Innovation and innovationInnovation and innovation policies: new evidence from theScience, Technology, Industry Science, Technology, Industry
Scoreboard 2011Scoreboard 2011Scoreboard 2011 Scoreboard 2011 Chi C i l OECDChiara Criscuolo, OECD
ScienceScience, Technology, gy,Industry Scoreboard 20112011
Innovation and growth in knowledge economies
The value of the STI Scoreboard
• Wide-ranging resource book of indicators• To inform policy making• Broad scope – includes BRIICSp• New indicators
K l d i t d d f t
The STI Scoreboard 2011Knowledge economies – trends and features
Building knowledgeg g
Connecting to knowledge
Targeting new growth areas
Unleashing innovation in firms
Competing in the global economy Competing in the global economy
RoadmapI ti d i ti li i t d • Innovation and innovation policies today: new evidence from the OECDOECD Science, Science, Technology, Industry Scoreboard 2011Technology, Industry Scoreboard 2011
• Why should we support Innovation?Why should we support Innovation?• What are the policy tools available?
h h ff f h l• What are the effects of the policies?• Policies for the services sector?Policies for the services sector?
Investing in R&D and talentInvesting in R&D and talent is critical
Gross domestic expenditure on R&D, 1999 and 2009as a percentage of GDPp g
0.98
0.77
1.39
4.55
15.4
0
0.64
1.09
41.2
4
8.48
0.92
0.03
100.
00
1.94
4.79
0.80
2.51
30.4
7
0.10
4.15
1.29
0.29
0.48
12.5
1
0.07
0.41
0.41
0.04
2.12
2.54
3.11
0.16
0.21
0.49
0.80
0.43
0.21
0.06
0.10
0.63
45
%
23
1999
s a %
of t
otal
O
ECD
R&D
pe
nditu
re, 2
008
01
SR IN WE 8) PN NK 8) 8) EU UT 8) 8) 8) RA EL AN 27 VN BR LD RL OR
HN 9) RT ZE ST
SP TA US 7) UN 8) UR OL 7) VK 8) 7)
As
exp
IS FI SW
KOR
(199
9, 2
00 J P DN
CH
E (2
000,
200
USA
(199
9, 2
008
DE AU
ISL
(199
9, 2
00
OE
CD
(199
9, 2
008
AU
S (2
000,
200
8
FR BE CA
EU
2
SV GB
NL IR
NO
CH
LUX
(200
0, 2
00 P R CZ ES ES IT RU
NZL
(199
9, 2
007
HU
ZAF
(200
1, 2
008
TU PO
GRC
(199
9, 2
007
SV
CH
L (2
00
ME
X (1
999,
200
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Building a critical mass in scienceR&D in OECD and non-OECD economies, 2009 or latest available year
R&D in OECD countries,2009 or latest available yearResearchers, per thousand employment
FIN
ISL
14.0
16.0BRIICSNorth AmericaEU27Other OECD members
R&D Volumes in 2000 USD -constant prices and PPP
1 Billion
10 Billion
USA
JPN
KORSWE
DNK
NOR
PRT
NZL
ISL
10.0
12.0100 Billion
DEU
FRA
GBRCAN
RUS
AUS
ESP
AUT
CHE
BEL
PRT
IRL SVN
LUXSVK
EST
6.0
8.0
ITA
NLD CHE
TUR
POL
CZEHUN
GRC
2.0
4.0
CHNMEX
ZAFCHL
0.00.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Gross domestic expenditures onR&D as a percentage of GDP
R&D expenditure by performing sectors, 2009
% B i t i Hi h d ti G t P i t fit
80
100
% Business enterprises Higher education Government Private non-profit
60
20
40
0
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Business enterprise expenditure on R&D, 1999 and 2009 as percentage of GDP
3.0
%0
2.0
1999
0.0
1.0
R N E ) N ) ) K ) U ) ) A ) L N ) N L 7 R N E R D S T P N A T ) ) R K L ) ) )
ISR
FIN
SW
EO
R (1
999,
200
8JP
NH
E (2
000,
200
8S
A (1
999,
200
8D
NK
UT
(200
2, 2
009
DE
UC
D (1
999,
200
8S
L (1
999,
200
8FR
AU
S (1
999,
200
8B
EL
CH
NU
X (2
000,
200
9S
VN
IRL
EU
27G
BR
CA
NC
ZEN
OR
NLD
RU
SP
RT
ES
PH
UN
ITA
ES
TZA
F (2
001,
200
8N
ZL (1
999,
200
7TU
RS
VK
PO
LE
X (1
999,
200
7R
C (1
999,
200
7C
HL
(200
8
KO C U A
OE
C I A L Z N M GR
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Manufacturing vs. Services
Business R&D in the manufacturing sector by technological intensity, 2008As a percentage of manufacturing business enterprise R&D
90
100
% High-technology Medium-high technology Medium-low and low technology
50
60
70
80
20
30
40
50
0
10
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Value added of innovation-intensive manufacturing sectors, 2008 as a percentage of total manufacturing value added
%32: Radio, television and communication equipment 34: Motor vehicles and trailers
40
45
% 24: Chemicals and chemical products 33: Medical, precision and optical instruments23: Coke and refined petroleum products
25
30
35
10
15
20
0
5
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Largest 4 industries in manufacturing…share of valued added, 2008
35
%
C30T33 Electrical and optical equipment C23T25 Chemical, rubber, plastics and fuel productsC29 Machinery and equipment, n.e.c. C27T28 Basic metals and fabricated metal productsC15T16 Food products, beverages and tobacco C34T35 Transport equipmentC21T22 Pulp, paper, paper products, printing and publishing C17T19 Textiles, textile products, leather and footwearC26 Other non-metallic mineral products Sum 2000
25
30
35
15
20
5
10
0
Largest 4 industries in servicesshare of valued added, 2008
90%
65-67 Financial Intermediation 50-52 Wholesale and retail trade; repairs 70-74 Real estate, renting and business activities
60-64 Transport, storage and communications 55 Hotels and restaurants Sum 2000
60
70
80
40
50
60
10
20
30
0
Share of services in business R&D, 1998 and 2008% 1998
70
80
90
% 1998
40
50
60
10
20
30
0
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Researchers in manufacturing and services, 2009 (per thousand employment in industry)
14
Manufacturing Services Not elsewhere classified‰
10
12
4
6
8
0
2
4
Patent quality index
Korea has high quality patents
Patent quality index by technology field, 2000-10
Italy
Finland
Engines, pumps, turbines
Polymers
Telecommunications
Germany
Denmark
Japan
Solar energy
Wind energy
Micro- and nano-tech
Patent quality index
Country with the maximum patent quality index
tions
Bio materials
Digital communication
Canada
United States
tech
IT methods
Fuel cells
Electrical machinery
Audio-visual tech.
T til d
Materials, metallurgy
Basic communication
Environmental
Australia
Norway
Textile and paper machines
Computer tech.
Medical tech.
Israel
Environmental tech.
Machine tools
Other consumer goods
Denmark
0.0 0.1 0.2 0.3 0.4
Biotechnology
Index
0.0 0.1 0.2 0.3 0.4
Semiconductors
Index
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
w6
슬라이드 19
w6 OK, I remain to be convinced -- but to me this seems very complicated. We'll need to be able to deliver the bottom line in 3-4 sentences.wyckoff_a, 2011-09-10
Korean patents are highly citedHighly cited patent applications to the EPO (top 1%), 1996-2000 and 2001-05
40% 2001-05 1996-2000
Highly cited patent applications to the EPO (top 1%), 1996 2000 and 2001 05As a share of all EPO patent applications in the top 1% in their field
30
Number of top 1% cited patents,
2001-05
1.5
2.0Magnified
20
0.5
1.0
0
10 0.0
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
But when looking at trademarks…T d k li ti t JPO OHIM d USPTO b t ti t GDP 2007 09
810
JPO
14.9
23.9
ns U
SD
PP
P
52.
0
Trademark applications at JPO, OHIM and USPTO by country, ratio to GDP, 2007-09 average
6
OH
IMJ
Mag
nifie
d
over
GD
P in
bill
io
0.5
1.0
1.5
24
US
PTO
Trad
emar
ks o
0.0
IDN
RU
SIN
DB
RIIC
SP
OL
BR
AS
VK
CH
NG
RC
TUR
HU
NZA
FC
ZE
0
IDN
RU
SIN
DB
RIIC
SP
OL
BR
AS
VK
CH
NG
RC
TUR
HU
NZA
FC
ZES
VN
ES
TP
RT
JPN
CH
LE
SP
MEX
KO
RN
OR
ITA
BE
LEU
27FIN
FRA
AU
TD
EU
NLD
GB
RIR
LS
WE
DN
KA
US
ISR
NZL
CA
NLU
XIS
LC
HE
OE
CD
US
A
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Boosting Innovation: di li ia diverse policy mix
Boosting innovation in the economyDirect government funding of business R&DIndirect government support to business R&D (R&D tax incentives)Total government support to business R&D
Direct government funding of b i R&D
0.45
0.50
% Indirect government support to business R&D (R&D tax incentives)
0.45
0.50
%
0.45
0.50
%
business R&D and tax incentives for R&D, 2009
0 25
0.30
0.35
0.40
0 25
0.30
0.35
0.40 No data/cost estimate available
0 25
0.30
0.35
0.40
0.10
0.15
0.20
0.25
0.10
0.15
0.20
0.25
0.10
0.15
0.20
0.25
0.00
0.05
0.00
0.05
0.00
0.05
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Business R&D intensity and government support to business R&D, 2009As a percentage of GDP
4 5
BERD intensity, as % of GDP
ISR
3.5
4.0
4.5
Indirect tax support to business R&D, 2009 (Million USD PPP)
No incentive / estimate
USD 75 million
USD 250 million
USA
JPNKOR
SWE
FIN
CHE
2.5
3.0
USD 2 500 million
FRA
AUS BEL
AUT
DNK
SVN
ISL
DEU
CHNLUX
CHE
1.5
2.0
CANGBR
NLD
TUR
ESPPRT
IRL
HUN
NORCZE
SVN
ZAF
POL
NZL
RUS
CHL
EST
SVK
MEX
ITAGRC
0.5
1.0
CHL SVK0.00.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50
Total government support to business R&D, as % of GDP
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Why Public supportT I ti ?To Innovation?
Why public support to R&D?Public support to R&D addresses the less-than-socially-optimal
private investment stemming from projects with large expected social benefits but inadequate expected private returns (Arrow social benefits but inadequate expected private returns (Arrow, 1962).
Government support to R&D aims to address market failures, and in pp ,particular to:
• Align private and social return, and mitigate the “incomplete private appropriability” problem (Nelson, 1959; Arrow, 1962);
• Correct for information asymmetries that lead to financing constraints especially for young and small firms
Supporting R&D: policy toolsTwo broad R&D policy instruments exist: Two broad R&D policy instruments exist:
1) Direct procurement and public funding of knowledge-based innovative activities carried out by public entities (universities, research centres, etc.);
) bli i l i i i f f2) Public support to commercial R&D, i.e. incentives for a greater amount of private investment, in the form of:
Tax incentives: based on firm-level R&D activity: market based tool.
Directly reduce marginal cost of R&D activities
Allow private firms to choose projects
Di t R&D b idi j t ifi t lDirect R&D subsidies: project-specific tools
Allow public bodies to target projects with perceived high marginal social rates of return
Grants vs fiscal incentivesR&D • R&D grants
Directed at specific projects (government/government agency chooses)
Often targeted to national needs
Sometimes targeted to collaborative research (with universities; government; other firms)
Sometimes “ pick-the-winner” strategy (see also Wallsten, 2000)
T i ti f R&D• Tax incentives for R&DAccelerated depreciation - usually 100%, i.e., expensing
Allowances – amounts that can be deducted from income for tax purposes (>100%)(>100%)
Credits – amounts deducted from tax liability
Market base method / affect price of R&D
More on R&D tax credits• Close gap between private and social return to R&D by lowering its • Close gap between private and social return to R&D by lowering its
cost
• Can also be used to target specific areas (more generous):i hBasic research
Small & medium-sized firms
Collaborative research
Energy
• Widely used in OECD countriesE.g. in US; Canada; Australia; UK; France; Spain for exampleg ; ; ; ; ; p p
Not available in e.g. Germany and Finland (grants)
• Design: Incremental vs. Volume base
Volume base R&D tax credit Australia, Canada, France, Norway, Brazil,
Details of differences in R&D tax incentives schemes across selected OECD countries (2009)
Design of the R&D tax incentive scheme
Volume base R&D tax credit Australia, Canada, France, Norway, Brazil, China, India
Incremental R&D tax credit United StatesHybrid system of a volume and an incremental credit
Japan, Korea, Portugal, Spainincremental creditR&D tax allowance Denmark, Czech Republic, Austria,
Hungary, UKPayroll withholding tax credit for R&D wages Belgium, Hungary, Netherlands, Spain
More generous R&D tax incentives for SMEs Canada Australia Japan UK HungaryMore generous R&D tax incentives for SMEs Canada, Australia, Japan, UK, Hungary, Korea, Norway
Targeting
Special for energy United StatesSpecial for collaboration Italy, Hungary, Japan, NorwaySpecial for new claimants FranceSpecial for new claimants FranceSpecial for young firms and start‐ups France, Netherlands, Korea
Ceilings on amounts that can be claimed Italy, Japan, US, Austria, Netherlands
Income based R&D tax incentives Belgium, Netherlands, Spain
No R&D tax incentives Estonia, Finland, Germany, Luxembourg, Mexico, New Zealand, Sweden, Switzerland
R&D support: direct and indirect effects• Relieve firms of (some) R&D and innovation costs;
• Improve the risk‐return pattern (also on other projects);
• Allow conducting further R&D projects at lower costs;
• Help firms updating their know‐how, which may in turn result in knowledge spillovers benefitting other firms (Klette et al 2000);spillovers benefitting other firms (Klette et al., 2000);
• (Especially small and/or young firms) have a certification effect (e.g. Lerner, 1999; Blanes and Busom, 2004). This lowers firms’ cost of capital at the margin, when applying for external sources of financing. Grants act as a signal of “good quality” for firms and projects, and reduce information asymmetry.
R&D expenditures of foreign-controlled affiliates, 2008as a percentage of Business Expenditure on R&D
%
60
80
40
20
0
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
R&D support and location of R&D• R&D support policies are used to attract internationally mobile R&D support policies are used to attract internationally mobile
R&D– even if R&D grants/tax incentives might affect the location of MNEs
R&D investment, there are other factors that are more important. • for MNEs laboratories aimed at doing basic research (the “R” in R&D)
(e.g. Thursby and Thursby, 2006; Belderbos et al. 2007; Alcacer and Chung, 2007; Branstetter et al., 2006)
l l i d h l i i i i f i h – access to local science and technology, proximity to university frontier research and centres of excellence, availability of a skilled workforce, engineers and scientists and strong intellectual property rights.
• for R&D labs engaged in development (the “D” in R&D) (e.g. Defever, 2006 and von Zedwitz and Gassman, 2001)
– access to local markets and proximity to other corporate activities, such as d i i d i i l lproduction sites, and proximity to local customers
Other aims/impacts of R&D support
• Induce firms to start conducting R&D
• Incentivise firms to conduct R&D jointly with universities
• Indirect effect on scientists wagesg
Policy makers may want to evaluate effect of R&D y ytax credits/grants on all these outcomes
Evaluating the effect of R&D supportSince Griliches (1958) and Blank & Stigler (1957) many investigated:Since Griliches (1958) and Blank & Stigler (1957), many investigated:
• Input additionality, i.e. the complementarity or substitutability of public and private R&D funds (especially additionality VS crowding out) (David et al, 2000 and Hall and Van Reenen, 2000 for a survey);
• Output additionality, i.e. the returns to R&D support programmes in terms of, e g innovative output productivity growth etc (Klette et al 2000 for a survey)e.g., innovative output, productivity growth, etc.. (Klette et al, 2000, for a survey)
Not many have investigated indirect effects on:
S i ti t ( G l b 1998 d L k hi d M h 2008)• Scientists wages (see Goolsbee, 1998 and Lokshin and Mohnen, 2008)
• Location of R&D activities (Bloom and Griffith, 2001 and Wilson, 2008)
• R&D start‐up decisions (Norway Skattefunne programme evaluation)
Innovation broader th R&Dthan R&D
Innovation is much broader than R&D…
Product innovators by R&D status 2006-2008 R&D ti fi Fi ith tR&D
y
80
90
100
% R&D active firms Firms without R&D
50
60
70
10
20
30
40
0
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Innovation strategies in the servicesP d t i ti l P d t & k ti i ti l i ti M k ti i ti l i ti l
80
100
% Product or process innovation only Product or process & marketing or organisational innovation Marketing or organisational innovation only
60
20
40
0
SOURCE: OECD, Science, Technology and Industry Scoreboard, 2011.
Current OECD projects • Innovation in services (INNOSERV): ( )• new evidence on the role of R&D in service innovation through quantitative analysis of micro
and sectoral data and the development of new indicators.
• Analysis of the barriers to R&D and innovation in services as well as of the role and impacts of y ppolicies (through questionnaires and case studies) will help identify good practices and strengthen the evidence base for the formulation of new policies which better take into account the specificities of service innovation
• New Sources of Growth; Intangible Assets (NSG) :
• structured evidence of the economic value of intangible assets as a new source of growth; and
• Improved understanding of current and emerging challenges for policy, addressing such areas as taxation, competition, intellectual property rights, the regulatory treatment and use of private and public data, and corporate reporting.
Looking at productivity…
510
%2001-07 2007-09
y
2009-10
05
bour
pro
duct
ivity
-5Gro
wth
in la
b
-10
…and labour utilisation2007 09 2009 10
10 %
2001-07 2007-09 2009-10
5
ilisa
tion
-50
wth
in la
bour
uti
-10
Gro
w