Introduction  (Page 13/20)

Powis

The Prince of Wales Innovation Scholarships (POWIS) program is aimed at providing 100 world-class graduates to welsh SME’s between 2009 and 2014. Each of the scholars is partly funded by the European Union and places scholar within a company for a period of three years, during which the scholars undertake research and development on any aspect of the company’s work; whether being to improve the company’s products and services, internal processes or the way that they interact with other companies. Each of the scholars is supported by a project manager, a local academic supervisor and a local or international academic supervisor with expertise in the chosen field of research. The scholar is expected to be based with their host company in Wales on a full time basis and use the outcomes of that time to complete a PhD (www.wales.ac.uk, 2010).

Non-set and service sectors

Knowledge-economy activities are often noticeable in the domains of Science, Engineering and Technology, particularly those that manufacture some patented product, though it is important to give consideration to the wider economy, in particular the service sector. Many of these, such as finance and telecommunications are captured in the OECD ‘ knowledge-intensive industries ’ definition (Coates and Warwick 1999). Growth in services led to almost all of the new jobs created in the EU in the period 1997-2002 and account for 70% of EU added value (EU 2005).

The importance of all sectors to the Knowledge Economy is emphasised by Michael Porter in ‘ The New Challenge to America’s Prosperity: Findings from the Innovation Index ’, (Porter and Stern 1999) where he outlines that there are no ‘low tech’ industries, only companies that fail to embrace new ideas and methods into their products. Porter and Stern also emphasise innovation in the context of ‘ discerning and meeting the needs of customers ’, rather than being a domain restricted to science and engineering, arguing that improvements in marketing, distribution and service can be as important as those generated in laboratories relating to new products and processes.

The role of the service sector in the Knowledge Economy and its economic impact is emphasised by the growth in knowledge services over the past decade. This is shown below in [link] , cited from the Work Foundation report for the 2007 EU Spring Council (Work Foundation 2006).

The importance of non-SET sectors is supported by historical observations. Peter Drucker in his book ‘ Innovation and Entrepreneurship ’ (Drucker 1985) describes how the economic growth of the US in the second half of the 20 ^th Century saw only one eighth of new jobs created in high technology. In fact technological effects such as automation often had negative effects on job creation. However, while robots appearing in factories may be an obvious example of how technology has affected manufacturing industries it should be remembered that something similar has also happened in the service sector. Telephone and on-line banking, e-commerce etc., are all examples of how growth in services has been accompanied by rationalisation and labour saving innovation (Hauknes 1999).