Presentation on STI Policy at the Joint Vienna Institute

1. 'Trends and challenges for
research, technology and
innovation policy'
JVI-Seminar
Public Governance and Structural Reforms
3. May 2011
Wolfgang Polt
Joanneum Research Ltd. -
POLICIES – Centre for Economic and Innovation Research
wolfgang.polt@joanneum.at

2. Reseach, Technology and Innovation:
Some Basic Concepts and Definitions

3. Definition of Research, Technology and
Innovation Policy
Innovation Policy: “… all public measures that
attempt to influence actors (enterprises,
public institutions, households) to develop new
knowledge and technologies (invention), to
commercialise these new technologies
(innovation) or to use them (diffusion)”.
Research (or Science) policy: aimed at
promoting research and the production of
fundamentally new knowledge.
(see Gassler/Polt/Rammer 2007)

4. Rationale(s) for Research and Innovation
Policies (1) – Effects on Economic Growth
 Innovation is the mayor driver of
productivity and economic growth
 Increasing share (though not and never
ALL) of innovation is based on
research and development (R&D)
 Structural change is going into the
direction of more ‚knowledge/skill/R&D
intensive„ sectors
 Competitiveness increasingly relies on
mastering these knowledge intensive
sectors

5. Rationale(s) for Research and Innovation
Policies (2) – Effects on Societal Well-Being
 R&D and Innovation contribute to
coping with societal challenges:
 Health
 Environment
 Security
 Nutrition
 Mobility
 ….

6. Rationale(s) for Research and Innovation
Policies (3) – market and systems failures
 Public good characteristics of
information and knowledge (spill-
overs, externalities, non-rival
consumption)
 Indivisibilities, critical mass and
network externalities
 Risk aversion of private actors
and capital markets
 Coordination failures (market- and
non-market incentives co-exist)

7. Basic Conceptions of Research and Innovation
The (in)famous
‚linear model‘
The ‚chain-linked
model‘
The ‚open
innovation
model‘

8. Basic Instruments of Science and Innovation Policy
 ‚Base„ or ‚core„ or ‚institutional‘
funding of research institutions
(universities, public research labs
etc.)
 Public funding of private R&D
Direct funding (subsidies)
Indirect funding (R&D tax
credits)
 Intellectual Property rights (e.g.
patents, trademarks as incentives
for innovation)

9. Basic Structures in a National Innovation
System (NIS)
Demand Framework Conditions
Financial environment; taxation and
Consumers (final demand) incentives; propensity to innovation and
Producers (intermediate demand) entrepreneurship; mobility
Industrial System Education and Political System
Research System
Professional
Large companies Government
education, training
Intermediaries
Research
Higher education
Mature SMEs institutes Governance
and research
Brokers
New, technology- Public sector
RTD policies
based firms research
The potential reach of
public policiesÉ
Infrastructure
Banking, venture IPR and Innovation and Standards and
capital information business report norms
Source: Erik Arnold and Stefan Kuhlman, RCN in the Norwegian Research and Innovation System,
Background Report No 12 in the Evaluation of the Research Council of Norway, Oslo: Royal Norwegian
Ministry for Education, Research and Church Affairs, 2001.

10. Developments of Instruments of Science and
Innovation Policy in a systemic perspective
 Fostering ‚Industry-Science –
Relations‘ (ISR)
 Creating Public-Private
Partnerships (PPPs)
 (Again) addressing ‘Grand
(societal) Challenges‘ (Mission-
oriented Research)

11. Recent trends and good practice in Research and
Innovation Policy
 RTP has become a major policy area in many
OECD countries
 Increasingly to be seen: formulation of explicit
RTP strategies
 Setting quantitative targets
 Explicit ‚policy learning„ (‚open method of co-ordination„)
 Setting targets and identifying priorities
 Thematic
 Functional
 Refining funding instruments
 Increasingly ‚Competitive„ / Programme funding -
Increasing the leverage effects of direct funding of
private R&D
 Increases in ‚indirect„ support to R&D via R&D tax
credits

12. Recent trends and good practice in Research and
Innovation Policy
 Fostering Human Resources for R&D
 Output of S&T graduates
 Career path for young researchers
 Attract talent
 Increase participation of women
 Coping with globalisation of R&D
 Reforming funding and performing instiutions
 Increased emphasis on monitoring and
evaluation (‚strategic intelligence for RTP„)
 Improving the ‚governance„ of RTP
 Strengthening the NIS as a SYSTEM
 …especially industry-science relations !

13. Socio-cultural factors influencing innovation

14. Challenges for Innovation Policy by Group of
Countries (EIS 2008)

15. Paradigm shifts in post-war RTP and PROs:
Relative Importance
New ‚missions‘ ?
New Public
Managment?
Generic elements of innovation systems
Civil ‚key‘ technologies
Classic mission-oriented approach
World War II today
Source: Rammer,Polt, Gassler(2008)

16. Global Trends in R&D and R&I Policies

17. Some basic trends in R&D
 General increases in the knowledge intensity
of production of goods and services
 Share of business sector increases with level
of development
 Share of service sector in R&D and in
innovation increases
 New ‚mode of production of knowledge„:
INTERACTION !
 Specialisation patterns between countries
differ … and will continue to do so (industrial
history, public priority setting…)
 Increasing globalisation (also of R&D) … in
various channels (international mobility,
international cooperation, inward/outward FDI)

18. R&D – global trends: intensity rises
over time
Source: OECD STI Outlook 2008

19. Overall R&D intensity (GERD)

20. R&D intensity of Business Sector (BERD)

21. Source: OECD STI Outlook 2010

22. in Firms
Types of Innovation
Source: OECD STI Outlook 2010

23. R&D spending in Higher Education Sector
(HERD)

24. R&D in Public Research Institutions (PROs)

25. Financing Structures of R&D

26. R&D Outputs: Scientific Publications

27. R&D Outputs: Patents

28. R&D Outputs: Export Performance

29. European Countries‘ Innovation Performance

30. European Countries Innovation
Performance by Sector

31. Current Challenges for RTI Policies
 Reaction to the Crisis !
 Private <-> Public Spending
 Coordination of Policies across a
growing number of policy domains
(environment, health, security,
energy, transport/mobility,
communication, industry policies…)
 In search for Excellence….

32. R&D and innovation in the business cycle,
OECD total (annual change)
Source: OECD STI Outlook 2008

33. Characteristics of CEEC innovation systems

34. Characteristics of CEEC innovation systems
 Low overall R&D intensity,
 CEEC have – in contrast to other
countries – considerably decreased
R&D spending post 1990 !
 Private sector R&D is still considerably
lower than in more advanced countries
 Large share of R&D in the Government
Sector  Academies of Sciences;
Institutes in Energy and Defense R&D

35. Characteristics of CEEC innovation systems
 With the break-down of old structures
industry science link almost collapsed
 Problems in Human Ressources and
Quality of Education
 Clear divide between the EU members
of CEEC and the non-EU members
 High FDI inflows,
 considerable share of high/medium-high
tech industries characterize the former
 much stronger focus of process innovation
than elsewhere

36. Innovation Performance and Change (EIS 2009)

37. Innovation Performance in selected CEEC (EIS 2008)

38. R&D expenditure as % of GDP (2006)

39. R&D expenditure by sector of performance (2006)

40. Technological Specialisation and Innovation Effort

41. Characteristics of CEEC‘s research and
innovation policies

42. Characteristics of CEEC‘s R&I policies
 STI policies were not given much
attention in the post-1990 period,
focus was rather on ‚macroeconomic
stability‘ (‚Washington consensus‘)
 ‚Stop and Go‘ approach to STI policies
 Pressure to build up own STI
capacities is rising, competitive
advantage of cheap, skilled labour +
low business taxation/regulation is
eroding

43. Characteristics of CEEC R&I policies
 EU plays considerable role for STI poliy
formulation and governance
 … but the creation of institutions (e.g.
implementing agencies) and orientation towards
EU STI policy setting (Framework Programme,
Structural Funds) is not generally favourable !
 Lack of priority setting (mechanisms)
 „…CEE innovation policies tend to solve
problems not existing in the respective
economies“ (KATTEL & PRIMI 2010) – e.g.
PPPs and TT

44. Main sources and suggested further reading:
 OECD: Science,Technology and Innovation Outlook
2010. Paris
 EU: Innovation Union Scoreboard 2010. Brussels
 Austrian Report on Research and Development 2010.
Vienna
 Helmut GASSLER, Wolfgang POLT, Christian RAMMER:
Setting priorites in Science and Technology Policy. In:
Claire Nauwelaires: Innovation Policy in Europe. Edward
Elgar. 2008
 Rainer KATTEL, Annalisa PRIMI: The periphery
paradox in innovation policy: Latin America and Eastern
Europe compared. March 2010
 Alasdair REID: EU Innovation Policy: Towards a
differentiated approach across countries. January
2009

45. Thank you for your attention !