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CHALLENGING ISSUES IN INITIATINGCHALLENGING ISSUES IN INITIATING
REGIONAL INNOVATION SYSTEMREGIONAL INNOVATION SYSTEMDEVELOPMENT:DEVELOPMENT:
THE CASE OF INDONESIATHE CASE OF INDONESIA
Tatang A. TaufikAgency for the Assessment and Application of Technology
(Badan Pengkajian dan Penerapan Teknologi / BPPT)
Sub-Committee on S&T Infrastructure and Resources Development (SCIRD).
The 7th ASEAN Science and Technology Week (7th ASTW)
2nd Science Congress and Sub Committee Conferences
Jakarta, August 5 7, 2005
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OUTLINEOUTLINE
INTRODUCTION/BACKGROUND
FOCUS OF DISCUSSION BRIEF REVIEW
IDENTIFIED GENERIC AND CHALLENGING
ISSUES : A Policy Perspective
THE PROPOSED COMMON FUTURE AGENDA BRIEF REVIEWS : FROM SOME EARLY
INITIATIVES
CONCLUDING REMARKS : SOME LESSONS
LEARNT
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1. INTRODUCTION / BACKGORUND1. INTRODUCTION / BACKGORUND
BRIEF REVIEW
INDONESIAN CONTEXT
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1. BRIEF REVIEW1. BRIEF REVIEW
Knowledge/innovation are the increasingly determining and
differentiating factor of competitiveness (micro, messo, and
macro levels); Paradigm shifts of the perspective on innovation in the last two
decades :
From linear-sequential perspectives (of technology push
and demand pull models) to a system perspective/
approach of a dynamic and interactive-recursive model
Some recent trends : more attentions on
Interactions and roles of actors ~ triple helix model
Local/regional dimensions : social learning and social
capital, local specificities, ~ regional innovation systemand industrial clusters.
Policy implication : national and regional
contexts/dimensions of the innovation policy.
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2. THE INDONESIAN CONTEXT2. THE INDONESIAN CONTEXT
Eroding competitive position of Indonesia in the international
arena ~ widening gap even with some other ASEAN countries;
Not yet fully recovered from the devastating 1997 crises ~
followed by political and other influential changes;
Indonesian context ~ innovation system :
a diverse cultural and regional uniqueness-rich country;
a large country problem with a small country capacity/capability;
More attention to the regional contexts :
Regional roles in development : the shift from centralized
economy to regional autonomy / decentralization;
Underdeveloped local specificities potentials for regionalunique advantages;
Regional innovation system development : the key to future
regional competitiveness.
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2. FOCUS OF DISCUSSION IN THE PAPER:2. FOCUS OF DISCUSSION IN THE PAPER:
KEY AREAS IDENTIFIED IN INITIATING THE
REGIONAL INNOVATION SYSTEMDEVELOPMENT
A BRIEF REVIEW FROM SOME EARLY STAGE
OF THE INITIATIVES
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3. BRIEF REVIEW ON INNOVATION SYSTEM3. BRIEF REVIEW ON INNOVATION SYSTEMAND INNOVATION POLICYAND INNOVATION POLICY
INNOVATION, INNOVATION SYSTEM, AND
INNOVATION POLICY SOME RECENT TRENDS
(Appendices)
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4. IDENTIFIED GENERIC AND CHALLENGING4. IDENTIFIED GENERIC AND CHALLENGINGISSUES :ISSUES :
A Policy PerspectiveA Policy Perspective
Attentions based on some dimensions :
2. Common problems ~ some comparative indicators;3. Innovation policy issues :
market and government failures;
systemic failures.
4. Regional dimensions/contexts.
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GENERIC AND CHALLENGING ISSUESGENERIC AND CHALLENGING ISSUES
IN INNOVATION SYSTEM DEVELOPMENT :IN INNOVATION SYSTEM DEVELOPMENT :
Weaknesses in general framework. These are related to some
issues such as :
Fundamental framework issues related to the innovationsystem, e.g., :
Regulatory impediments to development of business andinnovation;
Weaknesses in legal and regulatory development needed
to foster innovation progress; Weaknesses in specific infrastructural supports important
to innovation;
Costly bureaucracy administration process;
Very limited investment (financial supports) for innovative
activities; Uncompetitive fiscal supports (taxation structures/schemes) for
innovation;
Weaknesses related to intellectual assets (including IPRawareness, protection, and law enforcement).
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Weaknesses in institutions and S&T supports, and low
knowledge (technological) absorption of SMEs. These arerelated to
not yet properly developed (and/or missing) important
functions in the innovation system, and
weaknesses in science and technological supports relevant
to the development of the best local resources andspecificities;
on the other hand, small and medium enterprises (SMEs) as
the majority of the business actors (99% of business actors
in Indonesia), in general, have limited capability and
opportunity in accessing, utilizing, and developing knowledge(technology) important to their business competitiveness
enhancement.
GENERIC AND CHALLENGING ISSUESGENERIC AND CHALLENGING ISSUES
IN INNOVATION SYSTEM DEVELOPMENT :IN INNOVATION SYSTEM DEVELOPMENT : (Contd)
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1. Weaknesses in mutually beneficial linkages and interactions,and collaboration in diffusion of innovation (including bestpractices and/or R&D outputs). Mismatch in relevance and complementing functions
amongst knowledge pool development (knowledge supplyside) and technological needs and utilization (demand side),especially by private sectors in many technological areas are
widely acknowledged. Limited development and supports related to both business
(commercial) and non-business (non-commercial)technology-based transactions amongst actors, asymmetricinformation and limitations in capability and opportunity forinteractions important to innovation, diffusion and learning
process especially in traditional sectors in the economy areamong policy issues identified that impede mutually beneficiallinkages, productive interaction,and synergetic collaborationamongst actors in both the national and regional innovationsystems.
GENERIC AND CHALLENGING ISSUESGENERIC AND CHALLENGING ISSUES
IN INNOVATION SYSTEM DEVELOPMENT :IN INNOVATION SYSTEM DEVELOPMENT : (Contd)
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Weaknesses in innovation culture. Among other factors, these
are related to Low appreciation to creativity/innovativess spirits and
entrepreneurial business profession;
Slow development in entrepreneurship knowledge and skills,
and weak education system in supporting entrepreneurial
culture development; Limited talents (high quality human resources) in many
regions (regional brain drains), low high talent mobility and
interactions important to innovation and entrepreneurship in
the society;
Public authorities in general (at the national and regionallevels) are also among the weakness points for both the
development of innovation and entrepreneurhsip in their
environments and the significant progress in the society.
GENERIC AND CHALLENGING ISSUESGENERIC AND CHALLENGING ISSUES
IN INNOVATION SYSTEM DEVELOPMENT :IN INNOVATION SYSTEM DEVELOPMENT : (Contd)
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Weaknesses in development focus, value chains, competence
development and improvement of the sources of economic
progress. Weaknesses in interrelated business and non-business
activities (and actors) important to the economic dynamism and the
strong foundations for unique competitive advantages are caused by
some underlying factors such as :
Varieties of business activities and the supporting non-business
activities and regional unique competences developed in general arenot geared towards the more focused regional competitive
advantage development;
Business/industrial structures and linkages are weak;
Limited leadership and pioneering in progressing innovation and
diffusion of innovation;
Low development of start-up/new innovative companies (someteimes
called as the new technology based firms/NTBFs);
Most SMEs are lagging behind in creating and capitalzing the
opportunities from technological and non technological
progress/change.
GENERIC AND CHALLENGING ISSUESGENERIC AND CHALLENGING ISSUES
IN INNOVATION SYSTEM DEVELOPMENT :IN INNOVATION SYSTEM DEVELOPMENT : (Contd)
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Global (Globalization) challenge. Various weaknesses
(eventually) influence the readiness of Indonesia (at the nationaland regional levels) to play the better and strategic role in the
global arena and responding some important changes to
maximize the benefits for and minimize the negative impacts to
the society.
GENERIC AND CHALLENGING ISSUESGENERIC AND CHALLENGING ISSUES
IN INNOVATION SYSTEM DEVELOPMENT :IN INNOVATION SYSTEM DEVELOPMENT : (Contd)
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5. THE PROPOSED COMMON FUTURE AGENDA:5. THE PROPOSED COMMON FUTURE AGENDA:
THE HEXAGONS OF THE INITIATIVESTHE HEXAGONS OF THE INITIATIVES
Some considered aspects of the agenda :
2. Broad and fundamental policy themes
3. Universal to regional contexts of Indonesia
4. Interrelated areas
5. Keys to the initiatives based on current situations
1 DEVELOPING GENERAL FRAMEWORK
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1. DEVELOPING GENERAL FRAMEWORK.CONDUCIVE TO INNOVATION AND BUSINESSCONDUCIVE TO INNOVATION AND BUSINESS
DEVELOPMENTDEVELOPMENT
Developing regional innovation strategies;
Regulatory reforms: evaluating and eradicating impedingregulations;
Improving legal supports and environment important to
innovation and businesses;
Developing specific infrastructures important (and
unique) to the development of regional innovation
system;
Improving bureaucracy administration processes;
Enhancing the capacity (and capability) to improve
investment in innovation (the financing for innovation); Developing synergetic efforts to create/improve effective
incentive schemes for innovation;
Increasing awareness and implementation of the IPR
protection in the regions.
2 STRENGTHENING THE S&T INSTITUTIONS AND
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2. STRENGTHENING THE S&T INSTITUTIONS AND.SUPPORTS, AND DEVELOPING ABSORPTIVESUPPORTS, AND DEVELOPING ABSORPTIVE
TECHNOLOGICAL CAPACITY AND CAPABILITY OFTECHNOLOGICAL CAPACITY AND CAPABILITY OF
SMEsSMEs
National and regional S&T institutional reforms;
Better rewards/appreciation for S&T human resources;
Financial and legal supports to, especially, collective R&D
programs benefiting regional economies;
Practical tools for SME upgrading;
Better access for SMEs to knowledge databases andexpertise;
Enhancing financial supports to strategic SME
technological upgrading.
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3. FOSTERING COLLABORATION FOR INNOVATION3. FOSTERING COLLABORATION FOR INNOVATION
AND ENHANCING DIFFUSION OF INNOVATION,AND ENHANCING DIFFUSION OF INNOVATION,
BEST PRACTICES AND/OR R&D OUTPUTSBEST PRACTICES AND/OR R&D OUTPUTS
Financial and non financial supports to collaborative
innovation activities; Fostering techno-business based intermediaries
development (e.g., business development service
providers, regional technology clearing house);
Fostering business technological-based linkages;
Special technology diffusion/dissemination projects
benefiting to regional economies;
Developing an open coordination method/mechanism for
enhancing exchanges of best practices, benchmarking
activotoes, public domain of R&D outputs, and policy
coordination.
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4. DEVELOPING INNOVATION CULTURE4. DEVELOPING INNOVATION CULTURE
Increasing public awareness;
Education and R&D institutional reforms towards moreentrepreneurial organizations;
Entrepreneurship education and trainings;
Fostering new/start-up innovative companies (new
technology based firms/NTBFs ~ technopreneurial
firms);
Regional reverse brain drain (talents scouting), and
enhancing human resource mobilization;
Capacity building in regional public authority institutions;
Regional innovation awards;
Umbrella and set aside programs for particular regional
innovation projects.
5 FOSTERING AND STRENGTHENING INTEGRATED
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5. FOSTERING AND STRENGTHENING INTEGRATED5. FOSTERING AND STRENGTHENING INTEGRATED
EFFORTS OF REGIONAL INNOVATION SYSTEM ANDEFFORTS OF REGIONAL INNOVATION SYSTEM AND
INDUSTRIAL CLUSTER DEVELOPMENT INITIATIVESINDUSTRIAL CLUSTER DEVELOPMENT INITIATIVES
Strategic regional-specific R&D programs;
Competitive regional innovation development initiativeprojects (grant and/or resource sharing schemes);
Regional-specific industrial cluster development
programs;
Business (SMEs) technological upgrading programs;
Regional strategic alliance programs.
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6. DEVELOPING STRATEGIC RESPONSES6. DEVELOPING STRATEGIC RESPONSES
TO THE GLOBAL CHANGESTO THE GLOBAL CHANGES
Public awareness and law enforcement of IPR;
Developing local/indigenous knowledge/technologicalassets (including the legal aspects of the related IPR);
Enhancing regional capacity in the MSTQ system;
Fostering international collaboration in the regions.
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6. BRIEF REVIEWS : FROM SOME EARLY6. BRIEF REVIEWS : FROM SOME EARLYINITIATIVESINITIATIVES
1. The regions :
Tegal Regency (Central Java),
Sumedang Regency (West Java), and
Barru Regency (South Sulawesi).
2. General framework for collaboration and coordination
pattern3. An example : Tegal Regency ~ The starting/entry point
activities
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3
1
Tegal RegencySumedang Regency
Barru Regency
THE REGIONSTHE REGIONS
GENERAL FRAMEWORKGENERAL FRAMEWORK
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Thematic and/or Specific Initiatives
Framework Conditions
Regional DimensionsNational Dimensions
N
A
T
I
O
N
A
L
R
E
G
I
O
N
A
L
GENERAL FRAMEWORKGENERAL FRAMEWORK
FOR COLLABORATION AND COORDINATION PATTERNFOR COLLABORATION AND COORDINATION PATTERN
TEGAL REGENCY
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TEGAL REGENCYTEGAL REGENCY
Central Java
TEGAL REGENCYTEGAL REGENCY:
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TEGAL REGENCY:TEGAL REGENCY:
THE STARTING/ENTRY POINT ACTIVITIES ~ 2003THE STARTING/ENTRY POINT ACTIVITIES ~ 2003
Serial awareness and capacity building worskhops. Topics related to
competiveness and industrial cluster development;
Consensus building on the grand strategy : regional industrial clusterdevelopment as the platform of and approach to the regional economic
competitiveness development;
Establishing the Regional Competitiveness Council (a quasi-public
collaborative institution with membership consists of : business actors,
association, NGOs, educational communities, ex-officio reps. from regional
government, legislative members, prominent persons); Starting some industrial cluster initiatives (based on agriculture,
manufacturing and tourism industries) and industrial cluster task groups;
Revitalising an industrial district area as a center for services and
innovation of technology in the region;
Development of a regional vocational education;
Integrating the cluster projects into the annual regional government
program and with some other relevant projects (including some national
R&D projects).
TEGAL REGENCY RECENT ACTIVITIESTEGAL REGENCY RECENT ACTIVITIES
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TEGAL REGENCY: RECENT ACTIVITIESTEGAL REGENCY: RECENT ACTIVITIES
Serial awareness and capacity building worskhops. Topics related
to regional innovation system development;
Consensus building on the priority activities;
In the process of establishing the Regional Research Council;
Planning the regional innovation strategy document;
Continuing the previously agreed collaborative agenda.
INSTITUTION FOR COLLABORATION :INSTITUTION FOR COLLABORATION :
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Members
Office
Secretariate
Representatives
(from particular
industrial clusters)
Special task
force/teams
Functional
Groups
Special
Committees
Cross-sectoral (and
cluster) groups
e.g., : Promotional Expertise
e.g., : Benchmarking Specific industrial
cluster task groups
INSTITUTION FOR COLLABORATION :INSTITUTION FOR COLLABORATION :
The Regional Competitiveness Council (RCC)The Regional Competitiveness Council (RCC)
RCCRCC
THE ROLE OF BPPT TEAMSTHE ROLE OF BPPT TEAMS
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THE ROLE OF BPPT TEAMSTHE ROLE OF BPPT TEAMS
Organizing national and some regional workshops related to regional
innovation system themes;
Preparing guidelines (suggested steps and more practical tools/approach) ~industrial cluster development and regional innovation strategy;
Collecting and disseminating examples of relevant best practices ~
industrial cluster development and regional innovation strategy; Planning to
develop an internet based as a tool to develop an open coordination
mechanism (more simple model adopting from the EU Innovation
TrendChart Initiative);
Providing technical assistance :
facilitators (technical assistants/expertise) to accompany the regional
counterpart teams, particularly in the initial stage (process)
initiating regional consensus building
Some relevant initiatives at the national level, e.g.:
Policy studies;
Collaborations with other organizations;
Academic draft on indigenous knowledge/technology protection.
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AN EXAMPLE OF PRACTICAL TOOLSAN EXAMPLE OF PRACTICAL TOOLS (STAKEHOLDER-(STAKEHOLDER-
FRIENDLY)FRIENDLY) TO BUILD CONSENSUS ON THETO BUILD CONSENSUS ON THE
COMMON/COLLABORATIVE AGENDA (AND POLICYCOMMON/COLLABORATIVE AGENDA (AND POLICY
INTERVENTION)INTERVENTION)
Starting the Industrial Cluster Development Initiatives
(drawing some concepts and/or methodologies, e.g.,
from Porters Four Diamonds, for practical developingpractical approaches)
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Agenda Agenda Agenda Agenda
Results
Hierarchy
activities
outputs
purpose
goal
+ - + - + - + -
Stakeholder Mapping Analysing the Business Environment (The Porters Four Dia
Analysing the Improvement of the Business Environme
Prioritizing Goals/Objectives
Alternative Strategies Program/Activity MatriGoal/Objective Trees
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7.7. CONCLUDING REMARKS : SOME LESSONSCONCLUDING REMARKS : SOME LESSONS
LEARNTLEARNT(FROM THE INTIAL STAGE)(FROM THE INTIAL STAGE)
CONCLUDING REMARKS : SOME LESSONS LEARNTCONCLUDING REMARKS : SOME LESSONS LEARNT
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CONCLUDING REMARKS : SOME LESSONS LEARNTCONCLUDING REMARKS : SOME LESSONS LEARNT
(FROM THE INITIAL STAGE)(FROM THE INITIAL STAGE)
Biggest challenges :
Adapting to the paradigm shift (from a very centralistic and fragmented-sectoral development approach to a more decentralized, participatory
and collaborative effort). The learning process is costly yet a very crucialelement of development;
Commitment/seriousness of the participating actors;
Consistency in following up the agreed common agenda;
Readiness to some paradoxical fenomena of changes.
Common Operational but Significant Obstacles : government budgetstructure and bureaucratic rigidity.
Key Success Factors :
Unique/specific local potentials;
Strong motivation amongst regional business actors and programcounterparts towards improvement;
Local champions ~ highly motivatedand pioneeringindividuals; Common platform built upon agreed consensus and widely support to
develop synergetic and implementable activities of regionalcompetitiveness efforts;
Regional financial supports, especially regional government, for regional-specific starting activities.
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APPENDICESAPPENDICES
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3. BRIEF REVIEW ON INNOVATION SYSTEM3. BRIEF REVIEW ON INNOVATION SYSTEMAND INNOVATION POLICYAND INNOVATION POLICY
INNOVATION, INNOVATION SYSTEM, AND
INNOVATION POLICY SOME RECENT TRENDS
INNOVATIONINNOVATION
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INNOVATIONINNOVATION
Innovation
Technological ServicesOrganizational Goods
ProcessProcess ProductProduct SystemSystem
Technocratic definitions
SOME PERSPECTIVE DEVELOPMENTS ON INNOVATIONSOME PERSPECTIVE DEVELOPMENTS ON INNOVATION
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SOME PERSPECTIVE DEVELOPMENTS ON INNOVATIONSOME PERSPECTIVE DEVELOPMENTS ON INNOVATION
Technology Push:Technology Push:Linear-Sequencial Chains of Capability-driven Forces
1960s 1970s
BasicBasic
ResearchResearch R&DR&DAppliedApplied
ResearchResearchManufacturing/Manufacturing/
ProductionProductionSales/Sales/
DistributionDistribution
Demand Pull:Demand Pull:Linear-Sequencial Chains of Demand-driven Forces
1970s 1980s
DemandDemand
AppliedApplied
ResearchResearch
BasicBasicResearchResearch
Market Driven:Market Driven:Interactive-recursive (and Iterative) Process and as a Learning Process
1980s . . . .
Manufacturing/Manufacturing/
ProductionProductionR&DR&DSales/Sales/
DistributionDistribution
THETHE CHAIN-LINKCHAIN-LINK INNOVATION MODELINNOVATION MODEL
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THETHECHAIN-LINKCHAIN-LINKINNOVATION MODELINNOVATION MODEL
Research Knowledge Creation
Potential
Market
Invent
and/or
Analytical
Design
Detailed
Design
And
Test
Redesign
and
Produce
Distribute
and
Market
Transfer Processes
(various)
Source : Adapted from Kline and Rosenberg (1986).
NATIONAL RESEARCH AND INNOVATION SYSTEMNATIONAL RESEARCH AND INNOVATION SYSTEM
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NATIONAL RESEARCH AND INNOVATION SYSTEMNATIONAL RESEARCH AND INNOVATION SYSTEM
Source: Erik Arnold & Stefan Kuhlmann, 2001
The potential reach
of public policies ...
Framework Conditions
Financial environment; taxation andincentives; propensity to innovation
and entrepreneurship; mobility ...
Education and
Research System
Professional
education and
training
Higher education
and research
Public sector
research
Industrial System
Large companies
Mature SMEs
New, technology-
based firms
IntermediariesResearchinstitutesBrokers
Consumers (final demand)
Producers (intermediate demand)
Demand
Banking,
venture capital
IPR and
information
Innovation and
business support
Standards and
norms
Infrastructure
Political
System
Government
Governance
RTD policies
THE TRIPLE HELIX MODELTHE TRIPLE HELIX MODEL
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Source : Etzkowitz and Leydesdorff (2000).
Government Industry
Academia
Tri-literal networkTri-literal network
andand HybridHybrid
OrganizationOrganization
Linkages/interactionsamongst institutionsin the sphere as
dynamic and endlesstransitionalprocesses
THE TRIPLE HELIX MODELTHE TRIPLE HELIX MODEL
NATIONAL AND REGIONAL INNOVATION SYSTEMS :NATIONAL AND REGIONAL INNOVATION SYSTEMS :
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A Perspective on Regional/Local Uniqueness, Competence,A Perspective on Regional/Local Uniqueness, Competence,
and Cross-sectoral Linkagesand Cross-sectoral Linkages
Industrial Cluster 1-A
Industrial Cluster 2-C
Industrial Cluster 3-B
Industrial Cluster 1-Z
Industrial Clusters :
IndustrialClu
ster
3
Ind
ustrialCluster1
Sector I
Sector II
Sector III
Region
C
Region
A
RIS RIS
The national Innovation System
RIS : Regional Innovation System.
SOME PARADIGM SHIFTS ON INNOVATION AND POLICYSOME PARADIGM SHIFTS ON INNOVATION AND POLICYIMPLICATIONSIMPLICATIONS
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IMPLICATIONSIMPLICATIONS
Innovation policy (based on system approach)
began to develop.
Innovation policy are more two-side policyconsidered also as a learning process
developed towards the
developemnt/strenthening a more adaptable
innovation system. Innovation policy was no longer the
monopoly of the Central government, but
Regional government as well.
Innovation system era (1980s
now).
Note: New Growth Theorydeveloped.
Inovation viewed in a system
approach as a system of
aninteractive-recursive process(feedback loop/chain link model)
of a complex and dynamic
elements of creation (actors,
activities such as discovery,
invention, etc., and other
elements), utilization, diffusion,
and learning process holistically.
Policies emphasized on the demand side of
technology were increasingly dominating thegovernment attention to intervene the market
(demand driven). Technology policy and/or science and
technology (S&T) policies developed, but
most attentions were in a one-way
perspective (one-side policy).
Demand pull era(1970s
1980s).
Policies emphasized on the supply side of
technology were dominant (supply driven). Science/research policy were the central
theme in the government interventions. Technology policy began to develop.
Technology push era (1960s
1970s).
Inovation as a linear-sequential
process (pineline linear model).
No adequate attention and efforts for special
intervention (as policy issues).
Innovation has not received
special attentions (prior to
1960s).
Innovation (i.e., technological
change) as residual factors of
economic growth (neoclassical
models).
Main Policy ImplicationsThe EraThe View
AN INNOVATION POLICY FRAMEWORKAN INNOVATION POLICY FRAMEWORK
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AN INNOVATION POLICY FRAMEWORKAN INNOVATION POLICY FRAMEWORK
Education Policy
Knowledge and Skills
Creativity Professionalism
Entrepreneurship
Macroeconomic Policy
Monetary
Fiscal
Trade
Industrial Policy
Investment
Taxation - Subsidy
Incentives
Sectoral regulations
R&D Policy Regional Policy
Industrial Progress and Development:Competitiveness, Innovative Capacity, Rate of
Diffusion, Learning, Entrepreneurial Performance
Innovation Policy
Improvement ofExisting
Businesses
InvestmentDevelopment
Development ofNew Firms
(NTBFs)
Science Policy Technology Policy