1. Science, Technology and Innovation in the Asia-Pacific Region: Trends and Policy
Jerry Sheehan
OECD Science & Technology Policy Division
Asian S&T Forum: Innovation Indicators
OECD Washington Center
14 July 2005

2. The broader context for STI
Science, technology and innovation are receiving greater policy attention as their links to economic growth are more widely appreciated; government funding is growing accordingly.
Significant policy reforms across OECD to improve contributions of public research, foster business innovation, strengthen industry-science linkages (e.g., via public/private partnerships).
Innovation policy has been slow to adapt to the needs of the service sector, which accounts for growing share of output and employment in OECD economies.
Concerns about supplies of human resources for science and technology (HRST) are mounting across OECD at same time as migration patterns are changing.
Science, technology and industry are increasingly globalized, requiring further adaptation of policy to ensure benefits accrue to national economies.

3. Strengthening innovation systems
Increases in government funding for R&D
Change in funding and governance of public research
More project funding
More targeting of priority areas (IT, biotech, nano, energy)
Greater use of priority setting
Support for business R&D increasing
Entrepreneurship and SME financing
Shift in financing of business R&D away from direct funding and toward tax incentives
Strenthening industry-science linkages
Boost patenting & licensing of public research
Proliferation of public/private partnerships
Collaborative research

4. Ensuring supplies of HRST
Global demand is growing for scientists & engineers
Employment in HRST occupations grew twice as fast as overall employment between 1995 and 2000.
Number of researchers in OECD grew from 2.3 million in 1990 to 3.4 million in 2000 (5.6 to 6.5 researchers per 10,000 employees)
Efforts to increase innovation performance will further increase demand for HRST
EU R&D objective would require about half a million researchers.
Japan and Korea aiming to boost researchers and graduate enrollments, while development complementary skills
Will supply meet demand (numbers, skills?)
Demographic changes
Changing (waning?) interest in science and technology even as enrollments grow.
Patterns of international migration changing?

5. Driving innovation in service sector industries
Share of innovative firms, CIS3 Survey,
Services innovation driven by:
Acquisition of equipment and knowledge (especially IT)
Training & education (share of highly educated is twice that in manufacturing in many countries)
Intramural and external R&D (primarily in business services: computing, software, telecommunications)
Patterns differ by industry sector (e.g., finance versus business services)
Source: OECD Science, Technology and Industry Outlook 2004.

6. Responding to globalization: Foreign affiliates play larger role
Growth in output and employment in foreign affiliates (manufacturing),
Source: OECD Science, Technology and Industry Outlook 2004

7. Asian-Pacific STI: Different industry structures
R&D by size of firm
R&D by industry sector
Source: OECD, R&D Database, June 2005.

8. Different institutional role in R&D and innovation
By source of funding
By performer
Source: OECD Main Science & Technology Indicators, June 2005

9. R&D investments: US, Asia-Pacific and EU
Gross expenditure on R&D as % GDP
Source: OECD Main Science & Technology Indicators, June 2005

10. Differences in the performance of R&D
R&D in public research organisations as % GDP
R&D in the business sector as a % of GDP
Source: OECD Main Science & Technology Indicators, June 2005

11. Patenting rates increasing across the region, but significant difference remain
Triadic patent families per million population

12. Patenting linked closely to R&D spending

13. Direct government funding of business R&D
Government-funded business R&D as % of GDP ▲
US=0.44
Source: OECD STI Outlook 2004

14. Tax incentives becoming more generous
Rate of tax reduction for 1 unit of R&D spending, 2004.
(Calculated as 1 minus the B-index)
Source: OECD Science, Technology and Industry Outlook 2004.

15. Transition to a service economy?
Share of market services in total value added, 1980 and 2001
Source: OECD Science, Technology and Industry Outlook 2004.

16. Stimulating innovation in services
Share of innovative firms
Source: OECD, Enhancing the Performance of the Services Sector, 2005.

17. Human resources: how many researchers?
Researchers per 1000 employment
Total number of researchers in China = 811,000 in 2002, up from 471,000 in 1991.
Most recent figures for US, EU, Japan and Korea in 2001/2 were: 1.2 billion; 1.0 billion, 676 thousand, and 136 thousand, respectively
Researchers per thousand have increased in all Asia-Pacific countries, US, and EU.
Source: OECD Main Science & Technology Indicators, June 2005

18. Supplies of skilled human resources: Tertiary education
Share of tertiary-level graduates in total employment, by gender, 2003.
Source: OECD Education database, June 2005

19. Supplies of scientists and engineers
Share of S&E degrees in all tertiary level degrees
Percentage of S&E degrees awarded to women
Source: OECD Education Database, June 2005

20. Globalisation: a growing share of R&D is in foreign affiliates
Share of business R&D controlled by foreign affiliates

21. Where are US outward investments going?
Outward R&D investments, US$ millions
Outward investments growing in all major regions (in nominal terms)
Growth fastest in “rest of world” (5X)
China US$ 506M in 2000 compared to 5M in 1994
Singapore US$ 548M in 2000, compared to <50M in 1994
Motor vehicles, Radio/TV/Comms, Computing equipment and non-pharmaceutical chemicals are largest components
As a share of industry financed R&D, expenditures actually declined, from 12% in 1994; 10.8% in 2000).
Source: OECD Science, Technology and Industry Outlook 2004.

22. Reflecting increasing capabilities of other non-OECD countries
R&D as % of GDP
Combined R&D of China, Israel and Russia equalled 14.7% of OECD’s in 2001, versus 6.4% in 1995.
Patenting by non-Members has increased, but EU, Japan and US accounted for 92.7% of global patent families in 2000, down from 94.4% in 1991.
Most rapid growth in US outward R&D investments is outside EU, Japan and Canada
Source: OECD Science, Technology and Industry Outlook 2004.

23. National R&D priorities in Asia-Pacific countries
Australia
Environmentally sustainability; promotion and maintenance of good health; frontier technologies for transforming industry; safeguarding Australia.
Japan
Life science, ICT, environment; nanotechnology and materials.
Korea
Digital TV & broadcast; displays; intelligent robots; new generation automobiles; semiconductors; mobile communication; intelligent home networks; digital content & solutions; batteries; biomedicine.
New Zealand
Biotechnology; ICT, creative industries.
United States
Homeland security; networking and information technology; nanotech; priority areas of physics, biology of complex systems; climate, water and hydrogen.
Source: OECD Science, Technology and Industry Outlook 2004

24. Often linked to national plans/strategies
Australia
Backing Australia’s Ability
Strengthen ability to generate ideas, undertake research; accelerate commercialisation; develop & maintain skills
China
Revitalizing the Nation through Science and Education
Improve opportunities for market-based innovation to improve economic growth and performance
Japan
S&T Basic Plan
Boost economic effects and social benefits of intellectual assets
New Zealand
I3 Challenge
Define national needs, strengthen long-term research, extract greater commercial value
Source: OECD Science, Technology and Industry Outlook 2004.

25. Japan
Second S&T Basic Plan ( ) to establish a nation based on creativity of S&T.
Significant reforms to innovation system
Change in legal status of national universities and public research organisations
More competitive funding
Promotion of technology transfer from public research (1998 Law)
Intellectual assets and value creation—how to encourage firms to invest more in intellectual assets (R&D, patents, human resources, org. capital) to improve competitive performance.
IP Nation: strengthening of IPR rights and protection
Improving productivity and performance in Services.

26. Funding for priority fields in Japan
100 million yen

27. Korea Aim to double public expenditure on R&D between 2002 and 2007.
Established Innovation Headquarters (within Ministry of S&T) to coordinate innovation policy and R&D strategy.
Evaluation issues gaining in importance, especially as relates to identification of promising research fields.
Concerns regarding supplies of human resources in S&T, as student interest appears to be waning.

28. Australia Backing Australia’s Ability
Generate ideas and undertake research: Competitive grants; research infrastructure; National ICT research centre; tax concession.
Accelerate commercialisation: COMET programme, cooperative research centres; one-stop shop
Develop skills: programmes to improve S&T teaching
All of government approach: science and innovation ministerial council chaired by Prime Minister
AUD 1 billion per year 2006/7 – 20010/11
Comprehensive evaluation of all innovation policies underway.

29. New Zealand Growth and innovation framework I3 Challenge
focus on ICT, biotech and creative industries
Growth and innovation advisory board
“whole of government” approach to innovation policy
I3 Challenge
Defining national needs
Strengtehning long-term research capability
Extract greater commercial value
Reforms to university research
Performance-based Research Fund for universities
Centres of Research Excellence in areas of national interest
Research consortia (est. 2002/3) to match public and private sector R&D

30. China
Strategy of “Revitalizing the Nation through Science and Education” basis for substantial reforms
Restructuring of public research organisations
Transformation of R&D institutions into business enterprises and/or technical service organisations
Incorporation of large R&D institutions into large enterprises
Openness to international markets and technology
Foreign direct investment as key channel for technology transfer and upgrading of capabilities
Implications for IPR regimes
Developments in IPR policy
Considerable policy development related to ascession to TRIPS
Remaining issues related to enforcement

31. Overall assessment of China’s innovation system
R&D expenditures growing, but still low, especially in business sector.
Structure of R&D system improving, but system still not operating efficiently
Universities a small share of national R&D and conduct relatively little basic research.
Industry’s innovative outputs (patents, new products and services) low compared to R&D inputs.
Domestic enterprise sector weak contributor to innovation.
Mobility of human resources remains a concern, but educational output improving.

32. Large firms v. technology enterprises
Large and medium sized firms
Account for most of output and profits, as well as 37% of R&D.
R&D capabilities expanding, but declining R&D intensity.
R&D labs not operating at full capacity, under-utilised.
Output low compared to share of inputs, but improving
Technology enterprises
Start ups and spin-offs from government labs.
Plan to convert 4000 government institutes into tech enterprises.
Universities encouraged to establish enterprises.
Most focus on commercialising R&D
Technological strong, market oriented management.

33. Human resources for R&D
Total number of S&T workers growing, but low as share of total population
Share of scientists and engineers in S&T workforce has declined.
Education system promises to be source of workers
61% of undergraduates are in science and engineering
Graduate enrollments increasing; science and engineering accounts for 70% of masters and 80% of PhD students.
Brain drain remains a concern, although repatriation of students improving.

34. Policy challenges
Redefining role of government in innovation system--shift from government led to market led.
Improving innovation capabilities of business sector--through financial reform, absorptive capacity
Enhancing technology diffusion & commercialisation of R&D, while protecting science base.
Tapping into global knowledge networks related to science, technology, and personnel.
Framework conditions conducive to innovation: competition policy, IPR, financial stability, etc.

35. Related OECD Work STI Outlook 2004 (www.oecd.org/sti/sti-outlook)
Chapter 2 : Recent developments in STI policy
National responses to STI policy questionnaire
Innovation Policy and Performance (chapter on Japan)
Public-Private Partnerships for Research and Innovation: A Review of the Australian Experience (
Work with China
Chapter 9 of STI Outlook 2002: Science and Technology in China
Promoting IPR Policy and Enforcement in China (conference summary): An Emerging Knowledge-Based Economy in China? (
Starting innovation systems review of China
Upcoming National Innovation Systems reviews
New Zealand (2006)
Australia (?)
China ( )

36. STI Outlook 2001 Drivers of Growth
For more information. . .
STI Outlook 2004
STI Scoreboard 2003
STI Outlook 2001 Drivers of Growth