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).
Overview Why an “Innovation Strategy”? What is OECD’s Innovation Strategy? What are some of the implications for countries?Wali Memon walimemon.com 2
Why an Innovation Strategy?Wali Memon walimemon.com 3
A Pre-crisis drop in productivity... 4Wali Memon walimemon.com 4
...combined with huge global challenges... 70 CCS industry and transformation (9%) Baseline emissions 62 Gt 60 CCS power generation (10%) Nuclear (6%) Emissions (Gt CO2) 50 Renewables (21%) 40 Power generation efficiency and fuel switching (7%) 30 End use fuel switching (11%) 20 End use electricity efficiency (12%) BLUE Map emissions 14 Gt End use fuel efficiency (24%) 10 WEO 2007 450 ppm case ETP2008 analysis 0 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Source: International Energy Agency, Energy Technology Perspectives 2008: Scenarios and Strategies to 2050. Wali Memon walimemon.com 5
...and the lasting effects of the crisis.Revised OECD projections: November 2008 vs. November 2009 11/2008 11/2009 6Wali Memon walimemon.com 6
What is OECD’s Innovation Strategy?Wali Memon walimemon.com 7
A “horizontal" approach Cutting across policy areas Science and technology Industry and entrepreneurship Information and communications Tax Statistics Competition Investment Public governance TradeWali Memon walimemon.com 8
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. Wali Memon walimemon.com 9
What are some of the implications for countries?Wali Memon walimemon.com 10
Finding 1: Innovation today involves the interaction of a system R&D is only one elementWali Memon walimemon.com 11
R&D is critical to innovation... Gross domestic expenditure on R&D, 1994-2008% As a percentage of GDP4.03.5 Japan3.0 United States2.5 OECD2.0 EU271.5 China1.00.5 1994 1996 1998 2000 2002 2004 2006 2008 Source: OECD (2009), Main Science and Technology Indicators 2009/2, December. Wali Memon walimemon.com 12
...and is the main focus of public support. Direct and indirect government funding of business R&D and tax incentives for R&D, 2007 As percentage of GDPSource: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on NESTI 2009 R&D tax incentives questionnaire. Wali Memon walimemon.com 13
But innovation is more than R&D New-to-market product innovators, 2004-06 As a percentage of innovative firms by R&D status % Innovative firms without R&D Innovative firms with in-house R&D 70 60 50 40 30 20 10 0 Japan (1999-2001) Luxembourg Iceland (2002-04) Australia (2006-07) Canada (2002-04, Korea (2005-07, Norway Denmark Portugal Netherlands Mexico (2006-07) South Africa (2002- Spain Ireland Belgium Chile Austria United Kingdom Italy Sweden Czech Republic Estonia manufacturing) manufacturing) 04) Wali Memon walimemon.comSource: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on OECD, Innovation microdata project. 14
Firms collaborate with each other Firms with national/international collaboration on innovation, 2004-06 As a percentage of innovative firms % National collaboration only International collaboration 60 50 40 30 20 10 0 Canada (2002-04, Netherlands Denmark Japan (1999-2001) Luxembourg Germany Czech Republic Finland Australia (2006-07) Korea (2005-07, China Sweden Chile Iceland (2002-04) Estonia New Zealand (2006- Norway Portugal South Africa (2002- Belgium Spain United Kingdom Ireland Italy Austria manufacturing) manufacturing) 04) 07)Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on OECD, Innovation microdata project. Wali Memon walimemon.com 15
Innovation is multidisciplinary… Scientific publications cited by “green” patents Chemical Material Chemistry Physics Engineering Science Legend: 14.2% 17.4% 9.5% 10.5% Patents Patent-science link 10.6% Green 4.9% via citations Engineering Energy Technology (100% = all citations) Scientific 7.5% Papers 4.8% 6.6% 3.7% 5.7% Immunology Biochemistry, Agricultural Earth and Environmental and Genetics and and Biological Planetary Molecular Biology Science Microbiology Sciences SciencesSource: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on Scopus Custom Data, Elsevier; Wali Memon walimemon.comOECD, Patent Database; and EPO, Worldwide Patent Statistical Database. 16
…and the Internet has been a catalyst. 17Wali Memon walimemon.com 17 17
Policy Message 1: Policies need to be upgraded to reflect that innovation is a systemStrong 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). Wali Memon walimemon.com 18
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). Wali Memon walimemon.com 19
Finding 2:The mix of actors is changing Need to broaden our perspective from: Multinational enterprises; Public research organisations & universities; The G7.Wali Memon walimemon.com 20
...and job creation. Contribution of business start-ups to overall employment and the net employment growth (US, 1992-2005) 160 140 120 100 Percent 80 60 40 20 0 Share of Employment Share of Net Growth Wali Memon walimemon.com 22Source: “Who Creates Jobs? Small vs. Large vs. Young” (Haltiwanger, Jarmin and Miranda, February 2010).
And new players are emerging, spreading innovative capabilities... Scientific collaboration with BRIC countries, 1998 and 2008 As a percentage of total international co-authored articles % 1998 2008 18 15 12 9 6 3 0 North America Europe Far East & Oceania China (excluding China)Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on Scopus CustomData, Elsevier, December 2009. Wali Memon walimemon.com 23
...but innovation is not “flat.” Patents per million inhabitants, Europe, average 2005-07 24Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on OECD REGPAT Database andWali Memon walimemon.com 24OECD, Regional Database.
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.Wali Memon walimemon.com 25
Finding 3: Innovation is already a fundamental economic investment... Investment in fixed and intangible assets as a share of GDP, 2006% Machinery and equipment Software and databases R&D and other intellectual property products Brand equity, firm specific human capital, organisational capital302520 intangibles1510 5 0 Japan (2005) Canada (2005) Denmark Australia Portugal (2005) Spain Germany Sweden United Kingdom Italy United States Austria France Finland Czech Republic Slovak RepublicSource: 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 AccountsDatabase.Memon Wali walimemon.com 26 26
...and a driver of growth. Innovation accounts for a large share of labour productivity growth Percentage contributions, 1995-2006, in % % Contribution from intangible capital Contribution from tangible capital Labour productivity growth 7 6 5 4 3 2 1 0Source: OECD, based on research papers, 2009.Wali Memon walimemon.com 27
21st Century Innovation: the iPod The Apple iPod = 299$ of Chinese Distribution of the value added exports to US • 299 US$ – 75$ profit to US (Apple) – 73$ wholesale/retail US (Apple) – 75$ to Japan (Toshiba) – 60$ 400 parts from Asia – 15$ 16 parts from the US – 2$ assembly by China • iTunes Music Store (2003) – 70% digital market share – Big 5 recording companies Wali Memon walimemon.comhttp://blogs.computerworld.com/node/5724 28
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 Wali Memon walimemon.com 29
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. Wali Memon walimemon.com 30