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National innovation systems concept as a policy tool in refining catching-up strategies in small developing countries Photo: Johannes.

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Presentation on theme: "National innovation systems concept as a policy tool in refining catching-up strategies in small developing countries Photo: Johannes."— Presentation transcript:

1 National innovation systems concept as a policy tool in refining catching-up strategies in small developing countries Photo: Johannes Pääsuke 1912 Estonian National Museum

2 Recent policy work in Estonia Competitiveness and future outlooks of the Estonian Economy, Estonian R&D Council, 2003 Made in Estonia, forthcoming 2005 –Theoretical framework –ICT, bio- and nanotechnology trends –Estonian main socio-economic challenges –Policy scenarios

3 What policies should a small country pursue? Antonio Serra, Breve trattato delle cause che possono far abbondare li regni doro e argento dove non sono miniere [A brief overview of reasons that may bring a lot of gold and silver to kingdoms where there are no mines], Naples, Lazzaro Scoriggio, (See also: Reinert 1994, Freeman 1998)

4 Globalisation & EU enlargement Larger market enables for greater division of labour (Smith 1776) –application of new (in local context) technologies for increasing productivity –new markets for capital goods (technology)

5 All economic activities are not the same Charles King (1721): good trade and bad trade Creative destruction and economic cycles –Kondratjev 1926, Schumpeter, Freeman et. Al

6 From business cycles to long waves of development Source: Perez (2002)

7 Global spread of technologies Source: Wells (1972) …as they matured in mass production paradigm Initial R&D effort Increasing returns Decreasing returns

8 Catching up or lagging behind? Quality of industrial change in selected World regions, Source: Reinert and Kattel 2004

9 Real GDP per capita

10 Small/developing country squeeze Global technological development largely exogenous to domestic R&D efforts –Domestic (tiny) public investment into R&D generally not a feasible way to acquire presence in radically new indigenous high- tech industries Increasing cost competition in resource and/or labour intensive low-tech sectors –Avoid social dumping and race to the bottom

11 Policy strategies Source: Wells (1972) Technology leader Cost leader Fast follower Technology diversification

12 Locational windows of opportunities Attracting certain parts of the value chains of new high-tech industries, i.e. ICT, bio- and nanotechnologies … while ensuring positive spillovers from FDI and upgrading the existing traditional activities

13 Lessons for future Emphasis on structural adjustment and horisontal policy co-ordination –strong insight on the development of global markets and new technologies –future education and technology needs (inward technology transfer and R&D are both important) –life-long learning and active labour market policies –targeting of specific FDI and ensuring spillovers / technology transfer to indigenous companies


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