The Mexico City Roundtable on OECD’s Innovation Strategy


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  • The growth path of the leading economies before the crisis was not sustainable, economically, environmentally, socially and therefore politically: Stronger productivity growth is needed to enhance efficiency and secure good prospects for long term socio-economic development worldwide
  • Also true for the emerging economies where innovation = TFP in conjunction with the upgrading of HC offer by far the greatest potential for gains in GDP per capita / wealth & social well being
  • Crisis emphasises the demand for new sources of growth; While at the same time global challenges become more pressing; Thus the search for growth that minimises the detrimental environmental impact which lead to innovations. We have been monitoring this situation and have found many countries are undertaking bold moves to protect and advance their innovation system – see France;
  • A significant amount of R&D is perfromed in medium and low-tech sectors: ¼ in Canada, Spain and more than 30% in Australia, Greece and Norway.. Recent surveys show that between a quarter and a half of low-tech firms engaged in innovative activities but only about half performed any R&D.
  • ... causing an “opening” of innovation as collaboration occurs across borders (institutions, countries, disciplines)...
  • China is now the third largest investor in R&D globally (about the size of Germany) China’s growth of R&D spending has been on average 18% a year since 1995 China’s GDP R&D intensity is growing rapidly (now close to 1.5%) China now produces almost as many publications on nanotechnology as the United States
  • … fuelled by globalisation… (trade, FDI, migration)
  • … and by ICTs, especially the Internet, that lowers the barriers to collaboration .
  • It is not about innovation for its own sake. Many innovations are worthless or even harmful. Rather, it is about how to harness innovation for improved economic growth and social welfare.
  • Capturing value locally while tapping into global networks of innovation. Build absorptive capacity: = to capture spillovers you need high quality tertiary educ services as a critical component in the larger bundle maintenance on jet engines, the installation and tailoring of a computer network or the complex system integration associated with products such as aircraft require a local presence close to customers and users which captures the value locally. People and firms can and do move, they are attracted or deterred mainly by local factors. For firms the most important factor is gaining access to human capital. For people it is the availability of opportunities: jobs, education, and a high-quality way of life. At the intersection of these two are institutions of higher learning: nodes in the innovation system and essential bridging institutions between players. The policy challenge is to stop treating them as another part of the public bureaucracy and start treating them as essential cogs in the innovation machine which requires independence, competition, entrepreneurial spirit and flexibility
  • After 36 slides I hope that much of this is relevant to the local needs and issues; although I’m sure that we are missing a few key points which is why we are hear – we want to hear from you When we combine this analysis with the Review of Mexican Innovation Policies, it seems to me that 3 important points emerge.
  • -- governance: meetings like these for mobilisation, visibility and building momentum. Need to keep it going and avoid stop and go. see Korea & Finland; -- globalisation: not only FDI but all channels, Mexican firms need to look outside of Mexico – building on success stories and tapping into the diaspora abroad; They have the access to large and sophisticated markets in US and in LA that are enviable; -- entrep & education: see Korea where SME R&D has increased from 10% Asian pre-crisis to now 30%
  • The Mexico City Roundtable on OECD’s Innovation Strategy

    1. 1. The Mexico City Roundtable on OECD’s Innovation Strategy 2 nd Forum on Innovation for Competitiveness Andrew Wyckoff OECD / STI 7 January 2010
    2. 2. Overview <ul><li>The OECD Innovation Strategy </li></ul><ul><li>The Innovation Imperative </li></ul><ul><li>The changing nature of innovation </li></ul><ul><li>Implications for policy </li></ul><ul><li>Concluding remarks for Mexico </li></ul>
    3. 3. 1. OECD’s Innovation Strategy
    4. 4. A multidisciplinary approach
    5. 5. 2. The Innovation Imperative
    6. 6. Pre-crisis slowdown in productivity
    7. 7. Innovation offers the largest potential for catching up Decomposition of cross-country differences in GDP per capita into their determinants, 2005 (United States = 100 ) GDP PPP per capita TFP Human capital Physical capital Employment United States 100.0 100.0 100.0 100.0 100.0 Canada 83.5 72.0 103.3 105.8 106.0 Japan 72.6 52.6 100.4 130.7 105.1 China 9.8 13.6 57.3 105.2 119.5 India 5.2 12.7 47.7 98.3 87.1 Brazil 20.5 29.3 70.1 103.1 96.8 Russian Federation 28.6 31.5 84.9 97.4 99.3 EU27 + EFTA 64.7 67.8 91.2 114.1 91.3 Total World 22.8 27.9 64.2 104.2 95.8 Source: OECD .
    8. 8. The need to support innovation grows due to the crisis.
    9. 9. 2. The Changing Nature of Innovation what, how, where & who
    10. 10. What innovation encompasses has changed… <ul><li>Expansion to services, including non-market services like public sector services; </li></ul><ul><li>Broader than just R&D to include non-R&D innovation like design, marketing, organisational innovation; </li></ul><ul><li>Applied to social issues – e.g. climate change – not well supported by market mechanisms </li></ul>
    11. 11. … to include non-tech innovators … Source: OECD based on Eurostat, CIS-2006 (April 2009) and national data sources . Share of non-technological innovators by sector
    12. 12. Share of business R&D by technological intensity (manufacturing, 2006) … a wide cross section of industries…
    13. 13. (indexed on 1980=1.0, Annex 1 ratification countries) ...and applications to social issues. Patenting in climate mitigation technologies relative to all sectors
    14. 14. How innovation is conducted has changed… <ul><li>Increasingly at the intersection / interaction of separate borders: disciplines; geography and institutions </li></ul><ul><li>Cost pressures, competition and desire to reduce risk have led to more open / collaborative strategies; </li></ul><ul><li>Premium and competitive advantage attached to tacit knowledge: know-how, organisational capital, access to networks. </li></ul>
    15. 15. There is more collaboration among scientists... Trends in co-authorship in scientific publications Domestic single authors Domestic co-authors International co-authors International Single author
    16. 16. Share of companies collaborating in innovation activities, by size Source: OECD based on Eurostat, CIS-2006 (April 2009) and national data sources . ...and between firms...
    17. 17. … who are employing “open innovation” strategies for competitive advantage. <ul><ul><li>Items shipped on behalf of sellers who utilized Fulfillment by Amazon (FBA): 3x from 2008 </li></ul></ul><ul><ul><li>Amazon Web Services (AWS): 300k users </li></ul></ul><ul><ul><li>100k approved apps , up from 65k in August </li></ul></ul><ul><ul><li>estimated 2.5b$US iPhone “apps economy”* </li></ul></ul>Q3 ‘09 Q3 ‘09 * 27/08/09 “How Big is the iPhone App Economy?”
    18. 18. Where innovation occurs has changed… <ul><li>MNEs still play a huge role; but increasingly more than just “D” abroad; </li></ul><ul><li>Increase in x-border links; </li></ul><ul><li>Rise of China and India. </li></ul>
    19. 19. <ul><ul><li> global innovation networks emerge... </li></ul></ul>
    20. 20. 2004-06 1996-98 PCT patent applications with co-inventors located abroad <ul><ul><li>( ...including Mexico…) </li></ul></ul>
    21. 21. … as well as new global players... Contributions to growth in global R&D (in billion constant US PPP and %) Note: (1) Australia, Canada, Iceland, Korea, Mexico, New Zealand, Norway and Turkey (2) Argentina, Brazil, India, Israel, Russian Federation, Singapore, South Africa, Chinese Taipei Source: OECD. 1996-2001 2001-2006
    22. 22. ...that alter the topography of innovation. Broad based Leaders Narrow Leaders / Adopters Adopters / Followers
    23. 23. What drives innovation has changed… <ul><li>Global market for the highly-skilled; </li></ul><ul><li>Not only the “I” but now the “C” in ICTs; </li></ul><ul><li>Global Challenges: climate change, health care, food security, development; </li></ul><ul><li>Eco-system: not only the supply side (R&D, facilities, SET) but also the demand (procurement, “vouchers” and lead users) </li></ul><ul><ul><li>Not just a “National System on Innovation” but also a collection of regional / local innovation systems that directly link to global innovation networks </li></ul></ul>
    24. 24. ...labour markets for the highly-skilled are globalising… Growth in the number of tertiary education students enrolled outside their country of citizenship worldwide (millions) Source: OECD and UNESCO Institute of Statistics
    25. 25. … and ICT (especially the Internet) has altered the nature of innovation.
    26. 26. ...and global challenges will exert a large “demand-pull”. Potential technological contributions to CO 2 emission reductions Source: IEA.
    27. 27. The actors involved in innovating have broadened… <ul><li>A range of firms and industries – not just large and high-tech; </li></ul><ul><li>Wide range of actors needed – not just SET but entrepreneurs and non-profits; </li></ul><ul><li>A range of Ministries and public agencies, and all levels of government; </li></ul>
    28. 28. … forcing a “rethink” of how to manage and govern innovation. Finland’s Governance of Innovation Policy
    29. 29. 3. Implications for Policy: the OECD IS Policy Principles
    30. 30. <ul><ul><li>1. Empowering people to innovate </li></ul></ul><ul><ul><ul><li>Providing education and training: hard and soft skills, including entrepreneurship </li></ul></ul></ul><ul><ul><ul><li>Motivation and space for innovation to flourish: </li></ul></ul></ul><ul><ul><ul><ul><li>Competition & empowering consumers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Solid, predictable institutional framework that supports entrepreneurs: </li></ul></ul></ul></ul><ul><ul><ul><li>Effective and sustained public / private sharing of the costs & risks of innovation. </li></ul></ul></ul>
    31. 31. <ul><ul><li>Providing an infrastructure for a networked-based innovation system </li></ul></ul><ul><ul><ul><li>Policy must seek to erect bridges between the different parts, forming or joining a network – either locally or globally. </li></ul></ul></ul><ul><ul><ul><li>Soft skills are needed that can traverse disciplines, cultures and organisations. </li></ul></ul></ul><ul><ul><ul><li>Building networks through mobility. </li></ul></ul></ul><ul><ul><ul><li>Exploiting modern communication capabilities. </li></ul></ul></ul><ul><ul><ul><li>Providing a modern and reliable knowledge infrastructure and platforms for innovation </li></ul></ul></ul><ul><ul><ul><li>Facilitating knowledge flows and fostering the development of knowledge networks and markets </li></ul></ul></ul>
    32. 32. <ul><ul><li>Capturing value locally while tapping into global networks of innovation. </li></ul></ul><ul><ul><ul><li>Build absorptive capacity : skills, institutions, access to networks </li></ul></ul></ul><ul><ul><ul><li>Universities are an essential node in innovation systems that can be the glue between actors and a local anchor into global networks. </li></ul></ul></ul><ul><ul><ul><li>Building on existing strengths for dynamic comparative advantage through innovation </li></ul></ul></ul>
    33. 33. <ul><ul><li>4. Improve the governance of policies for innovation. </li></ul></ul><ul><ul><ul><li>A broader conceptualisation of innovation requires a re-think of governance mechanisms to improve coherence; </li></ul></ul></ul><ul><ul><ul><ul><li>Across ministries and levels of government; </li></ul></ul></ul></ul><ul><ul><ul><li>Need for strong political leadership; </li></ul></ul></ul><ul><ul><ul><li>Need for measurement and evaluation frameworks to support policy. </li></ul></ul></ul>
    34. 34. <ul><ul><li>Adapt to a post-crisis environment </li></ul></ul><ul><ul><li>Step up competition enforcement so that “creative destruction” can occur and new players can emerge </li></ul></ul><ul><ul><ul><li>Use of procurement as a “demand-pull” </li></ul></ul></ul><ul><ul><li>Stretch resources through co-operation / collaboration / PPPs and public depositories of information </li></ul></ul><ul><ul><li>Transform global challenges into innovative opportunities (e.g. Biodiversity; water management; food security). </li></ul></ul>
    35. 35. 4. Concluding Remarks: relevance of the IS principles in the Mexican Context
    36. 36. <ul><li>Governance : sustained commitment, continuity & leadership; </li></ul><ul><li>Globalisation : tapping into global networks to complement domestic capabilities in priority areas and Mexican Diaspora; </li></ul><ul><li>Entrepreneurship & Education : remove obstacles and nurture an entrepreneurial culture in the young. </li></ul>
    37. 37. <ul><li>E-mail comments & ideas: </li></ul><ul><ul><li>[email_address] </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul><ul><li>Keep abreast </li></ul><ul><ul><li> </li></ul></ul>Contact