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Rediscovering Industrial Policy for the 21st Century: Where to Start?

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Rohinton P. Medhora - Centre for International Governance & Innovation
ERF 25th Annual Conference
Knowledge, Research Networks & Development Policy

10-12 March, 2019
Kuwait City, Kuwait




Published in: Government & Nonprofit
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Rediscovering Industrial Policy for the 21st Century: Where to Start?

  1. 1. Rohinton P. Medhora March 2019 Rediscovering Industrial Policy for the 21st Century: Where to Start? www.cigionline.org @cigionline
  2. 2. Figure 1: From Kuznets-Chenery-Syrquin To… Source: Wikimedia Commons, M. Tracy Hunter (2014) 1
  3. 3. …Intangibles Broad category Type of investment Type of legal property that might be created Computerized information Software development Database development Patent, copyright, design IPR, trademark, other Copyright, other Innovative Property R&D Mineral exploration Creating entertainment and artistic originals Design and other product development costs Patents, design IPR Patents, other Copyright, design IPR Copyright, design IPR, trademark Economic Competencies Training Market research and branding Business process re-engineering Other Copyright, trademark Patent, copyright, other Source: Capitalism without Capital: The Rise of the Intangible Economy (2018) 2
  4. 4. Figure 3: Shifting Tangible and Intangible Asset Ratios of S&P 500 Market Value, 1975-2015 Source: Ocean Tomo (2017) 3
  5. 5. Figure 4: Tangible and intangible investment shares of GDP Source: Capitalism without Capital: The Rise of the Intangible Economy (2018) 4
  6. 6. Figure 5: Intangible and tangible investment (% GDP, average 2000-2013) Source: “Intangible investment in the EU and US before and since the Great Recession and its contribution to productivity growth” EIB Working Papers, No. 2016/08 5
  7. 7. Figure 6: Asset composition of intangible investment (% GDP, average 2000-2013) Source: “Intangible investment in the EU and US before and since the Great Recession and its contribution to productivity growth” EIB Working Papers, No. 2016/08 6
  8. 8. Figure 7: Intangible investment by industry (% officially measured industry value added, average 2000-2013) Source: “Intangible investment in the EU and US before and since the Great Recession and its contribution to productivity growth” EIB Working Papers, No. 2016/08 7
  9. 9. Features of an Intangibles Economy • High upfront costs and risk • Very low marginal costs of production • Huge first mover advantage (esp. via standards) • Economies of agglomeration inherent • Global geo-political strategy matters (a lot) 8
  10. 10. Policy Responses (1) Create, Protect and Valorize IP • Public procurement • Patent collectives • “new” IP creation/dissemination models • Unlock university-based IP 9
  11. 11. Policy Responses (2) Macroeconomic and Trade Policy • The exchange rate as an equilibrator • Foreign investment review • Signals that drive monetary policy • Taxing natural monopolies 10
  12. 12. Policy Responses (3) Social Policy • Redesign programs from “job centered” to “person centered” • Funding higher education • Savings and pension schemes • UBI? • Public provision of public goods? 11
  13. 13. Map 1: Equivalent patent applications by origin, 2016 12
  14. 14. Figure 18: Resident patent applications per million population for the top 20 origins 13
  15. 15. Top MENA Countries Harnessing IT Source: Tierry Geiger, “Which Nation in North Africa and Middle East is Top for Digital?” World Economic Forum (2015)
  16. 16. R& DRank Country/Regio n Expenditures on R&D (billions of US$, PPP) % of GDP PPP 1 United States 511.1 2.744% 2 China 451.9 2.107% 3 Japan 165.7 3.147% 4 Germany 118.8 2.94% 5 South Korea 91.6 4.292% 6 India 66.5 0.85% 7 France 60.0 2.256% 8 UK 44.8 1.701% 9 Russia 42.6 1.187% 10 Brazil 38.4 1.17% 15 Rank Country/Regio n Expenditures on R&D (billions of US$, PPP) % of GDP PPP 17 Turkey 15.3 1.007% 20 Israel 12.7 4.3% 30 Egypt 6.2 0.68% 34 UAE 4.28 0.70% 45 Saudi Arabia 1.8 0.25% 52 Qatar 1.3 0.47% 55 Kuwait 0.83 0.30% 59 Tunisia 0.78 0.68% 64 Iran 0.7 0.12% 77 Algeria 0.16 0.07% 84 Oman 0.07 0.23%
  17. 17. WIPO Global Innovation Index (2018) 1. Switzerland 2. Netherlands 3. Sweden 4. United Kingdom 5. Singapore 6. United States of America 7. Finland 8. Denmark 9. Germany 10. Ireland 38. United Arab Emirates 51. Qatar 60. Kuwait 61. Saudi Arabia 66. Tunisia 69. Oman 72. Bahrain 76. Morocco 79. Jordan 90. Lebanon 95. Egypt 110. Algeria 126. Yemen Source: WIPO, Global Innovation Index (2018)
  18. 18. Capacity to Innovate (1) 17 Source: Kaufmann D., A. A. Kraay, and Mastruzzi (2010), The Worldwide Governance Indicators: Methodology and Analytical Issues
  19. 19. Capacity to Innovate (2) 18 Source: Kaufmann D., A. A. Kraay, and Mastruzzi (2010), The Worldwide Governance Indicators: Methodology and Analytical Issues
  20. 20. 67 Erb Street West, Waterloo, ON, Canada N2L 6C2 Telephone +1 519 885 2444 Thank you. www.cigionline.org @cigionline

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