THE ROLE OF INFORMAL INSTITUTIONS FOR THE DEVELOPMENT OF THE WIND ENERGY INDUSTRY IN GERMANY AND BRITAIN

Camilla M. Chlebna MSc#12112222, Department of Planning

Supervisors:Prof. James SimmieDr. Dave Valler75m blade in Siemens Blade Factory

• Introduction• Objective of PHD element of research• Theoretical proposition

• Key elements• Conceptual Framework

• Fieldwork Methodology• Analysis Framework

• Role of informal institutions• What happened in GER / UK ?

• Why does this matter?• Outlook

PRESENTATION STRUCTURE

MPhil stage 1. To develop a conceptual framework to understand the role of institutions in the development of the wind

energy technology into a path dependent economic landscape2. To use the framework to develop a methodology for the analysis of information about the role of

institutions in the development of wind energy technology into a path dependent economic landscape3. To carry out pilot interviews to gain a better understanding of the history of the wind energy development

in Germany and the United Kingdom4. To refine the framework and methodology on basis of the pilot study with a view to the main fieldwork PhD stage 5. To carry out the main fieldwork in the form of the collection of quantitative, secondary data that illustrates

the effects of the significant institutional changes as well as in the form of qualitative interviews to understand the drivers and motivations of agents that sought and initiated institutional change.

6. To analyse both the quantitative and the qualitative information that has been gathered from the main fieldwork.

7. To arrive at an improved framework that illustrates the role of institutions in the development of the wind energy industry in Germany and the United Kingdom.

PHD STAGE OBJECTIVE

Development from invention/innovation to industry is non-linear(Nelson & Winter, 1977; Kline & Rosenberg, 1986; Llundvall et al, 2002)

Institutions matter(Polanyi et al., 1957; Perez 1983; North, 1991; David, 1994; North, 1996; and many more)

Three kinds of institutions (formal and informal, organisational)(North, 1991; Rafiqui, 2009)

Co-evolution of institutions and technology(Perez, 1983; Nelson, 1998; Strambach, 2010)

Multi-layered approach (Geels, 2002)

Phased cyclical model(Simmie, 2012)

KEY ELEMENTS

CONCEPTUAL FRAMEWORK

Conceptual Framework framing the fieldwork• Who sought influence on the institutions

over the years? • Why did they do what they did?• Were they successful?• Why? Why not?• What are the interactions with and

between institutions?

Qualitative element36 expert interviews in 2015• 4 pilot interviews with academics: 4th January – 11th March• 32 interviews in main fieldwork: 22nd June – 5th November• 18 German, 18 British• 26 face to face, 10 phone• Contacts sourced mostly via snowballing method• Interviewees tend to have overlapping experience of

framework layers but gained information across all layers

Quantitative elementQuantitative information will be drawn in for descriptive purposes

FIELDWORK

ROLE OF (INFORMAL) INSTITUTIONS

• Structure v. Agency(Giddens, 1984)

• Inter-dependency of institutions(Jackson, 2010)

• Pervasiveness of institutions / embeddedness of agents

• Change of informal institutions rare and slow(Rafiqui, 2009)

Important role of informal institutions in facilitating or inhibiting co-evolution of formal institutional arrangements with technological development

Informal institutions as key to different policy outcomes and thus industry development

Explicit recognition of role of informal institutions provides insight into the divergent development of technology, institutions and the economic landscape between places

ANALYSIS FRAMEWORK

CASE RELEVANCE

What happened in Germany?The combination of a fundamental shift in the informal institutions (attitude towards renewable/nuclear energy) following global events (Chernobyl) together with pressure from lower level institutions (Northern Laender) in response to the regional economic situation led to the creation of a stable institutional framework (feed-in law) that supported the development of the wind energy industry in Germany.

What happened in Britain?The same global events did not have the same effect in Britain because different informal institutions (elitism, cost of energy) were prevalent. Changes of the formal institutions eventually were made but only in response to pressure from superordinate institutions (EU) on the state and without the concomitant shift of the informal institutions. Thus the technology was not as positively received and spread at much lower speed, missing the opportunity to create a home industry for wind turbines.

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Wind power related applications as share of total applications [1978 - 2012]

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UK dependent on import of key energy sources(DECC, 2014)

Employment in wind energy:UK 15.500 [2014/15 – 0.05% of about 29.5m employed total]

GER 149.200 [2014 – 0.4% of about 38.9m employed total](RenewableUK, 2015a; O’Sullivan et al., 2015; Eurostat, 2015)

Construction / manufacturing is the most employment intensive part of wind energy development, but UK lacks companies in this part of the supply chain(RenewableUK, 2015b)

Similar rates of invention but in UK tendency to sell IP to companies abroad What motivates inventors? Profit vs idealism? - Beneficial tax arrangements for the sale and lack of support for industrialisation(OECD, 2013)

WHY DOES THIS MATTER?

“Research rarely goes according to plan, although this is not an argument against having a plan” (Burnham et al, 2004, p.43)

• Currently developing coding frame in Nvivo• March – April: Coding > basic and advanced analysis• May – June: Draft analysis chapter• By September: first draft• End of year: Hand-in• Early 2016: viva etc.

OUTLOOK

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THANK YOU FOR LISTENING

Camilla M. Chlebna MSc12112222@brookes.ac.uk

Please do not hesitate to contact me with any suggestions, corrections or just general kindness that you can offer.

International Student Initiative for Pluralism in Economics: http://www.isipe.net/

World Interdisciplinary Network for Institutional Research: http://winir.org/

Fieldwork supported by

Slide 1Atomkraft Nein Danke!: Schoolmann S. http://www.nordland-virus.de/wordpress/?p=94. Hamburg, Germany. Accessed on 23rd February 2016. 75m blade in Siemens blade factory: https://www.siemens.co.uk/pool/news_press/news_archive/2014/siemens-blade-factory.jpg. Siemens Wind Power, Germany. Accessed on 4th August 2015.Slide 4David PA (1994) Why are institutions the ‘carriers of history’?: Path dependence and the evolution of conventions, organizations and institutions. Structural Change and Economic Dynamics. 5 (2), 205–220.Geels FW (2002) Technological transitions as evolutionary reconfiguration processes: a multi-level perspective and a case-study. Research Policy. 31, 1257–1274.Kline SJ and Rosenberg N (1986) An overview of innovation. In: R. Landau & N. Rosenberg eds. The Positive Sum Strategy: Harnessing Technology for Economic Growth. Washington D.C., USA: National Academy Press. 275–305.Lundvall B-Å, Johnson B, Andersen ES and Dalum B (2002) National systems of production, innovation and competence building. Research Policy. 31, 213–231.Nelson RR (1998) The Co-evolution of Technology, Industrial Structure, and Supporting Institutions. In: G. Dosi, D. Teece, & J. Chytry eds. Technology, Organisation and Competitiveness - Perspectives on Industrial and Corporate Change. Oxford, UK: Oxford University Press. 319–335.Nelson RR and Winter SG (1977) In Search of Useful Theory of Innovation. Research Policy. 6, 36–76.North DC (1991) Institutions. Journal of Economic Perspectives. 5 (1), 97–112.

BIBLIOGRAPHY & SOURCES I

North DC (1996) Institutions, Institutional Change and Economic Performance. Cambridge, UK: Cambridge University PressPerez C (1983) Structural Change and Assimilation of New Technologies in the Economic and Social Systems. Futures. 15 (5), 357–375.Pike A, Dawley S and Tomaney J (2010) Resilience, adaptation and adaptability. Cambridge Journal of Regions, Economy and Society. 3, 59–70.Polanyi K, Arensberg CM and Pearson HW eds. (1957) Trade and Market in the Early Empires - Economies in History and Theory. Glencoe, IL, USA: The Free Press & The Falcon’s Wing PressRafiqui PS (2009) Evolving economic landscapes: why new institutional economics matters for economic geography. Journal of Economic Geography. 9, 329–353.Setterfield M (1993) A Model of Institutional Hysteresis. Journal of Economic Issues. 27 (3), 755–774.Simmie J (2012) Path Dependence and New Technological Path Creation in the Danish Wind Power Industry. European Planning Studies. 20 (5), 753–772.Strambach S (2010) Path dependence and path plasticity: the co-evolution of institutions and innovation - the German customized business software industry. In: R. Boschma & R. Martin eds. The Handbook of Evolutionary Economic Geography. Cheltenham, UK: Edward Elgar. 406–429.Slide 8Giddens A (1984) The Constitution of Society. Cambridge, UK: Polity PressJackson G (2010) Actors and institutions. In: G. Morgan, J. L. Campbell, C. Crouch, O. K. Pederson, & R. Whitley eds. The Oxford Handbook of Comparative Institutional Analysis. Oxford, UK: Oxford University Press. 63–86.

BIBLIOGRAPHY & SOURCES II

Rafiqui PS (2009) Evolving economic landscapes: why new institutional economics matters for economic geography. Journal of Economic Geography. 9, 329–353. Slide 10Energy Import Dependency: Department for Energy and Climate Change. UK Energy in Brief 2014. National Statistics Office. London, UK.Wind employment numbers: RenewableUK (2015a). Wind Energy in the UK. State of the Industry Report Summary October 2015. London, UK.O’Sullivan M, Lehr U, Edler D (2015). Bruttobeschäftigung durch Erneuerbare Energien in Deutschland und verringerte fossile Brennstoffimporte durch Erneuerbare Energien und Energieeffizienz. – Zulieferung für den Monitoringbericht September 2015. BMWE. Berlin, Germany.Total employment numbers:Eurostat (2015). Employed 15 – 64 year olds in 2014. Brussels, Belgium.Employment Effects: RenewableUK (2015b). Onshore Wind: Economic Impacts in 2014. Executive Summary April 2015., London, UK.Patent registrations: OECD, REGPAT database, July 2013.Slide 11Burnham P, Gilland K, Grant W and Layton-Heny Z (2004) Research Methods in Politics. B. G. Peters, J. Pierre, & G. Stoker eds. Basingstoke, UK: palgrave macmillanSlide 12Rethinking Economics Conference 2015. Greenwich University. London, UK. Own picture.

BIBLIOGRAPHY & SOURCES III

INDUSTRY VS SERVICES

Employment in sectors

General rise in employment in service sector but higher share in UK

General decline in employment in industries but flattening of curve in GER

Balance of payments(import vs export)

UK runs the largest deficit of the EU28 (2nd is Cyprus) while Germany has the 2nd largest surplus (after the Netherlands)

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BALANCE OF PAYMENTSMain components of the current account balance 2014 [% of GDP]

UK runs the largest deficit of the EU28 (2nd is Cyprus) while Germany has the 2nd largest surplus (after the Netherlands)