Shivakumar 12 12-11

Addressing the Innovation Imperative
Science and Technology Landscape in a Changing World
Enhancing US Collaboration with the EU and Member States
December 12, 2011
Washington DC
Sujai Shivakumar, Ph.D.
Board on Science, Technology, and Economic Policy
The National Academies
© Sujai Shivakumar, Ph.D.

Global Challenges for the 21 st Century
Fostering Economic Growth through Innovation
Driving domestic Growth and Employment
Developing New Sources of Energy
Commercializing renewable alternatives to oil
Increasing the capacity to fuel growing global demand for electricity
Addressing Climate Change
Growing a Green Economy; A major Growth opportunity
Delivering Global Health
Transforming large investments in research to affordable and personalized treatment and care
Improving Security
Through all of the above
Addressing these Global Challenges requires Innovation

Leading Countries and Regions are Responding to the Innovation Challenge
They are providing five things:
High-level Focus on Growth and Strength
Sustained Support for Universities
Rapidly Growing Funding for Research
Support for Innovative Small Businesses
Government-Industry Partnerships to bring new products and services to market
They are investing very substantial resources to create, attract and retain the industries of today and tomorrow.
© Sujai Shivakumar PhD.

China’s Goal: To Become an “Innovation-Driven Economy” by 2020
Boosting R&D Investments
Expenditure on basic research doubled between 2004 and 2008
Tax incentives for enterprises that invest in R&D
Building R&D Infrastructure and Facilities
Focus on building world class universities to create a Skilled Workforce
“ Indigenous Innovation” supported by Government Procurement and Financial Support
Financing for large projects
Facilitating Credit and investment capital for SMEs
Source: Mu Rongpin, 2010 UNESCO Science Report
© Sujai Shivakumar, PhD.

R&D Expenditures: Asia’s Surge © Sujai Shivakumar , Ph.D. The rapidly growing R&D expenditures of the Asia-8 economies (China, India, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand) surpassed those of the EU-27 in 2003. Source: NSF 2010 S&E Indicators U.S. Asia E.U.

The Rise of Global Innovation poses new Challenges Europe and the United States © Sujai Shivakumar, Ph.D.

New Challenges for the US and EU
New Competitors in New Markets
Emerging powers like China and India have critical masses of highly educated scientists and engineers, rising R&D spending, and large, rapidly growing domestic markets for high-tech products.
New Patters of Collaboration
Information technologies make knowledge, money, and people flow across borders with ever-greater speed and ease
Growth in open collaborative innovation networks linking corporations, researchers, investors and institutions around the world
New Innovation Hubs
Innovation hubs like Silicon Valley and greater Boston, face greater competition from dynamic new commercialization zones, such as Taipei, Shanghai, Tel Aviv, and Bangalore.

What is the Global Impact of China’s Innovation Strategy?
Competitive pressures are providing consumers with lower priced manufactured goods, but…
Imposing high environmental costs
Displacing workers and companies around the world
Large scale free-riding on the global innovation system is not sustainable for China or for the US and EU
China is leveraging its large domestic market to get foreign firms to transfer their technology—short term approach
Weak IP allows copying of foreign technology—but cripples innovation in China
Source: Carl Dahlman, “The World Under Pressure,” 2011

How is Europe Addressing the Innovation Imperative?

EU Innovation Funding Mechanisms: Some of the Most Innovative in the World
7 th Framework Program (€ 50 Billion)
Support to private companies, universities, public authorities, and researchers in developing countries
Competitiveness and Innovation Program (€3.6 Billion)
Seeks to provide SMEs better access to finance and business support services in the regions
EU Cohesion Policy (€86 Billion)
Structural and Cohesion funds spending on innovation, growth, jobs as well as sustainable development goals
Lifelong Learning Program (€ 6.2 Billion)
Erasmus and Leonardo Programs
Source: Delegation of EU to Washington, Jan 2010

The European Paradox Large international share of scientific publications Low number of patents and share in high tech products trade © Sujai Shivakumar, PhD

Resolving the Paradox: Europe’s Best Innovators are Changing
Finland, Sweden, the Netherlands, Germany & France are among those
Making Substantial public R&D investments
Internationalizing the innovation environment
Reforming universities and public research institutes
Mobilizing private capital for start-ups and growth companies ( eg. by providing tax incentives)
Introducing new partnership programs for greater productivity in the services sector (private & public)

How is the United States Addressing the Innovation Imperative? Strengths and Challenges

National Shares of Global R&D © Sujai Shivakumar, PhD. Source: OECD, Main Science and Technology Indicators, 2008. U.S. Germany France UK Japan Korea China Others Other EU

Federal R&D investment as a percentage of GDP has been declining © Sujai Shivakumar, PhD.

The Major Risks to the U.S.
Complacency about our competitive position in the world
Limited attention to the composition of the economy, including trade and investment policy
Focus on current consumption rather than investment for the future
A lack of investment in R&D on the scale of our fathers and our competitors
Failure to focus on the commercialization of research and on manufacturing

What must we need to do to Remain Competitive in the 21 st Century? Preserve our Advantages Reinforce our Strengths Encourage Cooperation © Sujai Shivakumar Ph.D.

Major U.S. Advantages in Innovation
Openness to science and innovation
Trust in Science & Scientific Institutions
Positive Social Norms
High Social Value on Commercial Success
Forgiving Social Norms allow more than one try
Entrepreneur-friendly Policies
Markets Open to Competition
Gentle Bankruptcy Laws permit rapid recovery
Taxes give Prospect of Substantial Rewards
Strong Intellectual Property Protection:
Encourages Research & Diffusion of Research

Reinforce our Strengths
Boost R&D investment:
The U.S. must fund R&D at the higher levels authorized under the America COMPETES Act
Sustain University Research
Build and Reinforce Successful Public Private Partnerships:
Renew and Expand programs like SBIR
Attract Foreign Talent:
Reform immigration laws to attract foreign scientists, engineers, and entrepreneurs

Building Innovation Clusters
State and Local Initiative: Traditionally, state and local governments have sought to stimulate cluster growth
Lack of Critical Mass: In many cases, however, state and local efforts lack critical mass
Funding; Facilities; Sustained Policy Support

New Federal Initiatives for Clusters
Energy Regional Innovation Clusters
DOE initiative to develop regional clusters in solar power, energy-efficient buildings, nuclear energy, and advanced batteries.
Regional Innovation Strategies Initiative
Commerce-EDA initiative to map clusters and provide grants to support local cluster programs
Nanoelectronics Research Initiative
NIST initiative brings together industry, government, and academia to develop next-generation semiconductor technologies
Index, a 11-university consortium, is based at the State University of New York-Albany.

The U.S. Remains an Outstanding Partner for STI Cooperation
Our open innovation ecosystem allows you to:
Connect with a robust and open innovation network
Draw on the US R&D and University Systems
Access one of the worlds largest and most open markets
Attract the attention of some of the largest & most dynamic overseas investors

Our Common Challenge
The Challenge for Europe and the United States is to Adjust to the new Globalization Dynamic
This involves initiating change through competitive incentives:
Incentives for entrepreneurial activity for Small Firms, Large Firms, and Universities
Incentives (not mandates) for cooperation among all actors
Cooperation and Mutual Learning is the best way forward
© Sujai Shivakumar, PhD

Thank You
Sujai Shivakumar, Ph.D.
Board on Science, Technology, and Economic Policy
The National Academies
500 Fifth Street NW
Washington, D.C. 20001
[email_address]
Tel: 202 334 1337
http://www.nationalacademies.org/step

Shivakumar 12 12-11

by Roos Kouwenhoven

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