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Innovation policy - new insights, new
questions, new directions
Dirk Pilat, Deputy Director
Directorate for Science, Techn...
Outline
1. The challenges - why innovation matters today
2. New insights
3. New questions
4. New directions and some concl...
1. THE CHALLENGE – WHY
INNOVATION MATTERS
TODAY
THE WORLD IS FACING COMPLEX CHALLENGES –
SLOW PRODUCTIVITY GROWTH …
Productivity growth has declined since the 1990s
Annua...
… GROWING WITHIN-COUNTRY INEQUALITIES …
Disposable income inequality has increased since 1990
Household disposable income,...
6
…, AS WELL AS CLIMATE CHANGE, ENERGY, WATER,
FOOD, AGEING AND OTHER GLOBAL CHALLENGES
Source: NASA
2. (SOME) NEW INSIGHTS
Business investment in fixed and knowledge-based capital
(as % of business sector gross value added, 2013)
Source: OECD ca...
9
Pre-production
Intangible
Pre-production
Tangible activities
Post-production
Intangible
R&D
Design
Logistics:
purchase
P...
2. We need to look beyond the average …
e.g. productivity gap between firms at global frontier & others
The productivity g...
11
… and not only at the size, but also at the
age of a firm …
Average over 18 countries, 2001-2011, in %
Source: Criscuol...
…as the dynamics of young firms matter for
growth & innovation
Average size of start-ups and old firms, in persons employe...
3. Design matters for innovation policy …
Direct funding of business R&D and R&D tax incentives,
as a percentage of GDP, 2...
NLD
NLD
NLD
NLD
ESP
ESP
FRA FRA
ITA ITAJPNNZL NZL NZL NZL
-0.10
0.00
0.10
0.20
0.30
0.40
0.50
1minusB-index
Large/Profitab...
4. Digital technology is a game-changer for
innovation and has become ubiquitous…
0
50
100
150
200
250
300
350
Millions
Sm...
1616
… with data-driven innovation affecting all parts
of the economy
HealthPublic Admin. Retail
TransportationAgriculture...
5. SKILLS ARE A MAJOR CHALLENGE FOR THE
DIGITAL …
Individuals who judge their computer skills to be sufficient if they wer...
… and innovation-intensive economy
Less than 40% of adults have the skills to succeed in a technology-rich
environment
(Pe...
6. Systems thinking is key: e.g. misalignment
between climate objectives and other policies …
ECONOMIC
TRADE
COMPETITION
F...
… where the incentives for investment and
innovation still favour fossil fuels
Sources: OECD (2013), Inventory of Estimate...
3. NEW AND OUTSTANDING
QUESTIONS
1. Responding to the digitalisation of
economy and society …
… and the future of jobs and skills …
Source: OECD calculations based on PIAAC and Arntz, Gregory and Zierahn (2016), see:...
… linked to shifts in the nature of work
Source: Levy and Murnane, 2013
Index of Changing Work Tasks in the U.S. Economy
2. Reconciling productivity, innovation and
inclusive growth …
25
Household disposable income, total populationProductivit...
… and making use of the new opportunities
offered by digital technology
Percentage of households with Internet access by
c...
3. Concentration and dynamics: R&D and IP
rights are highly concentrated …
0
10
20
30
40
50
60
70
80
90
100
0 250 500 750 ...
… and start-up rates have been falling in
many OECD countries
Source: OECD DynEmp v.2 database (see www.oecd.org/sti/dynem...
R&D budgets 2008-2015, G7 and Korea, Index 2008 = 100
Source: OECD, Main Science and Technology Indicators Database, www.o...
Innovation activity as part of a public procurement contract by type of requirement
As a percentage of firms with public p...
4. NEW DIRECTIONS AND
SOME CONCLUSIONS
New directions (1)
1. Measurement, learning and experimentation
– Learning and Evaluation: Much scope to learn more about ...
Confidential business
data in participating
countries
Non-
confidential
harmonized
output
For example: new microBeRD proje...
New directions (2)
2. More systemic approaches:
– Broadening and strengthening the role of innovation, which is
central to...
SOME RECENT WORK
oe.cd/innovation www.oe.cd/sti-scoreboard
Website: oe.cd/blue-sky
Information: OECD.BlueSky3@oecd.org
Registration is now open
THANK YOU
Follow us on Twitter: @OECDinnovation
Website: www.oecd.org/sti
Innovation Policy Platform:
www.innovationpolicy...
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Pilat eu spri new avenues innovation policy 9 june 2016

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Keynote presentation on OECD work at EU-SPRI conference on new insights, new questions and new directions for innovation policy

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Pilat eu spri new avenues innovation policy 9 june 2016

  1. 1. Innovation policy - new insights, new questions, new directions Dirk Pilat, Deputy Director Directorate for Science, Technology and Innovation dirk.pilat@oecd.org 2016 EU-SPRI CONFERENCE Exploring New Avenues for Innovation and Research Policies Lund, 9 June 2016
  2. 2. Outline 1. The challenges - why innovation matters today 2. New insights 3. New questions 4. New directions and some conclusions
  3. 3. 1. THE CHALLENGE – WHY INNOVATION MATTERS TODAY
  4. 4. THE WORLD IS FACING COMPLEX CHALLENGES – SLOW PRODUCTIVITY GROWTH … Productivity growth has declined since the 1990s Annualised growth of labour productivity (output per hour worked) Source: OECD estimations using OECD National Accounts database; OECD Productivity database; International Labour Organisation database. Statlink: http://dx.doi.org/10.1787/888933367500
  5. 5. … GROWING WITHIN-COUNTRY INEQUALITIES … Disposable income inequality has increased since 1990 Household disposable income, total population Source: OECD estimations based on OECD (2015), In It Together: Why Less Inequality Benefits All; and OECD Income Distribution database. Data: http://dx.doi.org/10.1787/888933367530
  6. 6. 6 …, AS WELL AS CLIMATE CHANGE, ENERGY, WATER, FOOD, AGEING AND OTHER GLOBAL CHALLENGES Source: NASA
  7. 7. 2. (SOME) NEW INSIGHTS
  8. 8. Business investment in fixed and knowledge-based capital (as % of business sector gross value added, 2013) Source: OECD calculations based on INTAN-Invest data, www.intan-invest.net and OECD, Structural Analysis (STAN) Database, http://oe.cd/stan, June 2015. 8 1. Firms invest heavily in innovation … Knowledge-based capital accounts for half of all business investment 0 5 10 15 20 25 30 35 % Non-residential GFCF including machinery and equipment KBC assets in National Accounts including software and R&D Other KBC assets including organisational capital and training
  9. 9. 9 Pre-production Intangible Pre-production Tangible activities Post-production Intangible R&D Design Logistics: purchase Production Logistics Marketing Services Value chain activities Value added Value Chain in the 1970s Global Value Chain in the 2000s The smiley curve … as investments in innovation are often key to value creation in global value chains
  10. 10. 2. We need to look beyond the average … e.g. productivity gap between firms at global frontier & others The productivity gap between the globally most productive firms and other firms has widened Note: “Frontier firms” is the average labour productivity (value added per worker) of the 100 or 5% globally most productive firms in each two-digit industry. “Non-frontier firms” is the average of all firms, except the 5% globally most productive firms. Source: OECD preliminary results based on Andrews, D., C. Criscuolo and P. Gal (2016), “Mind the Gap: Productivity Divergence between the Global Frontier and Laggard Firms”, OECD Productivity Working Papers, forthcoming; Orbis database of Bureau van Dijk.
  11. 11. 11 … and not only at the size, but also at the age of a firm … Average over 18 countries, 2001-2011, in % Source: Criscuolo, Gal and Menon (2014), www.oecd.org/sti/dynemp.htm
  12. 12. …as the dynamics of young firms matter for growth & innovation Average size of start-ups and old firms, in persons employed, services sector Source: Updated from Criscuolo, Gal and Menon (2014), www.oecd.org/sti/dynemp.htm 0 10 20 30 40 50 60 70 80 Employees Start-ups (0-2) Old (>10)
  13. 13. 3. Design matters for innovation policy … Direct funding of business R&D and R&D tax incentives, as a percentage of GDP, 2013 Source:OECD, R&D Tax Incentive Indicators, www.oecd.org/sti/rd-tax-stats.htm and Main Science and Technology Indicators, June, 2015, www.oecd.org/sti/msti.htm 0.0 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.4 0.5 % Direct government funding of BERD Indirect government support through R&D tax incentives Data on tax incentive support not available
  14. 14. NLD NLD NLD NLD ESP ESP FRA FRA ITA ITAJPNNZL NZL NZL NZL -0.10 0.00 0.10 0.20 0.30 0.40 0.50 1minusB-index Large/Profitable SME/Profitable Large/Loss-making SME/Loss-making … and we need to take a more granular look Implied generosity of R&D tax relief provisions – NLD vs OECD Implied marginal tax subsidy rates on R&D expenditures, 2015 B-Index country distribution, by firm size and profit scenario Source: OECD, R&D Tax Incentive Indicators, www.oecd.org/sti/rd-tax-stats.htm, December 2015. Based on OECD STI Scoreboard 2015. StatLink: http://dx.doi.org/10.1787/888933274335 ITA, JPN, NZL ITA, NZL
  15. 15. 4. Digital technology is a game-changer for innovation and has become ubiquitous… 0 50 100 150 200 250 300 350 Millions Smartphones Other mobile phones Quarterly shipping trends of smartphones, 2010-13 Sources: NBC News, St Peter’s Square: http://instagram.com/p/W2FCksR9-e/ and OECD Broadband Portal, http://www.oecd.org/sti/broadband/oecdbroadbandportal.htm
  16. 16. 1616 … with data-driven innovation affecting all parts of the economy HealthPublic Admin. Retail TransportationAgriculture Science & Education Manufacturing
  17. 17. 5. SKILLS ARE A MAJOR CHALLENGE FOR THE DIGITAL … Individuals who judge their computer skills to be sufficient if they were to apply for a new job within a year, 2013 (as a percentage of all individuals) 0 10 20 30 40 50 60 70 80 90 % All Individuals Individuals with high formal education Individuals with no or low formal education Source: OECD Measuring the Digital Economy: A New Perspective, 2014, http://dx.doi.org/10.1787/888933148354.
  18. 18. … and innovation-intensive economy Less than 40% of adults have the skills to succeed in a technology-rich environment (Percentage of 16-65 year-olds scoring at proficiency levels 2 and 3) Source: OECD Survey of Adult Skills, October 2013, https://www.oecd.org/site/piaac/surveyofadultskills.htm . 0 5 10 15 20 25 30 35 40 45 Level 3 Level 2
  19. 19. 6. Systems thinking is key: e.g. misalignment between climate objectives and other policies … ECONOMIC TRADE COMPETITION FISCAL INNOVATION SOCIAL INVESTMENT CLIMATE Source: OECD (2015), Aligning Policies for a Low-Carbon Economy, http://www.oecd.org/env/aligning- policies-for-a-low-carbon-economy-9789264233294-en.htm
  20. 20. … where the incentives for investment and innovation still favour fossil fuels Sources: OECD (2013), Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels; IEA (2013), World Energy Outlook; IEA (2013), Tracking Clean Energy Progress Report; OECD (2013), Effective Carbon Prices.
  21. 21. 3. NEW AND OUTSTANDING QUESTIONS
  22. 22. 1. Responding to the digitalisation of economy and society …
  23. 23. … and the future of jobs and skills … Source: OECD calculations based on PIAAC and Arntz, Gregory and Zierahn (2016), see: https://www.oecd.org/employment/Automation-and-independent-work-in-a-digital-economy-2016.pdf 0 5 10 15 20 25 30 35 40 45 50 Significant change in tasks Automatable Percentage of workers in jobs at high and medium risk of automation
  24. 24. … linked to shifts in the nature of work Source: Levy and Murnane, 2013 Index of Changing Work Tasks in the U.S. Economy
  25. 25. 2. Reconciling productivity, innovation and inclusive growth … 25 Household disposable income, total populationProductivity gap between the globally most productive firms and other firms Source: OECD (2016), OECD Economic Outlook – June 2016, http://www.oecd.org/eco/outlook/economicoutlook.htm .
  26. 26. … and making use of the new opportunities offered by digital technology Percentage of households with Internet access by country in 2008 and 2015 Source: Eurostat, Community Survey on ICT usage in households and by individuals, February 2016. Possible benefits:  Access to networks  Access to free or low cost information  Emergence of Internet- based services (incl. education and health)  Benefits from the sharing economy  New opportunities for micro-entrepreneurs
  27. 27. 3. Concentration and dynamics: R&D and IP rights are highly concentrated … 0 10 20 30 40 50 60 70 80 90 100 0 250 500 750 1 000 1 250 1 500 1 750 2 000 % R&D ranking of companies R&D expenditures Patents Trademarks Source: OECD Science, Technology and Industry Scoreboard 2015 based on OECD, STI Micro-data Lab: Intellectual Property Database, June 2015. http://dx.doi.org/10.1787/888933273408. R&D expenditures and the IP bundle of the top R&D companies, 2012 Cumulative percentage shares within the top 2000 R&D companies 27
  28. 28. … and start-up rates have been falling in many OECD countries Source: OECD DynEmp v.2 database (see www.oecd.org/sti/dynemp.htm ). Data for some countries are still preliminary.
  29. 29. R&D budgets 2008-2015, G7 and Korea, Index 2008 = 100 Source: OECD, Main Science and Technology Indicators Database, www.oecd.org/sti/msti.htm, January 2016. 4. The role of the state in the supply- …
  30. 30. Innovation activity as part of a public procurement contract by type of requirement As a percentage of firms with public procurement contracts Source: OECD analysis, based on final CIS2012 results. Note: Some firms may be required for some contract and not for others. http://www.oecd.org/science/inno/procurement-for-innovation.htm … and the demand-side of innovation
  31. 31. 4. NEW DIRECTIONS AND SOME CONCLUSIONS
  32. 32. New directions (1) 1. Measurement, learning and experimentation – Learning and Evaluation: Much scope to learn more about innovation and what works in innovation, e.g. by better use of micro data and other new sources of data (e.g. Manchester/NESTA compendium: http://www.innovation-policy.org.uk/compendium/ ) – Experimentation: Learn more about policies by greater use of experimental policies and RCTs (e.g. NESTA’s IGL: http://www.nesta.org.uk/project/innovation-growth-lab-igl ) and greater use of design thinking in policy formulation – Measurement: A familiar challenge, but new opportunities to measure key aspects of innovation (OECD: Blue Sky Forum of 19-21 September - oe.cd/blue-sky ) 32
  33. 33. Confidential business data in participating countries Non- confidential harmonized output For example: new microBeRD project on public support for R&D, based on microdata Statistical code run on microdata at local premises R&D microdata + Corporate tax data + R&D grant/loan data + Business register data + Patent data + Innovation data • Innovation in Firms (CIS data) • DynEmp • MultiProd Inspired by previous OECD work...
  34. 34. New directions (2) 2. More systemic approaches: – Broadening and strengthening the role of innovation, which is central to achieving many important public policy goals – Connecting more to other research and policy areas, e.g. economic policy, entrepreneurship, digital economy, health, energy, public sector innovation – innovation in analysis and policy often occurs at the intersection of disciplines … – Reconciling policy objectives, e.g. innovation, productivity, sustainability and inclusive growth, and developing new analysis and policy experiments – Engaging with a broader range of actors and stakeholders, to increase ownership and enable learning, which also requires new platforms and sharing of practices, e.g.: www.innovationpolicyplatform.org – A greater focus on implementation, institutional factors, governance and the political economy of reform 34
  35. 35. SOME RECENT WORK oe.cd/innovation www.oe.cd/sti-scoreboard
  36. 36. Website: oe.cd/blue-sky Information: OECD.BlueSky3@oecd.org Registration is now open
  37. 37. THANK YOU Follow us on Twitter: @OECDinnovation Website: www.oecd.org/sti Innovation Policy Platform: www.innovationpolicyplatform.org Newsletter: www.oecd.org/sti/news.htm Contact: dirk.pilat@oecd.org

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