Innovation and r&d
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Innovation and r&d

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  • But not all innovation is comes directly from R&D – other type of innovative activity is important as well – design, marketing, organisational change.
  • Collaboration among within a country and across borders is increasingly common.
  • The “cloud” is another example:NYT made use of a cloud service provided by Amazon S3 (Simple Storage service) where they uploaded all articles from 1851 to 1980 – 11m, 4TB of data in 24 hours at a cost of 240$.
  • KNM: knowledge is non-rival – one piece of K does not prevent the simultaneous use of the same piece by another party – thu steh need for IPRs are important because ; need to protect to reward the inventor, but this needs to be balanced against to socially optimal situation where as many agents have the K as possible (“spillover”)
  • Need to treat like our finnacial system – better data, and better international coordination
  • Tapping into a global innovation network = 400+ components from over all over the worldApple did very little R&D – rather most of its effort was spent on design, marketing and software development (iTunes Music Store) and the difficult negotiations of getting the “Big 5” music labels to agree to make their music available These intangibles / intellectual assets were the key to the success of this product, allowing Apple to capture half of the sales price and 70% of the legal digital download market in just 7 years (25% of all).

Innovation and r&d Innovation and r&d Presentation Transcript

  • OECD’s Innovation Strategy: Key Findings and Policy Messages
  • Overview • Why an “Innovation Strategy”? • What is OECD’s Innovation Strategy? • What are some of the implications for countries? 2
  • Why an Innovation Strategy? 3
  • 4 A Pre-crisis drop in productivity... 4
  • 5 0 10 20 30 40 50 60 70 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Emissions(GtCO2) WEO 2007 450 ppm case ETP2008 analysis BLUE Map emissions 14 Gt Baseline emissions 62 Gt CCS industry and transformation (9%) CCS power generation (10%) Nuclear (6%) Renewables (21%) Power generation efficiency and fuelswitching (7%) End use fuelswitching (11%) End use electricity efficiency (12%) End use fuelefficiency (24%) Source: International Energy Agency, Energy Technology Perspectives 2008: Scenarios and Strategies to 2050. ...combined with huge global challenges...
  • 6 6 ...and the lasting effects of the crisis. Revised OECD projections: November 2008 vs. November 2009 11/2009 11/2008
  • 7 What is OECD’s Innovation Strategy?
  • 8 A “horizontal" approach Cutting across policy areas Trade Tax Investment Information and communications Industry and entrepreneurship Science and technology Statistics Public governance Competition
  • 9 A series of products • A short Ministerial paper setting out the challenges and priorities for action on innovation, combined with a set of policy principles • An analytical report, providing evidence on the main innovation drivers and processes and policy recommendations • Measuring Innovation, presenting a set of policy- relevant indicators that will enable countries to position themselves on a range of policies and innovation outcomes, and proposing a forward looking measurement agenda • In-depth thematic reports on key issues • The beginnings of a policy handbook, that will enable countries to examine their own performance and system, and provide tools and examples to take action.
  • 10 What are some of the implications for countries?
  • 11 Finding 1: Innovation today involves the interaction of a system R&D is only one element
  • 12 Japan China OECD EU27 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 1994 1996 1998 2000 2002 2004 2006 2008 % United States R&D is critical to innovation... Gross domestic expenditure on R&D, 1994-2008 As a percentage of GDP Source: OECD (2009), Main Science and Technology Indicators 2009/2, December.
  • 13 Direct and indirect government funding of business R&D and tax incentives for R&D, 2007 As percentage of GDP Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on NESTI 2009 R&D tax incentives questionnaire. ...and is the main focus of public support.
  • 14 But innovation is more than R&D New-to-market product innovators, 2004-06 As a percentage of innovative firms by R&D status Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on OECD, Innovation microdata project. 0 10 20 30 40 50 60 70 Austria CzechRepublic Iceland(2002-04) Luxembourg Ireland Sweden Netherlands Estonia Chile Canada(2002-04, manufacturing) Norway Belgium Mexico(2006-07) Denmark Italy Japan(1999-2001) SouthAfrica(2002- 04) Spain Australia(2006-07) Portugal UnitedKingdom Korea(2005-07, manufacturing) Innovative firms withoutR&D Innovative firms with in-house R&D%
  • 15 Firms collaborate with each other Firms with national/international collaboration on innovation, 2004-06 As a percentage of innovative firms Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on OECD, Innovation microdata project. 0 10 20 30 40 50 60 Finland Chile Sweden CzechRepublic Netherlands Austria SouthAfrica(2002- 04) Belgium Norway Estonia Denmark Luxembourg NewZealand(2006- 07) Iceland(2002-04) UnitedKingdom Ireland Japan(1999-2001) Canada(2002-04, manufacturing) China Australia(2006-07) Korea(2005-07, manufacturing) Portugal Spain Germany Italy National collaboration only International collaboration %
  • Innovation is multidisciplinary… Green Technology Chemical Engineering Chemistry Material Science Physics Agricultural andBiological Sciences Immunology and Microbiology Biochemistry, Genetics and MolecularBiology Energy Earth and Planetary Sciences Engineering Environmental Science 17.4% 10.5% 4.9% 7.5% 5.7%3.7%6.6% 4.8% 10.6% 9.5% 14.2% Scientific Papers Patents Patent-sciencelink viacitations (100% = all citations) Legend: Scientific publications cited by “green” patents Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on Scopus Custom Data, Elsevier; OECD, Patent Database; and EPO, Worldwide Patent Statistical Database.
  • 17 17 17 …and the Internet has been a catalyst.
  • 18 Policy Message 1: Policies need to be upgraded to reflect that innovation is a system Strong innovation performance relies on a well- functioning system: • Involving both “push” (supply R&D and HRST) and “pull” (demand) factors (markets, consumers; standards; public procurement); • Linking the elements of the system (labour mobility; University / Industry; diffusion; MNE & SME).
  • 19 Policy Message 1 bis: Governments should foster platforms and markets that strengthen the system • ICT as a platform that lowers the barriers to innovation, network formation and collaboration (Broadband); • Provide access to public data (e.g. Maps, weather, publicly funded research data); • Develop markets and networks for knowledge that can service many actors (e.g. market for patent licenses).
  • Finding 2: The mix of actors is changing • Need to broaden our perspective from: –Multinational enterprises; –Public research organisations & universities; –The G7. 20
  • 21 33.5 13.5 4.5 4.2 3.0 2.8 1.6 1.6 0.9 0.7 0.7 0.4 0.3 0 5 10 15 20 25 UnitedStates Germany France Netherlands UnitedKingdom Sweden Finland Italy Denmark Belgium Austria Spain Norway % Share of patents filed by firms under 5 years old Share of countries in PCT filed by firms (%) Patenting activity of young ( <5 years) firms, 2005-07 PCT patent filings by young firms as a percentage of filings by firms in each country Note : Data refers to patent applications filed under the Patent Co-operation Treaty (PCT) with a priority in 2005-07. Patent counts are based on the country of residence of the applicants. The share of young firms is derived from the set of patent applicants successfully matched with business register data. New firms are very important to innovation... Source: OECD based on OECD, HAN Database, October 2009 and ORBIS© Database, Bureau Van Dijk Electronic Publishing.
  • 22 ...and job creation. 0 20 40 60 80 100 120 140 160 Share of Employment Share of Net Growth Percent Contribution of business start-ups to overall employment and the net employment growth (US, 1992-2005) Source: “Who Creates Jobs? Small vs. Large vs. Young” (Haltiwanger, Jarmin and Miranda, February 2010).
  • 23 Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on Scopus Custom Data, Elsevier, December 2009. Scientific collaboration with BRIC countries, 1998 and 2008 As a percentage of total international co-authored articles 0 3 6 9 12 15 18 North America Europe Far East & Oceania (excluding China) China % 1998 2008 And new players are emerging, spreading innovative capabilities...
  • 24 Patents per million inhabitants, Europe, average 2005-07 ...but innovation is not “flat.” Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on OECD REGPAT Database and OECD, Regional Database.
  • 25 Policy Message 2: Develop a Strategy for Innovation • A “horizontal” approach: – Leadership & long-term vision; – Co-ordination via the budget; – Seek coherence: young ≠ small; – Division of labour with regions: build on indigenous strengths; seek a critical mass. • Evaluate & monitor through improved measures (measurement agenda); • Strengthen multilateral co-operation of STI.
  • Finding 3: Innovation is already a fundamental economic investment... 26 Investment in fixed and intangible assets as a share of GDP, 2006 Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on COINVEST [www.coinvest.org.uk], national estimates by researchers, EU KLEMS database and OECD, Annual National Accounts Database. 0 5 10 15 20 25 30 SlovakRepublic Italy CzechRepublic Japan(2005) Australia Spain Canada(2005) Portugal(2005) Austria Sweden France Denmark Germany Finland UnitedStates UnitedKingdom % Machinery and equipment Software and databases R&D and other intellectual propertyproducts Brand equity, firm specific human capital, organisationalcapital intangibles
  • 27 ...and a driver of growth. Innovation accounts for a large share of labour productivity growth Percentage contributions, 1995-2006, in % 0 1 2 3 4 5 6 7 % Contribution from intangible capital Contribution from tangible capital Labour productivity growth Source: OECD, based on research papers, 2009.
  • 28 21st Century Innovation: the iPod Distribution of the value added • 299 US$ – 75$ profit to US (Apple) – 73$ wholesale/retail US (Apple) The Apple iPod = 299$ of Chinese exports to US http://blogs.computerworld.com/node/5724 • iTunes Music Store (2003) – 70% digital market share – Big 5 recording companies – 75$ to Japan (Toshiba) – 60$ 400 parts from Asia – 15$ 16 parts from the US – 2$ assembly by China
  • 29 Policy Message 3: Innovation: “Now more than ever” • “Stay the course”: continue to support long-term investments in innovation (basic R&D); – Not an “on / off” incremental investment, but accumulative – Cutting spending could limit growth and the ability to address global challenges • Not all policies require large public investment – Reform and streamline existing policies; remove barriers; – Use demand-side measures (procurement, standards); – Inject innovation into the public sector (e-Gov). • Better understand the broader role of innovation and its impact on economic growth
  • Conclusion or “What are some of the take-aways?” • Innovation – Now more than ever. • Innovation is broader than R&D – it is a system. Policies for innovation, not a narrow set of innovation policies; • Innovation policy is more than budget allocations. • Better measures to reflect the central role of Innovation to the economy. New data that:  Confirm some of our intuition (collaboration)  Challenge some priors (small vs. young; drivers of growth)  Set out an important measurement agenda. 30