Intangible assets at the heart of economic growth in European regions

As a starting point, the IAREG European research project acknowledges that ‘the process of innovation and knowledge accumulation is at the root of uneven territorial development.’ After examining the issue at length, the consortium offers policy makers at European, national and regional levels a number of general recommendations, including these four regarding the impact of knowledge accumulation on processes of economic growth:

  • Target systemic relationships rather than specific actors or categories of actors.
  • Recognise the strong geographical specificity of regional and local industrial structures.
  • Identify linkages between different organisations and institutional actors in a regional system.
  • Measure the systemic relationships, structure and organisation of regional innovation processes.

At the European level, the researchers contend that greater institutional coordination is needed to develop a benchmarking system for policy learning across the EU. This applies to national, regional and local levels with respect to knowledge creation, accumulation and diffusion.

The project highlights the economic relevance of research and education and urges closer coordination between European and national institutions. In terms of human capital, IAREG suggests that additional institutional funding be made available to support excellent research initiatives and recruit outstanding researchers from abroad. The IAREG team advocates a knowledge-flow strategy that promotes local interactions while helping build connections between local innovation systems and international entities. The project notes that better cross-regional integration and improved communication infrastructures could enhance knowledge flows.

Addressing a diverse range of economic and trade factors, IAREG appeals for a dismantling of residual national trade barriers and encourages multiple sources of financing (stock markets, venture capital and private equity) for investing in new technologies. The EU is also encouraged to provide investment incentives for research and development and to facilitate the sharing of costs for research and development among small and medium-sized enterprises.

At the national and regional levels, IAREG researchers see a need to improve education for the mobile workforce and to promote a culture of lifelong learning. Overall, the team stresses the importance of strengthening an economy’s ability to drive and absorb technological advancement.

Lack of data raises a serious problem for policy making

The European Union urgently needs a unified system for collecting data on intangible assets, such as human, organisational and social capital. Why such a system is needed – and how to go about creating it - are two key questions examined by IAREG, which is exploring the relationship between intangible assets (IA) and regional economic growth. Advocating a systematic approach to IA development policy, the research team has produced a catalogue of recommendations for decision makers at European, national and regional levels.

Convinced that a lack of regional data on IA is hampering research on the main determinants of economic development at the regional level in Europe, the IAREG research consortium proposes that standards for collecting and processing such information be improved. While acquiring good indicators for IA is difficult in general, their availability at a regional level is much lower than at the national level. Current sources of regional IA data in Europe are ‘heterogeneous’ and ‘poorly coordinated’, say the researchers, making it difficult to assess their current status and shape future development.

To support informed decision making, the IAREG consortium proposes that more micro-data be collected and released. The researchers insist that direct involvement by the EU’s statistical office, EUROSTAT, is required in order to develop a homogeneous database on region-specific intangible assets. They also suggest that regional and administrative boundaries be redefined for IA statistical purposes.

Looking beyond the lack of satisfactory data on intangible assets, the IAREG research team suggests a number of ways that these assets might be cultivated more effectively in Europe.

IAREG - Intangible Assets and Regional Economic Growth (duration: 01/02/2008 – 30/01/2010) was a Specific Targeted Research Project funded under the 7th Framework Programme for Research of the European Union, Thematic Priority 1 – Growth, employment and competitiveness in a knowledge society.

See: http://www.iareg.org/
Contact: Jordi Surinach, jsurinach@ub.edu