Wednesday, April 06, 2016

In Search Of Balearic Innovation

What does Biel Barceló do with himself? He does have a great deal on his plate. Tourism, the tourist tax and the tax on the tourist tax. That's enough of a job for one politician, you might think, but Biel is also vice-president, which requires him being involved in all manner of things unrelated to his ministerial portfolio. And this portfolio also means innovation and research.

Looking at reported activities since last summer on the government's web page for the vice-president and minister for innovation, research and tourism, one finds comparatively little devoted to the innovation and research components. There are one or two activities where the worlds of his portfolio collide. Take 10 February this year. An agreement signed with the university for a collaboration on touristic innovation. One of its principal ingredients is a project for Big Data aimed at the segmentation of markets for niche tourist products - cultural tourism, health tourism, cycling and so on. 

Yet there is nothing which might be described as major when it comes to innovation and research: certainly nothing comparable to the introduction of the tourist tax and to the other tourism dilemmas he is confronting, e.g. the regulation of holiday rentals. Might one conclude, therefore, that Biel has taken on rather more than one minister can handle? One might well do so. But the innovation stuff was a Biel project even before he landed in government last June. This is because it is very much the stuff of left-wing political agendas. Which is not to hint at anything critical. Quite the contrary. But glance at general and/or electoral programmes for Podemos and an often forgotten precursor to Podemos, namely Partido X, and you will find a great deal of prominence given to innovation.

Joy and wealth through innovation. This might be a slogan of the left. Innovation has an egalitarian feel to it. Wealth will be distributed thanks to it. Economies will be diversified because of it. Quite possibly. But much depends on how innovation is defined, what it is and what it actually means, what returns can be made on it. The greatest of returns come from different sources. They emerge from an unfettered spirit of entrepreneurialism, supported by a mentality geared to success and risk-taking as well as by an educational system which provides the knowledgeable raw material. They come also from Big Capitalism, the keepers of vast wealth with access to ever more from investors and debt and equity capital. Typically, they do not come from the state, unless the state is under strict centralised control.

For Barceló, an amalgam of tourism and innovation is a major step on a roadmap (they love roadmaps in current Balearic public administrations) to the Holy Grail of his much spoken-of new economic model. This is a model with a great deal to commend it. If, that is, we knew what it was and what it might look like. This is not a model which has shape, which is stuck together with glue and allowed to set before it is painted. It is a model of the abstract. Intangible, undefined.

For all the talk of a new model and of innovation, it's not as though we haven't been here before. In its rawest sense, innovation demands finance. It isn't simply a thought process. Flesh in an economic manner has to be applied to the bones of creative thinking.

Back in 2005, the amount which the Balearic government (the Matas government) dedicated to innovation and development (or R&D, call it what you like) was 183 million euros. The Antich administration which succeeded it was one that arrived in a flurry of talk about innovation. It was to be a big thing, just like new railways were to be, and we know what happened to those. Yes, there was crisis, and when recession hits there are things which are hurled from the window - research being one of them. But Balearic investment in R&D collapsed to a greater degree than other regions. By 2009, the amount had fallen to 55 million euros. It hasn't recovered. The overall level is now pitiful.

The report from the EAE Business School into R&D investment by Spain's regions makes for grim reading. The Balearics are bumbling along at the bottom of the league table. The principal industries - hospitality and construction - provide vastly lower levels of investment than those of oil, chemicals, pharmaceuticals and IT/telecoms.

The Balearics are caught in an economic vice of industries which, while they can be and are innovative, do not embark on programmes that generate major shifts in terms of economic welfare, returns on investment and wealth distribution. They don't have the need to. They are not those types of industry. So where does Barceló's innovation come from? Where does his economic model come from? Perhaps he can tell us.

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