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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 :

    http://www.leydesdorff.net/list.htm
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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


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