Definition and sources for “Regional Innovation Budget” used in M1 and M2

Notwithstanding the differences across the EU in the degree of influence of regional authorities on the regional innovation budget, IMPACTSCAN focuses on those budgetary sources which are under the control of the regional authorities. Hence the Regional Innovation Budget to take into consideration for filling M1 and M2, is defined as the latest available annual budget under regional responsibility, including funds received from national and EU budgets (e.g. structural funds). The Regional Innovation Budget is limited to public budget; private expenditures are not included. The Regional Innovation Budget is given in absolute € amount.

The content of regional innovation budget varies across regions. Typical budget lines to be included in these budgets are:
• Subsidies to intermediaries for innovation support;
• Direct financial support to firms for innovation;
• Public participation in venture capital funds;
• Infrastructure for innovation (depreciation costs only);
• Etc.

Example : Regional budget in Brittany
The data collection and calculation process was done on the 2005 primitive budget of the Regional Council of Brittany. Absolute figures refer to the amounts allocated during the year of reference. This budget is composed of regional receipts (regional taxes) + specific State allocations to Regions + some European budget for specific projects (structural funds for some innovation-related support activity). So the budget taken into account includes indirectly national and European funds as parts of the Primitive budget of the regional government.
European funds for innovation (not under the control of the Region, and innovation budget of bodies representing French ministries at the regional level (DRIRE, DRRT, OSEO) are not taken into account are because they are not under control of the Regional Council.

In order to prevent the periodical irregularities (ups and downs) of single large investments in infrastructures, the budget should not consider the total amounts of these investments but the current annual costs for depreciation.
For multi-annual budget lines, a yearly average should be calculated.

Example :
In Flanders the depreciation rate for S&T parks has been calculated at 10%.

For programmes encompassing a variety of objectives, only the innovation-oriented part should be retained.

Sources for this budget are official regional budgetary documents. These will need to be complemented in most cases, by analysis of activity reports or, in their absence, by direct enquiries towards intermediaries, in order to obtain the split between policy objectives, intermediaries (M1) and services (M2). When there is no regional budget, the approach should be to sum up a variety of innovation support projects.

Example : identifying publicly-supported actions for innovation in Madrid
An interesting conclusion of the interviews in Madrid is the intuitive or implicit "overestimation" of the public role and existence of some of the policy instruments, emerged in Madrid, while collecting data on regional budget. For example, each year the IMADE presents the Technology Parks as important instrument of their R+D+i policies. The interview with the responsible of the "Parque Tecnológico Madrid" made it clear that this Park does not carry out any activity with respect to innovation-related services: many non-innovative firms are located in the Park. The only difference between the Park and most other "Poligonos Industriales" is that one of Madrid's incubators is placed in the Park, however this centre is an "individual agency" auto-financing its activities with the fees paid by the firms located in the centre.

Example : identifying regional budget in Lower Silesia
The regional innovation budget for Lower Silesia has been estimated based on an analysis of budgets of individual projects. In most cases, only provisional budget is available, not real expenses. The budget has been calculated by summing up the individual projects. Those projects were found through desk research: lists of the projects financed from structural funds on national and regional level, through interviewing the intermediaries and searching their web pages, reports. The projects were financed under the Integrated Operational Programmes 2004-2006 for Improvement of Competitiveness of Enterprises (national level), and also directly from EU funds: Fp6, Leonardo, Interreg IIIC. Most of the projects have only started in 2005 and 2006. The innovation activities within the mentioned projects are not all focused on services for SMEs, however indirectly they are all considered as important for the development of the Lower Silesia Innovation System.

Validation of this regional innovation budget was done through the letter addressed to the Director of the Department of Regional Development in Regional Self-Government. Only the 2004-2006 Integrated Operational Programmes of Regional Development have been monitored in the region.

Example : Bottom-up approach to construct regional budget in Limburg
The selection of innovation-support projects to form the regional budget in Limburg, has been done by:
- including all innovation support projects from the regional economic affairs department of the regional government (Province). These projects often include structural funds or other European money. They also often include national money assigned to the region or extra national money.
- interviewing intermediary organisations, known for their involvement in innovation support, in the region. Some new projects where identified in this way. They where mainly Interreg projects.
- Next, all Interreg projects for the region were screened, trying to decide whether they where related to innovation support for SME's. In some cases 'new' intermediaries where identified. We had to decide whether they would become part of Impactscan or not.
- Structural funds were included only via the above mentioned projects. Some structural funds like CERES were not taken into account because the projects were mainly targeted to infrastructure funding.
In order to disentangle the innovation-related part of the projects, the following general criteria were used:
- Is the project targeting innovative companies?
- Somehow this is arbitrary but we excluded projects for traditional consumer services like clothing shops, restaurants etc.
- Are companies directly benefiting from the project? Directly means that they get a service or money. Buildings for starters have been left out.
- Is regional money involved? Money in control by the regional government or the regional development agency (LIOF) or structural funds (including Interreg) is considered as regional money.

Definition and sources for “Regional Innovation Budget” used in M1 and M2

Typology of Policy objectives

Typology of Intermediaries