polt jvi lecture 03 05 2011

'Trends and challenges for research, technology and

innovation policy'

JVI-Seminar

Public Governance and Structural Reforms 3. May 2011

Wolfgang Polt Joanneum Research Ltd. -

POLICIES – Centre for Economic and Innovation Research wolfgang.polt@joanneum.at

Reseach, Technology and Innovation: Some Basic Concepts and Definitions

Definition of Research, Technology and Innovation Policy

Innovation Policy: “… all public measures that attempt to influence actors (enterprises, public institutions, households) to develop new knowledge and technologies (invention), to commercialise these new technologies (innovation) or to use them (diffusion)”.

Research (or Science) policy: aimed at promoting research and the production of fundamentally new knowledge.

(see Gassler/Polt/Rammer 2007)

Rationale(s) for Research and Innovation Policies (1) – Effects on Economic Growth

Innovation is the mayor driver of productivity and economic growth

Increasing share (though not and never ALL) of innovation is based on research and development (R&D)

Structural change is going into the direction of more ‚knowledge/skill/R&D intensive„ sectors

Competitiveness increasingly relies on mastering these knowledge intensive sectors

Rationale(s) for Research and Innovation Policies (2) – Effects on Societal Well-Being

R&D and Innovation contribute to coping with societal challenges: Health

Environment

Security

Nutrition

Mobility

….

Rationale(s) for Research and Innovation Policies (3) – market and systems failures

Public good characteristics of information and knowledge (spill-overs, externalities, non-rival consumption)

Indivisibilities, critical mass and network externalities

Risk aversion of private actors and capital markets

Coordination failures (market- and non-market incentives co-exist)

Basic Conceptions of Research and Innovation

The (in)famous ‚linear model‘

The ‚chain-linked model‘

The ‚open innovation model‘

Basic Instruments of Science and Innovation Policy

‚Base„ or ‚core„ or ‚institutional‘ funding of research institutions (universities, public research labs etc.)

Public funding of private R&D Direct funding (subsidies) Indirect funding (R&D tax

credits)

Intellectual Property rights (e.g. patents, trademarks as incentives for innovation)

Basic Structures in a National Innovation System (NIS)

Political SystemEducation and

Research SystemIndustrial System

Demand

Consumers (final demand)

Producers (intermediate demand)

Framework Conditions

Financial environment; taxation and

incentives; propensity to innovation and

entrepreneurship; mobility

Large companies

Mature SMEs

New, technology-

based firms

Professional

education, training

Higher education

and research

Public sector

research

Government

Governance

RTD policies

Infrastructure

Banking, venture

capital

IPR and

information

Innovation and

business report

Standards and

norms

Intermediaries

Research

institutes

Brokers

The potential reach of

public policiesÉ

Source: Erik Arnold and Stefan Kuhlman, RCN in the Norwegian Research and Innovation System,

Background Report No 12 in the Evaluation of the Research Council of Norway, Oslo: Royal Norwegian

Ministry for Education, Research and Church Affairs, 2001.

Developments of Instruments of Science and Innovation Policy in a systemic perspective

Fostering ‚Industry-Science – Relations‘ (ISR)

Creating Public-Private Partnerships (PPPs)

(Again) addressing ‘Grand (societal) Challenges‘ (Mission-oriented Research)

Recent trends and good practice in Research and Innovation Policy

RTP has become a major policy area in many OECD countries

Increasingly to be seen: formulation of explicit RTP strategies Setting quantitative targets Explicit ‚policy learning„ (‚open method of co-ordination„)

Setting targets and identifying priorities Thematic Functional

Refining funding instruments Increasingly ‚Competitive„ / Programme funding -

Increasing the leverage effects of direct funding of private R&D

Increases in ‚indirect„ support to R&D via R&D tax credits

Recent trends and good practice in Research and Innovation Policy

Fostering Human Resources for R&D Output of S&T graduates Career path for young researchers Attract talent Increase participation of women

Coping with globalisation of R&D Reforming funding and performing instiutions Increased emphasis on monitoring and

evaluation (‚strategic intelligence for RTP„) Improving the ‚governance„ of RTP Strengthening the NIS as a SYSTEM

…especially industry-science relations !

Socio-cultural factors influencing innovation

Challenges for Innovation Policy by Group of Countries (EIS 2008)

Paradigm shifts in post-war RTP and PROs:

Classic mission-oriented approach

Civil ‚key‘ technologies

Generic elements of innovation systems

New ‚missions‘ ?

World War II today

Relative Importance

New Public

Managment?

Source: Rammer,Polt, Gassler(2008)

Global Trends in R&D and R&I Policies

Some basic trends in R&D

General increases in the knowledge intensity of production of goods and services

Share of business sector increases with level of development

Share of service sector in R&D and in innovation increases

New ‚mode of production of knowledge„: INTERACTION !

Specialisation patterns between countries differ … and will continue to do so (industrial history, public priority setting…)

Increasing globalisation (also of R&D) … in various channels (international mobility, international cooperation, inward/outward FDI)

R&D – global trends: intensity rises over time

Source: OECD STI Outlook 2008

Overall R&D intensity (GERD)

R&D intensity of Business Sector (BERD)

Source: OECD STI Outlook 2010

Source: OECD STI Outlook 2010

Types of Innovation

in Firm

s

R&D spending in Higher Education Sector (HERD)

R&D in Public Research Institutions (PROs)

Financing Structures of R&D

R&D Outputs: Scientific Publications

R&D Outputs: Patents

R&D Outputs: Export Performance

European Countries‘ Innovation Performance

Europe

an C

ountries I

nnovation

Perform

ance

by S

ector

Current Challenges for RTI Policies

Reaction to the Crisis ! Private <-> Public Spending

Coordination of Policies across a growing number of policy domains (environment, health, security, energy, transport/mobility, communication, industry policies…)

In search for Excellence….

R&D and innovation in the business cycle, OECD total (annual change)

Source: OECD STI Outlook 2008

Characteristics of CEEC innovation systems

Characteristics of CEEC innovation systems

Low overall R&D intensity,

CEEC have – in contrast to other countries – considerably decreased R&D spending post 1990 !

Private sector R&D is still considerably lower than in more advanced countries

Large share of R&D in the Government Sector Academies of Sciences; Institutes in Energy and Defense R&D

Characteristics of CEEC innovation systems

With the break-down of old structures industry science link almost collapsed

Problems in Human Ressources and Quality of Education

Clear divide between the EU members of CEEC and the non-EU members High FDI inflows,

considerable share of high/medium-high tech industries characterize the former

much stronger focus of process innovation than elsewhere

Innovation Performance and Change (EIS 2009)

Innovation Performance in selected CEEC (EIS 2008)

R&D expenditure as % of GDP (2006)

R&D expenditure by sector of performance (2006)

Technological Specialisation and Innovation Effort

Characteristics of CEEC‘s research and innovation policies

Characteristics of CEEC‘s R&I policies

STI policies were not given much attention in the post-1990 period, focus was rather on ‚macroeconomic stability‘ (‚Washington consensus‘)

‚Stop and Go‘ approach to STI policies

Pressure to build up own STI capacities is rising, competitive advantage of cheap, skilled labour + low business taxation/regulation is eroding

Characteristics of CEEC R&I policies

EU plays considerable role for STI poliy formulation and governance

… but the creation of institutions (e.g. implementing agencies) and orientation towards EU STI policy setting (Framework Programme, Structural Funds) is not generally favourable !

Lack of priority setting (mechanisms)

„…CEE innovation policies tend to solve problems not existing in the respective economies“ (KATTEL & PRIMI 2010) – e.g. PPPs and TT

Main sources and suggested further reading:

OECD: Science,Technology and Innovation Outlook 2010. Paris

EU: Innovation Union Scoreboard 2010. Brussels Austrian Report on Research and Development 2010.

Vienna Helmut GASSLER, Wolfgang POLT, Christian RAMMER:

Setting priorites in Science and Technology Policy. In: Claire Nauwelaires: Innovation Policy in Europe. Edward Elgar. 2008

Rainer KATTEL, Annalisa PRIMI: The periphery paradox in innovation policy: Latin America and Eastern Europe compared. March 2010

Alasdair REID: EU Innovation Policy: Towards a differentiated approach across countries. January 2009

Thank you for your attention !