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Version: Final Date: 25 August 2011

Regional Innovation Monitor Regional Innovation Report (Prague) To the European Commission Enterprise and Industry Directorate-General Directorate D – Industrial Innovation and Mobility Industries

Vladislav Čadil Jan Vanžura

Technology Centre ASCR

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 policy trends across EU regions. RIM analysis is based on methodologies developed in the context of the INNO-Policy Trendchart which covers innovation policies 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 Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, 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 country (Estonia, Latvia, and Lithuania), Malta which only has NUTS 3 regions, Slovenia which has a national innovation policy or Cyprus and Luxembourg which are countries 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 region as well as general trends. All region al 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 insert Vladislav Cadil ([email protected]) and Jan Vanzura ([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

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Table of Contents 1. Main Trends and Challenges in the Regional Innovation System 1

1.1 Recent trends in macroeconomic performance 1

1.2 Recent trends in regional innovation performance 2

1.3 Identified challenges 5

2. Innovation Policy Governance 7

2.1 Degree of institutional autonomy 7

2.2 Institutional-set up, co-ordination and implementation mechanisms 8

2.3 Availability and use of policy intelligence tools 13

2.4 Key challenges and opportunities 14

3. Innovation Policy Instruments and Orientations 16

3.1 The regional innovation policy mix 16

3.2 Appraisal of regional innovation policies 20

3.3 Good practice case 22

3.4 Portfolio of innovation support measures 24

3.5 Towards smart specialisation strategies 26

3.6 Possible future orientations and opportunities 28

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Appendices Appendix A Bibliography ............................................................................................... 30Appendix B Stakeholders consulted ...............................................................................31Appendix C RIM Repository information ..................................................................... 32Appendix D Explanation of factors of Innovation Performance, Governance and Policy........................................................................................................................................ 33Appendix E Statistical data ............................................................................................ 36Appendix F RIM survey responses .................................................................................37

Figures Figure 1-1 Economic and innovation performance indicators for Prague .......................5

Tables Table 3-1 Existing regional innovation support measures.............................................19

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Executive Summary 1. Introduction: Main recent trends in the Regional Innovation System The City of Prague is an administrative, economic, research, and educational centre of the Czech Republic, as underlined by the high concentration of universities, research institutions and innovation system entities. Prague generates almost a quarter of the country’s GDP, and GDP per capita stands at 172% of the EU average, placing Prague on the 5th position among European regions. The structure of GDP generation corresponds to a post-industrial structure, where more than 80% of GDP comes from the service sector. A comparison of the dynamism of individual sectors in Prague reveals a relative decline in the processing industry output in favour of the service sector. The structure of the processing industry is now showing a slight positive shift towards hi-tech production.

The excellent economic performance is caused by a unique position of Prague in a settlement and economic system of the Czech Republic.

Prague has a highly skilled workforce. The share of the total population holding a university degree or full secondary education is almost 84%. In Prague there are eight universities; their 36 faculties cover almost the whole range of study fields. Prague is the scientific centre of the Czech Republic. Roughly two thirds of the capacities of public R&D institutions and one third of the capacities of private R&D institutions are located in the region, inter alia there are 40 institutes of the Academy of Sciences of the Czech Republic and 50 other research institutes here. All this, combined with the high level of education enjoyed by the city’s inhabitants, constitutes its enormous innovative potential.

2. Major innovation challenges and policy responses Based on the analysis of economic and innovation performances, three sectoral challenges for development of innovation performance in the near future have been identified.

Challenge 1: Development of a strong, world-competitive biotechnology sector

Prague has a large knowledge base in the field of biotechnology in particular and in pharmaceutical industry in general. Several highly respected institutes of Academy of Sciences and universities provide quality R&D results in many fields in the pharmaceutical and medical research. Excellent research is conducted especially in the fields of organic chemistry, biochemistry, molecular and cellular biology, computational chemistry, physico-organic chemistry and biochemistry, cell biology and pathology, neurobiology, neurophysiology, neuropathology, developmental toxicology and teratology, molecular epidemiology, molecular pharmacology, immunopharmacology, cancer research, molecular embryology, stem cells and nervous tissue regeneration. This research has a broad application in development of new medicaments, implants and therapies. The universities provide highly skilled graduates and attract PhD students from many developed countries. Research results are commercialised to pharmaceutical corporations from all over the world. Several corporations have located their R&D activities in Prague to utilise the local knowledge base, however the majority of R&D results is commercialised abroad. Research institutes established several start-up companies, which should carry out further development of their knowledge; nevertheless the economic growth of the companies is still slow. Links among academic and business spheres seem to be strengthening, and internationalisation of research activities as well as business operations is in the phase of intensification. The nascent biotechnology cluster could become one of the basic pillars of future competitiveness of Prague in the EU and world markets. Although universities and research institutes co-operate with foreign companies and

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research institutions, international collaboration with similar clusters abroad is very weak so far. This biotechnology sector is not directly supported by any specific regional programme or policy, and evolves spontaneously.

Challenge 2: Excellence in an ICT sector

In Prague, the ICT sector is developing very fast in terms of both qualitative and quantitative changes. As in the biotechnology sector, Prague’s knowledge base is traditionally very wide, and is created by public universities, several institutes of the Academy of Sciences and some private R&D institutes. The ICT research topics of these universities and institutions are artificial intelligence, machine perception, robotics, and biomedical engineering with the focus to multi-agent systems, machine learning, data mining, pattern recognition, knowledge-based systems, medical data processing and collaborative robotics, control systems and software development. Similar to the above described biotechnology sector the majority of R&D results of the ICT sector is commercialised abroad (e.g. the Czech Technical University closely co-operates with USA based enterprises and national agencies). Nevertheless, the scope and high quality of R&D in this field have attracted several R&D departments of multi-national enterprises to locate a part of their R&D activities in Prague. Prague’s ICT application sector is focused on control systems, cybernetics and software development. Activities in the last mentioned discipline are not conducted only by multi-national corporations but by many small domestic firms as well. These companies are active mainly in design of web pages and Internet applications. The main advantage of the ICT sector is its wide knowledge base, specialisation and the attractiveness for foreign companies. On the other hand, despite the concentration of actors and their importance in Prague’s economy, collaboration among them seems to be rather low. Thus, intensification of co-operation should be a potential, partial challenge in this sector. The development of the ICT sector creates an opportunity for development of other industries utilising its knowledge. Especially electronic, electric and automotive industries use R&D results and products of this sector. However, location of these industries in Prague cannot be expected because of high prices of plots of grounds, industrial properties and the lack of human resources. These industries will be rather located in the surrounding region. Likewise the biotechnology sector, this sector is not supported by any Prague’s policies and programmes. The successful development of this sector is thus a result of path dependency (historical location of universities and research institutes) and the activity of market forces.

Challenge 3: Strengthening of co-operation between academia and businesses

Prague has a significant potential to become a leading knowledge centre among central European New Member States. As mentioned above, Prague concentrates crucial number of research capacities as well as innovative companies including trans-national corporations. Nevertheless, intensity of co-operation in the field of research and development, namely between academic and business sectors, is rather low. There are many reasons for this, e.g. a lack of motivation of researchers and many others. Many analyses made at regional and national levels show that the most severe barrier is an underdeveloped innovation infrastructure like business incubators and science parks. Nowadays, there are only four very small business incubators and no scientific park in Prague. Their operations and further development are limited by the lack of finances, and do not provide a sufficient basis for intensive co-operation between academic and business spheres and for commercialisation of R&D results. The underdevelopment of the innovation infrastructure or even an absence of some types of the innovation infrastructure significantly contributes to the fact, that many R&D results are commercialised abroad instead of being commercialised in Prague. The low intensity of the local commercialisation has negative economic and social impacts on Prague, because profit resulting from capitalisation of R&D results is not generated in Prague but in foreign regions. Therefore, it would be prerequisite to establish a dialogue forum for co-operation between academia and business sector and develop suitable measures to be implemented at the regional level.

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3. Innovation policy governance Support of R&D&I activities belongs to self-governmental functions of Prague. Prague, as a self-governmental territorial unit, has a large autonomy in designing its own regulations, development strategies (programmes) and budgets. Neither the Czech Government nor the Parliament is able to directly influence Prague’s self-governmental functions and activities guaranteed by the act on the capital city of Prague. It creates a unique opportunity to specify a support to R&D&I activities according to Prague’s needs. On the other hand, the wide autonomy (especially the financial, budgetary autonomy) also means that available resources are allocated among many activities, which Prague has to ensure in accordance to the Act.

Responsibilities for the design and approval of Prague’s developmental policies are divided among the City Council, the Municipal Assembly, the City Hall and the City Development Authority. Regarding the policy-making process, the Council and Assembly can initiate debates about the policy and order the City Hall and the City Development Authority to design the policy. Other important responsibilities are an approval of the policy and a budget allocated for the policy implementation.

The Prague City Hall is in charge of policy design in general and its implementation. The City Development Authority of Prague is a specific body in the process of policy-making. As for R&D&I-related policies, the Authority is responsible for the preparation and monitoring of the Strategic Plan of the City of Prague.

Coordination mechanisms for policy design have not been institutionalised yet. However, the Prague’s Council for Research and Economy shall be set up in 2011. Its main aim is to utilise capability of experts and economists for the preparation of short-term, mid-term, and long-term visions for Prague as an economic region of key importance in the Czech Republic.

Prague innovation policy is realised mainly through operational programmes co-financed by the EU Structural Funds. Prague implements two operational programmes in the current programming period 2007-2013. Objectives of both programmes are based on single programming documents, which were prepared in the previous programming period.

Comparing the implementation process in both periods, the significant simplification is evident. The number of institutions involved in implementation has been reduced, and the crucial tasks and responsibilities have been transferred to the regional level, that proved to be the most effective level for definition of calls, assessment and selection of project proposals as well as for monitoring, evaluation and communication with beneficiaries and the European Commission. We can say that the driving factors for this change came from the regional level, and were closely connected with the distribution of sources of EU Structural Funds in the present programming period. The main driving factor is the effort of the City of Prague representatives to gain more responsibilities in decision-making process in distribution of sources of EU Structural Funds and their utilisation for Prague’s development.

4. Conclusions: future actions and opportunities for innovation policy The support for innovation measures in Prague has not been a “hot” political issue in the past neither in the present times. There is much space in complementing and fixing national innovation policy at regional level, but it is hard to achieve when necessary institutional setting has not been laid down in Prague. The innovation system in Prague can be best described as fragmented, because there are many institutions without any coordinated activities. The current innovation policy mix solves this problem only partly. Key challenges can be summarised into following points:

• The absence of the any compact and institutionalised innovation policy. So far, the City of Prague does not have a complex innovation policy. Support of R&D&I is not covered by a clear and official innovation strategy, and is fragmented into the operational programmes. The new innovation strategy

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(policy) should be designed according to modern and internationally accepted standards and should be used as the main tool for promotion of R&D&I activities.

• The lack of co-ordination mechanisms. There are no horizontal, multi-level and cross-border co-ordination mechanisms of R&D&I activities in Prague. Innovation policy should be implemented by the newly established Regional Development Agency and Prague Council for Research and Economy. The Council shall be not only an advisory body of the city but a co-ordination platform as well; the Agency shall be an organisation implementing the innovation policy.

• Application of evidence-based methods. Application of policy-intelligence tools is very underdeveloped theme in the process of programme design and its implementation. Design of the new innovation policy would deserve more prominent use of foresight than before, thus addressing more effectively emerging smart specialisation of the region in biotechnology and ICT. Greater emphasis could be placed also on evaluation of existing support measures, which should be not only a formal issue, but a tool for improving the policy.

These challenges could be solved by the newly elected regional government, which has support for research and university education as one of its priorities. In this respect, the EU Structural Funds will continue to be the most important source for funding projects improving the innovative system in Prague, and hopefully it will continue in the next programming period.

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1. Main Trends and Challenges in the Regional Innovation System

1.1 Recent trends in regional economic performance

The City of Prague is one of the most economically developed regions within the EU, and it is economically the best-performing region in Central and Eastern Europe, with a potential for further economic growth. Prague is a natural economic, scientific, educational, cultural, and political centre of the Czech Republic.

Prague is home to 11.3% of the population of the Czech Republic and generates almost a quarter of the country’s GDP. In Prague, GDP per capita in purchasing power standard reached €42,800 in 2007, which was 172% of the EU-27 average (see the Figure 1-1), and placed Prague on the 5th position among European regions (CSO, 2010)2. The excellent position of Prague, however, is partly given by the fact that the majority of capital cities of other EU Member States form a cohesion region together with their agglomerations (e.g. the Hungarian region ‘Közép-Magyarország’ consisting of the City of Budapest and its hinterland), while Prague is the cohesion region formed only by the core city (which is the strongest economic unit in the Czech Republic) itself without its agglomeration. It means that the statistical data describing the City of Prague are not averaged together with data on its hinterland like in other capital cities within the EU, but describes only the city in its immediate borders. Thus, the excellent position partly results from a statistical definition of cohesion regions.

In comparison to the Czech Republic average, Prague’s GDP shows significantly higher growth dynamics, which results in deepening of regional differences in economic performance between Prague and the rest of the Czech regions. According to CSO (2010), Prague’s GDP has increased steadily; in 2007, the level of GDP increased by 66.5% since 2000 and reached 215% of the Czech Republic average (200% in 2000), while GDP of the whole republic increased only by 53%.

The high level of GDP and its high growth rate is positively influenced by a unique position of Prague in settlement and economic systems of the Czech Republic. According to CES (2009)3, the following factors belong to the most important: (I.) concentration of the majority of services sector (finance, insurance, telecommunication);(II.) concentration of gross value added generated by the governance sector; (III.) high level of commuting to Prague (18.5% people employed in Prague commute); (IV.) higher price level, and (V.) the highest wages.

The exceptional economic position of Prague is further evidenced by the level of gross fixed capital investment that has increased by 160.9% in the period of 2000-2008, while increase in the whole republic was only 86.4% in the same period. In 2008, Prague concentrated 33.6% of gross fixed capital investment of the Czech Republic, while it was only 24% in 2000. The level of investment is positively affected mainly by high concentration of Central European headquarters of multinational enterprises and massive investment into technical infrastructure and building of new business parks, office buildings, shopping parks and flats.

Excellent economic performance of Prague is further demonstrated by the highest labour productivity. Since Prague’s labour force is the most qualified in the Czech Republic, labour productivity amounted to 148 % of the national average in 2007, and was nearly by a half higher then in the second best region – Central Bohemia (CSO, 2010).

The number of employees increased by 8% in period 2000-2007, and Prague employed 13.1% of the total Czech labour force in 2007. The employment rate – 71.7%

2 CSO (2010) Czech Republic Statistical Yearbook, Prague, CSO. 3 CES (2009) Competitiveness Yearbook of the Czech Republic 2008-2009, Prague, CES VŠEM and Linde.

Available at: http://www.vsem.cz/rocenka-ces-vsem.html

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- was the highest among regions of the Czech Republic and by 7.1 percentage points exceeded the EU average (CSO, 2010). This high rate results from a quality and attractiveness of Prague’s labour market, highly skilled workforce, age structure, together with historical tradition of high women employment.

Prague, with an unemployment rate of 3.1% in 2009, ranks among EU regions characterised by traditionally the lowest unemployment. In the long-term development, Prague’s unemployment rate is the lowest in the Czech Republic. Its development follows the trends of the whole republic including the moderate upturn in 2009 caused by the world economic crisis. Roots of the lowest unemployment rate among Czech regions consist in successful economic restructuring taking place in the beginning of economic transition, high dynamics of economic performance, and the effective labour market highly affected by activities of multi-national firms located in Prague.

The structure of employment and GDP generation is in line with Prague’s specific status as a capital city with a high concentration of state administration authorities, educational and research institutions, central financial institutions, and large corporations. The structure of GDP generation corresponds to a post-industrial structure, where more than 80% of GDP come from the service sector. The structure of the processing industry is now showing a slight positive shift towards hi-tech production due to activities of multi-national enterprises, but the development of the hi-tech sector in Prague, and in the Czech Republic in general, is still lagging behind other countries, as evidenced by the low share of hi-tech output in exports, and the lower value added of exported goods.

As for high-growth manufacturing industries, massive increase of value added and employment has been seen in the pharmaceutical industry and the ICT sector in the period 2000-2007. This industry belongs to the most innovative branches not only in Prague’s economy but the whole Czech economy as well. The growth of both industries is driven mainly by activities of multi-national enterprises as well as newly established small and medium enterprises.

The crucial sector in Prague economy – services – has been characterised by a gradual penetration of foreign investment and a subsequent increase of business services and financial intermediation. These branches have ranked among pillars of economic growth and competitiveness of Prague. In addition to these branches, Prague competitiveness can be positively influenced by the high concentration of research capacities and universities of the Czech Republic.

Dark side of the economic performance is the lower quality of environment. The negative influence of traffic in particular on air quality, noise pollution and occupancy of urban areas has grown. The total production of pollutants (e.g. SO2) has been considerably reduced in the last 15 years because of collapse of many environmentally problematic and obsolete factories, but the emissions of pollutants generated by automobile traffic have noticeably increased.

To sum up, we can conclude that activities of multi-national enterprises are the most important factor of Prague’s economic growth as well as strengthening of its competitiveness within the EU and the global market. These enterprises are active especially in progressive industries like business services, financial intermediation, pharmaceutical industry and the ICT sector; and have been attracted by the unique position of Prague within the settlement structure, the favourable economic structure with the high proportion of services, the traditionally massive concentration of universities and research institutes, good traffic accessibility and proximity towards Germany. The economic growth has been driven mostly by these economic and geo-economic factors without interventions or even existence of regional economic or innovation policies.

1.2 Recent trends in regional innovation performance

Prague’s unique position in the field of research, development and innovation among the Czech regions is given by the specific historical development resulted in


traditionally high concentration of research institutions, universities and innovating firms. Almost one third of all the organisations performing research and development are located in Prague. Prague has almost 50% share of all the organisations performing R&D in the governmental sector and more than 35% share in the public university sector. To be more specific, 21% of innovating firms, 75% of institutes of the Academy of Sciences of the Czech Republic, 43 % of universities (public and private) and 30 % of other research institutes (including private companies) have their seats in Prague (Pechlát, 2006)4.

This fact also relates to other characteristics like an employment rate in R&D and expenditure on R&D, etc. Prague concentrated 41.5% of total intramural R&D expenditure in 2008. Its value increased in current prices by 172.4 % since 2000, while growth in the whole Czech Republic reached only 126%. In purchasing power standard in constant prices R&D expenditure allocated in Prague increased by 96.9%. This growth significantly exceeded the growth rate of the Czech Republic (63.4%) and the EU-27 (18.3%). Support to research and development from the national budget was at the level of approximately 2.6% of GDP in Prague (Czech Republic 1.54% and EU 1.85%).

From a sectoral aspect, the structure of R&D institutions in Prague is very diverse and covers all main specialisations. The quality of many of these workplaces is held in high esteem on the international stage. Technical research and development is carried out primarily at universities (especially the Czech Technical University and the Institute of Chemical Technology); research in natural sciences is mainly conducted at the institutes of the Academy of Sciences. The Czech Technical University research is focused on civil-, mechanical- and, electrical engineering, nuclear sciences and physical engineering, architecture, transportation sciences, biomedical engineering and IT. The Institute of Chemical Technology CT Prague is known for both the depth and broadness of its research activities in almost all branches of chemistry. Research areas of the Academy of Sciences consist of three main groups – (I.) mathematics, physics and Earth sciences, (II.) life and chemical sciences and (III.) humanities and social sciences.

In comparison with other regions, the Prague workforce is significantly more qualified and traditionally has greater skills and professional flexibility. In 2008, the share of citizens aged over 15 with tertiary education accounted for 25.5% of the workforce (the highest share among regions in the Czech Republic), with completed secondary school education 43.9% and with vocational training 19.1%. In Prague, there have been more than 100,000 students enrolled at 36 faculties of 8 universities. This, together with the above average proportion of the population with secondary education and other occupational skills, creates a favourable background of human resources (Pokorny et al. 2008)5.

The quality of human resources is displayed e.g. by employment in science and technology. 20.5% of workforce in science and technology of the Czech Republic is concentrated in Prague. An employment in science and technology increased from 284 thousands to 346 thousands in 2000-2008. Since the number of researchers and engineers stagnated in this period, the increase was caused mainly by creation of jobs for skilled workers in subsidiaries of transnational corporations.

In the Czech context, Prague holds a strong position in the field of research and development results i.e. in the number of awarded patents and registered utility models. Nevertheless in comparison with the most developed EU countries, the number of patent applications significantly lacks behind. Considering the low number of patents, R&D institutes evidently do not deal sufficiently with the issue of protecting

4 Pechlát J. (2006) R&D&I basis in Prague, Prague, URM. Available at http://www.urm.cz/cs/strateg-plan-analyzy-konkurenceschopnost

5 Pokorný O., et al (2008) Innovation Potential of Czech Regions, Prague, Technology Centre ASCR. Available at: http://www.tc.cz/downloads/?n=1&start=6&krok=6


their intellectual property rights. The low level of patenting activity is also caused by the poor motivation among researchers, whose work is assessed mainly on the basis of publishing criteria.

Several highly innovative industries exist in Prague such as the chemical industry (represented mainly by pharmaceutical industry), automotive, ICT and financial intermediation. Besides these industries, activities of innovative companies are important in many other branches as well. Therefore we cannot say that the high-tech sector is the most innovative and vice versa. Innovative performance of firms and sectors rather depends on firm strategies and a position of subsidiaries in corporate hierarchies.

In terms of size categories of firm, there are important differences between large companies and small and medium-sized enterprises (SMEs) (Čadil, 2008)6. In general, SMEs are often considered as more innovative than large enterprises. Nevertheless, this general observation does not hold true in Prague. Innovation survey conducted by CSO (2010)7 shows that more innovative are large companies, especially multi-national enterprises. This fact indicates that the sector of innovative firms consist of two main parts: (I.) more innovative multi-national corporation locating in Prague their R&D activities, and (II.) less innovative SMEs suffering by the lack of capital necessary for R&D and implementation of innovation and by managerial and personal weaknesses. This duality creates a potential threat for the further development of Prague’s innovation environment and performance.

Although Prague dominates in concentration of innovative firms, universities and public research institution, intensity of co-operation among business and public research sectors is rather weak in general. Innovative firms most often co-operate with their suppliers. The highest intensity of co-operation is in research and development, machinery and automotive industries. The low level of co-operation between academic and private sectors could be seen as a severe barrier for the further strengthening of Prague’s competitiveness, and reveals that technology transfer offices of universities and research institutes do not provide their services in a full scope and intensity.

Concerning types of innovation, organisation and process innovation are major types of innovation implemented by firms in Prague. Pazour, Pokorný and Kucera (2010)8 revealed that process innovation had the most significant influence on the extensive growth of small and medium enterprises. As they mention, it corresponds to the fact that this sector remains in a phase of steadily increasing effectiveness of production, and implementation of process innovation is more likely connected with the extensive growth, i.e. with extension of production capacities and new job creation.

The fact that Prague is the most developed region, with the most educated population is reflected in its broadband internet access. By its share of households with broadband internet access achieving 62%, Prague significantly exceeded other regions as well as the national average, which was 54%. Nevertheless, this high level causes that a growth rate in period 2007-2010 is the lowest among Czech regions, with the growth rate of 34.8% (national average 92.9%). The high level of broadband internet access together with availability of ICT experts (university graduates) and concentration of universities, research institutes and R&D regional centres of multi-national enterprises (i.e. Microsoft or Sun Microsystems) create a competitive advantage of Prague and a growth pole of Prague’s competitiveness.

6 �adil V. (2009) Sectoral Analysis of Business Innovation in Prague, Ergo 1: 3-7. 7 CSO (2010) Czech Republic Statistical Yearbook, Prague, CSO. 8 Pazour M., Pokorný O., Ku�era Z. (2010) Process innovation: Driver of enterprise growth in the Czech Republic, in OECD, High-Growth Enterprises: What Governments Can Do to Make a Difference, OECD Publishing.


Figure 1-1 Economic and innovation performance indicators for Prague

Source: Eurostat.

1.3 Identified challenges

Challenge 1: Development of a strong, world-competitive biotechnology sector

Prague has a large knowledge base in the field of biotechnology in particular and in pharmaceutical industry in general. Several highly respected institutes of Academy of Sciences (mainly the Institute of Experimental Medicine ASCR and the Institute of Organic Chemistry and Biochemistry ASCR) and two universities (Charles University in Prague an Institute of Chemical Technology) provide quality R&D results in many fields in the pharmaceutical and medical research. Excellent research is conducted especially in the fields of organic chemistry, biochemistry, molecular and cellular biology, computational chemistry, physico-organic chemistry and biochemistry and in related disciplines, cell biology and pathology, neurobiology, neurophysiology, neuropathology, developmental toxicology and teratology, molecular epidemiology, molecular pharmacology, immunopharmacology, cancer research, molecular embryology, stem cells and nervous tissue regeneration. This research has a broad application in development of new medicaments, implants and therapies. The above mentioned universities provide highly skilled graduates and attract PhD students from many developed countries. Research results are commercialised to pharmaceutical corporations from all over the world. Several corporations located their R&D activities in Prague to utilise the local knowledge base, however the majority of R&D results is commercialised abroad. Research institutes established several start-up companies which should carry out further development of their knowledge; nevertheless the economic growth of the companies is still slow. Links among academic and business spheres seem to be strengthening, and internationalisation of research activities as well as business operations is in the phase of intensification. The nascent biotechnology cluster could become one of basic pillars of future competitiveness of Prague in the EU and world markets. Although universities and research institutes co-operate with foreign companies and research institutions, international collaboration with similar clusters abroad is very weak so far. This biotechnology sector is not directly supported by any specific regional programme or policy, and evolves spontaneously.

Challenge 2: Excellence in an ICT sector

In Prague, the ICT sector is developing very fast in terms of both qualitative and quantitative changes. As in the biotechnology sector, Prague’s knowledge base is


traditionally very wide, and is created by three public universities (the Charles University, the Czech Technical University and the Czech University of Life Sciences), several institutes of the Academy of Sciences (especially the Institute of Computer Science ASCR, the Institute of Information Theory and Automation ASCR and the Institute of Mathematics ASCR) and some private R&D institutes. The ICT research topics of these universities and institutions are artificial intelligence, machine perception, robotics, and biomedical engineering with the focus to multi-agent systems, machine learning, data mining, pattern recognition, knowledge-based systems, medical data processing and collaborative robotics, control systems and software development. Similar to the above described biotechnology sector the majority of R&D results of the ICT sector is commercialised abroad (e.g. the Czech Technical University closely co-operates with USA based enterprises and national agencies). Nevertheless, the scope and high quality of R&D in this field have attracted several R&D departments of multi-national enterprises to locate a part of their R&D activities in Prague. A case in point is Honeywell, Sun Microsystems or Microsoft. Thus, Prague’s ICT sector is focused on control systems, cybernetics and software development. Activities in the last mentioned discipline are not conducted only by multi-national corporations but by many small domestic firms as well. These companies are active mainly in design of web pages and internet applications. The main advantage of the ICT sector is its wide knowledge base, specialisation and the attractiveness for foreign companies. On the other hand, despite the concentration of actors and their importance in Prague’s economy, collaboration among them seems to be rather low. Thus, intensification of co-operation should be a potential, partial challenge in this sector. The development of the ICT sector creates an opportunity for development of other industries utilising its knowledge. Especially electronic, electric and automotive industries use R&D results and products of this sector. However, location of these industries in Prague cannot be expected because of high prices of plots of grounds, industrial properties and the lack of human resources. These industries will be rather located in the surrounding region. Likewise the biotechnology sector, this sector is not supported by any Prague’s policies and programmes. The successful development of this sector is thus a result of path dependency (historical location of universities and research institutes) and the activity of market forces.

Challenge 3: Strengthening of co-operation between academia and businesses

Prague has a significant potential to become a leading knowledge hub among central European new Member States. As mentioned above, Prague concentrates crucial number of research capacities as well as innovative companies including transnational corporations. Nevertheless, intensity of co-operation in the field of research and development, namely between academic and business sectors, is rather low. There are many reasons for this, e.g. a lack of motivation of researchers and many others. Many analyses made at regional and national levels show that the most severe barrier is an underdeveloped innovation infrastructure like business incubators and science parks. Nowadays, there are only four very small business incubators and no scientific park in Prague. Their operations and further development are limited by the lack of finances, and do not provide a sufficient basis for intensive co-operation between academic and business spheres and for commercialisation of R&D results. The underdevelopment of the innovation infrastructure or even an absence of some types of the innovation infrastructure significantly contributes to the fact, that many R&D results are commercialised abroad instead of being commercialised in Prague. The low intensity of the local commercialisation has negative economic and social impacts on Prague, because profit resulting from capitalisation of R&D results is not generated in Prague but in foreign regions. Therefore, it would be prerequisite to establish a dialogue forum for co-operation between academia and business sector and develop suitable measures to be implemented at the regional level.


2. Innovation Policy Governance

2.1 Degree of institutional autonomy

Prague is a specific self-governmental territorial unit combining functions and activities of self-governmental regions (kraj) with functions and activities of municipalities, which are defined as self-governmental units as well. Furthermore, Prague administers some state functions delegated by the Czech state. Both – self-governmental and state – functions are defined in the Capital City of Prague Act (Act No. 131/2000 Coll., on the Capital City of Prague)9. Besides Prague’s functions, the act specifies the institutional framework, regional laws creation process, division of the Prague territory into further self-governmental units (Prague boroughs), economic management, etc.

Self-governmental function is administered by the Mayor, the Municipal Assembly and the City Council. Prague can e.g. submit law proposals to the Parliament of the Czech Republic, approve an urban (land use) plan of the Prague territory, approve and realise a development programme of Prague, approve a municipal budget, approve local regulations (regional ordinances), etc. One of the most important powers, nevertheless not mentioned in the act, is that Prague designs, implements and co-finances own operational programmes funded by the EU Structural Funds. For an overview of institutional autonomy see figure 2-1.

Prague City Hall is an executive body in Prague’s governance structure. The City Hall carries out activities and tasks in accordance to the Mayor and to the Council’s needs and decisions.

Prague’s budget is designed by the City Hall in close co-operation of self-governmental bodies being responsible for its approval. Budget design and its approval are independent on decisions of the Czech Government and the Parliament. Budget revenues consist of two major parts – (I.) local tax revenues (e.g. a realty tax), and (II.) a share of national tax revenues (Prague receives a proportional share of national tax revenues which is computed on the basis of the number of inhabitants, firms, etc.) given by the specific act. Although about 90% of the budget revenues are created by the share on national tax revenues, Prague can use them freely on activities defined in the Capital City of Prague Act.

In order to ensure that the financial management is effective and transparent, the Municipal Assembly has established a specific steering committee, which checks the financial operations in Prague financial management. The steering committee consists of elected members of the Assembly.

The Capital City of Prague Act enables Prague to establish specific allowance organisations for realisation of some activities, which belong among self-governmental functions. Moreover, Prague can establish and manage private companies.

Support of R&D&I activities including allocation of a relevant part of the Prague budget belongs to self-governmental functions of Prague. The above-mentioned act on the Capital City of Prague provides Prague power to design its own regional policies and to allocate funds for their realisation. The act says that Prague shall create suitable conditions for social and economic development of its territory. It means that Prague can directly support R&D&I activities of public and private research institutions, universities and firms, as well as stimulate foundation of innovation support infrastructure like business incubators, technology transfer centres and science and technology parks. Prague can support these activities directly through programmes or

9 Act No. 131/2000 Coll., on the Capital City of Prague


by establishing intermediary institutions. Moreover, the Act No. 130/2002 Coll., on the Support of Research and Development,10 allows regions (Prague) to prepare, fund and implement regional R&D programmes. However, the act on the Capital City of Prague does not explicitly mention support to R&D&I activities, so such support activities are not obligatory.

Although Prague can establish intermediary institutions and other organisation for support to R&D&I, no such institution in this field has been set up yet. The reason is the lack of politicians’ will to support and develop R&D&I activities.

To sum up, Prague, as a self-governmental territorial unit, has a large autonomy in designing its own innovation strategies (programmes) and in allocating a relevant budget for their realisation. Neither the Czech Government nor the Parliament is able to directly influence Prague’s self-governmental functions and activities guaranteed by the Act on the Capital City of Prague. Although Prague has a large autonomy in support of R&D&I activities, design and implementation of relevant policies or programmes is significantly determined by the politicians’ will, which has been rather low recently and still remains very weak at present.

2.2 Institutional set-up, co-ordination and implementation mechanisms

The current institutional set-up is a result of significant changes in division of responsibilities and competencies among the state, Prague and its boroughs taking place in the last 20 years. Following the trends of subsidiarity, the Czech government has decentralised its responsibilities to lower territorial (geographical) levels. The most important milestone in this process was the Act on the Capital City of Prague, which came into force in 2000. The Act exactly defined responsibilities and competencies of the Mayor, the Municipal Assembly, the City Council, the Prague City Hall, organisations established by Prague and Prague’s boroughs. Since that time the institutional set-up and co-ordination of self-governmental activities conducted by Prague have stabilised and have been going on only with minor changes (e.g. establishment of the Department of EU Funds of the Prague City Hall as the Managing Authority for implementation of operational programmes co-funded by the EU Structural Funds).

According to the Act, responsibilities for the design, discussion and approval of Prague’s developmental policies are divided among the City Council, the Municipal Assembly, the City Hall and the City Development Authority. These responsibilities are defined in detail in the Statute of the Capital City of Prague, the Organisation Order of the City Hall, the Rules of Procedures of the City Council and the Statute of the City Development Authority of Prague.

The Municipal Assembly executes the most important powers in terms of independent operation of the city in accordance with the Act. As a supreme self-governing body it is allowed to reserve the right to decide about other matters of independent operation of the city, which fall within the powers of other bodies of the city by the law. The Municipal Assembly has 63 members. The City Council is an executive body in terms of independent operation of the city. The Council has 11 members and it consists of the mayor, 4 deputy mayors and 6 councillors.

Regarding the policy making process, the Council and the Assembly can initiate debates about a policy and order the City Hall and the City Development Authority to design a policy. Other important responsibilities of the Council and the Assembly in this field are approval of the policy and a budget allocated for the policy implementation.

10 Act No. 130/2002 Coll. On Support of Research Development and Innovation


The Prague City Hall is in charge of policy design and its implementation in general. The City Council can charge individual departments with the creation of specific policies and programmes in the field, which the departments are responsible for. Once the policy or the programme is approved by the Council (in some cases also by the Municipal Assembly), the department has to implement them, in co-operation with other departments (e.g. economic, financial and audit departments).

The City Development Authority of Prague is a specific body in the process of policy making. The Authority is a contributory organisation established by the City of Prague dealing with preparation and processing of strategic, town-planning and territorial development documents for the City of Prague. As for R&D&I-related policies, the Authority is responsible for the preparation and processing of the Strategic Plan of the City of Prague11 that is a long-term conceptual document setting the objectives, priorities and paths for dealing with key questions of development of the city in a 15 to 20 year timeframe. Need for further development of R&D&I activities is stressed in the plan, especially in priority axe ‘Competitiveness’. The Authority, as an expert institution, was involved in the design of the Regional Innovation Strategy for Prague that was prepared by the Technology Centre ASCR; and participated in designing Prague’s operational programmes co-financed by EU Structural Funds.

Last year, the City of Prague established the Prague Regional Development Agency as its contributory organisation. According to the certificate of incorporation the agency should assure the city marketing, revitalisation of brown fields in the city, promote the development of innovative technologies in small and medium enterprises, provide consultancy services, etc. This proclamation shows that the agency could become an important institution in the field of innovation support. However, it is only at the beginning of its operation, and the exact definition of its activities and responsibilities are unclear; therefore it is too early to judge its significance as an innovation support organisation in the Prague innovation system.

Talking about institutions dealing with R&D&I support, it is worth mentioning that the City of Prague has not established a specialised City Hall department aimed at co-ordinating the Strategic Plan and innovation support measures. At present, no department or institution is responsible for this task. Partly it is a result of the absence of political will.

The City of Prague supports R&D&I activities mainly through operational programmes co-financed by the EU Structural Funds. Before the Czech Republic accession into the EU, Prague did not support these activities at all. There were two reasons for this – (I.) the lack of politicians’ will and (II.) favourable economic development, which did not motivate Prague’s political representatives to start discussions on new tools for stimulating economic growth.

Prague implements two operational programmes in the current programming period 2007-2013. Operational Programme Prague Adaptability is co-financed by the European Social Fund while Operational Programme Prague Competitiveness is co-funded by the European Regional Development Fund. Both programmes are described in detail in the next chapter.

Operational Programme Prague - Competitiveness was prepared by the Department of EU Funds of the Prague City Hall in co-operation with the City Development Authority of Prague playing part of an expert body. In order to focus programme objectives and priority axis more precisely, an expert group was established. It covered many important regional stakeholders like research institutes, universities, ministries, professional organisations, associations, etc. The expert group discussed important topics in analytical as well as strategic part of the programme, and provided some

11 Strategic Plan of the City of Prague. Available at: http://www.urm.cz/cs/strategicky_plan


recommendations for improvement of strategic orientation of priority axis and activities supported by the programme.

Preparation of the Operational Programme Prague – Adaptability was similar, with the exception that the formal expert group was not established. Instead of debates in the expert group, public discussion on specific web pages of the City Hall was selected as an effective tool for familiarising target groups with the programme and gathering opinions that could be incorporated into it.

The implementation of both programmes is quite complicated since competencies are divided between national authorities and the City. At the national level, the programmes are co-ordinated by the National Co-ordination Authority of the National Strategic Reference Framework 2007-2013, which is the main strategic document for a strategic orientation and utilisation of the EU Structural Funds in the current programming period. In fact, the Authority is a specific department of the Ministry for Regional Development of the Czech Republic, and is responsible mainly for the central co-ordination of a uniform framework for the implementation of operational programmes by Managing Authorities. It guides the Managing Authorities with the purpose of ensuring efficiency and legality in the management of the operational programmes. Other authority at the national level is the Ministry of Finance of the Czech Republic, which is the Paying Authority. In accordance to the Czech Government Resolution No. 198 of 22nd February 2006 the Paying Authority is responsible for financial management of the EU Structural Funds and audit activities. At the city level, the programmes are implemented by the Prague City Hall, which plays part of the Managing Authority according to EU regulations, the Act No. 248/2000 Coll., on regional development support, and the mentioned Czech Government Resolution. Competencies of the Managing Authority shall not be delegated to intermediate bodies within the management of the programmes. Activities of the Managing Authority (with the exception of matters, which are by legal or internal regulations mandated to the Assembly and Council) are executed by the EU Funds Department of the Prague City Hall. The Prague Municipal Assembly, in accordance with the Act No. 248/2000 Coll., on regional development support, approves selection of projects, which will receive financial assistance from the programmes. The selection of projects is the exclusive competence of the Assembly. No other institutions or bodies are involved in this process. The Council approves especially the documentation on implementation and management, provisions connected to publicity, respectively the annual, final and other reports. The Mayor calls and leads meetings of the Assembly and Council.

In the previous programming period 2004-2006, innovation activities were supported through Single Programming Documents (SPD) for Objectives 2 and 3. Similarly to the current situation the implementation competencies were divided between the state and regional (municipal) levels. Nevertheless, a degree of centralisation of competencies to the national level was significantly higher.

Comparing the implementation process in both periods, the significant simplification is evident. The number of institutions involved in implementation has been reduced, and the crucial tasks and responsibilities have been transferred to the regional level, that proved to be the most effective level for definition of calls, assessment and selection of project proposals as well as for monitoring, evaluation and communication with beneficiaries and the European Commission. We can say that the main driving factors for this change came from the regional level, and were closely connected with a negotiation process of the National Strategic Reference Framework 2007-2013 at both regional and national levels, and a discussion on organisational changes in the implementation process. Regional authorities represented by elected governors (and the Mayor of the City of Prague) demonstrated their political power and pressed their suggestions on decentralisation of responsibilities to the regional level. As far as Prague is concerned, the main driving factor is the effort of Prague representatives to


gain more responsibilities in the decision-making process to distribute sources from EU Structural Funds and their utilisation in the field of Prague development.

Any co-ordination mechanisms (horizontal, multi-level and cross-border) for innovation policy design and its implementation have not been established yet because of the lack of the politicians will. Prague’s political representatives have not seen the necessity of co-ordination, because, in fact, Prague has not had an official and complex innovation policy. Prague has only the Regional Innovation Strategy for Prague that has not been approved as an official strategic and conceptual document for development of the Prague territory. Nevertheless the Strategy realised the necessity of co-ordination of its activities in particular and the whole topic of R&D&I in general. The Strategy suggested the creation of a Regional Council for Innovation as a pilot action of the Strategy. The Council was supposed to act as an advisory body to the City Hall and the City Council, and be composed of representatives of the administrative and political bodies of Prague, representatives of institutions from the sectors of research and development, training, consulting, and financing, and representatives of the components of the Prague innovation infrastructure, business sphere, and state administration. The Regional Council for Innovation should have taken up the strategic dialogue, and should have assumed the professional guarantee for the implementation of the Regional Innovation Strategy. It should have also contributed to the preparation of strategically important information on possibilities of exploiting research and innovation in order to enhance the competitiveness of Prague’s economy. Nevertheless, the Regional Innovation Council was not established, because the Regional Innovation Strategy was not approved.

The new Mayor of the City of Prague, being elected in autumn 2010, considers R&D&I as an important issue in his political agenda and proposed to establish the Prague Council for Research and Economy as one of the first priorities of the new political leadership in Prague. The Prague Council for Research and Economy shall be an advisory body of the City Council. Its main aim is to utilise capability of experts and economists for preparation of short-term, mid-term, and long-term visions for Prague as an economic region of a key importance in the Czech Republic. It should be established in the first half of 2011. Although the proposal of establishment of this Council can be seen as a positive step towards design of the innovation policy and creation of co-ordination mechanism, nobody knows what the Council should be exactly doing. Its competencies and responsibilities have not been discussed and defined so far, and it is not clear what will an affect of the establishment of the Council in comparison with the above-mentioned Regional Council for Innovation.

Although there is no co-ordination mechanism in the policy making process, it cannot be said that policy design, and especially operational programmes design, is running without involvement of experts representing important actors as it was mentioned above. The preparation process of both mentioned operational programmes showed that not existing institutionalised horizontal co-ordination mechanisms provide valuable information leading towards better definitions of programme objectives, and was a useful communication channel for dissemination of information on programmes. Informal multi-level and inter-regional co-ordination mechanisms have not been applied yet in the innovation policy design process because the Department of EU Funds did not have any competencies to develop these co-ordination mechanisms and to involve other experts to the process. The current development of discussions on planned operational programmes for the next EU programming period shows no progress in this field. Co-ordination mechanisms are not only a tool in the process of the policy or programme design but in their implementation as well. So far, no expert team has been established as an advisory body and no experts have been involved to the project selection process. Again, the reason consists in the several times mentioned lack of political will.

As it was mentioned above, a design of single programming documents and operational programmes was discussed with many different stakeholders in Prague’s


innovation environment. Especially innovation support organisations were considered as important stakeholders providing interesting information about R&D activities, technology transfer and ways of innovation support. Moreover, the role of these organisations was not limited only to providing information and commenting on the design, but they were seen as an effective communication channel in business and academic spheres and between them.

In Prague’s innovation system, there are several innovation support organisations (namely technology transfer or knowledge transfer offices of individual universities), nevertheless scope and quality of activities and operations of the majority of them are rather weak because the lack of management skills and low interest of researchers for commercialisation of their results (caused by an absence of motivation schemes). Some technology transfer offices (e.g. operated by the Institute of Organic Chemistry and Biochemistry and the Institute of Experimental Medicine ASCR) are successful in the field of technology transfer. However, these offices provide technology transfer services only to their parent institutions and are not active in external activities and discussions. The most important and independent innovation support organisations playing the active part in innovation policy discussions are the Technology Centre of the Academy of Sciences of the Czech Republic (TCASCR) and the Business and Innovation Centre of Czech Technical University, both with more than 15 years long tradition; and a new organisation – the Prague Regional Development Agency established in 2010.

TCASCR is an independent consortium of legal entities (institutes of the Academy of Sciences of the CR) and a private company. It is the National Information Centre for European Research, it works on analytic and perspective studies in RTD and innovation and it is involved in local as well as trans-national technology transfer. The National Information Centre for European Research arranges information workshops on European Framework Programmes, offers complex services and consulting for preparing international research projects. Technology transfer activities are focused on national and international technology transfer and on introducing new technologies to small and medium size enterprises. Moreover, TCASCR prepared the regional innovation strategy for Prague that was used for formulation of priorities and supported activities of single programming documents in 2004-2006 and operational programmes for 2007-2013.

The Business and Innovation Centre of the Czech Technical University is an expert and consultancy institution helping to implement and accelerate technology transfer, transforming research results and creative activities into a commercial form through innovative entrepreneurship. It brings together the scientific and creative potential of the Czech Technical University and the innovative commercial environment inside the country and abroad. The main activities of the centre are consulting the academic as well as the business sector in the field of research project management and implementation, technology transfer, education and support for innovative entrepreneurship in the business incubator for technology start-ups.

Summarising the activities and the importance of the innovation support organisations we can say that there are huge differences among them. Impact of the two above mentioned traditional innovation support organisations, with strong experiences in support of R&D&I activities and especially the technology transfer, on the Prague innovation system is relatively strong. They intensively co-operate with research institutions located in Prague, with companies and many foreign institutions; and are actively involved in discussions on R&D&I both at the regional and national levels. Activities of both organisations are positively considered by many managers from the Prague City Hall and the City Hall of Prague’s six City Boroughs, where both organisations are located. To develop and strengthen their activities and position in the Prague innovation system, these organisations successfully realised their projects supported by single programming documents and operational programmes. The scope of activities and the importance of other organisations are limited only to technology


transfer services for their parent institutions, and their role as active stakeholders is very weak.

2.3 Availability and use of policy intelligence tools

Evidence-based methods are widely used in the policy-making and decision-making process in the field of support of innovation activities in the Prague innovation system. The Prague City Hall and the Municipal Assembly mainly use analytical and conceptual documents prepared by the City Development Authority of Prague, which is an expert institution providing analytical studies according to the Prague City Hall’s needs. In recent years, the Authority has prepared several documents focused on strengthening competitiveness and innovation, like e.g. the “Comparison of economic performance of European regions and cities with Prague”, and “Prague research and development basis”. However, all these studies only inform Prague’s political representatives about current trends and are not obligatory for making their decisions.

The City Development Authority also applied evidence-based methods in preparation of the Strategic Plan of the City of Prague and of the operational programmes. In depth analyses dealing with social, economic and environmental development form a central part of the Strategic Plan. On the other hand, analyses included in the operational programmes seem to be rather formal without going into details. They are rather used for justification of politically given objectives instead of giving evidences for the formulation of these objectives.

The Regional Innovation Strategy for Prague, prepared by the Technology Centre ASCR, is the other example of application of evidence-based methods. In order to identify the requirements and specific traits of the Prague region, several analytical studies were conducted. The resultant conclusions and recommendations were used for the formulation of measures of the strategy, to propose projects specified in the Action Plan, and to draw up pilot projects. These analyses were complemented by a regional field study at 490 enterprises and 60 research organisations, with the aim of identifying needs, barriers, and recommendations in the field of innovation generation and application. Since the Strategy was prepared without involvement of politicians, its objectives were formulated objectively only on the basis of in-depth analyses and other evidence-based methods.

Foresight methods are still a new tool for policy design and improving the relevance of regional innovation policy in Czech regions. The Regional Innovation Strategy for Prague was probably the first regional strategic document, which used some foresight methods for proposal of strategic areas of the strategy and related measures, selection of priority issues, and specification of drawbacks and barriers hindering the development of knowledge-based economy in the city. Since the design of the strategy had been finished, no other foresight methods have been used for design of innovation programme and policies in Prague because of the lack of the politicians’ will and their interest.

Programme or policy evaluation is connected only with implementation of single programming documents and operational programmes co-funded by EU Structural Funds. According to EU regulations, evaluation of these programmes is an obligatory task. Therefore ex-ante, mid-term and ex-post evaluation of single programming documents, and ex-ante evaluation of current operational programmes were carried out. Nevertheless, only general evaluations of the programmes were realised, without specific attention to innovation support. Evaluation results have been mainly used for better specification of measures and supported activities, and consequently for better formulation of calls for proposals. Regarding the quality of evaluation, all evaluation studies are rather formal and summative without providing explanations and recommendations. The low quality results from the fact that evaluation is demanded only by the EU regulations, and is not been considered by Prague’s political representatives and programme administrators as an effective tool in the policy cycle. With the exception of the mentioned programmes, no other programmes, strategies of


activities (e.g. participation of universities and research organisation in Framework Programmes) have been evaluated so far.

The above mentioned lack of political will in the field of application of policy intelligence tools is further expressed by the fact that the City of Prague has not participated in interregional or international networks (e.g. Interreg projects) and projects and initiatives (e.g. Innovating Regions in Europe) dealing with development and adoption of new and systematic tools for effective design and implementation of regional policies.

2.4 Key challenges and opportunities

Recently, the most important opportunity for the development of Prague’s innovation system has been Prague municipal elections taking place in autumn 2010. The new Mayor has proclaimed research and development and university education to be one of the policy priorities for his electoral term.

Newly elected regional politicians face many challenges (weaknesses) in design and carrying out of innovation policy. The insufficient institutional framework for effective implementation of innovation policies and programmes can be considered as the gravest challenge. Although the City of Prague has the Strategic plan, implements the operational programmes supporting R&D&I activities and has several organisations dealing with the programme design and its implementation, there is not an institutionalised co-ordination mechanism in the field of R&D&I and a City Hall department specialised in innovation support. This absence of co-ordination mechanisms results from the lack of the politicians will.

The Prague Council for Research and Economy is going to be established during the first half of 2011, however, it will be only an advisory body of the City Council, without an executive power. Thus, it can be hardly considered as a basis for creation of co-ordination and control mechanism. Therefore, it is necessary to step forward and to create a transparent co-ordination and governance structure, which will be able not only to design programmes, but to carry them out (including co-ordination of operational programmes). Today, R&D&I activities are the responsibility of the Mayor, nevertheless, no department is in charge of this field. It can be recommended that responsibilities in implementation of innovation policy should by defined; support of R&D&I would be given in responsibility of a member of the City Council, specialised in R&D&I; and a specific department of the City Hall dealing with design and implementation of research and innovation policies would be established.

The lack of the politicians will and the absence of the co-ordination mechanisms has many negative impacts on the development of Prague’s innovation system. One of them is the low intensity of co-operation among the City Hall and business and research (academic) spheres in terms of the triple helix concept. The low co-operation is evident in the absence of industrial clusters and regional technology platforms in Prague. So far, the City Hall and its contributory organisations have not played a role of a significant intermediary organisation. There are only two independent intermediary organisations very active in this field; nevertheless, they cannot substitute the role of public administration. Let us hope that the set up of the Prague Council for Research and Economy will contribute to bridge a gap between academic and business sectors.

Since the Prague innovation policy has been realised mainly through operational programmes co-financed by EU Structural Funds, a significant opportunity for oriented development of the Prague innovation system under innovation policies will be the EU cohesion policy in new programming period. Although principles of the cohesion policy are not exactly defined, innovation activities are likely to be supported more intensively. However, the overall benefit will depend on institutionalisation and cultivation of the framework for support of R&D&I activities.


Policy intelligence methods can be used for the cultivation of the institutional framework, nevertheless, Prague’s political representatives have shown a low interest for using them since results of these methods applications could undermine their decisions being based only on their will instead of being supported by independent analyses and objective information. Therefore further challenge or opportunity for the future development of Prague’s innovation system has to consist in the change of attitudes to application of modern and internationally respected evidence-based methods enabling effective governance of the regional innovation system.


3. Innovation Policy Instruments and Orientations

3.1 The regional innovation policy mix

As mentioned above, the only financial instruments, affecting the promotion of innovation are two operational programmes for Prague (Adaptability and Competitiveness), which have been designed as successors of similar programmes in the previous programming period. Apart from these programmes the City of Prague has not designed and implemented any other projects, programmes and tools in the field of R&D&I. Prague is not even active in any interregional programmes, the Seventh Framework Programme or international networks. Although Prague has several bilateral partnership agreements with cities inside and outside the EU, the partnerships are focused only on cultural or diplomatic activities instead of promotion of R&D&I.

The current operational programmes for Prague concentrate substantial resources (€108.39m in the programme Adaptability and €234.94m in the programme Competitiveness), which are funded through the EU (85%) and the remaining 15% is contributed by the central government and Prague municipal budget.

Both operational programmes were designed to support projects in various areas or priority axis under one umbrella; therefore both were classified as a horizontal measure. Design of the programmes is based on the Regional Innovation Strategy and the Strategic Plan, but they had to take into account documents and comments from the central authorities at national and European level, therefore they cannot be considered as purely regional.

Considering the total absence of other innovation policy measures dealing with promotion of innovation environment at the regional level, it can be stated that the operational programmes for Prague are the most important parts of the innovation policy mix. Therefore, the importance of supporting tools in the first category of innovation policy measures (i.e. governance and horizontal research and innovation policies) according to the methodology of RIM is the most relevant in Prague. Both operational programmes support a wide range of activities through several priority axes, and development of innovative environment is one of them.

The Operational Programme Prague Competitiveness12 is intended to support investment projects focused in particular on support of public transport and transport accessibility in Prague, support of innovations, information and communication technologies, business and improvement of the environment in Prague. Innovation activities are supported in part by the third axis – “Development of Innovation Environment and Partnership between the Research and Development Platform and Practice” with total allocation of €62.7m. Intervention of this measure focuses on projects that develop innovation infrastructure, i.e. science parks, incubators, innovation centres, excellence centres, etc., which will enable to exploit research and development potential concentrated within the city. Equally important are consultancy and information centres for innovation and technology transfer. Form of the support is grant.

12 Operational Programme Prague Competitiveness. Available at: http://www.prahafondy.eu/cz/oppk/dokumenty.html


• Acceptable beneficiaries of this measure are:

− Research and development organisations (institutions of higher education, Czech Academy of Science, research institutes etc.);

− Entrepreneurs (especially SMEs);

− Non-governmental non-profit organisations;

− Professional and interest groups (business associations, chambers of commerce etc.).

The Operational Programme Prague Adaptability13 supports non-investment projects focused on education, social integration, employment support and development of human resources in research and development. The support is directed to projects representing three thematic priority axis aimed at specific objectives: Support to Development of the Knowledge-based Economy, Support to Entry on the Labour Market, Modernisation of Initial Education. Promotion of the innovation environment is the closest to the priority axis paying attention to the development and use of the innovation potential in Prague through the improvement of co-operation between research, educational and businesses institutions (such as transfer of know-how and internships). Emphasis is placed on promoting innovative start-ups, entrepreneurship and consultancy in this area.

Budget of the priority axis supporting development of the knowledge-based economy is approximately 38% of the total programme allocation, as expressed in absolute terms it is €48.7m. Form of the support is grant as in the previous case.

• Acceptable beneficiaries of this measure are:

− Entrepreneurs;

− Public administration (organisations established by public administration);

− Academy of Sciences and other public research organisations;

− Non-governmental non-profit organisations;

− Professional and interest associations;

− Schools and others.

A fundamental document for the preparation of the operational programmes for Prague in the period 2007-2013 as well as in the previous programming period 2004-2006 has been the Strategic Plan, which was approved by the Assembly in 2000 and updated in 2008. The Strategic Plan of Prague is the most general policy document that deals with the overall development of the city of Prague reflecting main policy directions and being a basis for annual allocation of the city budget. This long-term conceptual document sets the objectives, priorities and paths for the development of the city in a 15 to 20 year timeframe. The Strategic Plan was approved by the Assembly in 2000 and updated in 2008 and has been a fundamental document for the preparation of the operational programmes for Prague in the period 2007-2013 as well as in the previous programming period 2004-2006.

The Strategic Plan formulates Prague's conception of the economic, social and spatial development. The updated document takes into account new realities in the development of Prague, (especially joining of the Czech Republic to the European Union, disastrous floods in 2002, global deterioration of security situation due to the growth of terrorism, and new trends in regional development of the city). These facts have been naturally mirrored in the regional budget during a couple of years. Prague’s budget has been burdened by costly investments in traffic (tunnel complex – part of inner motorway ring, enlargement of metro), anti-flood system or improvement of

13 Operational Programme Prague-Adaptability. Available at: http://www.prahafondy.eu/cz/oppa/dokumenty/program.html


public services (integrated Opencard). Furthermore, Prague is forced to invest heavily in building a new central wastewater treatment plant.

Innovation activities are supported through the aim called "Prague as the innovation centre of the country". Its main goal includes activities like enhancement of the intellectual potential of research capacities; support for building centres of excellence; support for innovation centres; science and technology parks. Support measures aimed at this goal have been incorporated into the operational programmes for Prague already in the programming period 2004-2006.

More attention to the development of innovation has been paid in the Regional Innovation Strategy (RIS) for the Prague Region elaborated in 2002 -2004. The key mission of the strategy is to foster the establishment of supportive environment for a further exploitation of the scientific, research, and knowledge potential of Prague, especially via small and medium-sized innovation enterprises. As such, the strategy should help to enhance the Capital's competitiveness by developing a knowledge-based economy. The strategy defines five thematic areas and one cross-sectional area as well as associated measures. Paradoxically, the strategy, including the action plan elaborated already in 2004, has not been approved by the city government since that time. However, some conclusions stemming from this document are taken in consideration in the implementation of the Strategic Plan and operational programmes.

The Strategic Plan is the only official conceptual document dealing with innovation policy as the Regional Innovation Strategy has not been approved. The support for innovation measures has not been “hot” political issue in the past neither in the present times. The focus of the most important strategic documents and budgetary expenditure clearly shows where particular attention is directed at Prague City Hall as more political and financial attention has been paid to capital-intensive projects during last years.


Table 3-1 Existing regional innovation support measures

Title Duration Policy priorities Budget Organisation responsible

More information

Operation Programme Prague Competitiveness

Operation Programme Prague Adaptability

2007-2013

2007-2013

1.3 Horizontal programmes/ measures

1.3 Horizontal programmes/ measures

€234,94m

€108,39m

Prague City Hall

Prague City Hall

http://www.rim-europa.eu/index.cfm?q=p.support&n=14123

http://www.rim-europa.eu/index.cfm?q=p.support&n=14125


When ranking the regional support measures, responsiveness to key challenges identified in the chapter 2.4 was taken into account. As the most important key challenge for development of the innovation policy in Prague, low level of institutionalisation within the regional governance structure was identified. The lack of co-operation was found not only among policy-makers and the rest of the innovation system but also among academia and business sector. The Operational Programme Prague Competitiveness focuses on building capacities required for technology transfer, and thus strengthens the academia-industry cooperation. In this respect the ranking of the support measures is following:

1. Operation Programme Prague Competitiveness

2. Operation Programme Prague Adaptability

Besides the official regional innovation policy there are no other large-scale initiatives, which are considered important in support of innovation. However, there are several smaller initiatives leading to tighter links among enterprises and research organisations through e.g. technology platforms and other similar associations. Nevertheless, these initiatives are not institutionalised in programmes or similar tools, and takes places only at the level of personal contact between politicians and researchers or entrepreneurs.

3.2 Appraisal of regional innovation policies

At present, Prague does not have any specific and complex innovation policy. The only political documents regarding innovation support are the very general Strategic Plan and the semi-official Regional Innovation Strategy and the only support measures dealing with innovation are parts of the two horizontally designed operational programmes.

The basic strategic document of the City of Prague dealing with innovation policy (Strategic Plan) is being monitored during its implementation. Based on the evaluation of fulfilment of the strategic conception, decisions are approved to optimise some measures. The last monitoring report from the period 2002 - 2003 served due to its fundamental comments as a basis for design of the updated Strategic Plan. Monitoring report for the updated strategic plan will be drawn up in 2012.

In the last monitoring report14, a part related to innovation policy mentioned that even though Prague has a great potential for innovation, it remains only partially exploited due to the small capacity of scientific and technological parks and incubators for start-ups. This state has remained without major changes yet, but several capacity-building projects in science and technology infrastructure will be completed around Prague in the foreseeable future, which should contribute to more effective utilisation of scientific knowledge produced by a strong research base in Prague. These projects have been supported by the Operational Programme Research and Development for Innovation15. However, the programme does not allow applicants to realise projects in Prague. As a result, applicants from Prague have been forced to carry out their projects in the hinterland of the capital city.

The operational programmes in both programming periods have positively influenced the innovation landscape and performance of Prague, but there are some differences in relevance of the programmes. While the projects supported in the period 2004-

14 Monitoring Report on Implementation of the Strategic Conception of the Capital City of Prague in 2002 and 2003

15 Operational Programme Research and Development for Innovation (Available at: http://www.msmt.cz/uploads/OP_VaVpI/Zakladni_dokumenty/OP_RDI_final_EN.pdf)


2006 (through Single Programming Documents16) have been focused more on creating linkages between enterprises and academia, projects supported in the recent period (especially through the Operational Programme Prague Competitiveness) have been targeted on R&D capacity building. As stated in Cadil, Pechlát (2010)17, Prague’s innovation system should not be seen as underdeveloped but rather specialised on knowledge creation with potential for networking with other regions.

Operational Programmes for Prague show strong applicants interest. In the areas of the support related to innovations the total budget of project proposals, according to monitoring reports18, significantly exceeded the total allocation of funds. However, it is impossible to speak about the benefits or effectiveness of the operational programmes or of the relevant areas, as no adequate evaluation has been made yet.

An important factor influencing the impact of innovation policy in Prague is the exclusion of Prague from the Convergence objective of the EU cohesion policy. This is a result of the EU policy focused on supporting those regions that are lagging behind in terms of their economic performance. Therefore, the resources available in the operational programmes for Prague compared with e.g. Operational Programme Research and Development for Innovation are very small and are scattered in several areas. Other external factors influencing effectiveness of the regional innovation policy mix are more general and common for the rest of the Czech Republic. As stated in Klusácek et al. (2008)19, the most important negative national factors are unsatisfactory legislative and fiscal conditions for spin-offs, low utilisation of venture capital, low exploitation of research results, disinterest of enterprises and research institutions for mutual cooperation, low patent activity and others.

Another document shaping the innovation policy in Prague (RIS for Prague) has been partially implemented, but without any official evaluation due to the absence of a formal approval by the regional government. At least, the strategy has been used for design of the operational programmes for Prague in the programming periods 2007-2013 and 2004-2006.

As stated in chapter 2.2, Regional Council for Research and Innovation should have been established in 2010 according to the Strategic Plan with the objective to foster co-operation of the city with major stakeholders of innovation, particularly with R&D institutions and businesses. Establishment of such an institution is a logical step in a situation when the city of Prague is missing any subject dealing directly with innovation policy. However, the Council has not been founded yet. As mentioned above, the Council may be replaced by the Prague Council for Research and Economy. Another measure of the Strategic Plan, which should boost effectiveness of the regional innovation policy mix, is setting up the Prague Regional Development Agency. The Agency was founded in May 2010 and is now in a state of establishing its work programme for the near future. Establishment of these institutions shows growing interest of policy representatives on innovation policy. However, Prague has not been able to fully realise them.

Prague is an important knowledge node with many academic and research institutions as well as some world leading companies particularly in IT and biotechnologies;

16 Single Programming Document for Objective 2 of the NUTS 2 Prague Region (Available at: http://www.prahafondy.eu/cz/jpd2.html) Single Programming Document for Objective 3 of the NUTS 2 Prague Region (Available at: http://www.prahafondy.eu/cz/jpd3/dokumenty.html)

17 Cadil V., Pechlát J. (2010) The relevance of R&D&I projects supported by Structural Funds on development of the Prague’s innovation potential, Ergo 5: 3-7.

18 Evaluation Report on Factual and Financial Development of the Operational Programme Prague Competitiveness. (Czech only)

Analysis of the First Public Call for Project Proposals, Operational Programme Prague Adaptability. (Czech only)

19 Klusácek K. et al. (2008) Green Paper on Research, Development and Innovation in the Czech Republic, Prague, TCASCR and SLON. Available at: http://istec/Documents/DocumentDownload.aspx?Id=7776


however, its fragmented innovation system is the main obstacle in reaching better innovation performance. The current innovation policy mix only partly solves this problem. The operational programmes focus on building capacities contributing to technology transfer and to human resource training. However, there is no focus on particular sectors identified as the potential cornerstones of the Prague knowledge-based economy. Serious problem seems to be establishment of any functional institution translating results of cooperation with R&D intensive institutions to the decision making process.

3.3 Good practice case

As a good practice case the third priority axis “Innovation and Enterprise” was chosen within the Operational Programme Prague Competitiveness. In spite of the fact that there would not probably be any financial instrument for innovation policy in Prague without the EU, this measure addresses some significant shortcomings of the Prague regional innovation system. Particularly, insufficiently developed partnership between research organisations, practical application institutions and high schools. Another rationale for designing this measure has been the mismatch between needs of the business sector and prevailing focus of research organisations as well as poor skills of researchers in the commercialisation of its outcomes. Its general objective “Improvement of Prague’s competitiveness through the development and effective use of its innovation potential” matches the identified shortcomings. Furthermore, cooperation between academia and business sector was identified as one of the challenges for Prague and that is why this measure was chosen as a good practice case.

The priority axis is implemented through three areas of intervention and the first of them is regarding insufficient R&D cooperation most. This part of the measure focuses on innovation infrastructure building (i.e. business incubators, science parks), which should lead to more effective exploitation of the research potential located in the city. The measure suitably follows up to the previous SPD Objective 2, which initiated promotion of R&D&I activities and cultivation of the innovation environment. Compared to the previous programme the total budget for one year in the relevant objectives was increased.

A reason why this measure treats as innovative is an important improvement achieved as compared to the previous programming period. The previous SPD Objective 2 was not covering the whole area of Prague, but only selected (less favoured) Prague’s boroughs. Substantial, parts of the City were excluded from any forms of support. This step allowed Prague to concentrate primarily on support of thematically defined issues in handicapped areas. Nevertheless, the majority of R&D&I institutions has not been located in such boroughs. The current operational programme eliminates this weakness and covers the entire City. This improvement allows R&D&I institutions to participate in the programme and implement their projects leading to strengthening of Prague’s competitiveness. The organisation responsible for designing and administrating the programme is the City Development Authority together with the City Council of the Capital City of Prague and the Department of the EU Funds, the Prague City Hall while in the previous period were competences scattered between regional government and relevant ministry. Determining a common management body for both recent measures was other improvement in comparison with the previous programming period. The Operational Programme Competitiveness has strong synergies with the other operational programme for Prague supporting mainly human resources development and professional mobility and this allowed better coordinating the implementation of the two programmes with stronger impacts.

The basic framework for defining strategies of the programme is given by objectives and strategies of superior policy papers at regional, national and European level. We could say that there would not be any financial instrument for innovation policy in Prague without the EU. Innovation and entrepreneurship is currently considered as a key prerequisite for economic development of the country. In accordance with this


fact, support given to this area by national public administrations as well as by the EU has steadily increased in recent years. Despite the important role of Prague in the field of innovation and business, available analyses confirm some of the shortcomings in fulfilling its role in the development of knowledge-based economy of the entire state. The extensive R&D capacities are not sufficiently connected to each other or with educational institutions and businesses. Development of the co-operation in the form of networks and clusters is starting up very slowly, partly due to not entirely appropriate legislative and organisational conditions. Another rationale for launching this measure is remaining insufficient focus of research on practical and innovative applications as well as poor skills of researchers in the commercialisation of its outcomes.

The measure as a part of the operational programme must be applied according to EU legislation. It means that the programme has to be monitored and evaluated and the partnership principle must be applied during the preparation, implementation, monitoring and evaluation of the operational programmes. The principle of partnership was fulfilled during design of the programme through using results of discussions at workshops, which took place with the participation of representatives of city districts, municipal administrations, relevant ministries, experts and the private and non-profit sectors. Final draft of the programme documentation was publicly discussed after incorporating all comments. Relevant stakeholders have been involved also in the Monitoring Committee, which supervises the effectiveness and quality of the programme. Transfer of views stemming from the public debate to the programme design is something extraordinary in the Czech Republic and the same counts for regular evaluations of measures. Therefore, this makes the operational programme including the chosen example A-class measure in the context of Prague and even within the context of the Czech Republic.

This measure enables project bearers to fund following categories of expenditure:

1. R&D activities in research centres

2. R&D infrastructure (including physical plants, instrumentation and high-speed computer networks linking research centres) and centres of competence in a specific technologies

3. Technology transfer and improvement of co-operation networks between small and medium-sized businesses (SMEs), between these and other businesses and universities, postsecondary education establishments of all kinds, regional authorities, research centres and scientific and technological centres (scientific and technological parks, techno-poles etc.)

4. Assistance to R&D, particularly in SMEs (including access to R&D services in research centres)

5. Investment in firms directly linked to research and innovation (innovative technologies, establishment of new firms by universities, existing R&D centres and firms etc.)

6. Other measures to stimulate research and Innovations and Enterprise in SMEs

7. Developing human potential in the field of research and innovation, in particular through post-graduate studies and training of researchers, and networking activities between universities, research centres and businesses

Beneficiaries of the measure are R&D organisations (institutions of higher education, Czech Academy of Science, research institutes etc.), entrepreneurs (especially SMEs), non-governmental non-profit organisations and professional and interest groups (such as business associations, chambers of commerce etc.). Achieving programme goals will strengthen the position of the region as an R&D pole and economic centre throughout the state. However, it is too early to judge the outcomes achieved because


final evaluation of the measure is not available yet and projects have been currently realised.

3.4 Portfolio of innovation support measures

The possibility of regions in creating their own regional innovation policy largely depends on their position in the national governance system, their competences and available funds. Conditions for creating an effective innovation system at the regional level also depends on other factors, particularly the willingness of regional governments to engage themselves in innovation policy.

Innovation policy in the Czech Republic is managed predominantly from the central level. However, innovation policy is rather beyond the basic obligations and priorities of the Czech regions, and therefore is limited by a shortage of money. The City of Prague Act allows Prague to establish organisational units and contributory organisations to carry out tasks delegated to regions. These delegated tasks are considered those which are in accordance with needs of the regions as prescribed by the law, which is a very general statement that gives regions an opportunity to create customized tools for fostering regional development including innovation support. However, this is very difficult in a situation when dispensable funds from Prague budget for economy support create only a negligible part of budgetary expenses as displayed in the figure 3.1.

The only measures in Prague supporting innovation are two operational programmes which are in compliance with other European and national strategic documents. Most generally, the Prague operational programmes take into account goals of the Lisbon Strategy, which are translated to the National Reform Programme.

Operational programmes are run under the common roof of National Strategic Reference Framework. However, Prague as a region with exceptional economic performance expressed by GDP per capita has been excluded from the Objective 1. However, parts of the Operational Programme Education for Competitiveness (e.g. system of education, strengthening links between industry and academia), Operational Programme Human Resources and Employment (active labour policy) and Integrated Operational Programme (effective state administration, promoting tourism) promote such activities that have systemic nature with a nationwide impact. In those cases beneficiaries from Prague are allowed to apply for funds too, and are complementary to both Prague operational programmes. In the rest of the cases the operational programmes for Prague mirror parts of other operational programmes.

There are similarities between Prague operational programmes, respectively their parts aiming at innovation, and other national operational programmes. Innovation support for business is provided mainly through the Operational Programme Enterprise and Innovation and the Operational Programme Education for Competitiveness. The operational programmes previously mentioned are utilised mainly for encouraging innovation activities in the business sector and for creating infrastructure for R&D, technology transfer offices and innovation. First of them is related mainly to the Operational Programme Prague Competitiveness while the second one rather to the Operational Programme Prague Adaptability. Both programmes for Prague are also linked with Operational Programme Human Resources and Employment dealing with adaptability of employees (through e.g. active labour market policy), supporting the consultancy services for new start-ups or promoting modernisation of public services.

Innovation environment in Prague is partly influenced through the Operational Programme Research and Development for Innovation although the projects supported are not realised directly in Prague. This programme supports large projects of science and technology infrastructure building, which is very attractive for extensive Prague R&D base. Many new R&D capacities have been currently growing near Prague.


In general, R&D and innovation are supported mainly by national programmes and other measures at national level. This support is provided through various programmes usually in a form of direct support of businesses (grants, loans, guarantees) as well as support of innovation infrastructure that creates favourable conditions for starting business (innovation centres, business incubators, etc.). However, public funds supporting R&D activities are fragmented among many providers, which results in an enormous administrative burden for applicants and impossibility of supporting larger R&D projects. Another obstacle is missing capital for start-ups20. In spite of the existence of these possible areas of intervention, Prague has not created any tool to complement the national innovation policy mix.

The overall framework for innovation policy is shaped by national conceptual documents, and regulations. Responsibilities for innovation policy are under the Ministry of Industry and Trade, which prepares and implements several programmes of industrial research. The Ministry of Industry and Trade manages the national programme of applied research called TIP, which has already allocated €302m and almost the same amount was allocated in a public call in 2011. The programme supports applied industrial research and R&D collaboration of business and academic sectors in 2009-2017.

Another significant funding measure called Programme of Applied Research and Experimental Development ALFA (2011-2016) is managed by the newly established Technology Agency of the Czech Republic, which should gradually take over the responsibility for competitive funding of applied research from particular ministries. The programme allocates approx. €116m for projects dealing with progressive technologies, materials and systems, energy sources, environment protection and creation and sustainable development of transport.

It is possible to say that those two previously mentioned national programmes are complement to the Prague operational programmes (especially to the OP for Prague Competitiveness), but it has not been done due to the regional initiative. Rather, it is a gradual update of national support programmes.

Part of the Czech innovation policy mix is fiscal incentives to stimulate private R&D effort, which was introduced in 2005. Anyway, this measure has had only a negligible impact on the collaboration between private and public sector, since they cannot be used for purchase of R&D outcomes from universities and public research institutes.

The influence of nationwide measures supporting research, development and innovation on regional policy mix cannot be assessed for one region due to a lack of information. However, synergies between Prague operational programmes and other national and especially European measures focusing on innovation support do exist. Role of the Structural Funds in the funding of R&D and innovation has grown in the new programming period 2007–2013 at national and even more at regional level. Similar activities supported as in the operational programmes operating at national level except by Prague are mirrored in the OPs Prague Competitiveness and Adaptability. On the other hand, both Prague operational programmes created in 2007 has become obsolete against the setting of newly established measures.

The biggest success of Prague in creating innovation policy mix has been obtaining the support from the Structural Funds through the above mentioned operational programmes, but Prague devotes most of its budgetary attention to investment intensive projects as stated in chapter 3.1 and that is why the innovation policy mix is rather minor issue. Furthermore, co-ordination of policy innovation in Prague region shows significant imperfections also causing impossibility to complement national innovation policy measures.

20 Klusáček K. et al. (2008) Green Paper on Research, Development and Innovation in the Czech Republic, Prague, TCASCR and SLON. Available at: http://istec/Documents/DocumentDownload.aspx?Id=7776


3.5 Towards smart specialisation policies

Since the Strategic Plan had been used as a background for design of the operational programmes for Prague, it is advisable to take this document as a baseline inspiration in seeking the support to smart specialisation. Public debate during the Strategic Plan actualisation has been inseparable part of the process as it is the public document, but this debate was focused predominantly on influencing the plan on public health. Furthermore, three workshops were held during the actualisation on specific themes (City development and transportation, Security, Prague in the competition of European cities). The whole process of actualisation including workshops and debates was managed by the City Development Authority. However, the debate on innovation and development of human and financial resources in a few areas globally competitive in Prague could not been launched when any policy debate on innovation policy has not been yet. Satisfactory proof might be absence of any conception dealing with economic development of the region. Let us say, this is too narrow issue for Prague region and general conditions for business and living are in the centre of attention instead of that.

Strategic documents dealing with innovation development (Strategic Plan, Regional Innovation Strategy, operational programmes for Prague) include an analysis of the current situation and identification of strengths and weaknesses, followed by a priority-setting. However, these two documents are the only ones dealing at least partly with economic development. Efforts towards the identification of potential smart specialisation through the so-called entrepreneurial process of discovery by the regional government in Prague are therefore very limited. Specialisation of Prague public policy on so-called smart industries is missing in its portfolio of activities. It is possible to mention tourism, which is a target of public support, even though the historical city centre has been already overloaded by tourists21. High attractiveness of Prague for foreign tourists and outstanding performance of public performance might be the reasons of negligible attention for economic development paid by the city decision makers. What is also important for development of any economic (not only smart) policy in Prague is absence of any policy unit responsible for economic development.

Among actions in the implementation plan the Regional Innovation Strategy for the Prague region states the establishment of industrial clusters. This project should identify suitable branches carrying high significance for the economic performance in the Prague region, with a significant impact on the creation of highly skilled jobs. The project has anticipated co-operation of the Prague Chamber of Commerce, regional authorities, association of SMEs and industrial associations and unions. However, no cluster has been established in Prague since 2004 when the Regional Innovation Strategy was finished. Low awareness of the City Hall about needs of entrepreneurs in Prague and low interest of business on cooperation with the city is only an implication stemming from the absence of any organisational unit of the city delegated to the economic development.

The only cluster located near Prague is CzechBio supported from the nationwide Operational Programme Enterprise and Innovation dealing with biotechnologies. Although there has been several technology platforms established in the Prague region and its surroundings, no involvement of regional authorities on the identification of strengths and weaknesses of the region was found. Activities of similar associations and technology platforms are usually not limited to one region and their main concern is to strengthen competitiveness and lobbying, therefore their impact should be rather assessed from the national point of view. On the other hand, the regional government

21 Strategic Plan of the City of Prague. Available at: http://www.urm.cz/cs/strategicky_plan


has not prepared any cluster or sectoral strategy, the emphasis is placed more on the development of infrastructure and services for its residents.

Analytical part of the Strategic Plan as well as the operational programmes includes a SWOT analysis identifying strengths and weaknesses of the region's economy. These analyses refer to a strong concentration of research and development capacities in Prague. They also add that the utilisation of research organisations' results by enterprises is not sufficient. Use of this substantial part of the Prague economy is insufficient not even in Prague but in the whole Czech Republic. However, none of the strategic documents focuses on the analysis and identification of potential smart sectors or technologies.

On the other hand, the Strategic Plan mentions that increased attention will be paid to the perspective fields of production bringing new technologies, but also to the strategic services and tourism. Underpinning parts of the Prague economy are branches of pharmaceutical industry, printing, food processing, cars and computer ICT production, and electrical engineering. An important element of the Prague's economy structure is tourism; therefore it is especially promoted by the Prague regional government. Although the Strategic Plan lists several concrete sectors, which are the most important for Prague, promotion of innovative entrepreneurship by the regional authority is in general strongly underestimated.

The Strategic Plan also addresses the increase in Prague’s human capital in accordance with its development visions. Priority is not only increasing the level of education in the population of Prague (such as life-long learning), but also to link universities with research capacities (the project is e.g. to build a new campus). Nevertheless, the Strategic Plan does not define disciplines or industries that should be promoted through support of human resources development and building R&D&I infrastructure.

The activities supported within the operational programme ‘Adaptability’ contributing to development of the smart specialisation are to be found particularly in the first priority axis called “Support to Development of the Knowledge-based Economy”. One of the objectives of this priority axis is the use of Prague innovation potential respectively, growing efficiency of R&D services. Example of activities supported through this axis with relation to development of R&D services is e.g. knowledge transfer between research organisations and enterprises by promoting mutual work stages. Smart specialisation is generally supported also in a part of priority axis 3 called “Modernisation of Initial Education”. Activities of a general relevance not only for a smart specialisation supported through this axis are e.g. improving the quality of education, development and innovation of educational programmes in relation to labour market demands. Activities of a particular relevance for smart specialisation are e.g. improving the quality of education, development and innovation of educational programmes in relation to labour market demands and developing the collaboration between schools and companies, universities and R&D institutions. Although the programme could become an effective tool for initiating the development of smart specialisation towards above-mentioned disciplines, its general focus and absence of definition of preferred industries limit its importance and benefits for development of industries and disciplines, which create the future competitiveness of Prague.

Prague is the most important research and innovation centre of the Czech Republic. Promotion of excellence of the knowledge infrastructure is done primarily through the operational programme ‘Competitiveness’, which devotes part of its funds to modernisation of research organisations’ facilities and to knowledge transfer. However, no special attention is devoted to specific research fields, rather the innovation infrastructure is supported, which will enable to exploit the research and development potential concentrated within the city.

Activities of the smart specialisation policy have been undertaken rather as a by-product during implementation of the Strategic Plan and the operational programmes,


and without coordinated intention by several bodies of the regional authority. The situation is to a great extent hampered by the absence of an institution that would be responsible for innovation policy, but also for promoting the entrepreneurship in general. It should be improved by the newly established Regional Development Agency and planned establishment of the Prague Council for Research and Economy.

Due to the early stage of the regional innovation policies in the Czech Republic an appearance of the crystalline form of the smart specialisation policy (e.g. involvement of clusters’ and platforms’ to the strength identification process) cannot be expected in a short time period. Start of the agency and the establishment of the Council are groundbreaking in this respect. However, it will take some time to achieve any visible results, because of the early stage of the life of these institutions.

Recently, discussions between the City of Prague (represented by the Prague City Hall) and the Ministry for Regional Development of the Czech Republic (responsible for regional policy and EU Structural Funds) on design of new operational programmes and regional policy in the new programming period have started. So far, the discussion is still in the beginning and it is too early to judge the future smart specialisation and its support. The Prague City Hall and the City Development Authority would like to specify industries and disciplines that should be promoted. However, it depends on progress of the discussion and changes of politician attitudes and their will.

3.6 Possible future orientations and opportunities

Prague region is among the economically most developed regions in the EU, it is an administrative, economic, research, and educational centre of the Czech Republic. Prague represents the most significant concentration of research organisations and development services, universities and high-tech enterprises within the Czech innovation system, which together with highly skilled workforce creates an enormous innovation potential. Prague also holds a strong position in research and development results, i.e. in the number of awarded patents, registered utility models and number of publications.

In spite of these facts, the utilisation of research outputs is very low due to a lack of co-operation between academic and business sector, but this is more a general problem in the Czech Republic.

However, innovation policy in Prague seems to be evolving only slowly. Prague innovation policy is based upon the Strategic Plan and Regional Innovation Strategy and implemented through two operational programmes. The Strategic Plan is rather general conceptual document, the Regional Innovation Strategy has not been officially approved by decision-makers and the operational programmes are also rather general. In spite of the fact the operational programmes concentrate substantial allocation of money dedicated to solve some important issues of the innovation system in Prague; these horizontal measures have been designed in 2007, and there has not been launched any other new policy measure dealing with innovation since that time. This has not been balanced even by partly complementary measures operating at the national level. Therefore, the operational programmes for Prague are the only support measures furthermore created mainly thanks to the EU initiative. Some steps in the regional innovation policy design have been proposed in the Strategic Plan for Prague, which is the most important policy document concerning innovation because the Regional Innovation Strategy has not been approved by the municipal government. However, some actions proposed in the strategy have already been realised. Implementation of Prague innovation policy is possible by two operational programmes whose relatively significant part is dedicated to innovation. However, the programmes are the only support measures created mainly thanks to the EU initiative.

The support for innovation measures in Prague has not been a “hot” political issue in the past neither in the present times. The focus of the most important strategic documents and budgetary expenditure clearly shows where particular attention is


directed. There is much space in complementing and fixing national innovation policy at regional level, but it is hard to achieve when necessary institutional setting has not been laid down. The innovation system in Prague can be best described as fragmented, because there are many institutions without any coordinated activities. The current innovation policy mix solves this problem only partly.

The absence of any compact and institutionalised innovation policy is the biggest challenge for the policy representatives in Prague. Innovation policy should be implemented by the newly established Regional Development Agency and Prague Council for Research and Economy. The Council shall be an advisory body of the city while the Agency shall be an organisation implementing the innovation policy. This is a possibility to design its own regional policy relatively independent on the central government. However, design of the new innovation policy would deserve more prominent use of foresight than before, thus addressing more effectively emerging smart specialisation of the region in biotechnology and ICT. Greater emphasis could be placed also on evaluation of existing support measures, which should not be only a formal issue, but a tool for improving the policy.

These challenges could be solved by the newly elected regional government, which supports research and university education as one of its priorities. In this respect, the EU Structural Funds are the most important source for funding projects improving the innovation system in Prague, and hopefully it will be continued in the next programming period.


Appendix A Bibliography

Blažek J., Uhlíř D. (2007) Innovations and innovation policies in the Czech Republic: the case of Bohemian Regional Innovation Strategy, European Planning Studies 15: 871-888.

CES (2009) Competitiveness Yearbook of the Czech Republic 2008-2009, Prague, CES VŠEM and Linde. Available at: http://www.vsem.cz/rocenka-ces-vsem.html

CSO (2010) Czech Republic Statistical Yearbook, Prague, CSO.

Čadil V. (2009) Sectoral Analysis of Business Innovation in Prague, Ergo 1: 3-7.

Čadil V., Pechlát J. (2010) The relevance of R&D&I projects supported by Structural Funds on development of the Prague’s innovation potential, Ergo 5: 3-7.

Klusáček K. et al. (2008) Green Paper on Research, Development and Innovation in the Czech Republic, Prague, TCASCR and SLON. Available at: http://istec/Documents/DocumentDownload.aspx?Id=7776

Pazour M., Pokorný O., Kučera Z. (2010) Process innovation: Driver of enterprise growth in the Czech Republic, in OECD, High-Growth Enterprises: What Governments Can Do to Make a Difference, OECD Publishing.

Pechlát J. (2006) R&D&I basis in Prague, Prague, URM. Available at http://www.urm.cz/cs/strateg-plan-analyzy-konkurenceschopnost

Pokorný O., et al (2008) Innovation Potential of Czech Regions, Prague, Technology Centre ASCR. Available at: http://www.tc.cz/downloads/?n=1&start=6&krok=6

Vanžura J. (2011) Innovation Policy at Regional Level, Ergo (to be published).

Žížalová P., Blažek J. (2011) Biotechnology industry in metropolitan region of Prague: a cluster within a fragmented innovation system?, Environment and Planning C: Government and Policy 28(5): 887 – 904.

European Commission (2009) INNO-Policy TrendChart – Innovation Policy Progress Report Czech Republic 2009.

European Commission (2010) ERAWATCH Research Inventory Report for: the Czech Republic (to be published).

Strategic Plan of the City of Prague. Available at: http://www.urm.cz/cs/strategicky_plan

Operational Programme Prague-Adaptability. Available at: http://www.prahafondy.eu/cz/oppa/dokumenty/program.html

Operational Programme Prague Competitiveness. Available at: http://www.prahafondy.eu/cz/oppk/dokumenty.html

The Research and Development and Innovation Information System of the Czech Republic. Available at: http://www.isvav.cz/

Act No. 130/2002 Coll. On Support of Research Development and Innovation

Act No. 129/2000 Coll. On Regions (regional government)

Act No. 131/2000 Coll., on the Capital City of Prague


Appendix B Stakeholders consulted

1. Milan Turba, Head of Strategic Planning Department, City Development Authority Prague (date of interview 11.1.2011).

2. Jakub Pechlát, analyst, City Development Authority Prague (date of interview 11.1.2011).

3. Jiří Kinský, Head of European Social Fund Unit, City Hall of the Capital City of Prague (date of interview 7.1.2011).

4. Dana Váchová, head of the technology transfer section, coordinator of Regional Innovation Strategy for Prague design process, Technology Centre ASCR (date of interview 14.1.2011).

5. Pavla Žížalová, researcher, Faculty of Science, Charles University in Prague (date of interview 12.1.2011).


Appendix C RIM Repository information

Baseline regional profile

CESKA REPUBLIKA CESKA REPUBLIKA Region PragueNUTS Code CZ01

Regional Profile

Introduction

Prague is the capital city of the Czech Republic (CR) and politically, economically and culturally themost important city in the Czech Republic.

Repository

Support mesures

Operation Programme Prague CompetitivenessOperation Programme Prague Adaptability

Policy documents

Strategic Plan of Prague Regional Innovation Strategy for the Prague Region

Organisations

Inovacentre of the Czech Technical UniversityTechnology Centre of the Academy of Sciences of the Czech Republic Regional Development Agency PraguePrague City Hall

Economy

Prague is the largest city of the Czech Republic with the population of 1,233,211 inhabitants as at 31December 2008. It presents the centre of economical, political, cultural, international, education andother activities of the Republic. High level of urbanization, concentration of many functions and theproximity of key players in the capital makes Prague a distinct centre of development on a nationallevel and places Prague above the other regions in nearly all of the structural indicators (e.g. onefifth of the Czech GDP).

As for economy, Prague has a unique position within the Czech Republic; it is the economic centreof the state and also a centre for intermediation of impacts of multinational economic relations in thewhole state. Apart from all of the main authorities of the state administration most of financialinstitutions and foreign enterprises are based here. All this has a significant effect on the economy ofPrague.

http://www.rim-europa.eu/index.cfm?q=p.baseline&r=CZ

http://www.rim-europa.eu/index.cfm?q=p.baseline&r=CZ0

http://www.rim-europa.eu/index.cfm?q=p.support&n=14123&r=CZ01

http://www.rim-europa.eu/index.cfm?q=p.support&n=14125&r=CZ01

http://www.rim-europa.eu/index.cfm?q=p.policy&n=14102&r=CZ01

http://www.rim-europa.eu/index.cfm?q=p.policy&n=14101&r=CZ01

http://www.rim-europa.eu/index.cfm?q=p.organisation&n=15211&r=CZ01




Prague.

Approximately a quarter of the Czech Republic's GDP (24%) is generated in Prague. GDP per capitain Prague reached 209.1% of the Czech Republic's average. At present Prague highly exceeds theaverage values for the entire EU-25 (GDP per capita in Prague was 54% higher). Higher GDP(generally typical for a metropolis) is related to a higher level of wages, localisation of activitieswith a high added value and the concentration of central bodies of the public and private sectors.

Characteristic features of the development of Prague economic basis are strengthening of the sphereof services and decrease of share of production industries. Tertiary industries represent now inPrague more than 80% of value added. Also employment rate in this sphere in Prague markedlyexceeds data from all the regions. 80.4% of all employed in Prague worked in services in 2008.

Prague´s labour market can be characterised by the very low level of unemployment. The registeredunemployment rate was in 2009 3.36% which is 1.2% higher than in 2008.

Research, Development & Innovation

Prague as a centre of education and research represent the highest concentration of universities andresearch institutions. Large number of institutions performing research implies that Pragueconcentrates the highest share of human resources in science and technology in the Czech Republic(approx. 27%) as well as the highest share of tertiary educated population in the Republicrepresenting 30% of the Prague labour.

As for universities and R&D institutions, Prague concentrates 29 universities and 57 institutes of theAcademy of Science.

Concentration of research and development activities to Prague has direct impact on R&Dexpenditures which represents approx. 27% of BERD in the Czech Republic. Prague together withthe neighbouring Central Bohemia Region concentrates more than half of Czech BERD.Outstanding inputs associated with research and development activities are reflected in applicableresults. Prague covers one fourth of EPO patents confirmed in the Czech Republic during2000-2008. In spite of the enormous research and innovation potential Prague represents, mutualcooperation of innovation enterprises and research institutions is very weak. The reason for thismight be hidden in a rigid structure of innovation surface. While the number of research institutions,dealing mainly with basic research, and innovation enterprises is above-average, there is a lack ofsupport innovation infrastructure (e.g. technology transfer centres, incubators) mediating contactbetween basic and applied research and business. Prague has only 3 relatively small businessincubators and no scientific park.

Governance

From the government structure point of view, Prague is a region as any other with one difference -its mayor is the hejtman (a president). Prague is not only the region, but a city as well. It means thatit has the same organisational structure as other regions in the Czech Republic.

Prague is also the capital city of the whole Republic which means that government subjects ofregional level might influence those on the national level (because of close informal contacts).Prague is self-governed by its city/region government elected by inhabitants of the city. The regionalgovernment consequently elects the Mayor and the Council - the executive body of Prague. TheCouncil establishes its initiative and advisory bodies (Secretariats in case of Prague) which help tomanage issues to the extent defined by the Czech law that are of interest to Prague and its citizens.Among such activities is e.g. education policy, social and housing policy, environment policy and soon, but there is no political body dealing with research and innovation. Policy areas relevant forinnovation created a minor part of the budget in 2009. Furthermore, the activities supported were ofnon-innovation manner. Most important activities reflected by the budget share are development andmaintaining of traffic (44%) associated with massive investment to the road infrastructure anddevelopment of public transportation. The second most important budget item (18%) is "The cityinfrastructure" represented basically by investment in wastewater plant, sewer systems, footways,flood-control systems and other technical infrastructure.

Policy

Prague is the region with the highest economic performance in the Czech Republic. In spite of this orjust because of this, political representation of Prague has not paid much attention towards support toinnovation and relies on Prague's economical strength. Another important feature affecting level ofattention devoted to innovation and related topics is a high degree of investment to the technicalinfrastructure. However, it is inexcusable that already elaborated Regional Innovation Strategy forPrague Region has not been approved. Some conclusions stemming from this document are taken inconsideration in the Strategic Plan of Prague, but lack real political support. This situation couldimprove establishment of a promised Regional Development Agency and Regional InnovationCouncil. There are two substantial financial measures in Prague (Operation Programme PragueCompetitiveness and Operation Programme Prague Adaptability) funded by the Structural funds.Both correspond with the Strategic Plan of Prague and do not pay special attention to innovation,rather complexly cover development of the city.

Support measure

CESKA REPUBLIKA CESKA REPUBLIKA Region PrahaNUTS Code CZ01

Support Measure

Title of measure

Operation Programme Prague Competitiveness



Full title

Operační program Praha Konkurenceschopnost

Duration

From: 2007 To: 2013

Policy objectives

1.3.3. Other horizontal policies

Presentation of the measure

The Operational Programme Prague Competitiveness is intended to support the investment projectsfocused in particular on support of public transport and transport accessibility in Prague, support ofinnovations, information and communication technologies, business and improvement of theenvironment in Prague.

The programme is one of two operational programs for Prague, which draws finances from the EUfunds. The programme includes four axes dividing the operational program into logical units.Innovation activities are supported by the third axis - Development of Innovation Environment andPartnership between the Research and Development Platform and Practice (total allocation €62.7m).It is possible to support development of the innovative infrastructure (science parks, incubators,innovation centres, centres of excellence), establishment of partnership relations between researchinstitutions, the Academy of Science of the Czech Republic, universities and enterprises,establishment of consulting and information centres for innovations and transfer of technologies, etc.

Keywords

Research infrastructureInnovation networksEntrepreneurship

Budget, source and type of funding

Currency: EUR

Source of

funding2007 2008 2009 2010 2011 2012 2013

National public

funds2,370,128 2,417,530 2,465,881 2,515,198 2,565,502 2,616,812 2,669,149

Regional public

funds2,370,128 2,417,530 2,465,881 2,515,198 2,565,502 2,616,812 2,669,149

EU Structural

funds26,861,447 27,398,675 27,946,649 28,505,582 29,075,693 29,657,207 30,250,352

Private funds

Other

Form of funding provided

Grants

Policy learning

Extent 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 ofrequested versus available budget) but it is too early to judge results or impact

Evaluation report links

Annual Report 2008 (czech only)

Evidence of outcomes based on evaluation and other evidence

The main positive factors are:

high demand of applicants for support;sufficient absortive capacity;wide range of the eligible activities.

The main negative factors are the low financial allocation for support to R&D&I activities and thecomplicated implementation system.

Do's and Don'ts

The regional stakeholders should focus on an information campaign to rise awareness of potentialapplicants on the measure.

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

Yes

Organisation(s) responsible

Prague City Hall

Support measure

http://www.prahafondy.eu/userfiles/File/OPPK-Dokumenty/OPPK_Vyrocni_zprava%202008.pdf

http://www.rim-europa.eu/index.cfm?q=p.organisation&n=14098


Support Measure

Title of measure

Operation Programme Prague Adaptability

Full title

Operační program Praha Adaptabilita

Duration

From: 2007 To: 2013

Policy objectives

1.3.3. Other horizontal policies

Presentation of the measure

The Operational Programme Prague - Adaptability represents an instrument funded by the EuropeanSocial Fund in the programming period of 2007-2013. The global objective of the programme is toincrease competitiveness of Prague by strengthening the adaptability and performance of humanresources and by improving access to employment for everybody. The programme supportsnon-investment projects focused on education, social integration, employment support anddevelopment of human resources in research and development. Project participants have to be fromPrague or they have to work for Prague employers. The support is directed to projects representingthree main priority axes aimed at specific objectives: Support to Development of theKnowledge-based Economy, Support to Entry on the Labour Market, Modernisation of InitialEducation. The fourth priority axis is Technical Assistance. The beneficiaries are: entrepreneurs,public administration, organisations established by public administration, non-state non-profitorganisations, professional and interest associations, schools and others.

Keywords

Science-industry cooperationInnovation cultureSkills for innovation



Budget, source and type of funding

Currency: EUR

Source of

funding2007 2008 2009 2010 2011 2012 2013

National public

funds1,093,433 1,115,302 1,137,608 1,160,360 1,183,167 1,207,239 1,231,384

Regional public

funds1,093,433 1,115,302 1,137,608 1,160,360 1,183,167 1,207,239 1,231,384

EU Structural

funds12,392,244 12,640,089 12,892,891 13,150,749 13,413,763 13,682,039 13,955,680

Private funds

Other

Form of funding provided

Grants

Policy learning

Extent 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 ofrequested versus available budget) but it is too early to judge results or impact

Evaluation report links

Annual Report 2008 (czech only)Annual Report 2008 (czech only)

Evidence of outcomes based on evaluation and other evidence

The main positive factors are:

high demand of applicants for support;sufficient absortive capacity;wide range of the eligible activities.

The main negative factors are the low financial allocation for support to R&D&I activities and thecomplicated implementation system.

Do's and Don'ts

The regional stakeholders should focus on an information campaign to rise awareness of potential

http://www.prahafondy.eu/userfiles/File/OPPA%20dokumenty/Vyrocni%20zpravy/OPPA_Vyrocni_zprava_2008_FINAL.pdf

http://www.prahafondy.eu/userfiles/File/OPPA%20dokumenty/Vyrocni%20zpravy/OPPA_Vyrocni_zprava_2008_FINAL.pdf

applicants on the measure.

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

No

Organisation(s) responsible

Prague City Hall

Policy document


Policy Document

Strategic Plan of Prague

Strategický plán hl.m. Prahy

Other organisation(s) involved

Prague City Hall

Content

The strategic plan is a programme for the development of the territorial area of the City of Prague inaccordance with Act no. 131/2000 Coll.. A long-term conceptual document that sets the objectives,priorities and paths for dealing with key questions of development of the city in a 15 to 20 yeartimeframe. The Strategic Plan was approved by the Assembly of the City of Prague in 2000.

The document formulates a concept of the economic, social and spatial development of the city.Innovation activities are supported through the measure called "Prague as the innovation centre ofthe republic". Its main goal includes activities like enhancement of the intellectual potential ofresearch capacities; support for building centres of excellence; support for innovation centresscience and technology parks.





Year of publication

2008

Link to website

Link: http://www.urm.cz/cs/strategie-rozvoje

Policy document


Policy Document

Regional Innovation Strategy for the Prague Region

Regionální inovační strategie pro Prahu

Organisation responsible

Technology Centre of the Academy of Sciences of the Czech Republic

Other organisation(s) involved

Prague City Hall

Content

This document analyses innovation environment of the Prague region and defines the developmentobjectives. Prague represents a high concentration of key entities involved in the innovationinfrastructure, but lacks a real political support for innovations. Exploitation of the innovationpotential is therefore incomplete and insufficient.

The key mission of the strategy is to foster establisment of supportive environment for a furtherexploitation of the scientific, research, and knowledge potential of Prague, especially via small andmedium-sized innovation enterprises. As such, the strategy should help to enhance the capital'scompetitiveness by developing a knowledge-based economy.

http://www.urm.cz/cs/strategie-rozvoje





competitiveness by developing a knowledge-based economy.

The strategy defines five thematic areas and one cross-sectional area as well as associated measures.Paradoxically, the strategy, including the action plan elaborated already in 2004, has not beenapproved since that time.

Year of publication

2004

Link to website

Link: http://www.tc.cz/bris/www/index73ba.html?lang=1&mesto=0

Organisation


Organisation

Inovacentre of the Czech Technical University

Inovacentrum ČVUT

Link: http://www.inovacentrum.cvut.cz/main

Jugoslávských partyzánů 3Praha 6,160 00

Mission

Innovation Centre of the Czech Technical University is an expert and consultancy institution helpingto implement and accelerate technology transfer, transforming research results and creative activitiesinto a commercial form through innovative entrepreneurship. The mission of the centre is to providethe "third pillar" of activities to the university (e.g. support for the implementation of research anddevelopment results), technology transfer and support for innovative entrepreneurship.

Activities

The main activities of the centre are consulting for academic as well as for business sectorsassociated with research project management and implementation, technology transfer (legal andadministrative services concerning licensing for new technologies, contract research, measurement

http://www.tc.cz/bris/www/index73ba.html?lang=1&mesto=0



http://www.inovacentrum.cvut.cz/main

and testing, licensing of technologies, expert opinions and consultancies, in-company lectures andtraining, etc.), education (lectures, assigning team projects for students, internships, trainingsessions) and support for innovative entrepreneurship in the business incubator for technologystart-ups. The centre has been involved in many national and international projects.

Organisation


Organisation

Technology Centre of the Academy of Sciences of the Czech Republic

Technologické centrum Akademie věd ČR

Link: http://www.tc.cz/home_/

Ve Struhách 27 Praha 6,160 00

Mission

Technology Centre of the Academy of Science of the Czech Republic is a consortium of legalentities (institutes of the Academy of Sciences of the CR): the Institute of Physics, the Institute ofMicrobiology, the Institute of Chemical Process Fundamentals, the Institute of Plasma Physics, theInstitute of Molecular Genetics and Technology Management Ltd.The consortium is open also tolegal entities outside the Academy of Sciences of the Czech Republic. Technology Centre wasestablished on 22 July 1994 as an independent legal entity.

Activities

Main Activities of the centre:

National Information Centre for European Research

Technology Centre manages the National Information Centre for European Research. A team ofnational contact points (NCPs) for the Framework Programmes (FP) arranges informationworkshops on European Framework Programmes, offers complex services and consulting forpreparing international research projects. It cooperates with the national information network for theFramework Programmes - NINET.

Innovation and Technology Transfer

Technology Centre coordinates the Czech Innovation Relay Centre (CIRC) that is a part of aEuropean co-operation network of 71 centres. These activities are focused on national and



http://www.tc.cz/home_/

international technology transfer and on introducing new technologies to small and medium sizeenterprises.

Strategic Studies and Projects

Technology Centre is engaged in studies and projects focused on preparing background documentsfor strategies on the national and regional level. The most significant activities are focused onelaboration of analytical and foresight studies, co-ordination of national foresight projects andelaboration of regional innovation strategies. Technology Centre is a member of the EuropeanTechnoEconomic Policy Support Network (ETEPS).

Czech Liaison Office for Research and Development (CZELO)

Technology Centre operates the Czech Liaison Office for Research and Development in Brusselsaimed at supporting successful participation of Czech researchers in the European FrameworkProgramme for Research and Development.

Organisation


Organisation

Regional Development Agency Prague

Regionální rozvojová agentura hlavního města Prahy

Link: http://www.rra-praha.cz

Blanická 1008/28Praha,120 00

Mission

Regional Development Agency (RDA) was founded in 2010 to support marketing of the capitalcity, development of brownfield and innovation technologies, particularly in small and mediumenterprises. Other objects lie in consultancy services, including networking in public and privatesector.

Activities

The main activities of the agency are:

preparation of policies and programmes for the systematic presentation of the city as a placefor business activities;providing consultancy and information services for local and foreign investors, including



http://www.rra-praha.cz

providing consultancy and information services for local and foreign investors, includingrelated marketing services;review of investment opportunities as a presentation of offers to the investors;assistance in co-operation of the business sector and the city administration in order tofacilitate communication;preparation of documents for the development of unused and neglected parts of the city;support for the development of innovative environment (linking scientific research and thebusiness sector);ensuring the establishment and functioning of regional clusters etc.

Organisation


Organisation

Prague City Hall

Magistrát hlavního města Prahy

Link: http://magistrat.praha-mesto.cz/lang/l2

Mariánské náměstí 2 Prague 1,110 01

Mission

The Prague City Hall performs tasks within the sphere of its independent powers set by the electivebodies of the city. These tasks are defined by law as performance of independent powers. The lawadditionally recognises performance of delegated powers. As far as performance within thedelegated powers is concerned, the city hall reports to state administration authorities (especially therelevant ministries) that charge the city hall with state administration tasks. The authority is dividedinto departments, which are further divided into sections. The field of innovation belongs toresponsibility of the Department of Regional Development. This deparment is in charge of thepreparation and implementation of regional development strategies, including regional innovationstrategy.

Activities

Key activities of the organisation are:

to issue general regulations of the region;to co-ordinate territorial development, to approve and implement developmental and strategicdocuments, to ensure their implementation and monitor their performance;



http://magistrat.praha-mesto.cz/lang/l2

to approve the territorial planning documentation for the region and announce its mandatoryparts;to elect representatives to the regional councils of the NUTS II region;to determine the extent of basic transport services for the region;to decide on the inter-regional or international co-operation;to approve the budget of the region;to establish and dissolve contributory organisations and regional departments;to determine the amount of personal and material expenses for the activities of the organisationand the specialised agencies;to prepare and implement regional innovation strategies;to offer grants for the region subjects active in the social services, culture, education andscience, healthcare, etc.


Appendix D Explanation of factors of Innovation Performance, Governance and Policy

D.1 Innovation Performance Factors

After having normalised all indicators to a common range of 0 to 1, a factor analysis or principle component analysis has been used to identify the main patterns, reducing the eight indicators into three main factors or components of innovation performance. The resulting factors can also be seen as composite or summary indicators.

Innovation performance factors

Innovative

entrepreneurship Technological

innovation Public

knowledge Non-technological innovators 0.91 Technological innovators 0.86 Higher education R&D 0.52 Non-R&D innovation expenditure -0.84 Business R&D 0.77 Patents 0.71 Government R&D 0.89 Tertiary educated 0.64 The first factor can be labelled as ‘Innovators or Innovative entrepreneurship’. It is mostly based on a high score on the share of both non-technological innovators (those introducing market- and or organisational innovations) as well as technological innovators (product and or process innovations) among SME’s in the region. This factor therefore identifies those regions where a large share of all SME’s are innovators.

The second factor is labelled ‘Technological innovation’ because it mostly refers to patent generating business R&D with relative low score on non-R&D innovation expenditures as share of their turnover. In regions where this factor shows a high score, technology generating firms are well represented.

The third factor is labelled ‘Public knowledge’. This component of innovation performance is based on the co-location of R&D expenditures at government research institutes and to a lesser extent on the share of population with tertiary education.

D.2 Governance Factors

The first distinctive governance characteristic is labelled ‘Autonomy’. For regions where the regional innovation strategy is politically binding and containing fixed targets, we also find the highest degree of both general institutional autonomy as well as autonomy regarding innovation policy. In essence, formalisation contributes to the autonomy factor and autonomy is associated with an assessment of innovation policy as effective.

The second distinctive characteristic is named: ‘Relying on Structural Funds’. It is based on the similarity in the answers regarding the strategic relevance and significance in terms of funding of EU Structural Funds for regional innovation policy. At the same time these regions report a low level of cooperation with other regions and the innovation system can be characterised as more public-driven.

A third distinctive factor is made up of the similar answers to the two other questions on coordination, namely the existence of vertical and horizontal coordination mechanisms. Finally, a fourth factor is labelled ‘Central, top-down’ because they combine a centralised policy delivery and top-down approach in policy design.


Governance Factors

Autonomy

Relying on Structural

Funds

Coordina-tion

mecha-nisms

Central, top-down

-How formally binding is the regional innovation strategy document on the regional public authorities ?

.84

- The general degree of institutional autonomy of the regional authorities in the region

.73

-To what degree is priority setting, design and monitoring of innovation policy subject to the design and of formalisation of the general set-up of institutions tasked with the development of innovation policy in your region (1=informal, 3= formal)

.68

- Degree of institutional autonomy of regional authorities in your region with regard to the design and implementation of regional innovation policies

.68

- How effective is the regional governance process? .58 - The relevance of the EU Structural Funds for regional innovation policy, for strategy development

.79

- The significance of the EU Structural Funds for regional innovation policy, in terms of funding

.70

- Inter-regional co-ordination projects and mechanisms (e.g. co-operation between agencies in different regions)

-.68

- Characterise the regional innovation system according to key drivers of innovative activities (1=private, 2=different, 3=public)

.68

- Horizontal coordination projects and mechanisms between regional players (e.g. inter-departmental working groups, council or multi-sector platforms)

.80

- Vertical co-ordination projects and mechanisms between local, regional, national and European authorities involved in designing or implementing innovation policy

.73

- Regional system of policy delivery is centralised (3), mixed (2), or de-centralised (1)

.81

- Design of regional innovation policies follows a top-down approach ( as opposed to bottom-up)

.80

D.3 Policy Factors

The first distinctive factor regarding the innovation policies is labelled ‘Public innovation policies’. A high contribution to this factor comes from the survey questions regarding: policies for public sector innovation, for open innovation, public procurement, and theme based policies aiming at societal goals.

The second policy factor is labelled: ‘Demand & service innovation policy’ because of the co-existence of demand-side policies and service innovation policies.

The third policy factor is named: ‘Cluster & S-I partner-ship policy’ since it is based on the frequent combination of Cluster policies and policies promoting new forms of public-private-partnerships for Science-Industry (S-I) co-operation and in addition the implementation of eco-innovation policies contributes to this factor.

The fourth factor is labelled ‘Research supply policy’ because it is based on the positive answers to the question on supporting research efforts (the supply side), in combination with an opposite negative answer to the question on ‘market and innovation culture (which is more on the demand side).


‘Policy making support’ is the name we have given to the fifth policy, similar to the main indicator. The last policy factor is ‘HR, creation & growth innovators’ which combines human capital development with policy aimed at creation and growth of innovative firms.

Innovation Policy factors

Public innovation policies

Demand & service innovation policy

Cluster & S-I

partner-ship

policy

Research supply policy

Policy making support

HR , creation & growth innovato

rs Policies for public sector innovation

.72

Policies for open innovation .66 Public procurement policies .64 Theme-based policies aimed at broader societal goals

.62

Demand-side policies .79 Policies for innovation in services .50 Support for the internationalisation of innovation policy.

.47

Cluster policies .70 Policies promoting new forms of public-private-partnerships for science-industry co-operation

.61

Eco-innovation policies .58 Innovation related tax policies .57 Support research efforts .74 Market and innovation culture policies

-.62

Support to policy making and horizontal policies

-.79

Support human capital development

.82

Support creation and growth of innovative enterprises

.67


Appendix E Statistical data

Indicator Praha

(2000) Praha

(2008 or most

recent)

EU 27 (2008 or

most recent)

Per Capita GDP (in Current EUR) 11,917.6 23,227 (2006)

25,131.9

Growth of Regional per Capita GDP (in %)

11.5 13.1 (2006)

0.7

Unemployment Rate (in %) 4.2 1.9 7

Gross Expenditure on R&D (GERD; in current EUR)

N/A 825.3 (2007)

237,000.2

Share of Business Expenditure on R&D in GERD (in %)

N/A 43.3 63.9

EPO Patent Applications (by Priority Year)

15.45 18.37 (2006)

37,689.12 (2006)

Share of Population Involved in Life-long Learning (in %)

N/A 12.31 9.34

Non-R&D innovation expenditures of all enterprises as a percentage of turnover (normalised scores within

a 0 (lowest) to 1 (highest) range)

N/A 0.32 (2006)

0.41 (2006)

Source: Eurostat and Community Innovation Survey


Appendix F RIM survey responses

Praha(CZ01) Average Categories

0 1 2 3 4 5

Governance

Pleaseindicatethegovernancelevelthatismostimportantforthedesignandimplementa?onofinnova?onpolicyintheregion(1=regionallevel,2=na?onallevel,3=sub‐regionallevel) 2 1,52 50% 48% 2%

Pleaseassessthegeneraldegreeofins?tu?onalautonomyoftheregionalauthori?esintheregion(1=regionalauthorityisanadministra?veappointeeofthena?onalgovernment,2=regionalauthorityincludingelectedcouncilbutnolegisla?vepowersandnoorminortaxraisingpowers,3=federateden?tywithlegisla?vepowerinsomebutnotallfields,limitedornotaxraisingpowers) 2 2,11 23% 43% 34%

Pleaseassessthedegreeofins?tu?onalautonomyofregionalauthori?esinyourregionwithregardtothedesignandimplementa?onofregionalinnova?onpolicies(1=verylow,2=low,3=average,4=high,5=veryhigh) 1 3,10 7% 18% 39% 31% 5%

Thedesignofregionalinnova?onpoliciesfollowsa(1=boNom‐upapproach,2=inputfrombothsides,3=top‐downapproach,4=strongtop‐downapproach) 3 2,25 11% 57% 28% 4%

TowhatdegreeispriorityseOng,designandmonitoringofinnova?onpolicysubjecttothedesignandofformalisa?onofthegeneralset‐upofins?tu?onstaskedwiththedevelopmentofinnova?onpolicyinyourregion(1=informal,2=mixed,3=formal) 1 2,19 18% 45% 37%

Istherearegionalinnova?onstrategyintheformofapublisheddocument(1=yes,2=no) 2 1,34 66% 34%

Howformallybindingisthisdocumentontheregionalpublicauthori?es?(1=anownini?a?vedocumentofanon‐publicbodyorpartnershipwithnobindingconstraintsonregionalauthori?es,2=a'pact'signedbyabroad‐basedpublic‐privatepartnership,3=apoli?callybindingpolicycontainingfixedtargets) n/a 2,21 25% 29% 46%

Pleaseindicateiftherearehorizontalcoordina?onprojectsandmechanismsbetweenregionalplayers(e.g.inter‐departmentalworkinggroups,councilorplaZormswithactorsfromdifferentsectors):(1=notyetverydeveloped,2=somewhatdeveloped,3=quitewelldeveloped) 1 2,26 13% 49% 39%

Pleaseindicateifthereareinter‐regionalco‐ordina?onprojectsandmechanisms(e.g.co‐opera?onbetweenagenciesindifferentregions)(1=notyetverydeveloped,2=somewhatdeveloped,3=quitewelldeveloped) 1 1,88 27% 59% 14%

Pleaseindicateiftherearever?calco‐ordina?onprojectsandmechanismsbetweenlocal,regional,na?onalandEuropeanauthori?esinvolvedindesigningorimplemen?nginnova?onpolicy(1=notyetverydeveloped,2=somewhatdeveloped,3=quitewelldeveloped) 1 2,02 20% 58% 22%

Pleasecharacterisetheregionalinnova?onsystemaccordingtokeydriversofinnova?veac?vi?es(1=private‐driven,2=mixed,3=public‐driven) 1 2,26 12% 50% 38%

Pleaseindicateiftheregionalsystemofpolicydeliveryiscentralisedorde‐centralised(1=ratherdecentralised,2=mixedform,3=rathercentralised) 3 2,47 5% 42% 52%

PleaseindicatethesignificanceoftheEUStructuralFundsforregionalinnova?onpolicy,intermsoffunding(1=<10%,2=11‐24%,3=25‐49%,4=50‐75%,5=>75%) 1 2,96 14% 30% 19% 19% 18%

PleaseindicatetherelevanceoftheEUStructuralFundsforregionalinnova?onpolicy,forstrategydevelopment(1=verylow,2=low,3=average,4=high,5=veryhigh) 1 3,27 11% 17% 25% 28% 19%

IsthereaspecificStructuralFunds’regionalopera?onalprogrammefortheregion(1=yes,2=no) 1 1,10 90% 10%

If1,isthisStructuralFundsROPadministeredattheregionallevel.(1=yes,2=no) 1 1,12 88% 12%

Involvement of the Region in Hot Innova4on / RTDI Policy Topics (0 = none, 1 = planned, 2 = implemented)

Supportfortheinterna?onalisa?onofinnova?onpolicy. 0 1,09 34% 24% 43%

Clusterpolicies 0 1,28 31% 10% 59%

Policiespromo?ngnewformsofpublic‐private‐partnershipsforscience‐industryco‐opera?on 0 1,21 28% 22% 50%

Policiesforopeninnova?on 0 0,68 58% 15% 27%

Demand‐sidepolicies 0 0,55 64% 18% 18%

Policiesforinnova?oninservices 0 0,77 52% 19% 29%

Policiesforpublicsectorinnova?on 0 0,64 60% 17% 24%

Publicprocurementpolicies 0 0,39 72% 17% 11%

Innova?onrelatedtaxpolicies 0 0,37 77% 9% 14%

Eco‐innova?onpolicies 0 0,80 50% 19% 30%

Theme‐basedpoliciesaimedatbroadersocietalgoals 0 0,72 53% 22% 25%

Priori4es on which regional innova4on policy is most strongly focused (1 = very low, 2 = low, 3 = average, 4 = high, 5 = very high)

Supporttopolicymakingandhorizontalpolicies n/a 2,71 21% 24% 32% 12% 12%

Supportresearchefforts n/a 3,94 1% 12% 20% 25% 42%

Supporthumancapitaldevelopment n/a 3,41 3% 17% 29% 39% 12%

Supportcrea?onandgrowthofinnova?veenterprises n/a 3,85 2% 9% 23% 37% 30%

Marketandinnova?onculture n/a 2,84 13% 24% 37% 16% 10%

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