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OECD WORK ON INNOVATION AND SOUTHEAST ASIAOECD ROUNDTABLE ON INNOVATION POLICY IN SOUTHEAST ASIA, BALI, 24 MARCH 2014
Molly Lesher, Counsellor, OECD Directorate for Science, Technology and Industry
• OECD work on innovation generally• Highlights of OECD work on
innovation in Southeast Asia– Regional review– IP framework– Inclusive innovation
• How can OECD help Southeast Asia achieve its innovation policy goals?
Overview
Innovation in science, technology and industry• Since 2005, the OECD has undertaken a
demand-driven programme of Country Reviews of Innovation Policy.
Completed: Luxembourg, Switzerland, New Zealand, South Africa, Chile, Norway, China, Hungary, Korea, Greece, Mexico, Russian Federation, Peru, Slovenia, Sweden
Recently completed: Colombia, Croatia, Vietnam, Southeast Asia
On-going: France, Netherlands
Upcoming: Malaysia
• Scope: Comprehensive analysis of the respective national innovation system (with a focus on the role of government policy)
See: www.oecd.org/sti/innovation/reviews
The policy domains covered by the reviews
Framework conditions for innovation(Functioning of markets, regulation, corporate governance,
education, communication infrastructures, etc.)
Science, technology and innovation policy
Policies to support
investment in science &
R&D
Policies to strengthen
linkages within innovation
systems
Demand-side measures
Supply-side measures
e.g. Procurement policies
e.g. R&D tax incentivesGrants
e.g. Public-private partnerships
e.g. Promotionof innovation
in SMEs
Policies to enhance
innovation competencies
of firms
Innovation in science, technology and industry (continued)
• Innovation for development • Contribution of innovation to economic growth and well-
being;• Impact of globalisation on development and innovation;• Inclusive innovation;• Education, skills and human capital;• ICTs for development; and• Institutional frameworks for innovation policy.
• Inclusive innovationExploring ways to leverage innovation to address high rates of social exclusion and poverty.
• Science, technology and industry working papersCover a broad range of topics including definition and measurement of science and technology indicators, global value chains, and research on policies to promote innovation.
• Innovation Policy Platform (IPP) Web-based tool providing state-of-the-art information relevant to STI policymaking, including statistics, case studies and policy briefs: www.innovationpolicyplatform.org.
• Innovation strategyMinisterial Mandate (May 2007): Boosting innovation to promote sustainable growth. Final report delivered to the OECD Ministerial in 2010.
Innovation in science, technology and industry (continued)
Valu
e cr
eati
on
Activities Source: Based on Shih (1992), Dedrick and Kraemer (1999), and Baldwin (2012).
R&D
Design
Logistics
Production
Marketing
Services
Boosting innovation helps countries move up the value chain
Logistics
OECD work on measuring trade in value added and GVCs is extensive
TiVA database covers 58 countries, including Southeast Asia
• oe.cd/tiva• oe.cd/gvc
OECD also produces indicators of science, technology and industry
OECD Review of Innovation in Southeast Asia
• This review is the first OECD innovation mapping of science, technology and innovation (STI) developments in a trans-national region
• The review assesses the STI capabilities, and analyses the strength, weaknesses, opportunities and threats through detailed country profiles of Cambodia, Indonesia, Malaysia, Singapore, Thailand, and Vietnam
• It represents a first step in better understanding the innovation policy setting in Southeast Asia
Framework conditions for innovation: Infrastructure
• Infrastructure can both carry and enable innovation
• Lack of basic infrastructure is an issue in parts of the region, although some higher income countries have made impressive strides in developing their infrastructure over the last 30 years
Internet users as a percentage of the population (2011) (ITU)
Percentage of population without electricity, 2009 (World Bank)
0102030405060708090
100
0
10
20
30
40
50
60
70
80
Framework conditions for innovation: Regulation (World Bank “Doing Business” indicators for start-ups)
2013 Rank
Procedures (number) Time (days) Cost (% of income
per capita)Paid-in Min. Capital (% of income per
capita)
2004 2013 2004 2013 2004 2013 2004 2013
Singapore 4 7 3 8 3 1 0.6 0 0Hong Kong, China 6 5 3 11 3 2.4 1.9 0 0Chinese Taipei 16 8 3 48 10 5.9 2.4 210.8 0Korea 24 10 5 17 7 18.4 14.6 347.7 0Malaysia 54 10 3 37 6 33.1 15.1 0 0Laos 81 7 6 153 92 23.9 7.1 32.1 0Thailand 85 8 4 33 29 8 6.7 0.4 0Viet Nam 108 12 10 59 34 31.9 8.7 0 0Japan 114 11 8 31 23 10.7 7.5 74.9 0China 151 13 13 48 33 17.8 2.1 1,236.50 85.7Philippines 161 17 16 49 36 28.6 18.1 2.3 4.8Indonesia 166 12 9 168 47 136.7 22.7 69.1 42India 173 11 12 89 27 53.4 49.8 428 140.1Cambodia 175 11 9 94 85 534.8 100.5 438.9 28.5
Human capital for innovation
PISA Educational Attainment of 15-year olds, 2009 (OECD, 2011)
Singa
pore
Taipei,
ChinaJap
anKorea
Hong Kong,
China
United St
ates
Malaysi
a
Thail
and
Indonesia
0
100
200
300
400
500
600
Mathematics Science
TIMSS Science and Mathematics Scores of Eighth-Grade Students, 2007
Secondary Gross Enrolment Rates (2010 or nearest year) (Source: World Bank)
• Many skills sets important for innovation
• At the basic level, adult literacy rates are high in most SEA countries
• Secondary enrolment rates are more mixed; engineering skills are particularly important in catching-up, but remain under-developed
• TIMSS and PISA 2009 Plus results indicate performance in mathematics and science
0102030405060708090
Reading Mathematics Science250
300
350
400
450
500
550
600
Malaysia OECD average Singapore Japan Korea Hong Kong, China
Tertiary education
• Tertiary education – both in academic and vocational skills – is essential for technological upgrading
• Enrolment rates in tertiary education vary significantly within the region with the level of development, with Thailand, Malaysia in the leading group
• Reflecting the state of development in many countries, the proportion of public expenditure on tertiary education from education budgets tends to be rather low. Singapore and Malaysia are leading in the region on these terms
Tertiary Gross Enrolment Rates (2010 or nearest year) (Source: UNESCO)
Percentage of public expenditure on education devoted to the tertiary level
(2010 or nearest year) (Source: UNESCO)
0
5
10
15
20
25
30
35
40
0
10
20
30
40
50
60
Southeast Asia’s Innovation Policy Challenges
• Framework conditions for innovation• Infrastructure• Relatively low overall investment in S&T
and innovation• Indigenous innovation capabilities remain
relatively weak overall in the majority of countries (compared to 1st generation East Asian “Tiger economies”: Korea et al.)
• Lack of regional or global brands
IP, innovation and development
• A new framework that identifies strengths and weaknesses in the IP system from the perspective of contributions to national innovation performance
• The framework has been applied to Indonesia (2014)
Critical dimensions in the IP framework
Organisation of IP systems and “legal quality”
Taking into account development challenges
Access to a wider group of users
Putting IP policies into the wider innovation context
Recommendations to enhance Indonesia’s IP system
Improve the quality of the IP system via legal and administrative reforms
Institute policies to include smaller entities and businesses in remote geographic areas (high potential gain from use of IP)
Remove barriers that inhibit public research institutes from playing a larger role in the innovation system
Enhance co-operation on IP policy among all stakeholders to improve policy design
• Benefits of growth do not automatically trickle down to generate more equal societies
• Inclusive development is also important for policy agendas as inequalities can negatively affect growth
Knowledge and Innovation for Inclusive Development
→ Innovation policies have been examined to date essentially with regards to their impact on the growth of aggregate income – what about impacts on inequalities (distributional impacts)?
Summary of Project Framework
Territorial Inclusiveness(Places)
Social inclusiveness
(People)
Industrial inclusiveness
(Firms)
Policies
Characteristics of the
Innovation System
DistributionalImpacts
Policies affecting mainly
industrial inclusiveness
Policies affecting
industrial and social
inclusiveness
Policies affecting mainly social inclusiveness
“Islands of Excellence”
Source: EC (2011), “Monitoring industrial research: 2011 EU Industrial R&D investment Scoreboard”, European Commission, Luxembourg; OECD (2012), OECD Science, Technology and Industry Outlook 2012, OECD, Paris.
Firm Sector of activity Economy
R&D investment
(million USD)
Employment (thousands)
1 Huawei Technologies Telecommunications equipment (9578) China 2392 110
2 PetroChina Oil & gas producers (53) China 1774 553
3 China Railway Construction Construction & materials (235) China 1407 229
4 Hon Hai Precision Industry Electronic equipment (2737) Chinese Taipei 1314 n.a.
5 ZTE Telecommunications equipment (9578) China 1188 85
6 Taiwan Semiconductor Manufacturing Semiconductors (9576) Chinese Taipei 1006 33
7 Petroleo Brasiliero Oil & gas producers (53) Brazil 980 80
8 Vale Mining (177) Brazil 867 71
9 MediaTek Semiconductors (9576) Chinese Taipei 789 5
10 Gazprom Oil & gas producers (53) Russia 781 393
11 China Petroleum & Chemicals Oil & gas producers (53) China 724 373
12 HTC Telecommunications equipment (9578) Chinese Taipei 438 13
13 Tata Motors Automobiles & parts (335) India 413 n.a.
14 CSR China Commercial vehicles & trucks (2753) China 366 80
15 Wistron Computer hardware (9572) Chinese Taipei 335 n.a.
Next steps in the project
• Global Forum on Development, 2 July 2014– Debate how innovation policies can support developing and
emerging countries’ quest for competitiveness without compromising industrial, social and territorial inclusiveness
– Explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas
• High-level policy conference and report– A publication will bring together the analysis and policy
recommendations and will be disseminated in various ways, including at a conference in India (Q4 2014 or Q1 2015).
Looking ahead…
• How can OECD help Southeast Asian partners boost innovative capacity?– Country reviews of innovation policy
• Vietnam (release forthcoming)• Malaysia (about to begin)
– IP framework case studies• Indonesia
– Inclusive innovation• Indonesia
– Statistics – regional network on S&T indicators?• How can we best partner with regional
organisations with similar aims and objectives?
Learn more and stay informed
www.oecd.org/sti/news.htm
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