Measuring the U.S.-China Innovation Gap: Initial Findings of the UCSD-Tsinghua Innovation Metrics Survey Project

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  • 1. Measuring the U.S.-China Innovation Gap: Initial Findings of the UCSD-Tsinghua Innovation Metrics Survey Project Peter  Cowhey   Tai  Ming  Cheung   with  Eric  Anderson       July  9,  2013  
  • 2. Current Innovation Metrics Mismeasure Actual Innovation •  Most  common  metrics  are  inputs  and  acAviAes,  not  outputs   (R&D  expenditures,  patent  output,  number  of  STEM  graduates,     journal  citaAons)   •  Magnitude  of  impact  innovaAon  inputs  have     on  commercial  innovaAon  varies  across  industries   Innovation Activities Innovation Outputs Innovation Environment
  • 3. New Survey to Measure U.S.-China Innovation •  For  each  industry,  survey  answers:   –  What  is  the  gap  in  innovaAon  between  the  United  States   and  China?   –  At  what  rate  is  Chinese  innovaAon  catching  up  to  the   United  States?       •  Includes  quesAons  on  innovaAon  environment   –  DomesAc/internaAonal  financing  and  talent,  government   regulaAon,  collaboraAon,  geography  
  • 4. Survey Demographics •  Web-­‐based  survey  administered  from  May-­‐June  2013   •  Received  68  U.S.  responses;  23  China  responses   •  China  sample  less  IC  design  experience  than  U.S.  sample   –  China  average  9  years;  U.S.  average  22  years  
  • 5. Correcting for Cross-Country Differences •  Concern  that  US  and  China  sample  may   approach  term  “innovaAon”  with  different   concepts  and  definiAons   •  Created  scenarios  depicAng  varying  levels  of   innovaAon  to  correct  for  bias   •  This  report  only  uses  respondents’  assessments     of  their  own  country     Methodology  used:  h_p://gking.harvard.edu/files/gking/files/vign.pdf  
  • 6. Survey Results: Innovation Level •  AcAviAes  of  5  most  leading-­‐edge  IC  design  teams   – 67%  of  US  experts  rate  US  innovaAon  high   – 81%  of  Chinese  experts  rate  China  innovaAon  low  
  • 7. Chinese Experts’ Assessment of China’s Innovation Gap •  China’s  most  innovaAve  IC  design  teams:   –  Average  49  months  to  current  fronAer   –  Average  57  months  to  advancing  fronAer   –  35  percent  of  Chinese  experts  say  China  will  never  catch  up  
  • 8. U.S. Experts’ Views of Innovation Gap   “China  will  catch  up  in  about  4  years  Ame.  There  is   nothing  that  moves  fast  enough  in  most  IC  design   spaces  that  is  so  unique  that  it  can’t  be  overcome,  as   long  has  you  have  enough  money  to  pour  into  it.”   -­‐-­‐Execu've  Vice  President  of  Engineering,     Fabless  Semiconductor  Company     “The  duraAon  of  IC  design  development  depends  on   the  number  of  engineers  ‘thrown’  at  a  problem.     Owing  to  costs,  companies  in  India/China  can  reduce   cycle  Ames  if  they  perceive  it  is  needed.”                        -­‐-­‐Associate  Professor,  Integrated  Circuits      
  • 9. Survey Results: Innovation Obstacles •  U.S.  three  largest  obstacles:     venture  capital,  qualified  talent,  foreign  compeAAon   •  China  three  largest  obstacles:     weak  IP  protecAon,  qualified  talent,  lack  of  high-­‐quality  IP  
  • 10. Survey Results: Government Impact •  Chinese  view  industrial  policy  as  posiAve,  But  only  22%     rate  it  highly  posiAve   •  Both  U.S.  and  China  have  balanced  view  of  public  services    (i.e.  tax  and  business  administra'on,  customs  services,  immigra'on      processing,  public  infrastructure)  
  • 11. Conclusion: Policy Implication •  Fair  consensus  that  China  is  4-­‐5  years  behind;     substanAal  view  that  it  will  never  catch  up   •  Biggest  problem  for  the  Chinese,  in  their  own  view,     is  intellectual  property   •  China’s  industrial  policy  is  viewed  as  posiAve  but  not  as   highly  posiAve—not  the  crux  of  their  compeAAve   advantage   •  Conclusion:  Devote  more  resources  to  IP  protecAon  and     fewer  resources  to  subsidized  R&D   •  Need  to  extend  survey  to  other  sectors  and  conAnue  to     refine  measurements   •  Survey  provides  measure  of  innovaAon  gap  at  leading   edge,  which  may  differ  from  gap  at  trailing  edge  
  • 12. FYI: Limitations and Potential Mismeasurement •  Conceptual  limits:   –  InnovaAon  definiAon  includes  products  and  processes     but  excludes  markeAng  and  organizaAonal  methods   –  Survey  focuses  on  leading-­‐edge  innovaAon,  capturing     the  fronAer  but  not  measuring  the  whole  industry   –  InnovaAon  inherently  a  dynamic  concept—likely  to  vary  within   IC  design  subsectors   •  Survey  Response  risks:   –  Low  survey  response  rates  of  ~5%  could  mean     non-­‐representaAve  sample   –  Pretested  quesAon  wording  but  experts  may  sAll  differ     in  interpretaAon  (i.e.  by  subsectors)