 3-2 Existing regional innovation support measures ...... 14

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Executive Summary 1. Introduction: Main recent trends in the Regional Innovation System The autonomous of Trento is a relatively small and mountainous situated in the Northeast of Italy. The total population is just over 500k and the density is low (approx. 83 per km2; only a small number of , 14 out of 217, have a population larger than 5,000). The province is relatively rich: GDP per capita was 122 relative to the EU27 in 2008 and GDP growth was positive during the last decade (e.g. 2.4% in 2006 and 2.9% in 2007), well above the Italian performance. The employment rate (52.6% in 2009) is in line with the European average and has been quite stable over time. Unemployment is less than half of the EU27 rate (3.3% in 2008), and is concentrated among women and youths. The share of services (financial intermediation and real estate, , community services and activities of households) in total gross value added is higher than the Italian average. Tourism is vital and mostly related to the exploitation of natural amenities, sky resorts etc. The share of agriculture is also higher than average while the importance of industry is lower than in the rest of Italy. The most important manufacturing sectors include: textiles, materials for construction, mechanics, food processing, paper and wood making. The fragmentation of the productive fabric and the prevalence of micro-enterprises in all sectors is a key feature of the economy (as well as of most Italian regions), which implies a lack of critical mass and has a negative impact on the innovation performance. The main barriers to innovation performance include: a relatively low business enterprise sector R&D expenditure (55% of GERD but growing) as opposed to a relatively high sector expenditure (22% of GERD); low patenting activity (49 in 2006; EU27=100); lower share of economically active population with tertiary education in comparison with the European average (64 in 2008; EU27=100) etc. Despite such barriers, the regional system can count also on key advantages such as the strong public research and innovation capacity in key enabling technologies (ICT) as well as lead markets (e.g. eHealth, sustainable constructions) and the presence of innovative SMEs (e.g. the CIS indicators on product/process/organizational innovation are higher than the EU average). 2. Major innovation challenges and policy responses Challenge 1: Strengthening the role of the private sector in RTDI by diffusing innovation culture among micro-enterprises and SMEs. SMEs are performing well on average but innovation is mostly incremental and linked to knowledge diffusion and technology transfer rather than to formal research activities, as a consequence of the low BERD and as shown, for instance, by the patent indicators. The lack of critical mass, due to the prevalence of small firms and a very limited number of medium and large enterprises, and the lack of RTDI culture in the business sector are the key constraints. The existing policy mix deals with the lack of innovation culture. In this context, it worth noting that the “Innovation Strategy on ICT Enabled Services” (July 2011) aims at benefiting both final users and firms by fostering the achievement of comparative advantages in the provision of innovative services. The province, through the law 6/99, promotes the development of science and industry linkages and the creation of a favourable innovation climate. It provides consultancy and financial incentives to the use of IPR and carries out initiatives to raise IPR awareness. Other promotional initiatives such as prizes, awareness raising campaigns etc. are implemented. There is not strong evaluation-based evidence of outcomes and impacts of the existing initiatives but the policy makers seem to be satisfied with the mix. The actions to increase innovation culture should be continued and more can be done to engage the entrepreneurs better and make them the protagonists of such cultural change. Challenge 2: Facilitating the growth of small innovative firms, their networking and aggregation in clusters built around larger global innovation champions

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In a context of increasingly global market integration and competition, a growth model based on incremental and marginal innovation seems hardly sustainable in the medium/long term. At the same time, facilitating the adoption of emerging technologies on the widest possible scale is important, especially in the perspective of pursuing a smart specialization strategy. The growth of local micro-enterprises and SMEs and their aggregation can be facilitated by attracting global players, which catalyse and coordinate the efforts. To deal with this challenge the province promotes specific agreements with large firms, which can benefit from the local knowledge base (e.g. Microsoft, , ST Microelectronics, Finmeccanica etc.). Moreover, as part of the existing policy mix, cooperative R&D projects (firms in partnership with research institutes), especially in the field of ICT and in the fields of renewable energy and sustainable building industry (e.g. Habitech Technology ) are financed. There is not strong evaluation-based evidence of outcomes and impacts of the initiatives; however, some positive indirect evidence on R&D projects support is provided by national evaluations of similar schemes. More can be done to support clustering in other sectors as well (e.g. food processing and other traditional manufacturing sectors). Challenge 3: Further increasing competitiveness in key sectors and lead markets by fully exploiting the regional knowledge base The robust research and innovation capacity in ICT and in its pervasive applications is a very important competitive advantage. The challenge is maximizing the utility of this advantage by strongly investing in promising research fields and corresponding lead markets such as eHealth, renewable energy and sustainable constructions etc. In eHealth, Trento is already in a leading position and it can further consolidate its role by continuing developing successful solutions and strengthening the participation in international networks. In relation to renewable and sustainable constructions, the challenge is further increasing the RTDI capacity and the development of the Habitech technology district can be considered an important step in this perspective. Local R&D organisations are supported through measures that concern excellence and management of research in universities and several infrastructure initiatives (e.g. Trentino in rete, Poli Tecnologici, FBK – Clean room). It is also worth mentioning here the ongoing initiatives for setting up a mechatronic pole in Rovereto, based on the collaboration among industry, research and education (e.g. the Bonfiglioli Mechatronic Research centre was set up in September 2011). Furthermore several initiatives to support job training, career development and mobility of researchers are being implemented. Policy makers seem to be content with the existing mix; however, evaluation-based evidence on performance is scarce which makes it hard to fully appraise the appropriateness of the regional action. 3. Innovation policy governance The Province of Trento has an elected parliament (Council) and a government called “Giunta”, headed by the President of the province who is directly elected and nominates the councillors (or ministries) responsible for the various policy areas. The province has full autonomy in RTDI policy. The Department of Industry and Crafts, the Department of Knowledge, the Department of Public Works and Mobility and the Provincial Directorate General are the main technical units designing and implementing RTDI initiatives in the provincial administration. They are responsible for: supporting entrepreneurship and business innovation; developing ICT infrastructure and services; planning and managing research and university policy. Other important regional actors which help to implement RTDI policy are: the Provincial Agency for the promotion of economic activities (APIAE), Trentino Sviluppo Spa, the Bruno Kessler (FBK) and the Edmund Mach (FEM) Foundations, the University of Trento etc. In conclusion, there is a broad network of public and private organisations that contribute to delivering and/or steering RTDI policy in the province. The most important policy documents (the Multi-annual Research Programme and the Innovation Strategy on ICT Enabled Services which aims at pursuing the model of “Trentino as a Lab” - TasLab) respond appropriately to local needs, due to the direct and continuous interaction between the provincial administration, the main RTDI actors and the local stakeholders (e.g. the business community). Furthermore, these

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strategies take into account global technological trends with a view to consolidate/increase local competitiveness. A challenge for governance is to further streamline and strengthen the relations between the provincial research institutions (e.g. FBK and FEM), the university and the business RTDI departments. This will facilitate creating critical mass and overcoming the fragmentation of the business sector. A further challenge is to diffuse the use of policy intelligence tools (e.g. foresight studies, sectoral road mapping and trend analyses) and carry out policy evaluation exercises more systematically. A wider use of these tools, currently mostly confined to the ICT sector, would help better identify enabling technologies (and their trends) as well as promising application fields and lead markets. 4. Conclusions: future actions and opportunities for innovation policy The approach of the Trento policy makers towards RDTI increasingly consists in strengthening a demand driven innovation system where the research excellence is oriented as much as possible towards societal needs. Hence the main future orientation will be to continue in this direction and further facilitate the development of an entrepreneurial process of discovery. This includes diffusing research and innovation culture by supporting the creation of new innovative enterprise, the growth and development of existing firms and their association in clusters, technology consortia and other networks involving public-private partnerships, and by attracting global players which can act as catalysers to allow synergies and critical mass. Making more intense use of pre-commercial procurement (PCP) is another step in this direction. By acting as technologically demanding first buyers of new R&D, public procurers can drive innovation from the demand side and innovate the provision of public services faster. This also creates opportunities for companies to take international leadership in new markets2. Important orientations for the future also include: Supporting the creation of territorial laboratories (e.g. TasLab) which can foster innovation focused on societal and business needs in innovative sectors and niches; accelerate the availability and accessibility of the public information repositories and data to allow reuse, increase transparency and participation of citizens and firms, and to generate business opportunities related to the creation of new services; keep on strengthening the evaluation culture to be able to fully understand the effectiveness of the different components of the policy mix and steer the action accordingly. Finally, the promotion of what has been and is being done by the Province (public marketing) is a key activity for successfully establishing new links and creating new opportunities for cooperation.

2 The reduction of time to market by developing a strong European home market for innovative products and services is key to create growth and jobs in quickly evolving markets such as ICT; see COM(2007) 799 final on Pre-commercial Procurement.

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1. Main Trends and Challenges in the Regional Innovation System

1.1 Recent trends in regional economic performance The autonomous province of Trento is located in the Northeast of Italy. It borders on (south and east), (west) and the province of Bolzano (north). Together with Bolzano it constitutes the region of Trentino-Alto Adige, which borders on Switzerland (northwest) and Austria. The territory of Trentino-Alto Adige was annexed from the Austro-Hungarian Empire to the after the First World War and then became a region of the Republic in 1947. The region itself was deprived of power in 1972 as most competences have been transferred to the two autonomous . There are three official languages: Italian, German and Ladin3. The territory of Trento is almost entirely mountainous (over 55% of the surface is occupied by forests) and characterized by low population density (82.6 persons per km2 in 2007). The urban areas are small: only 14 municipalities (out of total 217) had a population larger than 5,000 in 2008. The climate is between semi-continental and alpine; average temperatures range between -5 and -10 C° in winter and between 20 and 25 C° in summer. More than 77% of the territory is situated 1,000 m (or over) above sea level. The regional biodiversity is very wide and Trento hosts a national park (Stelvio), two provincial parks (Adamello-Brenta and Paneveggio Pale di San Martino) and four natural reserves. These features and the proximity with the attract numerous tourists in both winter and summer. Given the prominent role of tourism for the economy, the quality of the environment is of key importance. The total population is approximately 513k (2008), and is slowly growing mostly thanks to foreign immigration (+1.14% per year between 2000 and 2008). The regional GDP was about €16,007 million in 2008 (or 15,859 millions of PPS) and represents approximately 1% of Italian GDP. GDP growth was positive during the last decade until the onset of the global economic crisis in 2008. For instance, Trento recorded a GDP growth equal to 2.4% and 2.9% in 2006 and 2007 respectively, well above the national performance. GDP per capita was 122 relative to the EU27 in 2008 (PPS per inhabitant) and has experienced a steady decline since mid-1990s. The gross fixed capital formation per capita, relative to the EU, was 193.1 in 2004 and has been growing in the past decade. The employment rate (52.6% in 2009) is more or less in line with the European average and has been quite stable in the last decade (it was 51.5% in 2000). Unemployment is quite low (it was 3.3% in 2008) and has also remained fairly stable. It is less than half of the EU27 rate, and it is concentrated among women and youths. It suffers from the mismatch between the relatively high qualifications of young people and the labour demand of local firms, which are mostly traditional and small. This enables the region to successfully absorb immigration but does not provide enough opportunities to local young skilled labour. In Trento, the share of agriculture in total gross value added (3.1% in 2007) is larger than the Italian average (2.1%), despite the mentioned mountainous features. This is due to a strong agricultural tradition, the widespread presence of cooperatives of producers, which prevent fragmentation, and by the attention given to research in sustainable agriculture. The production of fruit represents the most important activity (e.g. apples4, berries, quality wines). Farming and production of milk and cheese are also historically important but do not represent a relevant share of total production.

3 The official name of the Region is bilingual (Italian/German): Regione Autonoma Trentino- Alto Adige/Südtirol. Italian is the majority language. In Bolzano over 30% of the population is of German language. Ladin is a neo- language spoken by approximately 55,000 people in Trentino-Alto Adige and Veneto. 4 Trentino harvest about 60% of total national production of apples.

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The share of services is also higher than average and has been growing in the last decade from 69.2% in 2000 to 70.2 in 2007, which is slightly lower than in Europe (71.6%). The growth concerns financial intermediation and real estate (24.5% of total NACE), as well as public administration, community services and activities of households (21.8%). Tourism is vital and mostly related to the exploitation of natural amenities, sky resorts etc. The share of industry (26.7%) is in line with the European average and is lower than in the rest of Italy (27.5%). It has been decreasing over the last decade; this decrease particularly concerned industry (strictu sensu), while the share of the construction sector grew from 6.9% in 2000 to 8.3% in 2007. The most important manufacturing sectors include: textiles, materials for construction, mechanics, food processing, paper and wood making. The fragmentation and the prevalence of micro-enterprises in all sectors is a key feature of the Trento economy as well as of most Italian regions. This feature implies a lack of critical mass and has an impact on the capacity to carry out research and on the innovation model pursued (see key challenges below). Due to a mix of reasons such as the importance of tourism, the presence of several large trucking companies, as well as of fuel distribution firms which store fuel also for neighboring regions, there is still a strong reliance on fossil sources. However, the province has set a 35% renewable energy target for 2020 and is moving fast towards this objective.

1.2 Recent trends in regional innovation performance The regional innovation system is well developed and interconnected. During the last decade or so, Trento has increasingly specialised in ICT as well as in their pervasive applications which became a very important competitive advantage and prompted the development of lead markets (e.g. eHealth, sustainable construction etc.). The province can count on the research capacity of the public research institutions (e.g. University of Trento, Foundation Bruno Kessler and Edmund Mach; see §. 2), as well as on the capacity of local SMEs to innovate. The low level of private R&D investments represents the main weakness of the system and is a consequence of the fragmentation of the productive fabric, which was highlighted in the previous fabric. The following subparagraphs provide information on the main features of the system. The availability of regional data on R&D expenditure as well as on SME innovative activities is limited and refers to the pre-crisis period. This gap does not allow us to appreciate the effect of the recession on research-related investments but it is quite directly recognised by both the public and private sector that the investment propensity of firms and the capacity to co-finance research projects has decreased, also due to the lack of liquidity which affects banks. Total GERD as a percentage of GDP was 1.17 in 2007; the government sector R&D expenditure as a share of total GERD shows a mildly decreasing trend but it is still much higher (22% in 2009) than the European average (13% in the EU27). Business enterprise sector R&D expenditure as a share of GERD has been increasing but it is still lower (55% in 2009) than in the EU27 (62%). Despite the private sector’s weakness in terms of intramural R&D expenditure, the number of SMEs innovating in-house as a percentage of all SMEs is high: it was 0.93 in 2004 compared to 0.55 in the EU27 (normalised scores within a 0 –lowest– to 1 – highest– range). The SMEs introducing product or process innovations as a percentage of all SMEs that is also remarkable: 0.86 in 2004 (normalised scores within a 0 –lowest– to 1 –highest– range) and substantially higher than in Europe (145.8 relative to the EU27). The number of SMEs introducing marketing and/or organisational innovations as a percentage of all SMEs that was higher than in Europe: 0.74 in 2004 compared to 0.57 in the EU27 (normalised scores within a 0 –lowest– to 1 –highest– range). Finally, the number of innovative SMEs collaborating with others as a percentage of all SMEs was 0.44 in 2004, which is in line with the EU27 average (normalised scores within a 0 –lowest– to 1 –highest– range). The EPO patent applications show a considerable annual variation (e.g. 25.5 in 2001, 16 in 2004, 18.8 in 2005) but the number of applications per head has been constantly

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below the European average during the last decade (49 in 2006; EU27=100). High- tech patent applications per head are even fewer (27 in 2006; EU27=100). The share of higher education expenditure in GERD is lower than in the EU27 (21% vs. 24%). Anyway, the enrolment in the universities went up and the share of the economically active population (15 years or over) with at least tertiary education has grown significantly from 11.5% in 2001 to 16.6% in 2008, even though it still remains much lower than in Europe (64.1 in 2008; EU27=100). The share of the population involved in life-long learning increased from 3.9% in 2000 to approximately 9% in 2008 and is in line with the European average. It involves all ages but the majority of these initiatives are focused on training and apprenticeships for young students. The share of households with broadband access has been strengthened especially in recent years, from 22% in 2006 to 44% in 2009; however, it is still substantially lower than in Europe: approx. 68 relative to the EU27 in 2009. Figure 1-1 Economic and innovation performance indicators

Source: Eurostat and Community Innovation Survey.

1.3 Identified challenges Important drivers of innovation performance in Trento include: favourable macro- economic conditions (relatively high income level, high investment propensity, satisfactory employment level etc.), even though these have been worsened by the global crisis; high capacity of public research and high share of education expenditure in GERD; strong innovation capacity in key enabling technologies (ICT) and lead markets (e.g. eHealth, sustainable construction); presence of unique natural amenities which represent an important tourist attraction. Key barriers to innovation performance include: very low private R&D intensity as opposed to a very high public sector share; low patenting activity; lower education attainments in comparison with the European average; total unemployment is low but concentrated amongst women and young people; high energy intensity and dependence on fossil fuel. These barriers and drivers can be expressed as potential challenges for the system. Challenge 1: Strengthening the role of the private sector in research and innovation by diffusing innovation culture among micro-enterprises and SMEs SMEs tend to be innovative according to the CIS but, apart from occasional exceptions, do not seem to consider knowledge and technology development as a long- term objective or a necessary condition for their market success. In other words, their approach to innovation is mostly of an incremental nature and not based on research. This is demonstrated by the data on RTDI expenditure and scarce patenting activity (even if patenting indicators must be carefully considered especially in relation to the ICT sector where software is protected by copyright in Europe). In general, a key problem is the lack of critical mass, due to the prevalence of small firms and a very

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limited number of medium and large enterprises as highlighted, for instance, by the Multi-Annual Research Programme 2010-20135. The insufficient propensity of firms to invest in research and technologies is linked not only to their average size but also to a lack of RTDI culture. As regards culture, the challenge is to engage the entrepreneurs better and make them the protagonists of such cultural change. Challenge 2: Facilitating the growth of small innovative firms, their networking and aggregation in clusters built around larger global innovation champions In a context of increasingly global market integration and competition, a growth model based on incremental and marginal innovation seems hardly sustainable in the medium/long term. At the same time, facilitating the adoption of emerging technologies on the widest possible scale is important, especially in the perspective of pursuing a smart specialization strategy. The fragmentation of the Trento economy (prevalence of micro-enterprises) is an issue well known to the policy maker, which still deserves great attention. From this point of view, a challenge is to facilitate the development of local micro-enterprises and SMEs and their aggregation, also by attracting global players, which can catalyse and coordinate the efforts. The seemingly good cooperation propensity of SMEs, which emerges from the CIS data, can be considered strength to start from in order to develop networks and clusters. Challenge 3: Further increasing competitiveness in key sectors and lead markets by fully exploiting the regional knowledge base and research capacity. The robust research and innovation capacity in ICT and in its pervasive applications is a very important competitive advantage. The challenge is maximizing the utility of this advantage by strongly investing in promising research fields and corresponding lead markets such as eHealth, renewable energy and sustainable constructions etc. In eHealth, Trento is already in a leading position and it can further consolidate its role by continuing developing successful solutions (e.g. TreC6, CSS7) and strengthening the participation in international networks. In relation to renewable and sustainable constructions, the challenge is further increasing the RTDI capacity and the development of the Habitech technology district can be considered an important step in this perspective. This would enable the province to respond to the need to lessen its dependence on fossil fuels. Another positive step is the development of the mechatronic pole in Rovereto, which gathers the interests and cooperation of industry, research and education. As part of this, the setting up of the Bonfiglioli Mechatronic Research centre in September 2011 was an important achievement.

5 “Programma pluriennale della ricerca per la XIV legislatura, 2010 – 2013” (multi-annual programme for research approved by the provincial Council on 14 December 2010). This multi-annual RTDI strategy has been prepared for the first time in 2006 to guide the regional action in this field; then it has been updated in several occasions by the administration. 6 TreC stands for “three times C”: Cartella Clinica del Cittadino (Citizen Health Record); see §. 3.3 for more information. 7 CSS: Cartella Sociale e Sanitaria (Electronic Social and Health Card)

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2. Innovation Policy Governance

2.1 Degree of institutional autonomy The Province of Trento, like other Italian with a special statute, has a long history of autonomy dating back to the constitutional law of 26 February 1948, which gave special to the region Trentino Alto-Adige (including Trento and Bolzano). However, in 1972 the statutory reform deprived the regional level of its power and most competences were transferred to the two provinces: Trento and Bolzano. The autonomous provinces manage the great majority of the local tax revenues and have a wide range of competences. Until the 2001 Constitutional Reform, the Italian Regions with an ordinary statute had much more limited powers but, after the reform, the differences in the distribution of competences between Trento and other territories diminished over time. In other words, currently all regions have legislative power in most of the policy areas relevant to regional development. As regards applied research as well as universities8, Trento has full autonomy in designing and implementing aid schemes, infrastructures, education and training. There is also full autonomy with respect to the design and implementation of enterprise, technology and innovation policy. The size of the public sector also reflects this distribution of competences: Trento has public functions that usually belong to the central government. According to the RIM questionnaire compiled by the province (former Dept. of Innovation and ICT and Dept. of University and Research), the public expenditure for innovation was EUR 110.24 million in 2008 and has grown since the beginning of the current programming period. Budgetary autonomy is in line with legal autonomy. Currently, provincial funding accounts for about 70% of the total publicly financed research and innovation activities, while Structural Funds represent 20% of this total and the remaining 10% is financed by national sources. From 1995 onwards, the Northern and regions experienced a significant growth in expenditure on economic development (including innovation) financed by the sub-central government (regional and sub-regional administrations), which also experienced an increase in available resources as a result of the increased autonomy. In Trento, the annual average growth of sub-national expenditure for development was 3.4% in 2000-2007; which was also a period characterised by a substantial increase in general government expenditure in the province while it decreased in the rest of Italy (-4.7%). The reasons why general government spending differed in the autonomous province of Trento and Bolzano compared to the rest of the country are related to the very low starting level characterising these territories. There was, in other words, a general redistribution of government expenditure, causing the regions that received the least resources from the centre to experience a leap forward. The regional competences relating to research and innovation comprise a wide range of RTDI activities: from improving governance and developing an innovation friendly environment to technology transfer; from the promotion of applied research to the creation of innovative enterprises etc. In terms of instruments, the regional action covers most kinds of initiatives including aid schemes, infrastructures and capital development.

2.2 Institutional-set up, co-ordination and implementation mechanisms The Province of Trento has an elected parliament (Council) and a government called “Giunta”, headed by the President of the province who directly elected and nominates the councillors (or ministries) responsible for the various policy areas. These political

8 Law no. 191/2009.

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representatives work together with the technical departments of the province to implement measures in their competence fields. In RTDI policy, the provincial government has full autonomy and, thanks to the relatively small size of the territory and the tradition of transparency in the policy action, the interaction with local stakeholders is very direct. At the beginning of 2012, the administration began a significant internal reorganisation of functions and a redistribution of compentences that is still ongoing. Currently, the key departments/structures which deal with innovation policy include: the provincial Directorate General (Direzione Generale), the Department of Public Works and Mobility (Lavori Pubblici e Mobilità), the Department of Knowlegde (Conoscenza) and the Department of Industry and Crafts (Industria e Artigianato). Before this change, the Department of Innovation and ICT was in charge of managing telecommunication networks and technologies, e-government initiatives and innovation in the public administration. Historically and given the specialization of the regional innovation system on ICT, this Department has been a key actor from a policy perspective since its competences included the development of both the telecommunication infrastructure and of innovative public services enabled by IT which are distributed through such infrastructure. The recent Innovation Strategy on ICT Enabled Services9 for the current term of office of the represents the main guiding document of the provincial action in the field and is highly integrated with the mentioned multi- annual research programme and the Provincial Development Programme. This strategy aims at pursuing the model of “Trentino as a Lab” (TasLab) that is a regional process of creation of services enabled by technological innovation10. Due to the mentioned reorganization, the competences of the Department of Innovation and ICT have being assigned in part to the Department of Public Works and Mobility and to the Provincial Directorate-General. The Department of Education, University and Research, through its University and Research Service, has been responsible for: drafting and updating the multi-annual research programme; managing the unitary research fund, the patents fund and the innovation fund; managing programme agreements with the foundations and other provincial research actors as well as with other national and international institutes and agencies; providing technical, scientific and evaluation advice; carrying out the state activities delegated to the province in relation to administrating, financing and developing infrastructures of the University of Trento. Following the reorganization, a new department was created (Department of Knowledge) which has inherited the competences of the Department of Education, Univesity and Research. Finally, the Department of Industry and Crafts will continue being responsible for the initiatives supporting entrepreneurship and business innovation (regulated by the law 6/99 which is discussed in more detail in the following paragraphs) 11. Other important regional actors which help to implement RTDI policy are: the Provincial Agency for the promotion of economic activities (APIAE), Trentino Sviluppo Spa, the Bruno Kessler (FBK) and the Edmund Mach (FEM) Foundations, the University of Trento, and finally, the Habitech technology district for energy and the environment. APIAE has been created in 2009 to increase effectiveness in granting aids and credit facilities to firms, in all sectors apart from agriculture. APIAE is responsible also for verification and control and looks after the relations with Consortia providing financial guarantees.

9 Document available at the following address: http://ptl.taslab.eu/c/document_library/get_file?uuid=dbfabab0-926d-433e-bc83- df3f753ee8e1&groupId=16 10 The model entails activating an Open Innovation mechanism where service innovation is driven by technological advances resulting from public-private collaborations and the full exploitation of the regional research capacity. 11 For updated information on the ongoing reorganization of the Provincial Administration please see the institutional website and in particular its innovation policy section: http://www.innovazione.provincia.tn.it/

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The FBK, previously Trento Institute of Culture, has 50 years of experience in research and innovation promotion. It incorporates a scientific and technological pole and a humanities pole. The former includes a research centre for materials and microsystems and a centre for information technologies. Furthermore the S&T pole carries out research in various areas ranging from physics to biology and from photonics to nano-sciences. The FBK has become a renowned international leader in specific fields such as Artificial Intelligence and Microelectronics. The Trento RISE association connects the ICT branch of the FBK with several major actors in ICT research, education and business, including the Department of information Engineering and Computer Science (DISI) of the University of Trento. The motivation to establish this association is to create an increasingly integrated system of research and higher education based on the principles of excellence and quality. The FEM, previously IASMA (Istituto Agrario di S. Michele dell’Adige), carries out research and high level training in agriculture, agro-food and environment; it is a leader in specific research fields (for instance it gave a fundamental contribution to discovery of the grapevine genome). Beside these large foundations there is a dense network of research centres and an innovation friendly environment, which has attracted some well-known firms such as Fiat, Ducati Energia and Microsoft, which established their own research centres in the region. Technology transfer is carried out by six highly performing Business Innovation Centres (BIC), which facilitate the collaboration between research centres, their spin- offs and new innovative enterprises. Trentino Sviluppo is a territorial agency which also operates in the field of technology transfer and innovation diffusion, and whose mission is to facilitate the interaction between industry and scientific research. It is part of the Innovation Relay Centre (IRC) network, the 1995 European Commission initiative, which matches technology demand and supply and aims at encouraging transnational technology transfer. Trentino Sviluppo provides specialised innovation services to existing firms and supports innovative start-ups with incubation assistance. Moreover, it provides office space at subsidised rates and organises learning and promotional events. In conclusion, there is a broad network of public and private organisations that contribute to delivering and/or steering RTDI policy in Trento. Beside the Provincial Departments and the mentioned organisations, the banks also play an important role in providing financial guarantees and risk capital. Assessing current and prospective performance is part of their work; in this way they take charge of control activities which otherwise should be carried out by the public administration. The mentioned most important policy documents (the Provincial Development Programme, the multi-annual research programme and the innovation strategy on ICT enabled services) are well integrated, clearly and timely defined. Most importantly, they have been defined by the administration in cooperation with the most important RTDI actors including the business community and the University In Trento, RTDI policy experienced several important developments during the last decade. As regards entrepreneurship and innovation; the Provincial initiative dates back to 1999 when the law no. 6/99 was introduced to support applied research projects in firms. In 2005, a reorganisation of the Trento research system took place and a unitary research fund was set up. The provincial law no. 14/2005 aggregated the existing provincial bodies carrying out research and established the above-mentioned foundations (FBK and FEM), which are still financially dependent upon the Province but are gradually becoming autonomous. The law also introduced a new selection and evaluation procedure, which also concerns scientific and industrial research, carried out by firms and financed in the context of the law 6/9912. The year 2010 is another important milestone in the development of the regional innovation system. The new multi-annual research programme (or PPR 2010-2013)

12 From July 2011, the procedures are managed by APIAE which identifies scientific and financial experts to evaluate/select eligible projects.

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was approved in December and aims at building up the regional research and high education system (STAR – Sistema Trentino della Ricerca e dell’Alta Formazione). Moreover, the principle of requalification of public spending as a lever for innovation was introduced (art. 5 of the provincial law no. 27/2010). The 2010 national financial law further increased the autonomy of Trento by delegating the administrative and legislative functions concerning the University of Trento to the Province. A specific Commission has been nominated to guide this transition from State to provincial competence. An intense consultation with experts inside and outside the university characterised the process, which led to the definition of a guiding document. A new collaboration model was also devised to develop ICT related innovative solutions. The TasLab (Trentino as a Lab) experience is the result of this endeavour and is a partner of the European Network of Living Labs (EnoLL). A common platform for the experimentation of a new generation ICT services has been set up (TestBed). This involves both firms and public research centres and exploits the 800 km broadband infrastructure that covers the entire territory and includes a Hiperlan wireless network with 700 access points. Yet in 2010, Trento RISE, the regional association for ICT advanced training and research joined the Knowledge Innovation Community (KIC) of the European Institute of Technology (EIT) in the field of ICT. KIC comprises the main European research and innovation nodes such as Paris, Berlin, Amsterdam, Stockholm, Helsinki, Budapest and . Finally, a substantial revision of the existing policy instruments was introduced in 2011 (provincial law no. 12 of 1.8.2011 which modifies law no. 6/99 on aid schemes) in order to respond to the market evolution towards increasing competition and to the current business cycle and global recession. The reform supports start-ups (e.g. new forms of guarantee), facilitates research investments and employment of researchers (for periods longer than 3 years) and gives a particular attention to female and youth entrepreneurship. It also supports internationalization and promotes networking, clustering and the constitution of consortia. The positive effects of these changes were immediately perceived by the province, which registered acceleration in business participation and a concession of grants. Furthermore, the law 14/2005 was modified to admit pre-commercial procurement as an innovation support tool (article 25 bis). In relation to co-ordination between regional and relevant national actors (e.g. The Ministry of Education, Universities and Research – MIUR – or the Ministry of Economic Development – MSE, CNR etc.), Framework Programme Agreements (APQ) are the actual operational instruments used to agree on joint RTDI interventions which pull together national and regional resources and allows them to focus national initiatives on priorities identified by (and agreed with) the regions. For example, there are programme agreements between local research institutions (UNITN, FBK, FEM, MTSN) and national agents (CNR and INFN). In relation to inter-regional co-ordination, framework agreements are also used to agree on common programmes focusing on scientific and technological sectors that are relevant for several territories. These common programmes may allow the signatory parties to benefit from synergies, economies of scale and scope and to exchange good practices. As regards cross-border co-ordination, the Region participates in three programmes. The Alpine Space transnational cooperation programme aims to increase the competitiveness and attractiveness of the area by fostering RTDI collaborative projects etc. the OP Central Europe aims, among other goals, to facilitate innovation across Central European regions and, apart from the North-East of Italy, it involves Germany (East and South), Hungary, Austria, Poland, Slovenia, Slovakia as well as Ukraine (western part). The participation in the OP South East Europe is also relevant insofar as it aims to contribute specifically to the future development of South-East Europe (SEE) as a place of innovation, to facilitate innovation, entrepreneurship and the knowledge economy and to enhance integration and economic relations in the co- operation area. The Managing Authorities of the mentioned initiatives are not located in the administration of Trento; however, there are national/regional representatives in the Programme Committees to secure a link between the transnational and national/regional level in programme implementation. Besides this coordination at

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transnational level, the Partner States ensure, through their contact points, that the different stakeholders in their territory are appropriately informed and involved in the programme implementation. National committees may be also set up for this purpose while transnational Task Forces may be established to deal with specific thematic and strategic fields (e.g. environmentally sustainable development) in relation to preparation of calls for project proposals.

2.3 Availability and use of policy intelligence tools Officials report that evidence-based methods (strategic intelligence, inter-regional benchmarking etc.) are used occasionally in regional policy making. The province relies on the permanent observatory on economy, labour and social demand(Opes) which has provided useful information for strategy and programme development, and is expanding its fields of analysis. Evaluations (see also § 3.2) are normally carried out by external experts in cooperation with the Region or by the region itself, through its bodies, and are used to both inform policy decisions and adjust policy objectives or measures. Compulsory evaluations under the Structural Funds, (mid-term in 2000-2006 and ex-ante in 2007-2013) usually have a wider scope while there is very little on innovation, apart from a study on the effects of the initiatives supporting the reduction of the digital divide in Vallarsa in the past programming period. Preparatory activities to develop RDTI evaluation culture and tools were carried out between 2006 and 2008 by the Technical and Scientific Committee for Research (CTS) and the Research Evaluation Committee (CVR): two support bodies set up in the context of the law 14/2005. The CTS contributes to research planning and to the definition of actual initiatives, including preparation of tenders and programme agreements. It also evaluates projects, monitors their progress and assesses the achievements. The CVR is in charge of the ex-post evaluation of the effects of the multi-annual research programme in order to provide feedback and guide the choices of the policy maker in the RTDI field. The CVR has developed a set of tools and set the pre- conditions to ensure that information systems are appropriately functioning in order to allow, from the next term of office of a legislature, useful evaluation exercises. Particular attention has been given to develop a model for the evaluation of the impact of research policy.

2.4 Key challenges and opportunities The most important policy documents respond appropriately to local needs, due to the direct and continuous interaction between the provincial administration, the main RTDI actors and the local stakeholders, including the business community, which contribute to shape the interventions. Furthermore, the strategies take into account global technological trends with a view to consolidate/increase local competitiveness. A challenge for governance is to further streamline and strengthen the relations between the provincial research institutions (e.g. FBK and FEM), the university and the business RTDI departments. Continuing the development of the TasLab model and, as planned, setting up appropriate Test Beds for the innovative services that have been developed is a way to further reinforce the interaction and synergy among all agents and to improve the effectiveness of regional innovation policy. This will also facilitate creating critical mass and overcoming the fragmentation of the business sector by encouraging firms to join networks and clusters and organize themselves around key global players and institutions. The creation of three IT consortia (Semantic Valley, Info-mobility and Health Innovation Hub – HIH), sponsored by the Province, is already an important achievement in this direction. A further challenge is to diffuse the use of policy intelligence tools and carry out policy evaluation exercises more systematically. Increasing the use of foresight studies, sectoral road mapping and trend analyses would be useful. These “intelligence” tools that aim to inform and strategically steer policy are currently mostly confined to the ICT sector. A systematic use of these tools in other relevant fields would help better

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identify enabling technologies (and their trends) as well as promising application fields and lead markets. As highlighted in the previous paragraphs, the evaluations carried out at a provincial level are rather broad in scope and do not provide policy makers with substantial additional information on research and innovation beyond what can be surmised automatically from the regional innovation monitoring system. The challenge is hence developing an evaluation culture that goes beyond the collection and reporting of monitoring data in order to explain the connection between policy interventions and regional outcomes, and hence provide policy officials with robust tools for better policy learning, decision making, to allow them to design increasingly effective policy support mechanisms in the future and to assist them in governing innovation support initiatives.

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3. Innovation Policy Instruments and Orientations

3.1 The regional innovation policy mix The innovation policy mix includes a relatively broad spectrum of initiatives ranging from RTDI support, to the improvement of governance and diffusion of innovation culture. ‘Creation and development of new innovative enterprises’ is the regional priority and the interviewed regional official estimated that 25% of the available resources (a combination of national, regional and EU funds) are devoted to this goal. Support to scientific and industrial research as well as human capital development are also a priority gathering approximately 25% of resources each. The initiatives for improving governance of innovation policy are considered important too and gather approximately 20% of the total available resources. Finally, some resources are devoted to complementary initiatives concerning markets and diffusion of innovation culture. In relation to governance and horizontal policies, the province actively participates to European initiatives (e.g. ICT European Alliance for innovation) and leads strategic working groups (e.g. on ICT enabled innovation) to involve local stakeholders in the definition of innovation support initiatives. As regards research and technologies, R&D organisations are supported through measures that concern excellence and management of research in universities (law 191/09 art. 2, comma 122) and several infrastructure initiatives (Trentino in rete, Poli Tecnologici, FBK – Clean room). In September 2011, the Province started acquiring new areas for the transformation of the Rovereto technology pole and the creation of a new Mechatronics Pole. Science and industry linkages are developed through knowledge transfer measures and R&D cooperation (patents fund under the law 6/99, EIT ICT Labs KIC). Direct and indirect support to business R&D is provided through the law 6/99. The category of human resource measures is supported through initiatives designed to strengthen the relationship between teaching and research (IPRASE, Centro formazione insegnamento di Rovereto, UNITN etc.), and stimulate PhDs (Marie Curie and Programme agreement with the UNITN, under the law 14/05). The law 14/05 with the Marie Curie tenders and the UNITN framework agreement also support job training and career development of researchers, while the law 6/99 supports the recruitment of skilled personnel in enterprises. Mobility of researchers is supported through a post doc call of 7 May 2010. In the category of enterprises support measures, the law 6/99 promotes sectoral innovation in manufacturing, organisational innovation and technology transfer between firms (e.g. Habitech – TasLab). Moreover, through Trentino Sviluppo innovative start-ups and risk capital are financed (e.g. Seed Money). The S.I.E.P. (the provincial electronic information system) can also be mentioned in this category. As regards market and innovation culture, Trentino Sviluppo supports the creation of a favourable innovation climate, provides consultancy and financial incentives to the use of IPR and carries out initiatives to raise IPR awareness. Fondazione Università (FTU) implements other promotional initiatives such as prizes. Other initiatives of awareness raising are carried out by the Province in this field (e.g. new museums of natural sciences and arts). Support to innovative Green Public Procurement is provided in the context of Habitech. Table 3-1 Overview of the regional innovation policy mix Governance Research and Human Creation and Markets and & Technologies Resources growth of innovation horizontal innovative culture research enterprises and innovation policies Cooperative - 2.3.1 Direct - 4.2.2 Support to - R&D support of organisational

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projects in business R&D innovation incl. the field of (grants and e-business, new ICT loans) forms of work, 2.2.3 R&D etc cooperation (joint projects, PPP with research institutes) Research 1.3.1 Cluster 2.3.1 Direct - 4.1.1 Support to - projects in framework support of sectoral the fields of policies business R&D innovation in renewable (grants and manufacturing energy and loans) 4.1.2 Support to sustainable innovation in building services industry Trentino - - 3.2.3 Mobility - - programme of researchers of research, (e.g. brain-gain, training and transferability mobility of of rights) post-doc 3.2.2 Career researchers development (e.g. long-term contracts for university researchers) Adoption of - - - 4.2.2 Support to - IT systems organisational for business innovation incl. innovation e-business, new forms of work, etc 4.2.1 Support to innovation management and advisory services Support to - - - 4.3.1 Support to - the creation innovative start- of ups incl. innovative gazelles enterprises 4.3.2 Support to ("seed risk capital money") ICT 1.3.3 Other - - 4.1.2 Support to 5.2.1 Funding Innovazione horizontal innovation in in support to dei servizi ai policies (ex. services the diffusion cittadini – society-driven of innovative TreC, CSS, innovation) technologies, SIAT etc. products and services Trento RISE 4.3.1 Support to – New innovative business start-ups incl. creation gazelles 4.3.2 Support to risk capital Source: Own assessment.

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In summary, support measures range from financing entrepreneurship, industrial research and pre-competitive development projects, which are characterised by a high degree of innovation in key thematic areas (e.g. ICT, renewable and sustainable constructions) to technology clusters. Support includes promotion of human capital development by financing mobility of researchers and advanced education and training schemes, in cooperation with the universities and research centres. Furthermore, the range of measures includes ICT diffusion among households and firms, support to R&D cooperation and partnership between local research institutions (e.g. UNITN, FBK, FEM, MTSN – Museo Tridentino di Scienze Naturali) and external research organisations (CNR, INFN). The main target groups are: firms, both existing and starting up, taken individually and as clusters, research organisations (public, semi-public and private) and society at large. The budget of existing measures is shown in the following table.

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Table 3-2 Existing regional innovation support measures Title Duration Policy priorities Budget Organisation More information responsible Cooperative R&D 2007-2013 2.3.1 Direct support of € 10 m (30% from the EU) Provincial Administration http://www.puntoeuropa.provincia projects in the field of business R&D (grants and Global tenders, not entirely – APIAE. .tn.it/programmazione_2007_2013 ICT (firms in loans) committed/disbursed as of /FESR_Fondo_Europeo_Sviluppo partnership with 2.2.3 R&D cooperation 31.12.2011 _Regionale/programma_FESR_20 research institutes) (joint projects, PPP with 07_2013/- research institutes) bandi_PO/pagina95.html 4.2.2 Support to organisational innovation incl. e-business, new forms of work, etc. Research projects in 2007-2013 2.3.1 Direct support of € 18 m (30% from the EU) Provincial Administration, http://www.puntoeuropa.provincia the fields of renewable business R&D (grants and APIAE. .tn.it/programmazione_2007_2013 energy and sustainable loans) /FESR_Fondo_Europeo_Sviluppo building industry (it 4.1.1 Support to sectoral _Regionale/programma_FESR_20 falls under the innovation in 07_2013/- activities aiming at the manufacturing bandi_PO/pagina85.html development of the Energy and 4.1.2 Support to innovation Environment in services Technology District) 1.3.1 Cluster framework policies

The Trentino 2007-2013 3.2.3 Mobility of A) Marie Curie – COFUND: Provincial Administration A): programme of researchers (e.g. brain- € 13.742 m http://www.uniricerca.provincia.tn. research, training and gain, transferability of B) Calls for proposals: it/Progetto_Trentino/- mobility of post- rights) Progetto_Trentino/ doctoral researchers • Post doc 2007: € 1.606 m 3.2.2 Career development • Post doc 2011: € 1.448 m B): (e.g. long-term contracts • Team/Unità di ricerca http://www.uniricerca.provincia.tn. for university researchers) 2011: € 3 m it/Bandi_di_ricerca/Bandi_PAT/

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Title Duration Policy priorities Budget Organisation More information responsible Adoption of IT systems 2007-2013 4.2.2 Support to € 2.6 m (30% from the EU) Provincial Administration http://www.puntoeuropa.provincia for business innovation organisational innovation .tn.it/programmazione_2007_2013 incl. e-business, new forms /FESR_Fondo_Europeo_Sviluppo of work, etc _Regionale/programma_FESR_20 4.2.1 Support to innovation 07_2013/- management and advisory bandi_PO/pagina78.html services Support to the creation 2007-2013 4.3.1 Support to innovative € 4 m (30% EU) Trentino Sviluppo http://www.puntoeuropa.provincia of innovative start-ups incl. gazelles Global tenders, not entirely Global tenders, not entirely .tn.it/programmazione_2007_2013 enterprises ("seed 4.3.2 Support to risk committed/disbursed as committed/disbursed as of /FESR_Fondo_Europeo_Sviluppo money") capital of 31.12.2011 31.12.2011 _Regionale/programma_FESR_20 07_2013/- bandi_PO/pagina88.html ICT Innovazione dei 2011-2013 4.1.2 Support to innovation € 51 m (total investment Provincial Administration http://www.innovazione.provincia. servizi ai cittadini – in services plan) tn.it/azioni/ SIEP (Sistema 5.2.1 Funding in support to Informatico the diffusion of innovative Elettronico technologies, products and Provinciale). E,g,: services • De-materialisation 1.3.3 Other horizontal • Interoperability policies (ex. society-driven • Simplification innovation) • Online services • SIAT • Etc. ICT Innovazione dei 2007-2013 4.1.2 Support to innovation € 4 m Provincial Administration http://www.innovazione.provincia. servizi ai cittadini – in services tn.it/azioni/ TreC, CSS 5.2.1 Funding in support to the diffusion of innovative technologies, products and services 1.3.3 Other horizontal policies (ex. society-driven innovation)

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Title Duration Policy priorities Budget Organisation More information responsible Trento RISE – New Call open until Sept 2012 4.3.1 Support to innovative € 50-100 k (average Trento RISE http://www.trentorise.eu/call-for- business creation start-ups incl. gazelles investment size) participation/new-business- 4.3.2 Support to risk creation capital Source: Own assessment.

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3.2 Appraisal of regional innovation policies The regional evaluation culture is still not strongly developed in Italy, and Trento is no exception to this claim even though important progress is currently being made in this province. Existing evidence of outcomes and impacts of innovation measures is scarce. However, it must be noted that, as stakeholders declare, evaluations are often carried out by the internal evaluation units for internal use. Sometimes, internal exercises are not easily available, not only to the public but also to potentially interested actors inside the PA. As already mentioned, the Technical and Scientific Committee for Research (CTS) and the Research Evaluation Committee (CVR), two support bodies set up in the context of the law 14/2005, have carried out preparatory activities to develop RDTI evaluation culture and tools between 2006 and 2008; they are currently in charge of research evaluation in the province. The CTS contributes to research planning and to the definition of actual initiatives, including preparation of tenders and programme agreements. It also evaluates projects, monitors their progress and assesses the achievements. The CVR is in charge of the ex-post evaluation of the effects of the multi-annual research programme in order to provide feedback and guide the choices of policy makers in the RTDI field. The CVR has developed a set of tools and set the pre-conditions to ensure that information systems function appropriately to enable useful future evaluation exercises (from the next term of office of the legislature). Particular attention has been given to developing a model for the evaluation of the impact of research policy. External evaluations are carried out in relation to the implementation of the ROP and hence concern Cohesion Policy rather than RTDI specifically (even if RTDI is one of the most important policy areas of Cohesion Policy 2007-2013). These ROP evaluations are in most cases “traditional”, meaning that they focus on monitoring data on the progress of initiatives. Moreover they only concern individual provincial measures (see ex post evaluations mentioned below). More comprehensive evaluations and studies are carried out by university researchers, the of Italy etc. However, these are more common at a national level and they usually focus on a certain type of instrument (e.g. RTDI incentives) rather than on a territory. For all these reasons, even though according to the regional stakeholders the effectiveness of innovation policy can be considered positive, the actual evaluation- based evidence is limited and even when it exists it rarely attempts to assess the added value of an intervention by applying counterfactual approaches or a mix of tools appropriate to deal with the complexity of RTDI effects. As a consequence, it is not straightforward, if at all possible, to appraise the extent to which the current policy mix is adequate given the challenges identified and to assess to what extent trends in indicators can be attributed to the support measures. Currently in order to answer the question we need to rely on indirect evidence of performance. Indirect sources of evidence of the effectiveness of regional innovation policy are: reports on programme implementation, results of evaluations of measures co-financed by the EU Cohesion Policy focused on the past (which may be relevant when they deal with instruments still in use), national academic studies concerning instruments similar to those used in the region (e.g. R&D grants and loans). Looking at the Annual Implementation Report 2010 of the ROP ERDF (approved in 2011), we can see that the actual implementation of intervention started no earlier than 2010, given that the tenders have been published from 2009 onwards. Since 31 December 2010, the procedural progress (tenders, selection of beneficiaries etc.) of the initiatives geared towards innovation is considered satisfactory since all actions were launched. However, the financial progress is relatively slow: 29% of resources allocated to projects in the ICT value chain have been committed and 10% disbursed (total allocated resources: approx. €16.7m). These mostly consist of public-private research partnerships and ICT enabled innovation in firms (52 projects completed). Some relevant initiatives have been completed also in the field of environment and energy: 20% of resources allocated to the promotion of applied research in the Habitech technology district have been committed and 11% disbursed (total allocated

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resources: €6.6m). No particular obstacle to progress is highlighted despite the current financial crisis, probably also thanks to the revision of the intervention laws (August 2011), which have helped to speed up interventions geared towards the business sector. There is no on-going evaluation of the OP while some ex post analysis of the SPD 2000-2006 have been completed in 2011. The ex post evaluation of measure 1.4 of SPD 2000-2006 (Effects of ICT infrastructure on provision of public sectors in periphery municipalities - Vallarsa, Terragnolo, Trambileno) employs a difference in differences approach to highlight positive effects of the initiatives undertaken which are also considered sustainable by the evaluator. Similar studies focused on 2000- 2006 interventions aimed at developing renewable energy sources and at facilitating the upgrade of existing firms have also been carried out recently. Their results will presumably be included in the AIR 2011 but will provide only limited insight in relation to the likely performance of RTDI measures currently being carried out. In other words, the results of the ex post evaluations are useful only in relation to those initiatives for which there is some continuity between the two programming periods. Academic studies conducted at a national rather than regional level may also provide indirect evidence on the effectiveness of RTDI initiatives undertaken in Trento. Counterfactual approaches that use econometric analysis are employed mostly ex ante and ex post to assess the effects of RTDI aid schemes. Typically, these rely on large databases of balance sheet indicators and are commonly not circumscribed to ERDF funding but analyse instruments financed by several sources including national and regional resources. The evidence on performance highlights the mainly positive effects of grants and loans at firm level (increased turnover, employment and productivity), and also on the investment continuity and on the networking of firms with knowledge producers. These interventions often support firms that carry out innovation activities for the first time. Thanks to the support, innovation then becomes endogenous to the businesses and goes on without further support. Such results can be considered encouraging for all the existing regional measures consisting of direct state aid measures and in general support to innovation in enterprises (sectoral innovation programmes, entrepreneurial innovation, start-ups and access to finance). To conclude, while it is not possible to make any kind of definitive statement about the performance of the provincial policy mix or the effectiveness of any of its individual innovation programmes, one can make several observations: Officials at the provincial administration are broadly satisfied with the portfolio of innovation policies. Thanks to the size of the Province, the administration is very close to the needs of the territory and the interaction among the stakeholders is continuous and direct. Also, there are no obvious gaps in the mix, inasmuch as the regional administration is able to undertake measures across the policy spectrum. The AIR shows that the various programmes and projects are being implemented reasonably efficiently. The ex post evaluations show positive effects of schemes oriented towards the business sector and suggest that the current measures in the portfolio, which are similar to those undertaken in the past, are being effective. Moreover, national econometric evaluations of RTDI measures confirm the additionality of industrial assistance, with improved productivity and competitiveness. It seems reasonable to assume the same will hold for Trento. The weak evaluation culture and the lack of a dashboard to proactively monitor interventions does mean that it is not easy for regional politicians and administrators to have a robust view of their policy measures performance, and few feedback loops for learning what mix/balance works best and why. Certainly, some important positive developments took place recently: The 2010-2013 Framework Agreements between the Province and the research foundations (e.g. FBK, FEM), require the production of a compulsory annual monitoring report (from each institution); the most recent multi- annual research programme has set the basis for putting in place a technical structure which should manage the information system and supervise/coordinate evaluation processes; an evaluation of effectiveness of business aids (law 6/99) in the period 2001-2010 was launched by APIAE and a 1st report on industry was recently completed (2011). Finally, the establishment of a research institute for the evaluation

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public policies (IRVAPP), within the FBK, may well contribute to facilitate these changes. All these encouraging developments are likely to provide useful information for guiding/steering the initiatives that will be undertaken by the Province in the future. However, further strengthening the evaluation culture and practice at a regional/provincial level is still a key challenge in relation to the appraisal of innovation policy. This also requires filling the gaps that exist in the evidence available on performance by evaluating innovation poles, technological , knowledge transfer schemes, horizontal policies, human capital development initiatives etc. which receive significant resources but whose effects are not systematically assessed.

3.3 Good practice case The Province has been strongly supporting ICT enabled innovation in services for the citizens and the local communities, especially since the beginning of the current programming period. These actions can be divided in four groups: knowledge and networks; public administration efficiency; labour, welfare and solidarity; identity and territory, A particular innovative and successful set of actions have been designed and implemented in relation to welfare and solidarity. TreC (i.e. three times C: Cartella Clinica del Cittadino or Citizen Health Record) is a eHealth project, which is considered particularly significant by the policy maker because it was successfully experimented and is the result of a strong private-public partnership. TreC aims at providing Trento citizens with a multi-channel access point (through computer, smartphone and TV) to health services and a series of tools for effectively managing the health needs of their families. Moreover it facilitates the work of the health professionals (doctors, nurses, public institutions officials) in organising and managing innovative care services. The users of TreC have direct access to their medical history and that of their children and/or family elderly people in need of assistance. The system allows them to consult relevant information, book services/treatments and receive diagnoses and certificates electronically. Citizens will be able to remotely monitor health needs and the responses of their relatives who are not self-sufficient. At the same time, doctors can monitor their patients and their response to treatment. For instance, elderly persons who may need to take medicines daily can share with their children, through TreC, information on the actions taken (e.g. medicine assumed, visit booked etc.). When an action planned in the calendar was skipped, the system automatically informs their relatives, hence supporting the health and safety of their families with a special attention to people who are not self-sufficient.

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Figure 3-1 TreC: a scheme of the tool

Source: Presentation of the project at ForumPA 2009. TreC was launched in 2007 with the objective of designing, implementing and experimenting with a digital platform of “pervasive eCare” services, accessible from different media. As previously highlighted, the platform supports both citizens and local health institutions in providing new prevention and care services. One of the main strengths of the approach is user engagement: TreC functioning is based on the active participation of people. TreC can be considered a good practice case based on its innovativeness, user feedback (it was successfully tested on 800 households) and strategic coherence (it is connected to the Hospital Information System). Approximately €3.2m have been dedicated to TreC since 2007. The platform is a successful example of an initiative developed by a significant public-private partnership involving: the Province (former Dept. of Innovation and ICT, Dept. of Health, Dept. of Social Policy), Informatica Trentina s.p.a, FBK, University of Trento, University of , the consortium of Trentino municipalities, local professional associations of doctors and nurses, and a local ICT company (GPI).

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Figure 3-2 TreC: an example of a concrete application of the tool

Source: Presentation of the project at ForumPA 2009.

3.4 Portfolio of innovation support measures Beside the measures and initiatives designed and implemented by the regional authorities, national and European policies must be considered in order to grasp the full influence of on regional innovation. At a national level, the Ministry of Education, University and Research (MIUR) and Ministry of Economic Development (MSE)13 grant funding to support both public and private research. MIUR manages a Fund for Industrial Research-FAR, which supports the initiatives foreseen in the National Research Programme (NRP). The NRP sets out the general objectives and procedures for implementing RTDI national policy, identifies the national growth prospects and the strategic scientific and technological areas. The programme identifies the following priority sectors for research: Environment, Transport, Energy, Agro-Food, Health, ICT, Advanced Materials, Nanotechnology, Biotechnology and Cultural Heritage. The NRP funds collaborative research projects involving businesses, universities and public research bodies, as well as industrial research in SMEs, and also finances the creation of start-ups / spin-offs (of public and private origin). During the period 2003-2008, FAR funded 8 projects in Trentino Alto-Adige (Province of Trento and Bolzano) and disbursed approximately €4.15m. MSE manages the Fund for Technological Innovation-FIT (Law 46/1982), which supports innovation projects in firms aiming at the industrial application of research results. During the period 2003-2008, FIT funded 7 projects with Trentino companies, investing about €6.09m. Among the initiatives managed by MSE, the Projects of Industrial Innovation (PII) are the main measures of “Industry 2015", the industrial policy programme launched in 2006 by the Italian Government. The PIIs identify specific technological and industrial objectives and promote the development of innovative products and services in five key technological areas: Energy efficiency; Sustainable mobility; Life sciences; new technologies for the ; and Cultural heritage. A new system of business incentives (“Regime Omnibus”) was defined for implementing PII. This system allows companies to choose the typology of financial support. The eligible activities range from industrial research and experimental development to the

13 It is worth mentioning that, to a lesser extent, the Ministry of the Environment (MATTM) and the Ministry of Health also promote research initiatives in their competence fields.

Regional Innovation Monitor 21

definition of prototypes and demonstration plants. The budget for 2007-2009 was more than €1b. According to the available information, in 2008, 6 projects were financed in Trentino Alto-Adige in the area of sustainable mobility (approximately €1.84m). The national R&D Tax Credit (law 296/2006 Art. 1, c. 280-283) is one of the largest innovation measures available to businesses within the region, and was introduced throughout Italy by the Financial Law 2007. This initiative is also managed by MSE. Approximately €12.08m were allocated to Trentino Alto-Adige as part of this policy in 2008, which is an order of magnitude greater than FAR, FIT or PII. As regards public research, the Research Programmes of Relevant National Interest (PRIN) are the main national support measures. These promote "bottom-up" research projects carried out by interregional networks of universities and other public organisations. In the biennium 2008-2009, the University of Trento coordinated 17 research projects carried out jointly with other public organisations. The total value of these is approximately €1.76m but the value of each individual project varies considerably between a few thousand and a few hundred thousand14. A ready-to- use national database of PRIN does not exist and a project-level analysis (one by one) would need to be carried out in order to estimate the amount of resources that are invested in a certain region. Another important national measure is the Basic Research Integrative Fund (FIRB) aimed at supporting universities and research organisations that collaborate with companies. This finances laboratories operated through a partnership of government and one or more private sector companies, and supports the research agenda of national technology platforms15. FIRB also supports “mission-oriented” joint-research projects carried out by networks of universities. At a European level, the EU Seventh RTD Framework Programme (FP7) and the Community Innovation Programme (CIP) are important instruments. Moreover the EU Cohesion Policy also provides an important input to regional innovation. As of May 2008, 1,806 Italian FP7 participants had secured EC contracts valued at around €523m (approximately 9% of the total FP7 commitment at that point). As of May 2008, 2.6% of the total number of Italian participants is in Trentino Alto-Adige; their projects represent 2.9% of total resources. In relation to EU Cohesion Policy, €7.1m have been allocated to innovation in the province of Trento in 2007-2013, 36.8% of the total available ERDF resources (€19.3m)16. The provincial policies and the mentioned national instruments form a comprehensive framework of support for innovation. However, the division of competences between national and local authorities remains blurred in the entire Italy, despite the presence of a permanent body that is aimed at improving coordination (the State-Regions Conference). Overlapping concerns especially industrial research, innovation and technology transfer.

14 The source of data is the MIUR website: http://prin.cineca.it/ 15 Thematic networks of science and industry that come together in regular meetings to develop a common strategic research agenda in key fields (medical research, telecom etc.). They have been established by the MIUR (starting from 2007), drawing from the experience of the EPT - European Technology Platforms. 16 This estimate is taken from policy paper on innovation produced by the “Expert evaluation network delivering policy analysis on the performance of cohesion policy 2007-2013”. The calculation is based on a selection of categories of expenditure (FOI codes). A broad definition of innovation is adopted, corresponding to that included in the third edition of the Oslo Manual. An innovation is, therefore, the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organisational method. For more information, see: Ismeri Europa (2010) “Policy paper on innovation”, Expert Evaluation Network.

22 Regional Innovation Monitor

3.5 Towards smart specialisation policies “Smart specialisation” is an emerging policy orientation that has been the main focus of a recent Communication from the European Commission17. The Communication recommends that regions should support the emersion and strengthening of market niches in which they have or can develop comparative advantages, allowing them to compete on the global markets. Regardless of the terminology used to identify these initiatives, in the Province of Trento, clear signs of a debate on the need for undertaking a policy approach aimed at smart specialisation can be found in the most relevant policy documents, particularly the latest multi-annual research programme and the Provincial Development Programme (PSP) which are both related to the National Research Plan (NRP) 2010- 2012. Origins of the debate leading to the new approach are to be found in accumulated experience, political and institutional changes (e.g. the full transfer of State competences to the Province in the RDTI field) and global trends. The current multiannual research programme 2010-13 drawing from the experience of the previous periods of office of the legislature (in particular 2003-2007) and from existing evaluations and studies highlights the need for a more integrated and less fragmented approach to RTDI in order to allow the Trento system to effectively compete in the global innovation market and reap the opportunities offered by mission oriented applied research. The programme clearly highlights the importance of widening RTDI networks, with a particular focus on the participation of firms. Moreover, it stresses the importance of supporting the recruitment of young skilled labour and their mobility. The PSP also points to the need for a “smart” change to the policy approach. Drawing from evaluation studies, it highlights that the innovation system cannot cover the full range of the scientific and technological areas and successfully carry out frontier research in all of them. Hence, it recommends that from the current period onwards, the policy makers make an effort to reduce the number of priorities and focus them better on priorities identified bottom up on the basis of consultations which take into account strengths, opportunities, global trends and strategies of the local actors. In relation to coordination, it is worth highlighting that the research programme has been designed by the technical-scientific Committee for Research and Innovation, an expert group set up in 2010 following the transfer of all State competences to the Province including the ordinary financing of the University. The Committee has coordinated a consultation process with all the main local RTDI institutions. There is diffused awareness that scientific and technological institutions do not possess individually a critical mass that allows them to compete globally. In the previous periods of office of the legislature, there was already this awareness and a strong effort to increase cooperation was made. However, each actor of the system pursued a disjointed approach to the identification of priorities while there was no shared programme. Moreover, the scientific community always tended to increase rather than rationalise the priority research areas. As mentioned, the research programme has been drafted in coherence with the NRP 2010-2012 which identifies six key enabling technologies to focus RTDI investments on: materials, genetics, neurosciences, ICT, energy and environment. Most of them, in particular ICT, energy and the environment as well as research and applications of genetics to the agricultural sector are particularly relevant for the Trento economy. In this context, smart specialization policies are already used in the region and their importance is likely to grow further in the next few years. In relation to “supporting an entrepreneurial process of discovery” and to identifying general purpose technologies and their application in the major economic sectors in the region, it is worth recalling some of the strategic initiatives undertaken in the field of ICT where the policy maker supports investments with the aim to create a territorial system able to guarantee a

17 European Commission (2010), Regional Policy Contributing to Smart Growth in Europe 2020.

Regional Innovation Monitor 23

long term competitive advantage based on cooperation between users, firms and research. The mentioned Trento RISE association, which connects the ICT branch of the FBK with several major actors in ICT research, education and business, has joined the Knowledge Innovation Community (KIC) of the European Institute of Technology (EIT) in the field of ICT in 2010. Being part of KIC provides an active linkage to the main European ICT research and innovation nodes such as Paris, Berlin, Amsterdam, Stockholm, Helsinki, Budapest and London. This recent development was anticipated by the creation of a strategic working group on ICT enabled innovation in 2009. As regards future actions, two research and innovation directions to strengthen the regional comparative advantage in the field have been already identified: Internet of the future (communication, services, and social networks) and pervasive embedded systems (monitor, control and intervene on the environment). By the same token, the activities carried out in relation to the Habitech technology district contribute to move the policy approach towards smart specialization. The district is a network of over 300 associates (firms, research centres and public agencies) which employ approximately 8,000 people and have a turnover of EUR 1 billion. It fosters interregional and international RTDI cooperation in sustainable building industry, mobility, energy efficiency and renewable energy resources. Some on-going national and European initiatives led by Habitech can be considered particularly relevant along the lines of smart specialization; for instance: the Green Valley project aiming at the transformation of the Primiero valley into an Oil Free Zone, the Benimpact research project supporting the development of methodologies for designing eco-sustainable buildings, the ILETE - Initiative for Low Energy Training in Europe, the Motus info-mobility project (mobility and tourism in urban scenarios) etc.

3.6 Possible future orientations and opportunities The approach of the Trento policy makers towards RDTI increasingly consists in strengthening a demand driven innovation system where the research excellence is oriented as much as possible towards societal needs. Hence the main future orientation will be to continue in this direction and further facilitate the development of an entrepreneurial process of discovery. This includes diffusing research and innovation culture by supporting the creation of new innovative enterprise, the growth and development of existing firms and their association in clusters, technology consortia and other networks involving public-private partnerships, and by attracting global players which can act as catalysers to allow synergies and critical mass. From this point of view, the positive experience of Microsoft, Fiat and Ducati Energia is likely to be continued and extended. Currently there are negotiations in place to attract new innovation champions such as ST Microelectronics, Finmeccanica etc. Making more intense use of pre-commercial procurement (PCP) is another contributing step in this direction. As recommended by the European Commission, by acting as technologically demanding first buyers of new R&D, public procurers can drive innovation from the demand side and innovate the provision of public services faster. This also creates opportunities for companies to take international leadership in new markets18. The Province of Trento is aware of the opportunities that might arise by pursuing this approach for procuring R&D services. PCP enables public procurers to: share the risks and benefits of designing, prototyping and testing new products and services with the suppliers, without involving State aid; create the optimum conditions for wide commercialisation and take-up of R&D results through standardisation and/or publication; pool the efforts of several procurers.

18 The reduction of time to market by developing a strong European home market for innovative products and services is key to create growth and jobs in quickly evolving markets such as ICT; see COM(2007) 799 final on Pre-commercial Procurement.

24 Regional Innovation Monitor

The system of RDTI relations between the public and private sectors should be further consolidated in the province of Trento. Increasing the centrality of PCT and PPP will contribute to ensure so. The determinant coordinating role of the province in relation to ICT research and innovation system can be strengthened by further developing Trento RISE which is increasingly becoming an integrator and an actor whose mission is to capture mission oriented research to the advantages of the territory. Important orientations for the future also include: • Supporting the creation of territorial laboratories (e.g. TasLab), which can foster innovation, focused on societal and business needs in innovative sectors and niches. Territorial labs are considered very useful instruments to facilitate collaborations between research centres, firms, final users (including the public administration) and to promote service innovation, technology transfer and creation of networks of firms. In this manner Trento can further consolidate its position of outpost for experimentation and consolidation, in cooperation with the leading global nodes, of advanced solutions especially in relation to eHealth, eGovernement etc. • Accelerate the availability and accessibility of the public information repositories and data banks to allow reuse, increase transparency and participation of citizens and firms, and to generate business opportunities related to the creation of new services. Semantic technologies and Open Government Data have a great potential in this respect and Trento is strongly pursuing this objective (e.g. through the working group “Trentino Open Data”). • The use of evaluation is being strengthened by means of various M&E initiatives which are currently being undertaken/launched (see § 3.2). However, evaluation culture can be further developed in order to be able to fully understand the effectiveness of the different components of the policy mix and be in a position to steer the provincial action accordingly in the future. For instance, the set up of a dashboard which consolidates in a single tool all the information on progress and performance of innovation policy can be a useful step forward. • Finally, linked to the previous point, the promotion of what has been and is being done by the Province (public marketing) is a key activity for successfully establishing new links and creating new opportunities for cooperation concerning both the public and private spheres. At the moment not enough attention is given to the promotion of Trento successful initiatives and to the diffusion of good practice and this is a pity considering the excellence of some interventions and the experience and capacity of developing public ICT based solutions from which other regions may learn.

Regional Innovation Monitor 25

Appendix A Bibliography

Annual Implementation Report 2010 of the PO ERDF 2007-2013. Bronzini R. and de Blasio G. (2006), “Evaluating the impact of investment incentives: the case of Italy’s law 488/92”, . COM(2007) 799 final, Pre-commercial Procurement: Driving innovation to ensure sustainable high quality public services in Europe. Ciffolilli A. (2010), Expert evaluation network delivering policy analysis on the performance of EU Cohesion Policy 2007-2013 – Task 1: Policy paper on Innovation - Italy, report prepared for the DG Regio, European Commission De Blasio G., Fantino D. and Pellegrini G. (2010), “Evaluating the impact of innovation incentives: evidence from an unexpected shortage of funds”, Bank of Italy European Commission (2009), Knowledge Economists Policy Brief n° 9, June ISAE (2009), Le previsioni per l’economia italiana, Roma, luglio Ismeri Europa and Applica (2010), Study on the distribution of competences in relation to regional development policies in the Member States of the , prepared for the DG Regio, European Commission. Merito M., Giannangeli S. and Bonaccorsi A. (2007), “Do incentives to industrial R&D enhance research productivity and firm growth? Evidence from the Italian Case”, Sant’Anna School of Advanced Studies and University of Pisa Ministry for Economic Development - DPS (2009), Improving regional research and innovation policies Potì B. and Cerulli G. (2010), “La valutazione ex-post di uno strumento di politica della ricerca industriale: modello analitico, processo di realizzazione, eterogeneità degli effetti”, Ceris-CNR, Roma, (forthcoming in L’Industria) UNCTAD (2009), World Investment Report 2009, Bruxelles Wolleb E., Naldini A. and Ciffolilli A. (2010), Expert evaluation network delivering policy analysis on the performance of EU Cohesion Policy 2007-2013 – Task 1: Policy paper on Innovation - Synthesis, report prepared for the DG Regio, European Commission

26 Regional Innovation Monitor

Appendix B Stakeholders consulted

1. Sergio Bettotti, Director of the Department of Innovation and ICT (now appointed project manager for the development of computer networks), Province of Trento (07 11 2011 and 13 2 2012). 1. Fausto Manzana, Director, GPI Spa – IT for welfare (07 11 2011). 2. Giuliano Muzio, eGovernment manager, FBK (07 11 2011). 3. Michele Michelini, Manager of the finance, research and development service of the Province of Trento (16 1 2012). 4. Michele Nulli, Manager of the research and development service of the Province of Trento (16 1 2012). 5. Mauro Odorizzi, Director of the office for business administration and accounting of the Province of Trento (16 1 2012). 6. Francesca Gleria, Directorate-General for the Province with a special assignment on innovation (consulted on several occasions in February-April 2012). 7. Diego Conforti, Provincial service for the organisation and quality of health initiatives (12 4 2012).

Regional Innovation Monitor 27

Appendix C RIM Repository information

28 Regional Innovation Monitor Baseline regional profile

ITALIA NORD-EST Region Autonomous Province of Trento NUTS Code ITD2

Regional Profile

Introduction

The Province of Trento is an autonomous province of Italy. It is one of the two provinces that make up Italy's region of Trentino-Alto Adige/Südtirol. Its capital is the of Trento. The province has an area of 6,207 km² and a total population of 521,779 (2009). The region is renowned for the Dolomites, which are part of the Alps.

Repository

Support measures The Trentino programme of research, training and mobility of post-doctoral researchers Support to the creation of innovative enterprises ("seed money") Promotion of research projects relating to the Energy and Environment Technology District Cooperative R&D projects in the field of ICT (PPP with with research institutes) Adoption of IT systems for business innovation Policy documents Provincial Development Programme for the XIV legislature Multi-annual Research Programme Operational Programme ERDF 2007/2013 Organisations Scientific Research and Technology Transfer Department – University of Trento Provincial Agency for the promotion of economic activities Trentino Sviluppo

Economy

The province of Trento was affected significantly by the international crisis. In 2008, the province's GDP was €12.940m, showing a decrease of 0.8% still smaller than national one. GDP per capita in 2000-08 was on average €27,443, a value that exceeds the national average of 15% for the same period. In 2008 there were 40,483 enterprises in the region. 73.4% of companies operating in the services sector (35.1% and 38.3% in services trade in other services), 17.4% in construction and 9.2% in industry. Helped to contain the impact of the crisis, the large weight of the services sector, supported by the good performance of tourism, the diversified structure of the productive sector and the importance of the local public sector. The most affected sector was manufacturing, which has experienced a significant decline in orders and production levels. The fall in the degree of capacity utilization and uncertainty on the timing and extent of recovery have slowed investment programs, as the turnover, however a slight increase is still expected in 2010. In the construction sector, which in 2007 had shown the first signs of difficulty, there was a further decline in activity levels, now back on the values of the early 2000s. The growth of the tourism sector continued, with positive effects on the regional economy, but the profit margins of companies decreased. The distribution of employment by sector shows a greater concentration on services (64.1%), while the industry is 21.7% and the construction sector is 14.2% of total employment. The labour market has suffered from the contraction of production mainly in terms of worked hours and employment, due to the massive use of redundancy. Participation in the labour market, already very high compared to the rest of the country, is further increased, however, is also increased unemployment, especially among young people and people with not higher degrees.

Banca d'Italia http://www.bancaditalia.it/pubblicazioni/econo/ecore/note/2009/trentino Istat - Research and Development in Italy - 2009 http://www.istat.it/salastampa/comunicati/non_calendario/20091221_00/

Research, Development & Innovation

The need to overcome the limitations of business size and the reduced propensity of local enterprises to innovate have led the province of Trento to intervene with a series of measures and projects to stimulate and facilitate networking between businesses (clusters and technology clusters). The contribution of business on R&D was €27.67m, equivalent to 0.36% of the national average, and 0.02% of the EU27. The province of Trento in 2006 has signed a memorandum of understanding with the Ministry of University and Scientific Research (MIUR) for the establishment of a committed district to disseminating and encouraging technological innovation among the province companies. The Creation of a meta-district based on forms of coordination and cooperation among the existing realities would also meet those who are the most recent Community and national guidelines, pressing for a sharper focus and concentration of financial supported operations. The average GERD in the period 2000-08 was €150m, less than 1% of the national average. The weight of the business contribution on R&D is equal to 12.27% of GERD. The province of Trento has given new organizational tools, with the law reform that has transformed research institutes from functional organizations to foundations, focusing the objectives on the tracks of a growing internationalization, on a exploitation of research for technology development of local businesses and on creating new opportunities for business. This measure showed a particular sensitivity to the impact of the choices in the private market research that are developed with excellent examples of spin-offs. The Autonomous Province of Trento has identified as the first priority of the ROP 2007-13 "Energy Policy and Technology District. Funding axis provides a total budget of €33.4m, with a ERDF contribution rate of about 30% (€10m). The remaining coverage would be ensured through national funding, with a regional contribution of 43%. The funds for this axis account for 52% of the total financing planned for the entire Operational Programme.

ISTAT - Technology & Innovation http://www.istat.it/imprese/innovazione/ Cotec - Rapporto Annuale sull'Innovazione 2009 http://www.cotec.it/it/2009/10/rapporto-annuale-sullinnovazione-2009/

Governance

The Province has implemented a new research system. The reform of the research system is considered strategic by the present government, which has been included in its reforms program jointly with local council reorganisation, welfare empowerment and school improvement. The reform aims to make research a more efficient reality, agile, able to fully exploit the creativity of researchers, less bound by bureaucratic rules designed for completely different contexts, and integrated into broader policy development of the Province. The Provincial Law No14/2005 has redefined the relationship between the Province and research and higher education in the area. These interventions have also had some significant effects on innovation-based ITC. This is in fact one of the application fields of research and innovation capacity that qualify research institutes and universities in Trento. The Multi-Annual Programme for Research (PPR) is a tool that guides for the first time public and private research towards common strategic objectives, thereby creating a strong starting point to achieve the goal of becoming a technology centre (the ITC) at European level. To ensure a more organic, interventions the Province has created a single fund for the research that accompanies the logic of the PPR. The design of the program lies in continuity with the provincial development program through participatory planning. As a demonstration of actual implementation of participation and concerted action was initiated a specific project, called "TXT - Trentino x Trentini" open to all the representatives of , organised in its various expressions. The program provides a distribution of the research fund resources in 50% to specific research, 30% to major projects or development projects and the remaining 20% to projects that give added value to the work already done by research institutions. Those instructed to implement the measures envisaged by the program are public and private entities, foundations and businesses.

National website of Italian research - Trentino http://www.ricercaitaliana.it/territorio-4.htm ICAR - The model of governance and community network in Trento http://www.progettoicar.it/ViewDocument.aspx?catid=31d90a19-92ba-41d3-953b-143cbe745d83&docid=58bc3f0a-f38c-4920-a30e-e9006209b0fb

Policy

The innovation policy as well as being strongly oriented to Europe is founded on principles of participation and creation of system between public and private. As macro objectives the province has set to increase investment in RTDI, especially concerning information and communication technologies (target Lisbon 2010: spending on RTDI: 3% of GDP), to support small and medium enterprises in promoting their competitiveness, innovation and productivity; prevent info-exclusion (digital delay and digital divide); adapt skills to the needs of the knowledge society; improve recognition of qualifications. The action of the Autonomous Province of Trento is directed towards a selection of areas for intervention and a focus of actions. In this way it aims to achieve sufficient critical mass to ensure the effectiveness of the new program, to warrant the additionality between EU funds, national and local resources, to maximize the effectiveness of overall public spending. The Province aims also to pass a vision of European funds as a pure economic support, in favour of a variation of cohesion in terms of competitiveness and employment and a focus on potential.

ICAR - http://www.progettoicar.it/ViewCategory.aspx?catid=31d90a1992ba41d3953b143cbe745d83 Observatory on regional policies for research and innovation http://cap.regione.marche.it/osservatorio/analisi.asp

Support measure

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Support Measure

Title of measure The Trentino programme of research, training and mobility of post-doctoral researchers

Full title

Progetto "Trentino" per la mobilità transnazionale dei ricercatori italiani e stranieri

Duration

From: 2010 To: 2013 Policy objectives 3.2.3. Mobility of researchers (e.g. brain-gain, transferability of rights) 3.2.2. Career development (e.g. long-term contracts for university researchers)

Presentation of the measure

The measure has been developed in the context of the provincial law for research (law no. 14/2005) with the financial support of the EU - FP7 (People "Marie Curie"). It finances research projects submitted by young researchers. The aim is promoting incoming and outgoing mobility of researchers as well as their reintegration after a period of research abroad. Therefore, the initiative encourages training, career development and the internationalisation of the Trentino research system. The financial resources allocated to this measure amount to €3.475m.

Keywords

Skills for innovation Universities International co-operation Budget, source and type of funding Currency: EUR

Source of funding 2010 National public funds Regional public funds EU Structural funds 3,475,000 Private funds Other Form of funding provided Grants Policy learning

Extent to which the measure can be considered as a success and worthy of policy learning

It is too early to judge the success of the measure (e.g results of first call for proposals still not known).

Evidence of outcomes based on evaluation and other evidence

There is no information available

Do's and Don'ts

For this measure, it is important to promote the mobility of research staff and facilitate the recruitment of temporary innovation managers by firms. Introduce specific projects for the dissemination of research results funded with the structural funds, and encourage the transformation of these results into market opportunities. Work on innovative sectors, promoting the establishment of new businesses in partnerships with universities and major companies.

This measure is recommended as an example of regional good practice to policy-makers from other regions:

Yes

Support measure

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Support Measure

Title of measure Support to the creation of innovative enterprises ("seed money")

Full title

Sostegno alla creazione di iniziative imprenditoriali mediante seed money

Duration

From: 2009 To: 2013 Policy objectives 4.3.1. Support to innovative start ups incl Gazelles 4.3.2. Support risk capital

Presentation of the measure The ROP ERDF 2007-2013 contains a particular regional priority: "New Entrepreneurship" (Priority III) which is related to the the NSRF priority II "promotion, and dissemination of research and innovation for competitiveness" and VII "competitiveness of productive systems and employment". The Province pursues such priority by carrying out a set of actions supporting the creation of new firms and and spin-offs, providing services to help firms dealing with generational transition and encouraging the development of networks of companies.The support to the creation of new innovative firms ("seed money") is targeted to new SMEs. Eligible expenditure include: cost of market analysis, feasibility studies, entrepreneurial training, IPR registration, business set up etc. Each start-up can receive a maximum of €150,000. The total budget allocated to this initiative amounts to €1m.

Keywords

Small and medium-sized enterprises Early stage-financing Entrepreneurship Budget, source and type of funding Currency: EUR

Source of funding 2009 National public funds Regional public funds 700,000 EU Structural funds 300,000 Private funds Other Form of funding provided Grants Policy learning

Extent to which the measure can be considered as a success and worthy of policy learning

There has been a positive response by beneficiaries to the measure (e.g. over-subscribed in terms of requested versus available budget) but it is too early to judge results or impact

Evidence of outcomes based on evaluation and other evidence there is no informaiton available

Do's and Don'ts

Encourage the use of new financial instruments for innovation and involve the financial system in risk sharing connected with business research. Institutionalise procedures for monitoring and evaluation.

This measure is recommended as an example of regional good practice to policy-makers from other regions:

No Organisation(s) responsible Trentino Sviluppo

Support measure

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Support Measure

Title of measure Promotion of research projects relating to the Energy and Environment Technology District

Full title

Promozione di progetti di ricerca inerenti il distretto tecnologico Energia e Ambiente

Duration

From: 2009 To: 2013 Policy objectives 1.3.1. Cluster framework policies 2.3.1. Direct support of business R&D (grants and loans) 4.1.1. Support to sectoral innovation in manufacturing 4.1.2. Support to innovation in services

Presentation of the measure

The measure falls under the axis I "Energy Policy and Technology District" of the ROP ERDF 2007-13 which aims to encourage industrial research in the areas of energy saving, development of alternative energy sources and environmental protection. Applied research projects carried out by individual firms and consortia are financed in the field of renewable energy sources (new components, technologies and solutions for heating, generation of electricity from renewable sources: hydro, solar, wind, geothermal, biomass, hydrogen) and sustainable building industry. Eligible expenditure must be higher than €250,000 and lower than €1.5m. The measure has been designed on the basis of the provincial law no.6/99 which regulates the promotion of applied research in Trento.

Keywords

Applied business research Cluster Eco-innovation Budget, source and type of funding Currency: EUR

Source of funding 2008 2009 National public funds Regional public funds 10,499,933 2,099,986 EU Structural funds 4,500,066 900,013 Private funds Other Form of funding provided Grants Policy learning

Extent to which the measure can be considered as a success and worthy of policy learning

There has been a positive response by beneficiaries to the measure (e.g. over-subscribed in terms of requested versus available budget) but it is too early to judge results or impact

Evidence of outcomes based on evaluation and other evidence

N/A

Do's and Don'ts

Experimental development is funded but this does not include routine or periodic changes made to products, production lines, manufacturing processes, existing services and other operations, even when these changes represent substantial improvements. Identify the local "excellence" (a university department, business innovative technology park, etc..) and define with them a set of pilot projects including the transfer of results to the marginal areas of region to be used as show cases at mid-term and promote cross-border and regional initiatives and transnational cooperation to strengthen the capacity of research and Innovation.

This measure is recommended as an example of regional good practice to policy-makers from other regions:

No

Support measure

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Support Measure

Title of measure Cooperative R&D projects in the field of ICT (PPP with with research institutes)

Full title

Interventi attraverso partnership tra imprese e organismi di ricerca per lo sviluppo della ricerca e dell’innovazione

Duration

From: 2009 To: 2013 Policy objectives 2.2.3. R&D cooperation 2.3.1. Direct support of business R&D (grants and loans) 4.2.2. Support to organisational innovation incl e-business

Presentation of the measure

The measure falls under axis II of the ROP ERDF 2007-13 "ICT value chain" which aims at promoting ICT research, increase competitiveness of local industry and encourage the use of ICT by citizens, businesses and government. The initiative has been designed on the basis of the provincial law for the promotion of applied research (law 6/99). It finances R&D projects carried out by firms in cooperation with research institutes, in the field of ICT. The projects mostly concern e-government, e-health, territorial and environmental monitoring, sustainable transport and mobility. Eligible expenditures cannot exceed €500,000. Following a 2009 call, 12 projects have been funded. The total budget of these is about €3m. In 2010 a second call was published and beneficiaries are currently being selected.

Keywords

Information and communication technologies Applied business research Public-private partnership Budget, source and type of funding Currency: EUR

Source of funding 2009 National public funds Regional public funds 2,099,986 EU Structural funds 900,013 Private funds Other

Additional comments and remarks in relation to the budget

Estimated allocations. Form of funding provided Grants Policy learning

Extent to which the measure can be considered as a success and worthy of policy learning

It is too early to judge the success of the measure (e.g results of first call for proposals still not known).

Evidence of outcomes based on evaluation and other evidence

There in no information available

Do's and Don'ts

N/A

This measure is recommended as an example of regional good practice to policy-makers from other regions:

No

Support measure

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Support Measure

Title of measure Adoption of IT systems for business innovation

Full title

Adozione di sistemi informatici per l’innovazione aziendale

Duration

From: 2010 To: 2013 Policy objectives 4.2.1. Support to innovation management and advisory services 4.2.2. Support to organisational innovation incl e-business

Presentation of the measure

The measure falls under the axis II of the ROP ERDF 2007-13 (ICT value chain). It aims at promoting wider dissemination of IT systems and strenghtening the information society. The measure is linked to the NSRF priority 2 "promotion, and dissemination of research and innovation for competitiveness". By means of this initiative, the Province encourages the adoption of IT systems, customised to the needs of particular firms, in order to contribute to solve their business problems. Eligible expenses include: hardware, custom application software, IT consulting services and innovation support services (in relation to databases, technical libraries, market research activities). The total investment for a single project must be higher than €20,000 and lower than €200,000. Local SMEs are the beneficiaries of the initiative.

Keywords

Information and communication technologies Small and medium-sized enterprises Innovation support services Budget, source and type of funding Currency: EUR

Source of funding 2010 National public funds Regional public funds 1,819,988 EU Structural funds 780,011 Private funds Other Form of funding provided Grants Policy learning

Extent to which the measure can be considered as a success and worthy of policy learning

It is too early to judge the success of the measure (e.g results of first call for proposals still not known).

Evidence of outcomes based on evaluation and other evidence

There is no information available

Do's and Don'ts

N/A

This measure is recommended as an example of regional good practice to policy-makers from other regions:

No

Policy document

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Policy Document

Provincial Development Programme for the XIV legislature Programma di sviluppo Provinciale per la XIV legislatura Content

The Provincial Development Programme (PSP) is the planning instrument that identifies strategies, objectives and related actions aimed at supporting economic and social development of the Province of Trento. Defined in line with the Programme of the Legislature, the PSP is the general framework for provincial policies and for the activities of local authorities and other public bodies. The provincial strategy is aimed at promoting sustainable local development and, contextually, at helping the Province to overcome the ongoing financial and economic crisis. Starting from an analysis of strengths and weaknesses of the provincial context, the programme identifies six strategic priorities (human capital, production capital, social capital and welfare, identity and cultural capital, environmental capital and infrastructure, institutional capital). For each priority, the Programme specifies objectives and lines of action consistent with the likely development of the resources available.

Year of publication

2010

Link to website

Link: http://www.uffstampa.provincia.tn.it/CSW/c_stampa.nsf/416AD2 ...

Policy document

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Policy Document

Multi-annual Research Programme Programma pluriennale della ricerca Content

The Programme, developed in relation to the national planning guidelines, defines the strategy of provincial initiatives on public-private research. The Programme identifies: the strategic objectives and the general lines of action to achieve these objectives, as well as related priorities; the priority research areas that will be covered by the provincial interventions; general criteria for the assessment of research activities and projects, as well as for checking their results; the eligible expenditure on the "Single Fund for Research" established by Provincial Law No 14/2005 ("Reorganization of the Provincial System of Research and Innovation"); the criteria for project funding in order also to foster cooperation and promote co-financing from other public and private organisations; the procedures for the management, implementation and evaluation of projects.

Year of publication

2007

Link to website

Link: http://www.uniricerca.provincia.tn.it/

Policy document

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Policy Document

Operational Programme ERDF 2007/2013 Programma Operativo FESR 2007/2013 Content

POR ERDF, adopted by the European Commission in 2007, has a total budget of around €64.3m. According to the Provincial Strategic Document, the Programme identifies specific measures aimed at supporting the structural adjustment of the provincial economy by encouraging research and innovation, new technology, entrepreneurship and enhancement the environmental assets as a lever for economic development. The Programme considers four priority areas: Energy, Environment and related Technology District; ICT value chain; New entrepreneurship; Sustainable local development. Strengthening the innovation system through the promotion of new ICTs and the enhancement of the research system (in particular in the environment and energy) is a key strategy of the OP. Also support measures for SMEs and the creation of new enterprises, part of Axis IV, are significant for boosting competitiveness of the Province.

Year of publication

2007

Link to website

Link: http://www.regione.basilicata.it/sportelloeuropa/default.cfm ...

Organisation

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Organisation

Scientific Research and Technology Transfer Department – University of Trento Università di Trento – Divisione per la Ricerca Scientifica e il Trasferimento Tecnologico Link: http://www.unitn.it/en/ateneo/3233/technology-transfer via Belenzani, 12 Trento, 38122 Mission The department is the structure of interface and connection between university and industry. The Department aims to: promote the dissemination and use of academic research results and the technology resources present in the University, especially in regional businesses; promote and support research initiatives of the University of Trento, with special reference to the protection of intellectual property and patenting as well as programs and experiences of academic spin-off; promote and support the participation of University in research and innovation projects by enhancing collaborations with other regional and extra regional stakeholders, such as universities, research centres, enterprises, institutions, local authorities Activities The Department offers companies, public administration and professionals the opportunity to use the knowledge, skills and results of research conducted in academia with the aim of contributing to innovation and competitiveness of the Province. To this end, the main instruments used by the Department are: research contracts on topics of businesses interest, to share academic knowledge, competence and instrumentations, in order to respond to company needs for new technology, new studies and research, analysis and measurements, laboratory tests; collaborative projects between university and enterprises, to carry out joint research with innovative industrial applications, also by taking part in research programmes and initiatives funded on a local, national or EU level; partnership in training new researchers, through doctoral research and research grants, specializations courses, theses and stages by students in enterprises; acquisition of University research results, by offering the patent portfolio of the University to all companies interested in the results of University research for industrial or business reasons (technological transfer or licenses); lifelong training courses, to promote and coordinate master and life-long training courses on the specific needs of enterprises placement of human resources adequately trained (postgraduate and postdoctoral) in enterprises support to start-ups and spin-offs from the results of academic research, through the provision of services such as capital investment, facilities/equipment, information and support services, pre-incubation and market assessment studies.

Organisation

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2

Organisation

Provincial Agency for the promotion of economic activities Agenzia Provinciale per l’Incentivazione delle Attività Economiche (APIAE) Link: http://www.apiae.provincia.tn.it/index.html Via G.B. Trener, 3 Trento, 38121 Mission The Provincial Agency for the promotion of economic activities (APIA) was established by provincial law No 2/2009, which amended the provincial law No 3 / 2006 "Rules governing the autonomy of the Trentino". APIE is an agency of the provincial administration aimed at making more effective the grants and the financial incentives for business and other stakeholders operating in all economic sectors (except agriculture). The Agency performs the following functions: the management of grants and financial incentives provided by the provincial laws, as well as the activities related to their monitoring and control; the management of relations with the guarantee consortia present in the province of Trento and other credit institutions. Activities The Provincial Agency for Promotion of Economic Activity is divided into two departments. The first "Department of Investment Promotion" has the following functions and activities: ensures, if necessary availing of other external bodies, the allocation and disbursement of financial facilities to support fixed investments of business and other stakeholders operating in all economic sectors (except agriculture); monitors external bodies in charge to manage the operations in supporting fixed investments; carries out inspections and checks on the facilitated initiatives; is responsible of the information activities concerning the activities managed. The second "Finance, Research and Development Department" performs the following activities: ensures, if necessary availing of other external bodies, the allocation and disbursement of financial facilities to support business services, research and equity loans in relation to all economic sectors (except agriculture); monitors external bodies in charge to manage the operations in supporting business services, research and equity loans provides the execution of analysis, studies and research relating to incentive policies carries out inspections and checks on the facilitated initiatives; is responsible of the information activities concerning the activities managed.

Organisation

ITALIA NORD-EST Region Provincia Autonoma Trento NUTS Code ITD2 Organisation

Trentino Sviluppo Link: http://www.trentinosviluppo.it/ Via Zeni 8 Rovereto (TN), 38068 Mission Trentino Sviluppo is the agency established by the Autonomous Province of Trento to foster the sustainable development of the Trentino by taking actions and services aimed at supporting the growth of skills and innovation capacity in provincial business. The shareholders of Trentino Sviluppo are the Autonomous Province of Trento (98.57%) and the University of Trento (1.3%). Trentino Sviluppo works in close contact with the principal provincial stakeholders in the financial, institutional and business system and with the major research organizations operating in Trentino (e.g. Habitech - Energy and Environment Cluster, Fbk-Irst, Bruno Kessler Foundation), Institute for Scientific and Technological Research (Fem-Edmund Mach Foundation). On the national and international level, Trentino Sviluppo is an active partner of many networks, such as EBN (European Business and Innovation Centres Network), IASP (International Association of Science Parks), IBAN (Italian Business Angel Network). Activities The activity of Trentino Sviluppo is aimed at boosting competitiveness by promoting cooperation between different provincial stakeholders in response to demands of entrepreneurship, innovation and social cohesion. To promote the development of provincial economy, Trentino Sviluppo operates along two lines: 1) promoting diffusion of innovation and entrepreneurship; 2) supporting directly the provincial companies through specific actions and instruments. Specifically, Trentino Sviluppo performs the following activities: implements initiatives for the promotion of managerial skills, innovation and internationalization to support the growth of local businesses; promotes training initiatives, with special attention to young entrepreneurs on various issues related to innovation and competitiveness; supports the companies during their start-ups, through the provision of mentoring services (e.g. for the preparation of business plans) and advanced services (such as spaces equipped and logistics services, support for ICT, links to banks data, funds for the purchase of high technology facilities). In this issue, TS manages 6 BIC - Business Innovation Centres in the Province; promotes the establishment of networks between businesses and other research organizations, to contribute to the creation of technology and productive clusters; carries on business support activities, assistance and information on research and technology as well as on funding opportunities; promotes technology transfer between research national and international centres and local enterprises, in order to support companies in identifying potential partners for their research and innovation activities; implements interventions for the acquisition and redevelopment of industrial areas, facilitating the establishment of new local businesses.

Appendix D Statistical data

Provincia Provincia Provincia Autonoma Autonoma Autonoma Trento Trento Trento (ITD2) (ITD2) (ITD2) EU27 2000 or Previous Most Indicator around year Most recent recent GDP per capita (PPP) 27200 30500 30700 25100 2000 2007 2008 2008 Change in GDP per capita 1.37 2.85 3.10 3.73 2000-03 2006-07 2005-08 2005-08 Unemployment rate 2.6 2.65 2.9 6.98 2000-03 2006-09 2007-10 2007-10 Change in unemployment rate -0.60 0.03 -0.25 -0.30 2000-03 2006-09 2007-10 2007-10 Tertiary education 0.11 0.18 0.18 0.30 2000 2009 2010 2010 Government R&D expenditure 0.52 0.42 0.42 0.24 2003 2007 2007 2008 Non-R&D innovation exp. ------0.41 ------2006 Patents per mln population 67.8 50.4 50.6 115.1 2000 2005 2006 2006 Business R&D expenditure 0.19 0.34 0.34 1.21 2003 2007 2007 2008 Higher education R&D expenditure 0.37 0.37 0.37 0.44 2003 2007 2007 2008 Source: Eurostat and Community Innovation Survey

Regional Innovation Monitor 29

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