GOVERNMENT AND BUSINESS INNOVATION PARTNERSHIP IN DENMARK Jørgen Lindgaard Pedersen Department of Manufacturing Engineering and Management Technical University of Denmark April 25, 2007

2 1 SOME INFORMATION ON DENMARK  Inhabitants: 5.3 mio  Area (without Greenland and Faroe Islands): square km  GDP: 31,000 USD/capita  Agriculture & fishing: 3 per cent  Industry : 20 per cent  Construction : 7 per cent  Commercial services : 47 per cent  Public services : 23 per cent

3 2 DANISH INNOVATION IN A EU CONTEXT  EU countries Summary Innovation Index (SII) – level and growth rate

4 3 TYPES OF INNOVATION PARTNERSHIPS  Public and private partners establish or more or less formalized cooperation with explicit purpose to make innovations in a certain field (diagnostic methods for certain diseases, drugs for treatment of certain diseases, fuel cells for production of electricity, etc.).  All partners come with inputs (knowledge, test equipment, man power, financial resources etc.)  Distribution of benefits including IPR  Risk sharing agreements

5  Broad Spectrum Partnerships  Wind energy programmes  Biotech Development programmes  IT Development and Implementation programmes »Programme committee »Time limits »Budget limits »Many different purposes

6  Narrow Focused Project Partnership  IT project  New principles in construction of bridges

7 4 INNOVATION PARTNERS  Of the innovation active companies the following percentages had taken active part in projects with partners: 45 percent.  Knowledge service: 53 percent  Manufacturing: 38  The innovation partners were:  In Denmark: » 40 percent had private partner » 16 percent had public partner

8 5 SOME PUBLIC – PRIVATE PARTNERSHIP FIGURES FROM ICT  Private companies with ICT R&D activities in cooperation with a public knowledge institution (incl. GTS institutes): 51 per cent.  Public knowledge institution with cooperation with one or more private companies in Denmark: 90 per cent.  50 per cent had cooperation with 4 or more private companies.  40 per cent had cooperation with at least one company abroad

9 6 R&D IN DENMARK 1980, 2002, 2005 AND O (Barcelona) Public R&D in per cent of GDP Private R&D in per cent of GDP Total R&D in per cent of GDP

10 7 THREE IMPORTANT R&D FIELDS IN DENMARK TODAY HealthICTEnergyOtherTotal Public cluster R&D in per cent of total public R&D Private cluster R&D in per cent of total private R&D Public + private cluster R&D in per cent of total R&D

11  The health sector includes:  Pharmaceutical industry (insulin etc.)  Medico industry (hearing aid etc.)  The energy sector includes:  Windmill, pump industry, insulation  Industrial enzymes (75 per cent of world market)  Other includes:  Social sciences  Humanistic sciences  Other natural sciences

12 8 THE DANISH WINDMILL INDUSTRY – A BROAD SPECTRUM PARTNERSHIP  I shall tell the windmill story in respect of the innovation partnership dimension  The first energy crisis 1973/74  Political stalemate on nuclear power after twenty years´fight  Majority of population were against majority of parliament in energy questions  Oil and natural gas could start up from Danish part of North Sea  People in general and strong NGO’s wanted use of renewable energy sources (wind, waves, biogas, ethanol etc.)

13  What to be done from the mainstream political system in the end of 1970s ?  The main goal – a certain degree of self - sufficiency  Incentives for insulation of buildings and processes  The electricity distribution companies shall buy surplus electricity from windmill owners  The price paid to the mill owners higher than price on conventional electricity (infant industry, clean energy)  Establishment of National Windmill Test Station at Risoe (the center of nuclear power competences and interests in Denmark!)

14 9 AFTER ESTABLISHMENT OF THE WINDENERGY CLUSTER  60 per cent of the productivity gains in production of windmill electricity comes from economics of scale! So permanent growth in windmills are important.  The best locations for windmills on land have been used. Therefore off shore wind parks are relevant.  Most of the original price premium paid to mill owners has been taken away.  New and other forms of ownership than individual and cooperative have been allowed – e.g. electricity companies can own windmill parks.

15  38 per cent of the world production of windmill capacity  Vestas has 30 per cent of the world production  21,000 people employed (directly and indirectly)in Denmark  3 billion € export  20 per cent of Danish electricity production comes from windmills

16 10 WHAT CAN BE LEARNED?  A problem which could not be solved by one actor (politicians, business or grassroots) alone. A compromise was a necessity.  During so long a timespan (1973 – 2007) changes in aims, instruments and actors take place.  The self – suffiency has been supplemented with other aims (environment, industrial policy and foreign trade policy)  Only the premium paid for diminishing carbondioxide is today a relevant financial subsidy (but naturally it is decisive that energy distribution companies shall buy excess eelctricity)

17  Wind energy has been transformed into big business.  But the public in general is still very consciousness about the game with strong economic and political interests connected to fossile energy and nuclear power.  Therefore wind energy (and other renewable energy technologies) continue to be high on the political agenda.

18 11 WHAT CAN THAILAND LEARN?  Identify your national priority fields in innovation subjects!  Maybe it is basic tasks as provison of clean water, sanitation and production of rice but done in a better way than it has been before.  The energy field will probably be one of the most important fields to focus on because lots of energy can be saved in production processes including domestic work as washing of clothes. Developing of industrial enzymes can be a fruitful strategy.  Which renewable natural resources are disposable in Thailand? (wood from forests where sustainability can be used).

19  Maybe it will be reasonable to take part in/establish network with relevant public and private actors from different parts of the world.  Try to establish long term contact with trustworthy partners to minimize transaction costs (contract costs).