Towards a sustainable innovation framework to assess new Indo-Swiss collaboration scenarios

The world is "becoming flat" (Friedman, 2005), this means that innovations are emerging thanks to the deployment of new open collaborative frameworks and Information and Communication Technologies that enable the development of new products and services. Additionally, there are two key emerging trends changing the business arena: 1) the fast development, of economics, such as China and India that besides low cost opportunities also represent new attractive markets counting together with more than 2 billion people and which at the same little are investing to improve their innovation capabilities and 2) the acknowledgement of the latent worldwide need to care not only about economic returns, but also about the social welfare of human beings, in whichever market they live, and the impact that any type of organisation has oil the environment to diminish worries such as global warming, energy consumption and waste. Therefore, the goal of this paper is twofold: 1) propose a sustainable innovation framework that integrates four key enablers and 2) explain how this framework was applied ill file SWISSMAIN project to assess and compare seven identified scenarios to enable Swiss and Indian firms to collaborate towards new business opportunities considering economic, social and environmental impacts..

Villes à la frontière et transformation de l'espace

Lena Poschet El Moudden

Few borders exist which separate two countries as dramatically disparate as the Dominican Republic and Haiti. Both share the territory of the Hispaniola island, but a profound process of differentiation rooted in the colonial division of the island between France and Spain and ideologically maintained by both modern nations, has lead to what Théodat (1998, 2003) calls the "twofold insularity" – each country behaves as if it were located on a separate island. In spite of all prejudices and ethnical, historical, linguistic, social, economic or religious differences, people living in the border regions established cross-border relations which, even if largely based on economic interests, are much more frequent and important to both nations than officially admitted (De Jesus Cerdano and Dilla, 2005; Sillé & Segura & Cabral, 2002). The local dynamic created by this exchange becomes palpable when one observes the busy binational market in the border towns of Ouanaminthe (Haiti) and Dajabón (Dominican Republic). Twice a week, people from nearly the whole northern part of both countries travel to these towns located on either side of the Masacre River, in order to buy and sell goods or to offer services in the market of Dajabón. The other days, tons of cargo transit to Haiti, to the extent that the once small borderland settlements have become an important junction in the economic subsystem of the northern part of the island. Moreover, the construction of a free zone in Ouanaminthe in 2002 –to produce textiles for the US-market– has connected the borderland towns to the international economy. This recent development is set within a context of progressive opening of borders (Martinez, 1994). It is the result of international policies that have been decided in the capitals, without consulting the concerned regions. In Ouanaminthe and Dajabón, local institutions are weak and receive no or little financial and administrative support from central administration. They do not have the means to cope with growing pressure on land and infrastructure, as the emergence of legal and illegal livelihood opportunities in the borderland has generated a threefold increase of the overall population in the past twenty years (Dajabón grew from 8'500 inhabitants in 1980 to 16'000 in 2002 and Ouanaminthe from 7'000 in 1981 to 39'000 in 2003). How did these recent economic, political and societal transformations shape the urban space of the two borderland towns? I addressed this issue by analyzing the motivation of stakeholders involved in the process of spatial transformation, and the impact of their actions. In my work I refer to the conceptual framework of urban intermediation (Bolay and Rabinovich, 2004), i.e. the spatial issues that each town has to address according to its internal characteristics, its function in national and international networks and its relation to the direct rural environment. In order to use this framework for the borderland issues, the conceptual part of this study proposes to develop the concept of "borderland intermediation". To the existing urban intermediation concept, it adds the influence of the characteristics of the border (based on policy and political aspects, economic issues, local identities, social networks, national defense issues and geographical insertion). By doing so, it relates the bi-national system of borderland towns to the intermediation concept. Data has been collected over three and a half years during several periods of fieldwork: observation and mapping of occupation and use of urban space, cartography, qualitative interviews with local stakeholders and residents, completed by other primary and secondary sources. This study shows that the recent transformations have accentuated the existing unbalanced relationship between the two towns. The powerlessness of the municipality of Ouanaminthe to meet population growth and to impose regulations or taxes related to the growing trade has enhanced its dependency to the Dominican town. For a growing number of Haitians, it is of existential importance to cross over to Dajabón in order to seek income, healthcare and education and this, in spite of latent racism and mistreatments. Founded on a strong sentiment of exploitation, Haitians often criticize the capitalist or even colonialist relationship imposed by their neighbors: not only the fact that the bi-national market takes place in Dajabón, but also that Dominican enterprises develop subsidiaries in Ouanaminthe, taking advantage of cheap labor and the absence of local production. On the contrary, the majority of Dajabón residents interviewed do not need to cross the river for their living. Most of them have never been to Ouanaminthe, but consider it insalubrious, out of control and dangerous. Both towns lack application of regulations in urban planning matters. Thus, spatial growth has entirely been ruled by landowner structure and land occupation practices. Around Dajabón, the adjacent land belongs mainly to two landowners, whose strategy –to enhance soil value through development of equipped middleclass neighborhoods– has restricted the urban sprawl. In Ouanaminthe land belongs to a multitude of small peasants. The selling and illegal occupation of rather small plots leads to sprawling urban growth, guided by rural pathways and leaving entire parts of neighborhoods inaccessible to motor vehicles. Population growth has also been absorbed by high densification of existing neighborhoods. No formal collaborations exist between the two municipalities. Informal ones do, through the implication of the two mayors, but overall, cross-border collaboration is left to NGOs and professional associations who militate for human rights, environmental issues and fair treatment inside the bi-national market. International development agencies present in the borderland initiate projects with bi-national concern, but these are disconnected from the local level and strongly influenced by the fact that these agencies relate directly to the central governments. We also observe a process of internal segregation in both towns, as commercial establishments progressively occupy parts of the town centers and the emergent middle class gathers in specific neighborhoods. Ouanaminthe and Dajabón are functionally interlinked and their transformation is undeniably governed by the progressive permeability of the border. Nevertheless, this border separates two completely different urban landscapes that are deeply marked by the internal characteristics of each town. Furthermore, the unequal and complex relationship of both populations creates the paradox that their spatial proximity accentuates the segregation in both towns, as it allows the citizens of both countries to stay in their environment and to commute –if necessary– even daily. This work shows that the application of the intermediation concept is relevant for the study of complex relationships that govern borderland space. The analysis based on this concept has enabled to study, on a local level, processes that are taking place on a global level. In so doing, it has allowed us to provide some answers to the central question: "How do local populations, national and international firms and governments react when a territorial economy, based on agriculture, is progressively linked to international networks? "

EPFL2006

Socio-Economic Assessment of Fusion Energy Research, Development, Demonstration and Deployment Programme

Denis Bednyagin

Providing safe, clean and affordable energy supply is essential for meeting the basic needs of human society and for supporting economic growth. From the historical perspective, the constantly growing energy use was one of the main factors, which drove the industrialised countries to the current level of prosperity. Meanwhile, in recent decades, the issue of global energy security became a topic of increasing concern in the international policy agenda. On the one hand, the world is facing the problem of exhaustion of most convenient and cheep fuel reserves. The situation is becoming worse, because of the constantly growing demand in developing countries, and the oligopolistic behaviour of major energy exporting countries. On the other hand, the society is becoming more and more sensitive to the environmental pollution problems, caused by the excessive consumption of fossil fuels. In the face of energy security challenge, national governments ought to implement adequate strategies aimed at liberalisation of energy markets, diversification of energy supply mix, enhancement of energy efficiency, encouragement of investments in energy infrastructures, and promotion of innovation in energy sector. In a longer term perspective, the latter point becomes increasingly important, because the world is relying currently on the consumption of non-renewable fossil fuels, and the development of new safe, clean and resource unconstraint energy technologies is vitally needed. In line with this strategy, the major world economies pursue the joint R&D programme on thermonuclear Fusion technology, which represents numerous advantages due to its inherent safety, avoidance of CO2 emissions, relatively small environmental impact, abundance and world-wide uniform distribution of fuel resources. Considering the importance of the projected environmental and economic benefits of Fusion, the questions are raised whether the current level of financial support is sufficient, and what could be the optimal strategy to proceed with the demonstration of Fusion technology, given the time span and potential risks of Fusion RDDD programme. To put these questions into the context, one has to consider the current trends in energy R&D funding, which has seen a drastic decline ( ~50%) over the last three decades. The liberalisation of energy sector poses additional problem due to the fact that free markets partially failure to provide public goods, such as basic science and R&D, because of the so-called spillover effects meaning that the firms are not able to appropriate the integral results of their R&D investments. Regarding the thermonuclear Fusion technology, the decision makers responsible for national energy policies and allocation of public R&D funds may face the following specific questions: What is the expected net socio-economic payoff (social rate of return) of Fusion R&D programme, including both internal and external costs and benefits? What are the reasonable economic arguments that could justify the increase in public funding of the ongoing and future Fusion R&D activities and would stimulate greater involvement of the private sector? What additional value can be obtained through undertaking a more ambitious Fusion R&D programme (accelerated development path), which requires bigger number of experimental facilities, increased funding, and more intense overall efforts of international scientific and industrial community? In order to provide sound arguments for policymakers seeking to optimise public R&D funding, a robust socio-economic evaluation of the whole Fusion research, development, demonstration and deployment (RDDD) programme is needed. At the present stage, prospective analyses of Fusion technology have been emphasised mainly on the investigation of technological issues, estimation of the direct costs of Fusion power and analysis of its potential role in future energy systems. Meanwhile, methodological tools and practical studies aiming at a more comprehensive socio-economic assessment of global long-term energy R&D programmes, such as Fusion, are still incomplete. The primary difficulty concerns the evaluation of positive externalities that may reveal through different types of spillover effects, including but not limited to knowledge, network and market spillovers. While the presence of these effects has been identified in the economic theory and confirmed by empirical studies, their quantitative analysis in the specific case of large scale energy R&D programmes represents some methodological lacuna and deserves further investigation. Another problem relates to the methodology of cost-benefit analysis, which oftentimes ignores the hidden value of R&D projects arising due to the possible flexibility in managerial decisions. In fact, throughout the course of any R&D project, its prospective cash-flows can be significantly improved by pro-active management of different implementation stages, e.g. expanding the production, if market conditions are favourable, or abandoning, if R&D process appears to be unproductive. As a result, the strategic value of any R&D project normally exceeds its net present value (NPV) calculated with the traditional discounted cash flow (DCF) method. Although this strategic approach to capital budgeting, known as Real Options, has been propagated recently in several publications dealing with appraisal of lumpy irreversible investments, its practical application in the context of Fusion RDDD programme has not been mastered yet to the required extent. A particular challenge consists in the need for adequate treatment of different types of uncertainty in the model structure, parameters and input data. Accordingly, the main objective of this thesis consists in complementing the existing studies with an in-depth analysis of the positive externalities (spillover benefits) of Fusion RDDD programme and calculation of its strategic real options value subject to different managerial strategies throughout demonstration and deployment stages. Net social present value of Fusion RDDD programme and potential impact of Fusion R&D activities on the economic performance of the involved private companies are estimated using an integrated modelling framework, which includes the following components: (1) assessment of technological potential for deployment of Fusion power plants based on the simulation of multi-regional long term electricity supply scenarios with PLANELEC model; (2) economic evaluation of Fusion RDDD programme and analysis of different implementation strategies using Real Options model; (3) estimation of the economic value of spillover benefits from participation in Fusion R&D projects at the microeconomic level with the help of financial evaluation model; (4) strategic evaluation of Fusion RDDD programme, taking into account both spillover benefits and real options value, and policy recommendations.

EPFL2010

The shaping effects of innovation and technology: from micro business model evolution to macro environment sustainability

Qinli Lu

Innovation is a prerequisite guarantee for the development of a country in this new era. It is an important driver not just for corporate growth but also for national social and economic transformation. Considering the strategic supporting role of innovation in the modern economic system, this thesis approaches the shaping effects of innovation and technology mainly from two important micro and macro perspectives, business model evolution and national sustainable development. The first essay takes business model innovation (BMI) in China as an entry point to investigate how novel elements can shape business models. There is a widespread perception that Chinese companies, compared to their Western counterparts, are not good at creating novel products and services. But in the arenas of e-commerce and other digital businesses, Chinese companies have become highly successful. This has led some observers to hypothesize that while Chinese firms may not excel at developing new-to-the-world products and services, they may be good in inventing new-to-the-world business models. To explore this phenomenon, I analyzed 137 suggested innovative business models in detail to investigate new-to-the-world features, yielding an overview of BMI in China. Based on these cases, a theoretical framework was proposed to investigate how innovative features can prompt successful BMI. I summarize the reasons behind BMI in China. The second essay explores the support from open innovation (OI) for BMI based on literature review and some inspiration from the first essay. Theoretical underpinnings are often cited as a necessity to advance the research of BMI. The study proposes that the development of OI and BMI keeps pace within a dynamic innovation process. To develop a consistent body of knowledge about BMI and OI, this conceptual paper sheds light on the relationships between OI and BMI by providing a framework and discussing its implications. The main investigations are as follows: 1) Why OI has strong impacts on BM development; 2) How OI can shape BMs; 3) What support OI can provide for BMI. The third essay analyzes the shaping effects of technology on environmental issues by carrying out an empirical study of tracing the imbalance of carbon emissions embodied in trade. The technological differences among developing and developed nations are tremendous, which have kept having strong impacts not only on economic and societal development but also on environmental sustainability. Thus, this study provides a new and critical perspective to reconsider the imbalance of carbon emissions regionally and globally, revealing essential policy implications for region-specific sustainable development strategies. The thesis makes several important contributions. For micro business model evolution, the thesis develops a theoretical framework to show how the values are delivered in a business model system and how innovative features can further prompt successful business model innovations, as well as a comprehensive analysis of the theoretical underpinning from open innovation for business model advance. For macro environmental sustainability, the thesis presents a comprehensive spatio-temporal analysis of carbon emissions embodied in trades of nations within and beyond BRI, contributing to methodological advances of measuring the impacts of technological differences on carbon footprints and emissions leakage, which is largely underexplored in current studies.

EPFL2020