Presentation on theme: "John Dryden Deputy Director for Science, Technology and Industry OECD"— Presentation transcript:
1 Developing Poles of Excellence: Partnerships between Research and Business John DrydenDeputy Director for Science, Technology and IndustryOECDEC Conference on Regions for Economic ChangeBrussels, June 2006
3 Outline The importance of innovation – its link to economic growth. Policies to foster innovationLinking science to industry:The growing importance of interactionsPolicies and toolsThe role of public-private partnerships“Innovative Clusters”Conclusions
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 EUPolicy strategies in the US, Japan and Korea to strengthen innovationGrowing policy focus outside the OECD, notably in China.Innovation has become more important to economic policy making – e.g. OECD Going for Growth report.
6 FDI R&D & international R&D spillovers WelfareEconomic growthEmployment growthProductivity growthInnovationQuality of labourCapital deepeningR&DFDI R&D & international R&D spilloversDomesticR&DScience Base
7 R&D Intensity (2003)Gross domestic expenditure on R&D as a percentage of GDPOECD STI Scoreboard 2005
8 Countries that are successful in innovation share common characteristics Good fundamentals, including well-functioning labour and product markets and sufficient international opennessAbove 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&DA diversified base of innovators, with a greater role for small technology-based firms, thanks inter alia to a supportive financial systemSolid regional pillars of national development, i.e. vibrant innovative clustersHigh level of networking among innovators, especially strong linkages between science and industrySome examples of countries with high correlation of innovation and MFP growth: Australia, Finland, United States.Success in innovation, or more to the point, the quantity of innovation is usually measured by innovation surveys, patent statistics, estimates of MFP growth, etc. Though none of these measures is nearly perfect.“The very basic definition of an industry cluster is ‘geographical concentrations of industries that gain performance advantages through co-location (Doeringer and Terkla 1995, pg.225).’ This definition of clusters is similar to that of agglomeration economies, but in fact, it is within industry clusters that agglomeration economies are likely to be observed. Beyond the basic definition, however, there is little consensus on how to define an industry cluster.” From ‘Industry Cluster Literature Review’, Jessica LeVeen, Urban and Regional Development course syllabus, U. of N. Carolina, March 1998.
11 Innovation PolicyInnovation requires strong fundamentals (eg macro stability)But strong fundamentals are not necessarily sufficient – a range of market and system failures may limit innovationInnovation 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.Innovation Policy Recommendations On The EU Area(From OECD “Going For Growth 2006”)Main assessment: Despite progress in recent years, innovation performance in the European Union, as measured by R&D and patent intensities, remains lower than in Japan and the United States.Review R&D spendingRecommendation: Monitor R&D spending at the Community level to give priority to projects that have the greatest spill-over effects.Remove barriers to tradeRecommendation: Remove remaining cross-border barriers in goods and especially services marketsas they undermine the diffusion of innovations and hamper the growth of firmsImplement a patent systemRecommendation: Introduce a Community Patent and take steps to make the patent system moreaccessible to SMEs.Increase competition in public procurementRecommendation: National research grant competitions should be made subject to the Communityprovisions for cross-border public procurement.
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 sectorsChanges in business R&D strategies: “Open Innovation”:Focus on core business and short to medium term research agendaIndividual products and processes incorporate an increasing range of technologiesGrowing need for knowledge from outside the firm.OPEN INNOVATION involves extensive use, by firms or other participants in the R&D process, of research results originating outside their own organisational boundaries. One can identify several dimensions in the open innovation discussion:new trends an issues in the acquisition of external technology through such – traditional - means as licensing, corporate VC, collaborative research, etc.economic implications of growing use of non-proprietary technologies, especially in ICT products, and public pressures for greater access to ICT contentgrowing use of research results from abroad and implications for NISThere are many channels by which firms aim to access external innovation/knowledge/etc.: collaborative R, funding of external R, inward licensing, acquisitions, supply chains. the link to the "other" kind of openness is whether the sourcing of external knowledge is done in a proprietary/transaction based manner, or in an open/free manner.
13 R&D Linkage Public to Private Private to Public OECD STI Scoreboard 2005
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 An example: Innovation networks in Europe Types of innovation networks, % share based on a survey of eight European countriesComplete innovation networksincluding universities and public laboratories19.1Marketing-oriented networksinvolving users competitors suppliers of equipment& components21.9Marketing-oriented networksinvolving users and suppliers of equipment & components15.8Marketing-oriented networks involving usersand competitors16.0Equipment supplierdominated networks14.4Weak or no linkages12.9
16 Governments can help address obstacles to Industry-science links Non-conducive framework conditions (e.g. barriers to entrepreneurship)Ineffective intermediariesDeficient legal and regulatory frameworkSpeed-up the acquisition of new knowledgeIncrease the innovation capacity of firmsUpgrade innovative networks and clustersSecure and diversify the funding baseProvide guidance for research prioritiesImprove research tools and capabilitiesISR: Industry-Science RelationshipInappropriate researchers’ incentivesRegulatory obstacles to researchers’ mobility and entrepreneurshipSpecialisation in research fields not relevant to businessLow propensity to innovate and lack of absorptive capacityLack of qualified S&T personnelShort time horizon of investment in innovation
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 industryEfficient bridging institutions and platforms, e.g. incubators, science parks, intermediaries, clusters.Social and professional networks, e.g. through joint publication, conferences and expos, informal contactsFlows of graduates from science to industryPolicies to promote industry-science relationshipsEntrepreneurship (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 Public-private partnerships Policies to promote industry-science relationshipsEntrepreneurship (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)NTBFs: New Technology-Based FirmsFramework conditions (regulations, clusters)Policies tostrengthencooperation withininnovationsystemsPolicies tosupportNTBFs, including spin-offsPolicies topromotepatenting byPROsPublic-private partnerships
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:InstitutionalisationGovernment as a partner.Shared objectives and a clearly defined public interestActive involvement and co-investment of resources
20 There are many ways to science to innovation There are many ways to science to innovation. This chart depicts the principal mechanisms. The vertical axis depicts increasing levels of complexity and formalisation.
21 Public-private partnerships are of growing importanceP/PPs are expanding because they can :provide effective platforms for pre-competitive R&Dhelp 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 researchhelp link SMEs to scientific researchincrease synergies between regional innovation systemsP/PPs play an increasing role within the innovation policy tool-kit of most OECD countries
22 OECD work on Public-Private Partnerships for Innovation P/PPs: definition, typology and policy rationaleOverview and monitoring of national initiativesPeer-reviews of national PP/P programmesFive case studiesCooperative Research Centres in AustraliaKompetence Centres in AustriaNational Networks of Technological Research in FranceLeading Technology Institutes in the NetherlandsTechnology Centres and Concerted R&D programmes in SpainCountry-specific evaluationOECD-Russia project
23 P/PP PROGRAMMES IN THE OECD CASE STUDIES AustraliaCo-operative Research Centres Program (CRCs)AustriaKplus and Kind/KnetFranceResearch and Technological Innovation Networks (RRITs)NetherlandsLeading Technology Institutes (LTIs)SpainTechnological Centres (TCs) and Concerted Research ProjectsType of researchRather appliedPre-competitiveType of P/PPMission-orientedSome Australian “national benefits” CRCsSome projects in some French RRITsSome Australian “national benefits” CRCsSome French RRITsMarket-orientedAustralian “Business Development” CRCsMost Austrian Kind/KnetMost Spanish Technological Centres and Concerted ProjectsAustralian “Industrial collaboration” CRCsMost Austrian KplusMost French RRITsDutch LTIsHIDDEN SLIDE
24 Key factors of success for P/PPs Long-term commitment from both government and industry, based on a shared visionAchieve 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 interestsOther areas that require attention:Organisation and management of such projects.Evaluation of such efforts - the key to learning and improvements in policy.
25 Cluster policies involve: Stronger industry-science links may also develop through “innovative clusters” policiesCluster 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 strategyShifting 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 initiativesBuilding on existing innovation networks, but keeping incentive schemes open and attractive to outsiders, especially new firmsUsing high leverage instruments (stimulate but not crowd out private initiative; no silver bullet but a set of well coordinated instruments)
26 An indirect measure of innovative clusters OECD STI Scoreboard 2005
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 importanceThey 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 networksThey 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.
29 ConclusionCountries are focusing their efforts on improving science - industry links, which have many dimensions and require a broad spectrum of policiesImproving 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)?