1. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 1 The emerging role of Public-private partnerships in Spanish S&T and innovation policies Luis Sanz-Menéndez Ministry of Education and Science CSIC Institute for Public Goods and Policies OECD Working Party of Senior Budget Officials Symposium on Evaluating Innovative Approaches to Public Service Delivery Madrid, 30-31 October 2007

2. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 2 Outline of the presentation PPPs in the context of Research and Innovation Policies Features of the research and innovation system Former PPPs initiatives prior 2004 OECD Review of the PPPs in Spain (2004) Background and rationales for new PPPs Responses to the OECD Review: CENIT

3. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 3 The context of research and innovation policies confronting PPPs Evolution and changing targets of science, technology and innovation policies Research direct performance Mission oriented and applied technologies Indirect measures (incentivating private investments) Production, diffusion and utilization of knowledge as central factors for economic growth, social welfare and sustainability

4. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 4 Profiling the Spanish Innovation System 0 50 100 150 200 250 300 350 400 450 500 GDP per capita Annual growth of GDP Annual MFP growth Intensity of R&D expenditures Intensity of business R&D expenditures Intensity of public R&D expenditures Population of professionals and technicians Population of business researchers Graduation rate at PhD level in S&E Scientific and engineering publications Share of S&E articles in life sciences Share of S&E articles in physical sciences Density of innovative firms Concentration of "triadic"patent families Business funding of public R&D Business funding of higher education R&D Firm co-operation with universities Firm co-operation with government Breadth of international coauthorship ties Share of patents with foreign co-inventors Contribution of foreign affiliates to R&D Intensity of venture capital investments Share of technology intensive exports Performance range of OECD countriesPerformance range of G7 countriesSpain Macro-economic performance R&D activities Human resources in S&T Scientific output Innovative output Science-industry linkages International linkages Technological entrepreneurship & industrial structure

5. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 5 Situation and evolution of R&D and innovation in Spain R&D effort still low but growing fast, GERD/GDP: 1.10% (2003); 0.82% (1997) Industry financed R&D also growing [48,4% (2003); 44,7% (1997)], but still far from the EU average Significant contribution of business to the funding of HERD and GOVERD

6. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 6 Share of HERD and GOVERD financed by industry Spain Total OECD EU-15 0.0 2.5 5.0 7.5 10.0 12.5 19811984198719901993 19961999

7. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 7 Situation and evolution of R&D and innovation in Spain Innovative firms: 20,6% (2002), but improving Innovative firms in Spain cooperate in innovation less than in other European countries Size of companies is positively correlated with innovation cooperation Suppliers are the main source of innovation information for SME, while Universities play a significant role for larger companies

8. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 8 Innovative firms cooperating in innovation (%), 2000

9. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 9 Challenges and opportunities of the Spanish innovation system Industrial structure is dominated by services, low and medium technology industries and SMEs PROs (specially universities) are the biggest knowledge producers and a reservoir of S&T capabilities (70% of all researchers)

10. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 10 Other features of the R&D and innovation policy environment Institutional fragmentation of S&T policy domains: Various Ministries of the central government involved Regional governments (17) also play a very active role in S&T and innovation policies S&T and innovation action is developed under then umbrella of the National R&D and Innovation Plan, resembling EU RTD FP

11. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 11 Policy targets and implementation Therefore promoting technology transfer from PROs to industry and fostering sustained cooperation between industry and science has been part of the underlining rationales and explicit objectives of S&T and innovation policies …but: historically too much fragmentation in the programs and policy initiatives, because of the dominant bottom-up policy model

12. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 12 Types and cases of PPPs for R&D and innovation: 1. Public funding for RTD&I in a context of increasing relevance of PP collaboration 2. Constructing and supporting a common pool of resources for technological services and innovation and under PPP 3. Competence RTD centers in specific technology areas 4. Steering Public research activities under PPPs 5. Clustering and Agglomeration strategies under PPPs 6. Changing the R&D regulatory environment to encourage PPPs and blurring boundaries between public and private 7. New commercialization, start ups and spin off strategies of PROs 8. PPPs for strategic private funding of RTD of general interest areas

13. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 13 General features of the PPPs for research and innovation before 2004 Small size of the projects supported Limited timeframe of the cooperation Multiple instruments and Fragmentation Stretching of traditional instruments of public policy Bottom up initiatives from the societal actors

14. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 14 As a way of balance before 2004 Many initiatives and experiments, but not canonical PPPs programs Some of the most interesting cases are bottom-up initiatives, but have been taken on board by governments

15. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 15 Problems and opportunities in 2004 (I) A new, or an evolved, policy rationale is driving the innovation system into more PPPs (new conditions for a more intelligent public funding) New initiatives from below (firms and PROs) and experiments that implies a societal demand of PPPs approaches are emerging Political opportunity: 25% of R&D budget increase expected next 4 years.

16. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 16 Problems and opportunities in 2004 (II) A more pro-business view of S&T and innovation policies favours the development of PPP, but the institutional architecture of S&T&I policies (Ministries of Education & Science versus Industry & Technology) often creates important constraints because of the customer-client view of the Ministries in the context of distributive politics

17. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 17 Problems and opportunities in 2004 (III) International diffusion of PPPs for innovation policy is a relevant factor Need of policy entrepreneurs and strategic research actors (with negotiating skills) to overcome the pervasive battles over distributive politics within inappropriate institutional environments and to built an advocacy coalition for PPPs OECD could play a role in shaping the outcome

18. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 18 The impact of the OECD evaluation End 2003: the Spanish authorities requested the cooperation from OECD to evaluate the current practices of PPP for Research and Innovation (CSTP-TIP) The Review was developed in 2004 and published early 2005. Mid 2005: The Spanish Government launched (in the context of National Reforms Program) INGENIO 2010, including the CENIT Programme (Strategic Consortia for Technological Innovation)

19. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 19 OCDE(2005): …the Spanish system of research and innovation has now reached a sufficient level of sophistication for a new approach to the promotion of science-industry relationships to be successfully experimented […] adapting the model implemented in diverse OECD countries to the Spanish conditions. AustraliaAustriaFranceThe NetherlandsSweden Co-operative Research Centres (CRCs) Programme Kplus, Kind/Knet Research and Technological Innovation Networks (RRITs) Leading Technology Institutes (LTIs) Competence Centers Other countries experiences CENIT (Consorcios Estratégicos Nacionales de Investigación Tecnológica) Results of the OECD PPP review

20. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 20 CENIT Background and Rationale (1) Strong role of universities and PRO in the Spanish Research and Innovation system Industrial structure: large share of low-medium tech industries, large share of SMEs, large share of MNCs, Large share of service economy

21. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 21 CENIT Background and Rationale (2) Fostering sustained cooperation between industry and science, that is... over a longer period (min. 5 years)... on an institutional basis (but flexible)... with an ambitious research programme (significant budget)

22. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 22 Goals of PPPs for Research and Innovation Encouraging existing firms to engage in more radical types of innovation Promoting technology-based start-ups Increasing the role of the Public Research sector in providing a research base to be utilized co-operatively with industry...but: multi-purpose programmes with many goals - problem of target setting!

23. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 23 Description of the Programme – CENIT since 2005 fostering long-term collaboration between enterprises and public research institutions Despite some technology areas mentioned, no ex-ante setting of thematic priorities Competitive selection process (public calls) First call subsidies for 200 M (16 projects) Second call: Subsidies for

24. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 24 TRADITIONAL INSTRUMENTS One shot projects Small duration (1-3 years) and limited scope Support mainly based on soft loans Low commercial risk RTD Limited behavioral additionality and leverage of private investments CÉNIT Thematic lines of research Long duration and bigger size Bigger role of public subsidies Research with more commercial risk Bigger leverage of private funding and behavioral additionality National R&D&I Plan 2001-2003: 60K subsidy + 116K repayable loans per projects CENIT Projects: 10-20 Million euros per project CENIT PP collaboration programme versus previous instruments

25. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 25 Long Term Research Contractual Agreements between firms and research groups in PROs for a joint research programme Minimum size: 4 firms (2 SME) and 2 PROs Minimum duration: 4 years extendible Minimum budget of the project: 5 M euros per year Financial rules: i) Minimum contribution of private sector: 50% ii) Minimum participation of PROs and TICs: 25% Expected Budget of the CENIT programme: 1,000 M euros in 4 years (half private). CÉNIT Programme: General features

26. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 26 Elements of good practice (1) Implementing a sound concept of PPPs based on international experience Targeting systemic failures instead of specific sectors Applying a flexible, bottom-up approach Clear governance structure (caveats!) Ensure quality through selection criteria and processes

27. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 27 Elements of good practice (2) Long-term commitment and additionallity (trust, behavioral additionality) Clear delineations to other sources of public support Catalyst of change for setting new standards in evaluation and policy learning Diversified portfolio and broad participation Linkages and visibility

28. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 28 Challenges of PPPs instruments for RTD and innovation ins Spain Synergies and overlaps with other instruments? How many new projects? Future after the funding? Governing structures of the projects Sustainability and transformation into joint research centers Difficulties of measuring efficiency and additionality. Evaluation

29. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30-31 October 2007 29 Thanks LSanz@iesam.csic.es Or Luis.Sanz@mec.es