Regional innovation systems are important because: 1) strong dynamics of innovation generation in regions are crucial for achieving national innovation policy objectives; and 2) innovation performance can contribute to improving the overall economic competitiveness of individual regions by increasing the productivity of firms. As such, the goals of regional innovation policy are relevant to policy makers from both the regional development and science and technology fields. This policy relevance appears to be increasing, not only in federal or regionalised countries such as Germany and Italy, where innovation policy has a strong regional focus, but also in countries with a more centralised policymaking tradition such as France and Japan.

Innovation has a spatial dimension. This is clear from extensive research into how firms innovate. Yet does this mean that innovation policy necessarily needs a spatial dimension? The aim of this introduction is to clarify some of the main issues relating to regional innovation.

This chapter provides an overview of the North of England from a demographic, economic and innovation perspective. The first question it raises is whether the North is an appropriate unit of analysis as one regional innovation system. While there are several common challenges across different parts of the North, it does not constitute one system. There are considerable intra-regional variations in performance, including across the eight city-regions and between urban centres and more rural areas. The chapter then considers the industrial history of the region and the changes in industrial composition that explain in part productivity differences with other UK regions. The analysis of industrial composition also sets the stage for interpreting innovation indicators and needs. In some cases the variation in results across regions can be explained in part by industrial composition differences (R&D investment, patenting) and in other areas (propensity for firms to innovate) these regional differences are less obvious. The position of the three regions of the North of England with respect to different innovation indicators and regional innovation system typologies is assessed, including comparisons with other regions of similar characteristics. The chapter concludes with a discussion of the strengths and opportunities for the North going forward that national and regional policies and strategies could support.

The starting point for discussion of regional innovation in the UK can be from two angles: innovation as a component of regional policy, and innovation in regions as a component of national innovation policy. As discussed in the Introduction, there has been a general convergence of interest between these two policy domains in OECD countries, and the UK is no exception. In both cases, the issue is to what extent innovation can help achieve the principal objectives of these two policy streams. The supplementary question is to decide the role of the national and regional actors in a way that is efficient and provides relevant supports and services for firms, the main target of public policy in this field.

The role of sub-national efforts to support innovation is to both tailor strategies and instruments to the specific needs of the region and to fill any gaps in national policy based on the country-specific division of labour. Thus far, Regional Development Agencies (RDAs) have made great strides over the last ten years to support innovation in their regions through a number of instruments including innovation advisory services, centres of excellence, major innovation sites and helping firms access the local science base, among other instruments. However, given the nature of funding for innovation at the national level and limited sub-national fiscal autonomy, sub-national action to support innovation is rather limited in international comparison, resulting in a challenging environment within which RDAs and local authorities need to operate.