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Policy Mixes for R&D in Europe A study commissioned by the European Commission – Directorate - General for Research
Policy Mixes for R&D in Europe
A study commissioned by the European Commission – Directorate - General for Research
Contact : Claire NauwelaersCoordinator of the Policy Mix projectUNU-MERITUniversity of Maastricht and United Nations [email protected]
This report has been prepared on the basis of the results of a study commissioned by the European Commission’s Directorate-General for Research. The views presented in this report do not necessarily reflect the views of the European Commission.
Policy Mixes for R&D in Europe
UNU-MERIT, April 2009
A study commissioned by the European Commission – Directorate-General for Research
Lead partner :Claire Nauwelaers
(UNU-MERIT, University of Maastricht and United Nations University)
With inputs from Policy Mix team :Patries Boekholt, Bastian Mostert (Technopolis Group)
Paul Cunningham (University of Manchester)Ken Guy (Wise Guys Ltd)
Reinhold Hofer (Joanneum Research)Christian Rammer (ZEW)
1
Policy Mixes for R&D in Europe
Contents
1. Introduction 3
2. Designing policy mixes for R&D : A model 5
3. Key questions for a country-level Policy Mix analysis 9
4. Core issues for Policy Mix design 11
4.1. Policy Mix and Innovation System Challenges 13
4.2. Coordination needs for the Policy Mix 16
4.3. Stakeholder Engagement for Policy Mixes 18
4.4. Policy Mix Design 19
4.5. Implementation, Evaluation and Impacts of Policy Mixes 36
5. State-of-play with Policy Mix Developments in practice 39
6. Conclusions and future needs 41
Annex : The Policy Mix Study and Web Site 43
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1. IntroductionIncreasing quantity and performance of research investments is a goal pursued by most governments in Europe and elsewhere. Which portfolios of instruments and policies are most effective to this aim?
This report helps policymakers confronted with this question, by providing a framework, lessons from policy experiences, and policy tips and hints on how to create and implement an efficient policy mix for R&D.
The content of this report is based on the results of a study commissioned by the European Commission’s Research Directorate-General, carried out during 2006-2009 by a partnership of six research organizations specialised in science, technology and innovation policy studies1. The research team conducted two types of work :
• Theoretical and conceptual analysis of the policy mix concept (Methodology development, Policy Mix Key Questions, Policy Mix Themes) ;
• Investigation and analysis of policymixes experiences inmore than 30 countries: country reviews for all EU-27 Member States, the United States, Canada, Japan and South Korea and case studies in selected countries, regions and sectors.The full results of this work are available on the project website :
http://ec.europa.eu/research/policymix.
What is a policy mix ?
The novelty of the policy mix concept is that it relies on the idea that it is the combination of policy instruments interacting among each other, which influences R&D, rather than instruments taken in isolation. The other key idea is that R&D is not only influenced by policies from that policy sphere (such as direct funding or fiscal incentives, etc.) but that R&D is also influenced by policies from other domains, such as, for example, environmental regulations influencing R&D activities.A policy mix (targeted at R&D investments) is defined as :
1 See a summary of the project and its main outputs in the Annex. The empirical information available on the web site represents the situation at the end of 2006 for country reviews, and 2007 for case studies. For updated information on R&D policies, see the ERAWATCH portal http://cordis.europa.eu/erawatch/and on innovation policies, see the Pro-INNO portal http://www.proinno-europe.eu/.
1.
Intr
oducti
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The combination of policy instruments, which interact to influence the quantity and quality of R&D investments in public and private sectors.
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In this definition, policy instruments are :
Interactions refer to:
Influences on R&D investments are:
No best practices !
Unfortunately, there is no easy recipe to find a «best policy mix» that is valid everywhere. This is due to the complexity of R&D and innovation systems and the vast differences between them in terms of comparative strength, maturity and governance structures and processes. Hence, this report aims at providing guidance and food for thought to reflect upon this complex question.
Structure of the report
In this report, the reader will find :
• APolicyTypologyModeltobeusedforapproachingthepolicymixconcept (Chapter 2) ;
• Keyquestionsforempiricallyanalysingpolicymixes(Chapter3);
• Athoroughdiscussionoffivecoreissueswhichhavebeenfoundcrucialfor evolution towards coherent and efficient policy mixes (Chapter 4):
o Policy Mix and Innovation System Challenges
o Coordination needs for the Policy Mix
o Stakeholder Engagement for Policy Mixes
o Policy Mix Design
o Implementation, Evaluation and Impacts of Policy Mixes ;
• Aviewonthestate-of-playofpolicymixdevelopmentsinpractice(Chapter5);
• Conclusionsonfutureneedsfordesigningmoreefficientpolicymixes (Chapter 6)
1.
Intr
oducti
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“The fact that the influence of one policy instrument is modified by the co-existence of other policy instruments in the policy mix”.
“All programmes, organisations, rules and regulations with an active involvement of the public sector, which intentionally or unintentionally affect R&D investments”. This usually involves some public funding, but not always as, for example, regulatory changes affect R&D investments without the intervention of public funds.
“either direct (in this case we consider instruments from the field of R&D policy) or indirect (in that case we consider all policy instruments from any policy field which indirectly impact on R&D investments, the “non-R&D” policies)”.
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2. Designing policy mixes for R&D : A model A large variety of models and approaches can be used to approach the complex phenomenon of Policy Mixes for R&D. Several models are available on the Policy Mix Web Site. One of these models is the Policy Typology model depicted in Exhibit 1 below, with the associated policies listed in Exhibit 2.
This model provides a framework to distinguish between “R&D” policies, with a direct impact on R&D activities and investment levels (indicated by red striped arrows), and “non-R&D” policies - those with more indirect effects (black and then dotted green arrows). The model presents four main ‘policy domains’ (an R&D domain; an Innovation domain; a Human Capital domain; and a Finance domain) and depicts how a wide variety of different types of policies can theoretically impinge on these domains, both directly and indirectly.
R&D Policies include :
• Allgeneric and sectoral policies specifically aimed at the R&D domain, including so-called ‘direct’ instruments (e.g. grants for R&D projects) and ‘indirect’ instruments (e.g. R&D tax incentives) ;
• Human Capital policies specifically developed for the R&D domain ;
• R&D-specific Finance policies and instruments ;
• All policies that specifically link, or involve links between, the R&D and Innovation domains, e.g. programmes of collaborative R&D and IPR-related policies.
Non-R&D Policies include :
• AllotherpoliciesaffectingtheHuman Capital domain that have indirect impacts on R&D activities (e.g. education and employment policy);
• Allotherpoliciesaffecting theFinance domain which have indirect impacts on R&D activities (e.g. financial and fiscal policy and macroeconomic policy);
• All other policies affecting the Innovation domain that have indirect impacts on R&D activities (e.g. innovation policy itself, plus policies in spheres as diverse as industry, trade, defence, consumer protection, health and safety, environment, regional development and competition).
2. D
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olicy m
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A m
odel
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Exhibit 1 A Policy Typology Model to Distinguish between R&D and Non-R&D Policies
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olicy m
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D :
A m
odel
R&D domain : public and private R&D performers, e.g. universities, research institutes, government labs, high tech SMEs, larges firms etc.
Other key domains : e.g. private sectors firms (Innovation domain) : financial institutions (Finances domain) ;eductational establishments (Human Capital domain)
Direct policy impacts on R&D domain
Direct policy impacts on other domains
Indirect policy impacts on R&D and other domains
External influences on all domains
Governance structures and processes
Governance
Governance Governance
External Influences
External Influences
External Influences
Exte
rnal
Influ
ence
s External Influences
Source : Policy Mix Project Team (2006), “Methodological Report”, Report to the Research DG ,http://ec.europa.eu/research/policymix/
7Source : Policy Mix Project Team (2006), “Methodological Report”, Report to the Research DG ,http://ec.europa.eu/research/policymix/
Exhibit 2 A Taxonomy based on the Policy Typology Model
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(Continued overleaf)
R&D Domain
R&D Policies
Generic Public SectorDiscretionary institutional funding for R&D projects (e.g. block funding)Competitive R&D project grantsSupport for R&D infrastructuresSelective support for centres of excellenceStructural reform of Public Research Institute sectoretc.
Private SectorDiscretionary institutional funding for R&D (e.g. block funding to firms)Competitive R&D project grantsCompetitive R&D project loansR&D friendly procurementetc.
Sectoral Selective R&D support schemes for existing high-tech sectorsSelective R&D support schemes for new high-tech sectorsSelective R&D support schemes for low to medium-tech sectorsetc.
R&D/Innovation Policies
Linkage PoliciesCollaborative R&D programmesTechnology platformsCluster policies and regional growth pole policiesSupport for Science Parks and other co-location schemesSupport for other University-Industry linkage mechanisms Support schemes for spin-offsetc.
IPR Policies Reform of IPR regulationsetc.
R&D Specific Finance PoliciesRisk capital for R&D measuresLoan and equity guarantees for R&D investmentVolume R&D tax measuresIncremental R&D tax measuresetc.
R&D Specific Human Capital Policies
R&D Specific Education PoliciesSupport for ST&E post-docsSupport for ST&E post-gradsetc.
R&D Specific Employment PoliciesSubsidies for hiring R&D personnelR&D mobility schemesetc.
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Finance Domain
Financial and Fiscal Policies
Non-R&D SpecificRisk capital measures supporting innovative companies (including start-ups)Loan and equity guarantees supporting innovative behaviourTax measures supporting technology diffusion and innovationFavourable tax measures for all or select groups of companiesetc.
Macroeconomic PoliciesSustainable growth oriented strategiesMeasures to ensure low interest ratesMeasures to ensure price stabilityetc.
Human Capital Domain
Education Policies
Non-R&D SpecificSupport for ST&E under-gradsEfforts to make S&T more attractive to studentsEntrepreneurship training schemesSupport for life-long learningetc.
Employment Policies
Non-R&D SpecificSupport for flexible labour marketsetc.
Innovation Domain
Innovation Policies
GenericTechnology diffusion schemesAwareness and demand stimulation schemesInformation and brokerage schemesNon-R&D Network schemesInnovation management support schemesSupport services to SMEsetc.
Sectoral Selective innovation support schemes for existing high-tech sectorsSelective innovation support schemes for new high-tech sectorsSelective innovation support schemes for low to medium-tech sectorsetc.
Other Policies
Industry PoliciesTrade PoliciesDefence PoliciesConsumer Protection PoliciesHealth and Safety PoliciesEnvironment PoliciesRegional Development PoliciesCompetition PoliciesOther Policies
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3. Key questions for a country-level Policy Mix analysisA Policy Typology Model such as the one proposed above, provides the conceptual framework necessary for studying different aspects of policy mixes. When deliberately setting out to design policy mixes or sub-components of them in a specific country, however, there is also a need for further orientation, especially in terms of understanding the factors influencing the form and content of policies and the necessary steps to take to design new or modify existing policy mixes. In short, there is a need for context and history to inform designs for the future.
The questions depicted in Exhibit 3 were used as the basis for drafting country reviews of policy mixes within the Policy Mix study2. They also constitute a good starting point for policy makers when developing a contextual and historical perspective on their policy mixes for R&D.
One first step is to understand the main challenges faced by the national innovation system and to appreciate how these have developed over time. This should be accompanied by a review of how policies have been mobilised to confront these challenges, together with an assessment of the appropriateness of these policies in terms of the match between stated policy objectives and the nature of the challenges faced.
It is important to develop an appreciation of the range of policy instruments, from the R&D domain and outside (“R&D” and “non-R&D” policies) used to fulfil policy objectives, again with assessments of their relative efficiency and effectiveness. Here the above typology can be used.
Some indication of the current needs of R&D and innovation actors and how these have developed over time is another imperative, in conjunction with assessments of how past and existing policy instruments have or have not satisfied these needs. Such assessments allow the utility and importance of different types of policies and policy instruments to be weighed and taken into consideration when designing new policy mixes.
Collecting evidence, or conducting fresh analyses of interactions between policy instruments, is another question at the core of any policy mix analysis.
And finally, the issue of policy governance and coordination is one of the most critical elements of the policy mix analysis.
3.
Key q
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2 See results of these analyses in the 31 Country reviews on the Policy Mix Web site.
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Exhibit 3 Ten Basic Questions Relevant to the Design of Policy Mixes
Challenges
What are the main challenges faced by your National Innovation System, how have they changed over the last five years, and how have they impacted on R&D activity?
ObjectivesWhat are the main objectives and priorities of R&D policy in your country and how have they changed over the last five years?
Gaps (between Challenges and Objectives)Is there a gap between the challenges faced by your country and the main objectives and priorities of government policy?
InstrumentsWhat policy instruments are in place to support R&D activities in the private and in the public sector? What instruments outside the R&D policy domain (e.g. human resource policies, innovation policies, market stimulation policies etc.) are of particular relevance to R&D activities and increased investment in R&D ?
Gaps (between Objectives and Instruments)Is there a gap or mismatch between the main policy objectives and the instruments expected to attain them ?
History How has the usage pattern of R&D policy instruments evolved ?
Actors Which R&D and innovation actors are targeted by which policy instru-ments ?
ImportanceWhich policy instruments have had the greatest impact on R&D expenditure levels ?
InteractionsIs there any evidence of policy instruments interacting either positively or negatively in terms of their impact on R&D expenditure levels ?
GovernanceDoes the R&D and innovation governance system allow for any form of co-ordination between R&D policy and policies from other domains with potential repercussions for R&D investment levels ?3
. K
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4. C
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n4. Core issues for Policy Mix designThe Policy Mix study concluded that the following five core issues are the most critical ones for Policy Mix design. These core issues point to-wards the need for coherence, coordination, and effectiveness of policy mixes :
1 Policy Mix and Innovation System Challenges : how to build policy mixes, which respond to the specific challenges faced by a national / regional innovation system. How to ensure a match between policy mix orientation and system’s strengths, weaknesses and challenges.
2 Coordination for the Policy Mix : how to ensure appropriate policy coordination across the diverse policy fields, and the various levels of authorities, concerned with the policy mix. What is the potential for bottom-up coordination through integrated policy programmes (“mini-mixes”, see discussion of the concept below)?
3 Stakeholder Engagement for Policy Mixes : what are the pros and cons of involving many stakeholders in the design and implementation of policy mixes?
4 Policy Mix Designs : how to design a coherent policy mix. What are the possible routes to follow and how to prioritise between them ? Which mixes would best match different paths towards industrial restructuring objectives ? How to spur positive interactions, and avoid negative interactions, between policies (taking into account policies from within the R&D domain as well as “non-R&D" policies).
5 Implementation, Evaluation and Impacts of Policy Mixes : how to move from evaluation of instruments to evaluation of policy mixes. What are the conditions for efficient implementation of policy mixes ? What strategic policy intelligence tools to use for these purposes?
Table 1 presents an overview of the above core issues, each divided into sub-questions and matched with a set of examples3. Key findings of the study under each issue and sub-questions are discussed in turn in the following sections.
3 Further discussion on the questions and the examples mentioned in the table can be found on the Policy Mix Web Site.
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4. C
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nTable 1 Overview of Policy Mix Core Issues and Examples
Core Issue Sub-questions Examples
Policy Mix and Innovation System Challenges
Increase of overall R&D expenditure Increasing R&D in South Korea
Increasing R&D in Austria
Ensuring adequate human resources for R&D and innovation
Ireland’s investment in the Higher Education sector
Responding to new technological opportunities and keeping pace in upcoming fields of technology
Flemish Foresight exercise
The US- Nanotechnology Initiative
German High-Tech Strategy
A need to restructure or reinforce elements of the NIS
The challenge for Romania to increase private R&D
Building Ireland’s Knowledge Economy
Improving the interactions between STI system actors
The cluster approach in the Rhône-Alpes region
Core Issue Sub-questions Examples
High Level Co-ordination for the Policy Mix
Science and Innovation Councils Japanese Council for Science and Technology Policy
The Flemish Council for Science Policy (VRWB)
Danish Globalisation Council
Coordination through mini-mixes Innovation Programmes in Key Areas in The NetherlandsPôles de Competitivité in France
Coordination across geographical levels
Cross-border coordination of R&D policy in Øresund
National-regional coordination in North-Brabant
National-regional coordination in Saxony
Core Issue Sub-questions Examples
Stakeholder Engagement for Policy Mixes
Stakeholder involvement in Policy Bodies and in Policy Review and For-mulation
Stakeholder involvement in the UK’s Science and Innovation Investment Framework 2004-2014
Involvement of stakeholders in Castilla y Leon to develop the RTDI strategy of the region
Stakeholder consultation in the German High-Tech Strategy
Core Issue Sub-questions Examples
Policy Mix Design Defining Routes Choosing parallel routes for ICT in HungaryShifts in routes in Finland
Shifts in routes in Sweden
Good practice in high-tech industries and R&D intensification approaches
German Biotechnology Programmes
Friuli/Venezia/Guilia: Integrated initiative to enhance competitiveness of regional clusters
The Netherlands’ ICTRegie
Interactions between R&D and R&D, and R&D and non-R&D policies
The German Pharmaceuticals Initiative
Core Issue Sub-questions Examples
Implementation, Evaluation and Impacts of Policy Mixes
Systems and meta-evaluations Evaluation of NIS and the key policy measures by the Science and Technology Policy Council, Finland
The Austrian system evaluation experience
The United Kingdom’s systems review exerci-ses
Implementation of Policy Mixes Setting targets at the system level
BMWI: Policy Mix implementation through streamlining, Germany
Cross-policy domain implementation in Flanders
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4.1
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hallenges4.1. Policy Mix and Innovation System Challenges
The set of policy actions taken by governments in the field of R&D should relate to the specific challenges in the national innovation system (NIS). An appropriate mix of policies to address these challenges should build on a good analysis of the strengths and weaknesses; the opportunities and bottlenecks in the innovation system. This is why there is no “one-size-fits-all” standard policy mix.
A number of NIS challenges are common to most European countries :
1. Low R&D investments and the need to increase the overall R&D spending (in the public and/or private sectors)
2. Ensuring adequate human resources for R&D and innovation
3. Responding to new technological opportunities and keeping pace in upcoming fields of technology
4. A need to restructure or reinforce elements of the NIS, i.e. mostly changes to structures, processes or framework conditions
5. Improving the interactions between Science, Technology and Innovation (STI) system actors
The sets of policy objectives reported fall into three broad categories : those addressing the public sector (strengthening of the science base, human resources for R&D, governance and coordination issues) ; those addressing the private sector (promotion of R&D performed in the business sector, innovation friendly business environment) ; and those linking the two (leveraging the results of public sector research by industry, addressing industry skills needs).
Increase of overall R&D expenditure
Austria represents a country case that has developed substantial efforts at the start of the century to raise R&D investments both on the public and private sides.
A first choice to be made by policy makers in this situation is the set of R&D instruments to be used and the balance, for instance, between direct and indirect measures, and between generic and thematic policies. In practice, this is rather ‘path dependent’ and rarely follows a rational choice. A second perspective that needs to be reviewed is whether the country is an attractive place to do (industrial) research, and the influence of Non-R&D policies. For firms this is mainly influenced by framework conditions, markets and human resources rather than R&D policy. The case of South Korea is illustrative of a country that has placed important policy attention on the framework conditions for R&D-active business conglomerates. A third perspective which requires a choice is the weight given to the various routes to increase R&D investments (see Policy Mix Design discussion below).
If, for example, a country has few indigenous companies conducting R&D a choice could be made to attract foreign companies to invest (in R&D activities) in the country and even relocate their R&D functions. However, this needs a careful assessment of a range of policy interventions and instruments. Policy makers thus need to ask a series of questions :
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• Aretheframeworkconditions(e.g.financialclimate,bureaucracy,availability of skilled staff, dynamic business sector, etc.) for foreign investments attractive ? If not, these may need a range of Non-R&D policy interventions.
• AreadditionalR&Dincentivesinplacefortheseforeigncompanies?Thiscould lead to a decision to launch direct or indirect schemes (e.g. fiscal incentives) in favour of private R&D expenditures.
• Doesthecountryhaveexcellentresearchersanduniversities,whichforman attractive partner for private companies? If not, actions have to be taken in the public research sector or with schemes to promote excellence in science.
• Doregulations(IntellectualPropertyRightsrulesaboutcontractresearch)and cultural factors influence these partnerships, either positively or negatively ? If so, better regulations and awareness actions are available options to alleviate this.
This is an example of how policy choices lead to a whole set of considerations that need a mix of policy actions, which are not always within the R&D realm.
Ensuring adequate human resources for R&D and innovation
This challenge crosses both the public and private R&D domains but its main focus rests on ensuring a supply of trained and skilled personnel to meet the needs of industry. Key targets for addressing this challenge are the higher education sector and the current workforce (for example, through re-training or industry based skills development programmes). Ireland’s investment in the Higher Education sector is an example of a country that has managed to positively impact on human resources for the knowledge economy. More specific examples include :
• Theneedtoensuresuppliesofhigh-qualityscienceandengineeringgraduates, for the work-force, the science base and in general; and
• Theneedtoensurethatindustryrequirementsforspecificskillsarebeingand will continue to be met. This challenge raises the general issue that, in order to monitor ongoing and future skills needs, close dialogue with industry is required. However, due to differences in the timescales for higher education training capacities and industrial skills requirements, a robust and well- functioning higher education system is still required as a buffer to the potentially destabilising effects of the business cycle.
The domain of human resources typically spans two policy areas: R&D policy and education. Skills for innovation are, in some countries, dealt with from the edu-cation angle (e.g. vocational training) or, in other countries, specifically from the innovation policy area (e.g. training for innovation management skills).
Responding to new technological opportunities and keeping pace in upcoming fields of technology
In order to keep a dynamic economy and benefit from growth from emerging tech-nology areas, researchers and companies need the strategic intelligence to know what new technology opportunities will emerge and what developments are taking place in the rest of the world. Policy support can be given to develop and gather this strategic intelligence and to facilitate the process of dissemination. Examples include foresight studies (see, for example, the Flemish Foresight exercise) and publicly funded road-mapping exercises.
Ensuring adequate human resources for R&D and innovation Ensuring adequate human resources for R&D and innovation
Responding to new technological opportunities and keeping pace in Responding to new technological opportunities and keeping pace in upcoming fields of technology upcoming fields of technology
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In addition – and in terms of budgetary weight, more importantly - many governments have invested significant efforts to support research, business start-ups and linkages with existing companies in areas that they have recognised as potentially upcoming fields. ICT, life sciences, biotechnology and nano-technology are typical areas that have been supported through a wide mix of policy measures such as thematic R&D programmes, specialised incubator facilities, regional cluster initiatives and early stage investment schemes. The US Nanotechnology Initiative, involving initiatives both in the R&D and in the non-R&D domain, is a good example of a policy mix approach within this specialisation area. The German High-Tech Strategy is a comprehensive, multi-annual approach by the federal government, combining public and private efforts to increase R&D.
A need to restructure or reinforce elements of the NIS
On the one side, this challenge is clearly reflected in public sector changes (in relation to governance and functioning) whilst the improvement of framework conditions is of greater relevance to private sector R&D investment. The reform of Universities/Higher Education Institutes and the education system form a specific challenge in Austria and Italy, for example. The need to improve framework conditions (such as regulation, tax systems, etc.) for research and innovation and to enhance innovation capabilities is also encountered in a number of countries.
Innovation systems can be unbalanced, for instance, because the public research sector is either very small or very large in comparison with the private research sector. The latter situation holds e.g. in Romania and several new Member States. This leads to strong system mismatches, which cannot be fixed by introducing better linkage programmes and calls for the reinforcing of one or both elements of the system. Ireland has addressed this issue with the ‘Building Ireland’s Knowledge Economy’ Action Plan. In addition, many new Member States have the problem that both parts of the NIS are weakly developed and need simultaneous boosting. This was a challenge faced by South Korea in recent decades but which it has managed to address successfully. Many more countries face the problem that there are no intermediary structures or linkage programmes that help bring the public and private research systems together.
One example is that of an Innovation System which has very few start-up companies that might underpin growth in emerging technology sectors. Often, the public research system may need restructuring as its organisation or funding model prevents modernisation or multi-disciplinary research. Interventions have been put in place to address such problems, for example, the Technopartner programme in the Netherlands.
Improving the interactions between STI system actors
Improving the interactions between STI system actors is a major challenge in many countries. One of the major concerns relates to the level of interaction between the public research base and business. The challenge is relevant to the issue of both public sector and private sector R&D investment. Again, a more specific set of related challenges can also be identified, such as :
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• Improvingthelevelandscopeofinteractionsbetweenpublicandpri-vate R&D performers, promoting industry-science relationships, and in-creasing knowledge spillovers.
• Increasingcommercialisation,andincreasingpatentingactivity.
• IncreasingthereturnonpublicR&Dinvestment.
• Alsorelatedtothissetofchallengesisthemoreoutwardlookingneedto improve international R&D linkages and/or EU participation.
Typical linkage programmes that address these issues are collaborative R&D programmes, technology platforms, cluster policies and regional growth pole policies, support for science parks and university-industry lin-kage schemes. The regional example of Rhône-Alpes combines several of these instruments.
4.2. High Level Coordination for the Policy MixAccording to the Policy Mix Typology Model underpinning this study, a comprehensive policy mix that creates the best conditions for R&D will involve multiple policy domains and multiple influences from other policy domains. Policy Mixes for R&D policy cross the boundaries of the core R&D policy domains.
The effectiveness of an R&D Policy Mix is, hence, highly dependent on the quality of the governance of the research and innovation system. In order to set up policies that are complementary and mutually reinforcing, coordination mechanisms across a host of policy actors are vital. Ideally, long-term policy strategies should attempt to integrate the R&D/innovation policy mix with the concerns of other policy areas. Examples are linkages with health (R&D) policy, the policy domains of energy and environment as well as more general innovation and business support policies.
High-level political support beyond the strict R&D domain can result in the development of policy strategies, which take account of framework conditions and objectives from adjacent policy domains. Thus, there is a need for high-level political coordination, interdepartmental coordination and coordination across institutions. This involves:
1. The establishment of formal coordination bodies such as high-level horizontal Councils as well as more informal mechanisms of coordination ;
2. Experiments to coordinate policy mixes on a smaller scale through ‘mini-mix’ approaches: these are initiatives where policy makers have developed a packaged set of instruments deliberately designed to be a coherent whole, addressing various aspects of R&D and innovation;3. Coordination across geographical levels.
Science and Innovation CouncilsThe high-level Science and Innovation Councils established in several coun-tries often represent several ministries (and even the Prime Minister) as well as stakeholder groups. Finland was one of the first countries to install such a Council (The Science and Technology Policy Council), led by the Prime Minister. Other countries have followed this example with variations in role and composition.
4.2. High Level Coordination for the Policy Mix 4.2. High Level Coordination for the Policy Mix
Science and Innovation Councils Science and Innovation Councils
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• Alsoto improve international R&D linkages and/or EU participation.• Also• Also• Also
• Increasing
• Also• Also• Also• Also
• Increasing• Increasing• Increasing
• Increasing
• Increasing• Increasing• Increasing• Increasing
• Increasing• Increasing• Increasing
• Improvingvate R&D performers, promoting industry-science relationships, and in-• Improving• Improving• Improving
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The Councils can play a role in assessing the entire Innovation System (meta-evaluations), taking a systemic look at the R&D policy portfolio and determining the focus of the Policy Mixes. The mere existence of such a Council does not ensure that it has an impact on defining a more coherent Policy Mix. This depends on aspects such as the mandate, the political weight of the Council, its budgetary influence and its composition. Interesting examples of such Councils are the very broad-based Danish Globalisation Council, the Japanese Council for Science and Technology Policy and the ‘research union’ of the German High Tech Strategy. The Flemish Council for Science Policy led a Foresight exercise to determine research funding priorities for the region.
Coordination through mini-mixes
A mini-mix is a “packaged” policy programme that explicitly uses different types of policy instruments (e.g. human resource initiatives, fiscal exemptions, grant schemes, regulation, etc.) to achieve a specific R&D policy goal (e.g. R&D investments in bio-tech) or to support a specific target group (e.g. new technology-based firms). These instruments can also be non-R&D policies – regulation, fiscal, and innovation-oriented.
Experiences with these approaches are quite recent and hardly any evaluations have been done to establish the effect of such an approach, which is often intended as a long-term effect, rather than a short-term boost in R&D activities. An essential element is that ministries and or agencies from different policy domains have to work together to establish a joint programme, often using different sources of funding. The French Pôle de Compétitivité is an example that has also inspired the Netherlands (with the bottom-up and user-driven Innovation Programmes in Key Areas) and Wallonia to set up similar initiatives.
Conclusions from the mini-mixes analyses are :
• The assessment of user needs requires some form of stakeholderinvolvement and/or expert opinion. Governments thus need to develop or mobilise the strategic intelligence for such a process;
• Stakeholder involvement is particularly strongly developed in thecluster-type mini-mixes and in the thematic packaged programmes. Such involvement ensures that the mini-mix matches the needs of the target group. The government needs to consider the perspective of the ‘tax-payers’ and ensure that this process is open and transparent.
• Asystematicreviewoftheexistingmechanismsforthetargetgrouporpolicy objective is necessary to assess what can be included, what should be streamlined and which new activities need to be set up;
• There isnosinglerecipeforthe implementationofsuchmini-mixes,they are too context specific;
• Theevaluationandmonitoringofmini-mixesisanareathatneedsfurther development.
4.2
. H
igh L
evel C
oord
inati
on for
the P
olicy M
ix
• Theinvolvement and/or expert opinion. Governments thus need to develop or • The• The• The
• Stakeholdercluster-type mini-mixes and in the thematic packaged programmes. • Stakeholder• Stakeholder• Stakeholder
• Apolicy objective is necessary to assess what can be included, what should • A• A• A
• Therethey are too context specific;• There• There• There
• Thefurther development.• The• The• The
18
Coordination across geographical levels
Many countries encounter the challenge of having to deal with a multi-governance situation at the regional and national R&D policy level. Countries such as Germany, Austria, Spain and the UK have joint responsibility for R&D policy at regional and at national governance levels. This requires good policy coordination to avoid overlaps, duplications and a lack of critical mass at the regional level. In addition, even regions without a clear R&D policy mandate can be largely affected by decisions taken at central level; for instance, by the location of major research institutions or the establishment of cluster initiatives.
North-Brabant and Saxony are examples where this coordination has improved over the years. The Øresund case, which aims to establish a strong knowledge cluster (in biotech) in the joint Danish/Swedish region, is a case which strives to achieve coordination of a mix of R&D policies across borders.
4.3. Stakeholder Engagement for Policy MixesIn R&D policy, typical stakeholders are representatives from the science and business community, although they could also be representatives from societal groups (e.g. labour, environmental groups, patients), policy users (e.g. transport regulators), or intermediary organisations (e.g. hospitals). There are various Policy Bodies that tend to include stakeholders and which can influence a Policy Mix :
• High-levelPolicyCoordinationCouncils;
• StrategicCommitteesidentifyinghightechnologyopportunities;
• Groups convened in strategic intelligence exercises such as foresights and roadmaps ;
• StakeholdersarealsoinvolvedinthePolicyReviewandformulationprocesses, or meta-analyses of policy mixes.
There are pros and cons towards stakeholder involvement in the various stages of the policy cycle.
Broad stakeholder involvement in the strategy-setting phase (such as with the UK’s Science and Innovation Investment Framework 2004-2014) ensures that many interests can be taken into account and that a consensus view can be formulated, but it can also hamper a clear prioritisation process and options for radical structural changes if too many (conflicting) interests intervene or wish to maintain the status quo. The involvement of high-level representatives from various policy domains, on the other hand, can have a positive effect on the coherence and coordination of the set of policy instruments. This was the case, for example, with the wide stakeholder consultations that took place during the preparation of the German High-Tech Strategy, or, at regional level for the prepa-ration of the Castilla y Leon RDTI plan.
Once priority areas are set, the involvement of stakeholders can improve the relevance of a set of research programmes, for instance for the private sector, or it can promote the level of ‘buy-in’ from the actors concerned. It can help to fine-tune instruments to the needs of the target groups although it also carries the danger of conflict of interest.
Coordination across geographical levels Coordination across geographical levels
4.3. Stakeholder Engagement for Policy Mixes 4.3. Stakeholder Engagement for Policy Mixes
4.3
. S
takehold
er
Engagem
ent
for
Policy M
ixes
19
From an industrial restructuring perspective, it is important to identify and leverage new opportunities that emerge out of new research results. Regular reviews of programmes and measures, often organised or supervised by a steering committee involving major stakeholders, are frequently applied for this purpose. The German High Tech Strategy is one example, the Danish Globalisation Strategy another. What is more, a bottom-up approach for defining the research agenda, which addresses a large number of actors from academia and industry, tends to be advantageous for identifying new opportunities early and broadly since it maximises the information available on promising new fields of research and its application in the respective high-tech sector in the research community.
Stakeholders are often included in ‘strategic intelligence’ activities such as sectoral competitiveness analyses, techno-economic studies on the impact of new technologies, and technology foresight studies. Some of the newly established public R&D infrastructures follow a public-private partnership approach that actively involves industry stakeholders as shareholders. Implementation can be improved if regular communication with stakeholders and addressees of R&D policy measures is organised in order to be informed of their experiences with policy actions in non-R&D policy fields, particularly where these may conflict with attempts to increase R&D and innovation activities.
In the Non-R&D domains, the involvement of key (societal) stakeholders in the evolution of regulatory structures and institutions is likely to promote the acceptance and diffusion of new technologies such as nanotechnology. Informing stakeholders at an early phase as to when new policies will be launched, increases predictability and gives stakeholders greater confidence in the planning of their longer-term R&D investments and related activities.
4.4. Policy Mix DesignHow can policy makers design optimal Policy Mixes for R&D ?
Three challenges can be identified in this respect :
1. Determining priorities between the various ‘routes’ that may be followed towards the overall goal of raising R&D expenditures;
2. Choosing between a strategy aiming at intensifying R&D and innovation across many industries and sectors of activity, and a strategy to focus on specific high-tech sectors which will drive the economy towards higher knowledge intensity;
3. Anticipating and optimising the potential interactions between different types of R&D instruments and between R&D instruments and instruments from other policy domains or Non-R&D instruments.
4.4
. Policy M
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esig
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20
Defining routes
To build efficient and balanced policy mixes for R&D, policy-makers have to define priorities amongst possible routes to raise R&D investments. This needs to be based on a clear picture of the needs of the National Innovation System and its evolution, and on the profile and effectiveness of the actual policy system. Hence, the prioritisation process requires a high level of strategic intelligence, including on the prospective challenges facing the NIS.
The routes cover the main ways of increasing public and private R&D expenditures in a country. Each route is broadly associated with a different target group, though there are overlaps across routes. These routes, as depicted in Exhibit 4, are :
1) promoting the establishment of new indigenous R&D performing firms
2) stimulating greater R&D investment in R&D performing firms
3) stimulating firms that do not yet perform R&D
4) attracting R&D-performing firms from abroad
5) stimulating public-private collaboration in R&D
6) increasing R&D in the public sector.
The relative emphasis placed on the various routes can have very different implications for the nature and orientation of the resulting R&D activities and the dynamics of public-private interactions and development paths :
• An emphasis on Route 2, for example, could help reinforce existing R&D strengths in the private sector ;
• AnemphasisonRoutes1and3,however,wouldbeappropriatewhentheaim is to stimulate R&D activities in new technology areas or industrial sectors ;
• AnemphasisonRoute4suggestsitselfwithinthebroadercontextofindustrial modernisation strategies where the aim is to upgrade existing low-to medium tech sectors via the intensification of knowledge-based activities ;
• EmphasisingRoute6 isnecessarywhen thepolicypriority is tostrengthen the science base, but following this route in parallel with Route 5 helps to ensure that the development paths of the public and private sectors remain linked and relevant to each other.
Defining routes Defining routes
4.4
. Policy M
ix D
esig
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21
4.4
. Policy M
ix D
esig
nExhibit 4 Routes to Raise R&D Investment Levels
Source: Policy Mix Project Team (2006), “Thematic Report: Routes for Policy Mix for R&D”, Report to the Research DG. http://ec.europa.eu/research/policymix/
Efforts to Increase PrivateSector R&D
Efforts to Increase PublicSector R&D
Efforts to Increase Public-Private R&D
Route 1
Efforts to promote the establishment of new, dommestic R&D performing firms
Route 2
Efforts to stimulate greater R&D investment by non-R&D performing firms
Route 3
Efforts to stimulate R&D investment by non-R&D performing firms
Route 4
Efforts to attract R&D-performing firms from abroad
Route 5
Efforts to increase R&D by stimulating public-private sector collaboration
Route 6
Efforts to increase R&D levels in public sector research organisations (PROs)
22
In practice, countries usually follow a combination of all the routes. In many cases, the “prioritisation” between routes is the result of a de facto accumulation of instruments and initiatives, rather than an explicit policy choice. In most cases, priorities amongst the routes are rather immobile or fixed: there is path-dependency and inertia in structures, programmes, approaches, etc., which makes it difficult to change the priorities even when the perception of a need for changes arises. A cumulative process and incremental approach in the prioritisation of routes seems to be the general rule. Policies are influenced by policy goals other than those aimed at raising R&D expenditures: competitiveness and job creation are overarching priorities, and R&D is seen as but one of many means to achieve such priorities. The observation of policy practice denotes a trend towards a prioritisation process which tends to reinforce strengths rather than address weaker parts of the system.
A long-term shift in the priority of routes can be discerned : Route 6 (supporting public R&D activities) and Route 2 (supporting private R&D activities in R&D active firms) are the most traditional and obvious areas of action, justified through market failure arguments, and in line with a linear vision of innovation. With the diffusion of a more systemic and firm-centered vision of innovation, a shift towards Route 5 (which addresses science-industry linkages) has become widespread, and more recently, there has been increased attention to specific categories of actors: new-technology-based firms (Route 1). Less frequently, an emphasis on Route 3 has been emerging, with a view to extend the innovative base by addressing those companies that are not yet involved in R&D activities. The latter route was, e.g. found to be prioritised in the policy mix for ICT in Hungary. While the first constellation, Route 6 + Route 2, was generally dealt with by two separate Ministries (for Science and for the Economy), the other routes call for greater interaction between those (and other) policy areas. This shift reflects a general broadening of policies from a science-driven view, towards a more holistic approach to innovation.
Route 4 (attracting R&D performing firms from abroad) is seldom a priority as such: in many cases, policy instruments are deployed without discriminating between domestic or foreign R&D performers as users. The conjunction of other Routes may act as a substitute to Route 4.
There is also a strong complementary relationship between Route 6 and Route 5 : for example, changes in modes of funding and in incentives structures in the public sector might directly contribute to the objectives of Route 5.
Route 3 (broadening the base of R&D performing firms) receives scant policy priority. This is in line with a policy of supporting the strongest, although in several countries this lack of attention is considered as a weakness (for example, in Denmark). However, it is not easy to see how to pursue such a route, which deviates quite markedly from the normal direction followed by traditional R&D policies.
Route 1 (promoting the creation of new, R&D-based firms) shows strong complementarities with Routes 6 and Route 5.
Sweden for example has for a long time been successful with its emphasis on supporting Route 6 (increasing R&D in the public research sector) combined with Route 5 (linking large R&D firms with this public R&D). In recent years, there has been an increasing concern because of the fact that many Swedish firms have been bought by foreign companies and thus may be prone to having their operations and, in particular, their R&D functions moved abroad. Moreover,
4.4
. Policy M
ix D
esig
n
23
deregulation and liberalisation have put an end to the previous intimate public–private partnerships that were such an important factor in the emergence and growth of several Swedish multinational corporations (MNCs). As a result more emphasis is gradually put on research in SMEs (Route 2) and on increasing the rate of formation and growth of new technology-based companies (Route 1).
A traditional division of labour between the national and the regional level tended to follow the pattern of large-scale generic funding for the public and private sectors (mainly through Route 6 and Route 2) at the national level, and filling the gaps in networking and linkages with other parts of the industrial fabric (mainly through Route 5 and Route 3) at the regional level. A more recent trend in the best performing regions covered in this study, is to fund poles of excellence, thereby following Routes 6, 2 and 5, but shifting attention away from Route 3.
The portfolio composition for each route does not present a standard pattern : in each country or regional environment, various types of instruments are used to reach the goals of the Routes, according to policy traditions, the specific needs of the system, etc. Each Route is thus directly or indirectly served by a large variety of instruments, as evidenced in Table 2. This table should not be taken as representing a dogmatic classification of instruments: depending on their actual implementation mode and the policy environment, they might be more suited to serve different routes in different contexts. The instruments presented in Table 2 come from an analysis of actual policy mixes in 34 countries carried out during the study, and hence, differ a bit from the abstract list provided earlier in Exhibit 2.
4.4
. Policy M
ix D
esig
n
24
Pol
icy
cate
gori
esPol
icy
in
stru
men
tsR
OU
TE 1
:
prom
ote
esta
blis
hmen
t of
new
indi
ge-
nous
R&
D-p
er-
form
ing
firm
s
RO
UTE
2 :
stim
ulat
e gr
eate
r R
&D
in
vest
men
t in
R
&D
-per
for-
min
g fir
ms
RO
UTE
3 :
stim
ulat
e R
&D
in
vest
men
ts in
fir
ms
non-
pe
rfor
min
g R
&D
RO
UTE
4 :
attr
act
R&
D-
perf
orm
ing
firm
s fr
om
abro
ad
RO
UTE
5 :
stim
ulat
ing
publ
ic-p
riva
te
colla
bora
tion
in R
&D
RO
UTE
6 :
incr
ease
R
&D
in
publ
ic s
ecto
r
Tabl
e 2:
Pol
icy
inst
rum
ents
and
broa
d ro
utes
to
incr
ease
R&
D in
vest
men
ts
R&
D D
omai
n
(XX: ve
ry im
port
ant
cont
ribu
tion;
X:
impo
rtan
t co
ntribu
tion:
(X): s
ome
cont
ribu
tion
expe
cted
)
R&
D p
olic
y ge
neri
c
Inst
itutio
nal f
undi
ng
at u
nive
rsiti
es &
PR
Os
XX
Larg
e in
fras
truc
ture
an
d eq
uipm
ent
at
univ&
PR
Os
XXX
Com
petit
ive
fund
ing
at u
nive
rsities
&
PROs
XX
XX
Direc
t ai
d sc
hem
es
for
R&
D in
co
mpa
nies
X
Ref
orm
of
univer
sitie
s an
d PR
Os
X
(X)
XX
XX
(X)
X
X X
4.4
. Policy M
ix D
esig
n
25
R&
D p
olic
y se
ctor
al
Str
ateg
ic r
esea
rch
cent
res
XX
XX
XXX
Them
atic
res
earc
h pr
ogra
mm
es –
pub
lic
sect
or o
rien
ted
XX
XX
XX
Them
atic r
esea
rch
prog
ram
mes
– p
rivat
e se
ctor
orie
nted
XXX
XX
X
R&
D /
In
nova
tion
po
licy
– Li
nkag
e
Com
pete
nce
Pol
es
and
cent
res,
col
lect
i-ve
, ap
plie
d re
sear
ch
cent
res
(X)
XX
(X)
(X)
XX
XX
Pro
gram
mes
for
pu
blic
-priva
te c
olla
bo-
rativ
e re
sear
ch(X
)XX
(X)
XXX
X
Tech
nolo
gy tra
nsfe
r un
itsXX
XX
X(X
)XX
Mob
ility
sch
emes
un
iver
sity
-indu
stry
(X)
XX
XXX
Uni
vers
ity L
iais
on
offic
esXX
XX
XXX
Spi
n-of
f su
ppor
t
prog
ram
mes
XX
X
Res
earc
h N
etw
orks
XX
R&
D /
In
nova
tion
po
licy
– IP
R
Sub
sidy
for
pat
ents
ap
plic
atio
nsXX
X
4.4
. Policy M
ix D
esig
n
26
R&
D
spec
ific
finan
cial
an
d fis
cal
polic
y
Tax
ince
ntives
for
re
sear
cher
s in
pub
lic
sect
or (al
so for
eign
)XX
Tax
ince
ntives
for
re-
sear
cher
s in
priva
te
sect
orXX
XX
XX
(X)
Fisc
al in
cent
ives
for
R&
D in
vest
men
ts in
fir
ms
XX
XX
XX
(X)
Vent
ure
capi
tal f
unds
XX
XX
(X)
Gua
rant
ee s
chem
es
XX
X
R&
D
spec
ific
educ
atio
n po
licy
Com
petit
ions
on
scie
ntific
them
es fo
r st
uden
tsX
(X)
Info
rmat
ion-
trai
ning
fo
r sc
ienc
e pr
ofes
-so
rs(X
)(X
)
4.4
. Policy M
ix D
esig
n
Pol
icy
cate
gori
esPol
icy
in
stru
men
tsR
OU
TE 1
:
prom
ote
esta
blis
hmen
t of
new
indi
ge-
nous
R&
D-p
er-
form
ing
firm
s
RO
UTE
2 :
stim
ulat
e gr
eate
r R
&D
in
vest
men
t in
R
&D
-per
for-
min
g fir
ms
RO
UTE
3 :
stim
ulat
e R
&D
in
vest
men
ts in
fir
ms
non-
pe
rfor
min
g R
&D
RO
UTE
4 :
attr
act
R&
D-
perf
orm
ing
firm
s fr
om
abro
ad
RO
UTE
5 :
stim
ulat
ing
publ
ic-p
riva
te
colla
bora
tion
in R
&D
RO
UTE
6 :
incr
ease
R
&D
in
publ
ic s
ecto
r
27
Fina
nce
Dom
ain
Fina
ncia
l an
d fis
cal
polic
y
Red
uctio
n of
gen
eral
co
mpa
ny t
ax le
vel
XXX
XXX
Red
uctio
n of
tax
es
on la
bour
XXX
XXX
Impr
ovem
ent of
fisc
al
and
lega
l sta
tus
of
inde
pend
ent w
orke
rsXX
Bus
ines
s Ang
els
XX
Mac
roec
o-no
mic
pol
icy
Gro
wth
orien
ted
stra
tegi
es(X
)(X
)(X
)X
(X)
Low
inte
rest
rat
es,
Price
sta
bilit
y, ...
4.4
. Policy M
ix D
esig
n
Fina
nce
Dom
ain
R&
D
spec
ific
empl
oym
ent
polic
y
Gra
nts
for
PhD
and
po
st-d
oc r
esea
r-ch
ers
(pub
lic)
(X)
XX
Sch
emes
for
att
rac-
ting
fore
ign
rese
arch
ers
(pub
lic)
(X)
XX
Sch
emes
for
att
rac-
ting
fore
ign
rese
arch
ers
(priv
ate)
XXX
X(X
)
Sub
sidi
es for
hirin
g re
sear
cher
s in
com
-pa
nies
XX
XX
(X)
XX
Impr
ovem
ents
in
rese
arch
ers
care
ers
XX
28
Hum
an C
apit
al D
omai
n
Educ
atio
n po
licy
Life
-long
lear
ning
pr
omot
ion
(X)
(X)
X(X
)(X
)
Trai
ning
cen
tres
(X)
XX
(X)
(X)
Obl
igat
ion
for
ente
rpri-
ses
to in
vest
in tra
inin
g ac
tions
(X)
XX
(X)
(X)
Trai
ning
che
ques
, su
ppor
t fo
r tr
aini
ng
actio
ns o
rgan
ised
by
ente
rprise
s
(X)
XX
(X)
(X)
Yout
h pl
acem
ents
in
ente
rprise
s fo
r te
ch-
nica
l tra
inin
g
X
XXX
XX
Tech
nolo
gy a
t Sch
ool
(X)
(X)
(X)
(X)
(X)
(X)
Empl
oym
ent
polic
y
Red
uctio
n of
tax
pr
essu
re o
n sa
laries
XX
(X)
XX
X
Ince
ntives
for
hirin
g sp
ecifi
c ca
tego
ries
of
empl
oyee
sX
XX
XX
Youn
g pa
rent
s in
em
ploy
men
t po
licy
(X)
(X)
(X)
(X)
(X)
Res
earc
her-
frie
ndly
imm
igra
tion
polic
yX
(X)
XX
(X)
X
4.4
. Policy M
ix D
esig
n
Hum
an C
apit
al D
omai
n
Pol
icy
cate
gori
esPol
icy
in
stru
men
tsR
OU
TE 1
:pr
omot
e es
tabl
ishm
ent
of n
ew in
dige
-no
us R
&D
-per
-fo
rmin
g fir
ms
RO
UTE
2 :
stim
ulat
e gr
eate
r R
&D
in
vest
men
t in
R
&D
-per
for-
min
g fir
ms
RO
UTE
3 :
stim
ulat
e R
&D
in
vest
men
ts in
fir
ms
non-
pe
rfor
min
g R
&D
RO
UTE
4 :
attr
act
R&
D-
perf
orm
ing
firm
s fr
om
abro
ad
RO
UTE
5 :
stim
ulat
ing
publ
ic-p
riva
te
colla
bora
tion
in R
&D
RO
UTE
6 :
incr
ease
R
&D
in
publ
ic s
ecto
r
29
Educ
atio
n po
licy
Life
-long
lear
ning
pr
omot
ion
(X)
(X)
X(X
)(X
)
Trai
ning
cen
tres
(X)
XX
(X)
(X)
Obl
igat
ion
for
ente
rpri-
ses
to in
vest
in tra
inin
g ac
tions
(X)
XX
(X)
(X)
Trai
ning
che
ques
, su
ppor
t fo
r tr
aini
ng
actio
ns o
rgan
ised
by
ente
rprise
s
(X)
XX
(X)
(X)
Yout
h pl
acem
ents
in
ente
rprise
s fo
r te
ch-
nica
l tra
inin
g
X
XXX
XX
Tech
nolo
gy a
t Sch
ool
(X)
(X)
(X)
(X)
(X)
(X)
Empl
oym
ent
polic
y
Red
uctio
n of
tax
pr
essu
re o
n sa
laries
XX
(X)
XX
X
Ince
ntives
for
hirin
g sp
ecifi
c ca
tego
ries
of
empl
oyee
sX
XX
XX
Youn
g pa
rent
s in
em
ploy
men
t po
licy
(X)
(X)
(X)
(X)
(X)
Res
earc
her-
frie
ndly
imm
igra
tion
polic
yX
(X)
XX
(X)
X
Inno
vati
on D
omai
n
Inno
vation
po
licy
gene
ric
Adm
inis
trat
ive
sim
-pl
ifica
tion
for
com
pa-
nies
XX
XX
XX
(X)
Ente
rprise
sup
port
se
rvic
es, in
nova
tion
audi
tsX
XXX
XX
Scie
nce
park
s an
d en
terp
rise
cent
res
(includ
ing
incu
bato
rs)
XX
XX
(X)
XX
X
Entr
epre
neur
ship
Act
ion
Pla
nXX
(X)
(X)
(X)
(X)
Act
ion
Pla
n fo
r In
for-
mat
ion
Soc
iety
(X)
(X)
(X)
(X)
(X)
Inno
vation
po
licy
sect
oral
Com
petit
iven
ess
pole
s an
d cl
uste
rs
XX
XX
XXX
XX
X
Oth
er
polic
ies
- in
dust
ry
Ref
orm
of st
anda
rds
and
norm
s(X
)(X
)(X
)(X
)
Sub
sidi
es for
inve
st-
men
ts in
com
pani
esX
XX
X
Indu
strial
est
ates
X(X
)(X
)X
Oth
er
polic
ies
- tr
ade
Sup
port
for
exp
or-
ting
com
pani
es(X
)(X
)(X
)X
Fore
ign
inve
stor
s po
licy
XX
4.4
. Policy M
ix D
esig
n
Oth
er
polic
ies
- de
fenc
e
Def
ence
-orien
ted
publ
ic p
rocu
rem
ent
XX
(X)
(X)
(X)
Milita
ry r
esea
rch
proj
ects
XX
(X)
(X)
X
Oth
er
polic
ies
– co
nsum
er
prot
ection
Thos
e po
licy
inst
rum
ents
sha
pe fra
mew
ork
cond
ition
s fo
r th
e ac
tiviti
es o
f co
mpa
nies
and
re
sear
ch in
stitu
tions
, an
d ar
e lik
ely
to im
pact
on
the
gene
ral c
onte
xt for
und
erta
king
re
sear
ch a
nd d
evel
opm
ent
activ
ities
. Th
e im
pact
is in
dire
ct,
and
varies
acr
oss
activ
ities
(e
.g.
heal
th a
nd s
afet
y re
gula
tions
hav
e an
impo
rtan
t im
pact
on
publ
ic a
nd p
riva
te
R&
D a
ctiviti
es in
the
foo
d, o
r ph
arm
aceu
tical
sec
tors
).
Oth
er
polic
ies
– he
alth
and
sa
fety
Oth
er
polic
ies
- en
viro
nmen
t
Reg
ulat
ions
: fo
cus
on e
nerg
y re
duc-
tions
, en
viro
nmen
t pr
otec
tion
Oth
er
polic
ies
– re
gion
al
deve
lopm
ent
Incr
ease
d us
e of
Eu
rope
an S
truc
tura
l Fu
nds
for
“kno
wle
dge
soci
ety”
Oth
er
polic
ies
- co
mpe
tition
Ope
ning
up
of
mar
kets
Oth
er
polic
ies
– so
cial s
ecur
ity
4.4
. Policy M
ix D
esig
n
Oth
er
Def
ence
-orien
ted
XX
(X)
(X)
(X)
Pol
icy
cate
gori
esPol
icy
in
stru
men
tsR
OU
TE 1
:pr
omot
e es
tabl
ishm
ent
of n
ew in
dige
-no
us R
&D
-per
-fo
rmin
g fir
ms
RO
UTE
2 :
stim
ulat
e gr
eate
r R
&D
in
vest
men
t in
R
&D
-per
for-
min
g fir
ms
RO
UTE
3 :
stim
ulat
e R
&D
in
vest
men
ts in
fir
ms
non-
pe
rfor
min
g R
&D
RO
UTE
4 :
attr
act
R&
D-
perf
orm
ing
firm
s fr
om
abro
ad
RO
UTE
5 :
stim
ulat
ing
publ
ic-p
riva
te
colla
bora
tion
in R
&D
RO
UTE
6 :
incr
ease
R
&D
in
publ
ic s
ecto
r
30
31
Oth
er
polic
ies
- de
fenc
e
Def
ence
-orien
ted
publ
ic p
rocu
rem
ent
XX
(X)
(X)
(X)
Milita
ry r
esea
rch
proj
ects
XX
(X)
(X)
X
Oth
er
polic
ies
– co
nsum
er
prot
ection
Thos
e po
licy
inst
rum
ents
sha
pe fra
mew
ork
cond
ition
s fo
r th
e ac
tiviti
es o
f co
mpa
nies
and
re
sear
ch in
stitu
tions
, an
d ar
e lik
ely
to im
pact
on
the
gene
ral c
onte
xt for
und
erta
king
re
sear
ch a
nd d
evel
opm
ent
activ
ities
. Th
e im
pact
is in
dire
ct,
and
varies
acr
oss
activ
ities
(e
.g.
heal
th a
nd s
afet
y re
gula
tions
hav
e an
impo
rtan
t im
pact
on
publ
ic a
nd p
riva
te
R&
D a
ctiviti
es in
the
foo
d, o
r ph
arm
aceu
tical
sec
tors
).
Oth
er
polic
ies
– he
alth
and
sa
fety
Oth
er
polic
ies
- en
viro
nmen
t
Reg
ulat
ions
: fo
cus
on e
nerg
y re
duc-
tions
, en
viro
nmen
t pr
otec
tion
Oth
er
polic
ies
– re
gion
al
deve
lopm
ent
Incr
ease
d us
e of
Eu
rope
an S
truc
tura
l Fu
nds
for
“kno
wle
dge
soci
ety”
Oth
er
polic
ies
- co
mpe
tition
Ope
ning
up
of
mar
kets
Oth
er
polic
ies
– so
cial s
ecur
ity
4.4
. Policy M
ix D
esig
nIncreasingly, modern ‘agglomeration strategies’, e.g. policies and policy instruments designed to support a range of R&D and innovation actors within ‘clusters’ or ‘competitiveness poles’ (variously structured around regions, technologies or sectors), actively promote developments along multiple routes and are supported by regional, national and international support bodies. This was found to be the case with several instruments of the Finnish policy portfolio. In such instances, the need for greater degrees of communication, coordination and coherence between national, regional and international policies and policymakers is paramount.
In addition, depending on their particular characteristics, allegedly “similar” instruments might serve different routes. Policies geared towards the improvement of human capital availability contribute to all routes: these policies appear as essential building blocks for policy portfolios aiming to raise R&D in all configurations of priorities. Moreover, there is often a certain degree of myopia in the policy-making process, wherein only a limited subset of instruments is explicitly considered as contributing to the Routes’ objectives.
One important finding of the analysis of policy portfolios “menus” associated with each route, is that non-R&D policies are important for the demand-side. Thus, market creation forms an indirect way to promote R&D investments in a large set of firms (Route 3) and for Foreign Direct Investment (Route 4), in particular, but also for R&D performing firms (Route 2) and New Technology Based Firms (Route 1). Hence, policy instruments from fields other than R&D policy, are likely to be of crucial importance, even if their impact on the objective of raising R&D investments in an economy is indirect.
This brings us back to the challenge for increased or better policy coordination across policy domains in order to assess the respective importance and ensure good integration between all policy instruments. The fact that “Science” and “Innovation” policies are, in many environments, still pursuing parallel courses, represents a hindrance. In this context, there may be lessons to be learned from the role of “competitiveness poles” or other “mini-mixes” instruments to ensure such linkages between policy domains, from a bottom-up perspective.
Good practice in high-tech industries and R&D intensification approaches
Designing appropriate Policy Mixes is a great challenge for those countries that aim for industrial restructuring. Two principal ways to design industrial restructuring policies towards higher knowledge intensity can be identified, and are depicted in Exhibit 5 :
1. The high-tech industry approach rests on the preferential support of pre-defined sectors that particularly depend on R&D and new knowledge (‘high-tech industries’), and that promise to produce new technologies, which are likely to have substantial effects on larger parts of the economy. Basically, the high-tech industry approach aims at helping R&D-intensive sectors to grow fast. At the same time, policy may avoid the subsidisation of low-tech industries that show signs of stagnation, and may instead actively replace those that lose international competitiveness with new high-tech activities. If such a policy is successful, a country’s sectoral structure will change considerably towards high-tech sectors, with an
32
accompanied change in the average R&D intensity of the economy. The high-tech industry approach to industrial restructuring is thus very closely linked to R&D policy and, in many countries, it is regarded as part - and often even as the "heart" - of R&D policy. Examples of this approach include the US National Nanotechnology Initiative, a dedicated policy action to boost R&D in a particular high-tech area, and the German Biotechnology Programmes.
2. The R&D intensification approach attempts to raise knowledge intensity across many industries simultaneously, without necessarily prioritising any particular sector. It is typically part of a wider strategy to adjust the industrial structure of an economy aiming at ‘modernising’ a country's or region's business sector. The key objective is to increase a country's or region's competitiveness by bringing as many firms as possible in as many sectors as possible onto a knowledge-based competitive strategy. If this policy is successful, industry structures will change rather little, but the economy’s average R&D intensity will increase substantially. This approach is typically followed by countries or regions that start with a rather low R&D intensity in their economy, which partly results from a specialisation on sectors having low or medium technology intensity. This strategy commonly involves a number of other policy areas such as trade and industry policy, monetary and currency policy, fiscal policy, wage policy, education policy and public investment in technical infrastructures. R&D policy is likely to play only a minor role in this concert of policies. Examples of this approach are the ICT-Regie in the Netherlands or the regional policy in Friuli/Venezia/Giulia.
Exhibit 5 Schematic Representation of the Two Main Approaches to R&D-oriented Industrial Restructuring
Source: Policy Mix Project Team (2006), “Thematic Report: R&D Policies for Industrial Restructuring”, Report to DG RTD http://ec.europa.eu/research/policymix/
High-tech Industry Approach R&D Intensification Approach
4.4
. Policy M
ix D
esig
n
33
4.4
. Policy M
ix D
esig
nThe following success factors are identified for high-tech industrial restructuring strategies :
• Adequate strategic intelligence efforts to identify the most appropriate target sectors;• The bottom-up identification of research priorities after the top-down identification of target sectors;• Adequate consideration of regional strengths and capacities and the involvement of the appropriate regional authorities in policy formulation and implementation;• Efforts to identify and implement an appropriate sequence for the deployment of different public support activities, e.g. policies to develop a strong science base; policies to link this with industry ; policies to develop adequate regulatory frameworks; policies to stimulate demand, etc ;• The adoption of a coordinated approach to the deployment of R&D policies and Non-R&D policies;• Efforts to ensure that sector-specific support instruments complement rather than duplicate generic R&D support instruments;• Supportfortheestablishmentofstronginfrastructurestosupport and strengthen the science base relevant to the targeted sectors ;• Complementary efforts to link the science base to industrial actors in the targeted sectors;• Theapplicationoftrainingandmobilitymeasuresgearedto satisfying the immediate short-term skill needs of rapidly growing target sectors while educational policies readjust to satisfy longer term needs;• The precautionary adjustment of regulatory regimes likely to affect the future diffusion of the innovations, technologies, products and services likely to emerge from new high-tech sectors ;• Support for the early internationalisation of firm activities in emerging high-tech sectors;• Recognitionthatamultitudeoffactorsinthebroaderenvironment in which R&D and innovation actors operate can have dramatic influences on the growth dynamics of emergent high-tech sectors, with a consequent need for policy to both track these changes and adapt flexibly in response to them.
Generally speaking, although R&D policies constitute the most critical component of R&D intensification strategies, generic efforts to improve the overall framework conditions affecting the environment in which R&D and innovation actors are involved are also vital, particularly those that encourage innovation and stimulate demand for innovative products and services. Many of the success factors associated with R&D intensification strategies are thus similar to those for high-tech industry strategies. These include the need to deploy a range of R&D support instruments and the need to harmonise R&D policies with other Non-R&D policies, particularly those that ensure adequate supplies of human capital, help create a favourable business environment and stimulate demand.
34
Interactions between policy instruments from within the R&D policy domain and between R&D and non-R&D policy domains
Multiple R&D policy instruments, when in operation simultaneously, can interact with each other, either positively or negatively (i.e. they enhance or hamper each other’s effectiveness). There are only a few examples in Europe where the interactions between concurrent instruments have been deliberately taken into account while designing new, or revising existing measures.
Central in the R&D-R&D interaction debates are the trade-offs between indirect and direct policies and, secondly, between generic and thematic (e.g. sectoral, technology specific) policies.
A further dimension is the interaction between national and regional policy mixes that are mostly complementary but which, in some countries, also show a replication of national structures at the regional level.
One strategy followed in order to favour positive interaction is to concentrate R&D policy instruments in a limited number of intermediary agencies. This was the course followed in Austria, e.g.
The United Kingdom provides one good example of a contradictory interaction between two elements of the policy mix. The example concerns the aims of promoting excellence in the research that is funded within universities and that of stimulating greater academic/industry knowledge transfer and collaboration. The former aim is supported by block funding of university research activities by the Higher Education Funding Councils, whilst the latter is supported by a number of measures. This creates tensions in the applications of the two types of instruments.
In Belgium, because of the organisation of competences in the federal state, there is no co-ordination with respect to R&D instruments across the regions. Due to the governance structure of the country the number of R&D policy instruments in place is complex. Companies being active throughout Belgium face different policy mixes according to a location criterion. Direct and indirect R&D support measures are provided by different levels of authorities and may cause duplication of efforts or foregone synergies. However, no analysis of complementarities or duplication of efforts have been undertaken so far.
With respect to interactions between R&D and non-R&D policies, the most visible and prevalent interactions and impacts fall into two broad categories. The first category concerns support for R&D performed by different ministries, including those responsible for so-called Non-R&D policy domains (Health, Transport, Energy and Environment, Agriculture, etc.) and those responsible for R&D policy itself (typically those ministries responsible for the generic support of R&D in the public and private sectors). The second category concerns the integration of R&D activities with other activities that are the responsibility of ministries in Non-R&D policy domains (e.g., R&D and innovation support actions or, on a grander scale, between sets of policies aimed at improving R&D intensity, stimulating innovation, industrial restructuring, and regional and economic development generally).
In many countries, the involvement of multiple ministries in the development of coherent policies for R&D can be problematic. Not only is there often a strong degree of rivalry between ministries and agencies, but it can also be difficult to motivate Non-R&D ministries (i.e. ministries whose primary orientation is not towards support for
