1. 1 Enhancing Innovation Capacity Tugrul Temel Department of Economics and Development Research Institute Tilburg University April 5, 2007

2. 2 Outline Background and Literature Background and Literature Conceptual framework Conceptual framework The problem situation The problem situation Applications Applications The way forward The way forward

3. 3 Background Subject is Information & Knowledge (I-K) I-K in growth models & innovation systems I-K in growth models & innovation systems Institutions & ICT use for innovation capacity development Institutions & ICT use for innovation capacity development Innovation capacities for interactive learning Innovation capacities for interactive learning

4. 4 Literature The Solow-Swan model (1956) The Solow-Swan model (1956) Endogenous growth (Romer 1990) Endogenous growth (Romer 1990) -R&D as a choice variable -In R&D-based models, innovation drives growth -R&D externalities increases economy-wide knowledge stock Evolutionary growth (Nelson, Winter 1974) Evolutionary growth (Nelson, Winter 1974) -role of institutions, path-dependency, uncertainty -dynamic firm-specific capabilities rather than R&D -difficulty in measuring capacities at the aggregate level

5. 5 Literature National Innovation Systems Freeman 1987; Lundvall 1992; Nelson 1993; Patel and Pavitt 1994; Metcalfe 1995 Common points - -organizations interact in knowledge or technology generation, diffusion & use - -rules & regulations pattern their interactions

6. 6 The Problem Situation Evolution -Global/regional networks for I-K exchange -From individual orgs to networks of orgs -Agr research systems viewed within innovation systems Implications for individual orgs -Link innovation strategies to wider S&T policies -Establish partnerships with private enterprises -Exploit ICT for better interaction with I-K networks

7. 7 The problem situation I-K flow among a broad range of actors P R B F I M Pr C X Linkages between any two organizations FXLinkage between Farming and External organizations Organizations outside NARS: Finance (B) Input Supply (I), Marketing (M), Agro- processing (Pr), Consumption (C) Organizations in NARS: Policy (P), Research (R), Farming (F), External (X) FX

8. 8 Conceptual Framework InstitutionsICT use Innovation Capacity Facilitate

9. 9 Agricultural Innovation System (AIS) A set of public and private organizations that jointly and/or individually lead to valuable changes in agriculture when information & knowledge are made available and are put into socially and economically productive use.

10. 10 (1)Agricultural POLICY, legislative, regulatory structure - Ministries, regulatory & enforcement agencies (2)Agricultural Science & Technology KNOWLEDGE Base - Agr Univ, Res-Ext orgs, NGOs for indigenous knowledge input suppliers, marketing agents, (3)MARKET System - Farmers, Agro- processors, input suppliers, marketing agents, consumers (4)EXTERNAL Sector - Donors, International R&D Orgs Goal: to reduce poverty & food insecurity Components of an AIS

11. 11 Assumptions of AIS I-K: central to economic growth & development I-K: central to economic growth & development Interactions: critical for I-K flow & org. learning Interactions: critical for I-K flow & org. learning Learning: as important as direct investment in R&D Learning: as important as direct investment in R&D Innovations: take place everywhere in society Innovations: take place everywhere in society

12. 12 Innovation Capacities Absorptive capacity is strong if I-K receivers are competent. Absorptive capacity is strong if I-K receivers are competent. Linkage capacity is strong if actors in AIS are linked and interact. Linkage capacity is strong if actors in AIS are linked and interact. Competition capacity is strong if actors invest in human capital and learning. Competition capacity is strong if actors invest in human capital and learning.

13. 13 Institutions rules of the game or humanly devised constraints that structure human interaction (North, 1996)

14. 14 Institutions create an enabling environment for capacity development secure the benefits from investment in I-K secure the benefits from investment in I-K improve rate of I-K generation, diffusion, use improve rate of I-K generation, diffusion, use shape the innovation process by managing - conflicts (i.e., IPR, enforcement) - information supply (i.e. labeling regulations) - uncertainty (i.e. governance of natural resources)

15. 15 ICT facilitates capacity development ICT use enhances the rate of I-K absorption, exchange and use. ICT penetrates into the innovation system when absorptive, linkage & competition capacities are strong.

16. 16 Mapping I-K flow in the AIS Mapping I-K flow in the AIS Components: policy (P), research (R), education (E), credit (C), extension & information (I), private enterprises (M), farming (F), consultancy (D) and external (X) Components: policy (P), research (R), education (E), credit (C), extension & information (I), private enterprises (M), farming (F), consultancy (D) and external (X) Characterizing the AIS Characterizing the AIS Policy recommendations Policy recommendations Application 1 Information and Knowledge Flow

17. 17 Application 1 Information and Knowledge Flow P R B F I M Pr C X Linkages between any two organizations in the AIS FXLinkage between Farming and External organizations Organizations outside NARS: Finance (B) Input Supply (I), Marketing (M), Agro- processing (Pr), Consumption (C) Organizations in NARS: Policy (P), Research (R), Farming (F), External (X) FX

18. 18 Application 1 Cause-effect structure of the AIS

19. 19 Application 2 ICT use in Georgia Goal: assess ICT infrastructure & use to facilitate AIS for HV sector Goal: assess ICT infrastructure & use to facilitate AIS for HV sector Objective: identify pivotal orgs to establish an IEN Objective: identify pivotal orgs to establish an IEN Rationale: weak market participation due to weak I-K exchange Rationale: weak market participation due to weak I-K exchange Constraints: Government is not transparent; pluralistic information flow has not been a tradition Constraints: Government is not transparent; pluralistic information flow has not been a tradition Data collection: questionnaire & Needs Assessment Interviews Data collection: questionnaire & Needs Assessment Interviews

20. 20 Application 2 Information Exchange Network P R B F M Pr C X FX PM Information Exchange Network Linkages between any two organizations in the AIS Additional organizations in the AIS Organizations in NARS I Information flow by: Face to Face Meetings; Mass Media (Radio, Newspapers, TV, Magazines); Internet/Web; Telephony, Call Centers

21. 21 So far a methodology developed - To characterize the AIS - To assess ICT use Now the challenge is to assess - the influence of I-K related institutions and ICT use on innovation capacity - the effect of changes in innovation capacity on the functioning of the innovation system The way forward

22. 22 Survey Design & Measurement Survey of organizations in the innovation system Survey of organizations in the innovation system – Absorption, linkage, competition capacities - skills and qualifications of human resources, networking capacity, ICT use in I-K exchange − Org innovation – motivation for the innovation concerned; resources used; consequences for organizational performance − Org linkage – nature (codified/tacit), type (coop./ partnership), strength, cost (free/subscription) of interaction with I-K sources (open/limited) − Characteristics of I-K flow - direction, nature (codified/tacit), strength & means of I-K transfer (capital goods, new employees, patents, licenses) − Perceived degree of influence - Org A is said to influence org B if the I-K originating from A motivates or is used in B’s innovation activities Apply concepts and principles of systems analysis & graph theory Apply concepts and principles of systems analysis & graph theory Econometrics for estimating ICT’s impact on learning/org change Econometrics for estimating ICT’s impact on learning/org change

23. 23 Thank you…