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1 Developing Poles of Excellence: Partnerships between Research and Business John Dryden Deputy Director for Science, Technology and Industry OECD EC Conference.

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Presentation on theme: "1 Developing Poles of Excellence: Partnerships between Research and Business John Dryden Deputy Director for Science, Technology and Industry OECD EC Conference."— Presentation transcript:

1 1 Developing Poles of Excellence: Partnerships between Research and Business John Dryden Deputy Director for Science, Technology and Industry OECD EC Conference on Regions for Economic Change Brussels, June 2006

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3 3 3 Outline The importance of innovation – its link to economic growth. Policies to foster innovation Linking science to industry: –The growing importance of interactions –Policies and tools –The role of public-private partnerships –Innovative Clusters Conclusions

4 4 4 The importance of innovation Innovation is the key driver of economic growth - new and improved products, processes and services account for the bulk of economic growth since the Industrial Revolution. Innovation is of growing importance to economic activity in OECD countries – global competition is forcing all countries to upgrade their economic activity and move up the value chain. A growing number of countries recognise the importance of innovation: –Lisbon strategy in the EU –Policy strategies in the US, Japan and Korea to strengthen innovation –Growing policy focus outside the OECD, notably in China. Innovation has become more important to economic policy making – e.g. OECD Going for Growth report.

5 5 5 Going for Growth 2006

6 6 6 Welfare Economic growth Productivity growth Employment growth Innovation Quality of labour Capital deepening R&D FDI R&D & international R&D spillovers DomesticR&D Science Base

7 7 7 R&D Intensity (2003) Gross domestic expenditure on R&D as a percentage of GDP OECD STI Scoreboard 2005

8 8 8 Countries that are successful in innovation share common characteristics Good fundamentals, including well-functioning labour and product markets and sufficient international openness Above average improvement in innovation due to: –Strong investment in knowledge (education, ICT and R&D) –Success in turning new technology, notably ICT, in stronger productivity growth and process innovation, e.g. in services. –High share of business in financing R&D –A diversified base of innovators, with a greater role for small technology- based firms, thanks inter alia to a supportive financial system –Solid regional pillars of national development, i.e. vibrant innovative clusters –High level of networking among innovators, especially strong linkages between science and industry Some examples of countries with high correlation of innovation and MFP growth: Australia, Finland, United States.

9 9 9 Going for Growth 2006

10 10 Country Notes Going for Growth 2006

11 11 Innovation Policy Innovation requires strong fundamentals (eg macro stability) –But strong fundamentals are not necessarily sufficient – a range of market and system failures may limit innovation Innovation policy addresses these problems, e.g.: –Innovation may be held back by barriers to interaction between partners in the innovation process, e.g. between clients and firms, between universities and firms, at the international level, etc. Some key trends in innovation policy in recent years: –Reform of universities and public research organisations – greater autonomy, flexibility and focus on performance. –Growing policy efforts to foster greater investment in business R&D and innovation (eg, R&D tax credits, numerical targets) –Increased emphasis on networking and co-operation. –Growing focus on international S&T co-operation. –Greater attention to policy evaluation.

12 12 Industry-science links are of growing importance in the innovation process Increasing scientific content of innovation: –Growing importance of science-based technologies (electronics, new materials, biotechnology, nanotechnology, advanced analytical and measurement methods) –ICTs have accelerated and intensified the role of codified knowledge, resulting in a move away from craft-based technology to technology based on more formal bodies of knowledge (including science) in many traditional engineering sectors Changes in business R&D strategies: Open Innovation: –Focus on core business and short to medium term research agenda –Individual products and processes incorporate an increasing range of technologies –Growing need for knowledge from outside the firm.

13 13 R&D Linkage Public to PrivatePrivate to Public OECD STI Scoreboard 2005

14 14 Science-industry links have developed rapidly in some countries (Average number of scientific papers cited in patents taken in the US, by country of origin)

15 Weak or no linkages Equipment supplier dominated networks Marketing-oriented networks involving users and competitors Marketing-oriented networks involving users and suppliers of equipment & components Marketing-oriented networks involving users competitors suppliers of equipment & components Complete innovation networks including universities and public laboratories An example: Innovation networks in Europe Types of innovation networks, % share based on a survey of eight European countries

16 16 SCIENCE NDUSTRY INDUSTRY Non-conducive framework conditions (e.g. barriers to entrepreneurship) Ineffective intermediaries Deficient legal and regulatory framework Low propensity to innovate and lack of absorptive capacity Lack of qualified S&T personnel Short time horizon of investment in innovation Inappropriate researchers incentives Regulatory obstacles to researchers mobility and entrepreneurship Specialisation in research fields not relevant to business Speed-up the acquisition of new knowledge Increase the innovation capacity of firms Upgrade innovative networks and clusters Secure and diversify the funding base Provide guidance for research priorities Improve research tools and capabilities Governments can help address obstacles to Industry-science links

17 17 Connecting science to innovation – interactions and policies An efficient science-industry interface involves : –Co-operation (e.g. joint laboratories) –Well-functioning markets for knowledge – involving spin-off firms, mechanisms for patenting and licensing, research contracts and labour mobility between science and industry –Efficient bridging institutions and platforms, e.g. incubators, science parks, intermediaries, clusters. –Social and professional networks, e.g. through joint publication, conferences and expos, informal contacts –Flows of graduates from science to industry Policies to promote industry-science relationships –Entrepreneurship (new technology-based firms, including spin-offs) –Patenting (licensing IPR that results from publicly-funded research) –Co-operation (joint projects involving scientists and innovators) –Public-private partnerships for research and Innovation (P/PPs)

18 18 Entrepreneurship (new technology-based firms, including spin-offs) l Patenting (licensing IPR that results from publicly-funded research) l Co-operation (joint projects involving scientists and innovators) l Public-private partnerships for research and Innovation (P/PPs) Policies to promote industry-science relationships Policies to promote patenting by PROs Policies to support NTBFs, including spin-offs Policies to strengthen cooperation within innovation systems Framework conditions (regulations, clusters) Public-private partnerships

19 19 P/PPs for innovation Definition: Any formal relationship or arrangement over a fixed-term/indefinite period of time, between public and private actors, where both sides interact in the decision-making process, and co-invest scarce resources such as money, personnel, facility, and information in order to achieve specific objectives in the area of the area of science, technology, and innovation A public-private partnership -- as opposed to more casual, arms length or hierarchical relationships – is characterised by the following: Institutionalisation Government as a partner. Shared objectives and a clearly defined public interest Active involvement and co-investment of resources

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21 21 Public-private partnerships are of growing importance P/PPs are expanding because they can : provide effective platforms for pre-competitive R&D help build innovative networks in new multidisciplinary research fields (e.g. nanotechnology, genomics) But also because they can contribute to other objectives: increase the impact of public R&D funding on business R&D and business behaviour (e.g. changes in the type or orientation of research) help create new avenues for commercial spill-overs from public research help link SMEs to scientific research increase synergies between regional innovation systems P/PPs play an increasing role within the innovation policy tool-kit of most OECD countries

22 22 ØP/PPs: definition, typology and policy rationale ØOverview and monitoring of national initiatives ØPeer-reviews of national PP/P programmes §Five case studies ü Cooperative Research Centres in Australia ü Kompetence Centres in Austria ü National Networks of Technological Research in France ü Leading Technology Institutes in the Netherlands ü Technology Centres and Concerted R&D programmes in Spain ØCountry-specific evaluation §OECD-Russia project OECD work on Public-Private Partnerships for Innovation

23 23 Type of research Rather appliedPre-competitive Type of P/PP Mission- oriented Some Australian national benefits CRCs Some projects in some French RRITs Some Australian national benefits CRCs Some French RRITs Market- oriented Australian Business Development CRCs Most Austrian Kind/Knet Most Spanish Technological Centres and Concerted Projects Australian Industrial collaboration CRCs Most Austrian Kplus Most French RRITs Dutch LTIs P/PP PROGRAMMES IN THE OECD CASE STUDIES P/PP programme AustraliaCo-operative Research Centres Program (CRCs) Austria Kplus and Kind/Knet France Research and Technological Innovation Networks (RRITs) Netherlands Leading Technology Institutes (LTIs) SpainTechnological Centres (TCs) and Concerted Research Projects

24 24 Key factors of success for P/PPs Long-term commitment from both government and industry, based on a shared vision Achieve critical mass but also deep reach within the National Innovation System (e.g. complement large P/PPs with support to smaller research teams). Build on existing networks but do not neglect areas where potential actors are still dispersed (e.g. in multidisciplinary research) and/or inexperienced. Implement efficient/competitive selection and steering/financing mechanisms that ensure a sustainable balance between public and private interests Other areas that require attention: –Organisation and management of such projects. –Evaluation of such efforts - the key to learning and improvements in policy.

25 25 Stronger industry-science links may also develop through innovative clusters policies Cluster policies involve: –Building a shared vision, based on sound diagnostics about starting point, and ensuring a dialogue between industry and government in defining and implementing the strategy –Shifting from « top down picking winners » to « backing local leaders » –Improving availability and access to key resources (skilled people, R&D, physical and « intangible » infrastructure, smart money) –Leveraging regional resources through interregional co-operation and participation in nation-wide or international innovation initiatives –Building on existing innovation networks, but keeping incentive schemes open and attractive to outsiders, especially new firms –Using high leverage instruments (stimulate but not crowd out private initiative; no silver bullet but a set of well coordinated instruments)

26 26 OECD STI Scoreboard 2005 An indirect measure of innovative clusters

27 27 Such policies need careful consideration Cluster policies have sometimes focused too much on «High-tech» or Manufacturing – but knowledge- intensive services are often of great importance They have sometimes focused exclusively on applied research, ignoring the need for basic research and strong capabilities (free riding model) They have sometimes led to the building of knowledge cathedrals in the desert, instead of building on existing networks They have sometimes been captive to allies of past successes, ignoring new players. References: OECD, 2001, Innovative Clusters. Drivers of National Innovation Systems; OECD, 2001, Innovative Networks. Co-operation in National Innovation Systems.

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29 29 Conclusion Countries are focusing their efforts on improving science - industry links, which have many dimensions and require a broad spectrum of policies Improving science - industry links requires a good understanding of demand and supply factors – top-down approaches are rarely effective. Fostering links also requires finding a balance between different aims of public policy with regard to scientific institutions, e.g. long-term scientific research and/or being relevant to business. Some good practices have been developed in OECD countries, but this field continues to change and good practices will continue to evolve. So, what is the role of the European level in fostering P/PPs for innovation, in a world of increasing globalisation in high-value added activities, including R&D, and increasing innovation policy activity at regional and national levels? What can be done to avoid a repeat of past errors such as trying to pick winners (e.g. too many attempted centres of excellence) in a layered policy environment (regional, national, EU)?

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