Institute for Statistical Studies and Economics of Knowledge  

UNDERVALUED INNOVATORS: EXPANSION OF THE HARMONIZED INNOVATION

SURVEYS TO MINING, UTILITIES AND AGRICULTURE

Prof. Leonid GokhbergVitaliy Roud

21 September 2016

Rationale to cover the sectors beyond the ‘core’ Sectoral specificities of innovation Adjusting the methodology: unification vs high

specialisation Cases: Mining and Quarrying Utilities Agriculture Conclusions

2© National Research University Higher School of Economics, 2015

Outline

3

• Pavitt’s taxonomy – deployed at sectoral level: Special role of advanced

manufacturing and science-based services as sources of technology for other sectors

Technological trends change existing views on the flows of knowledge in the national innovation systems

• Firm-level taxonomies: Presence of advanced (as

well as less sophisticated) innovation modes in all manufacturing and service sectors

• High-technology myopia (focus on high tech manufacturing)

• Cross-sectoral diffusion of radical platform technologies

• Low tech innovation, services

• Technological paradigms Narrow understanding of platform

(horizontal) technologies ICT-driven shift in productivity

• Next production revolution Interdisciplinary and cross-

sectoral convergence of technologies

1980-1990s 2000-2010sOriginal concepts behind the OM Recent evidence

4

Scope of the harmonized innovation surveys

Conventional OM coverage:ManufacturingServices (often KIBS)

Typically left outside:Agriculture Mining and QuarryingUtilitiesConstructionTransport

General traditional argument to limit the sectoral scope (OM-2005): Low innovation activity beyond services and manufacturing

Rationale to increase sectoral coverage (1): Technological trends are transforming all existing and emerging sectors

5

Worldwide concentration of innovation effort on technological prioritiesClimate change mitigation: lighting, electric power, transportationAgeing, health and food security: chemistry, biotechnology, etc.Information and communication management: “big data”, virtual payments, etc.New manufacturing processes: chemistry, nanotechnology, composite materials, new materials, additive technologies, lasers

Sustainable development heavily relies on advanced technologies• Existing technology at a certain point enables growth only at cost of

natural capital depletion. Restrictive green policies limit the growth• Sustainable development can only be enabled by disseminating new

technologies

ICT, robotics and automation, additive production, biotech&synthetic biology, nanotech including composites, smart materials, etc.

A shift in the production landscape and disruptive sectoral changes are led by convergence of advanced technologies

Technologies are a key factor determining productivity in all sectorsMechanics of multifactor productivity growth:(1) advances in global productivity frontier(2) diffusion of new technologies from the global frontier firms to national frontier firms(3) diffusion of existing technologies from the national frontier to laggard firms

6

Rationale to increase sectoral coverage (2): economic significance

For certain economies these sectors account for: - a higher share of GDP and employment- considerable contribution to BERD and total R&D personnel

Source: OECD Statistics. 2014 or closest year

0 5 10 15 20 250

5

10

15

20

25

JapanSwitzerland

ChileNorway

Swizerland

ChileGreece

PolandPortugal

Series1 Series3 Series5 Series7 Series9

Share in GDP (%)

Shar

e in

Lab

or (

%)

0 10 20 30 40 50 60 70 80 90 1000102030405060708090

100

Australia

Australia

CanadaChile

Norway

Chile

Series1 Series3 Series5 Series7 Series9

Share in BERD (%)

Shar

e in

tot

al R

&D

per

sonn

el (

%)

7

Sectoral coverage: harmonized guidelines vs. national practices

Manufacturing

Services

Agriculture

Mining and Quarrying

Manufacturing

Utilities

Services

Construction

Sectoral coverage of national innovation surveys reviewed in the OECD Innovation Survey Metadata project (% of countries) 14

89

100

86

94

17

There exist broad national practices to measure innovation in non-’core’ sectors but lack of harmonization hampers data stocktaking

8

Sectoral specificities of innovation activities……explained by business models, market structure and industrial organization

• heterogeneity of industry structures, dominant sizes of actors, regulatory frameworks, and presence of the state

• Products and processes and the underlying technology base (definitions of product and process innovation):

• e.g. agriculture: repetitive practices of interchanging crop types complies to a formal definition of innovation products

• Innovation activities and expenditure on innovation

• e.g. agriculture: shift to the advanced fertilizers; construction: new materials – little costs at the stage of initial introduction but high further current costs – total cost of ownership/total cost of innovation?

• Knowledge production/dissemination patterns

• institutional locus of formal R&D, impact of the appropriability conditions on the innovation-related rent, typical schemes of co-operation, etc.

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Adjusting the methodology: unification vs high specialisation

  Methodological guidelinesUnified Sector-specific

Survey design

Unified survey, unified

questionnaire

Feasible for sectors that match the product/process definitions Most of EU countries, Canada: Mining, Utilities

Allows to control for certain specificities; produces comparable indicators Russia: Mining, Utilities; Construction

Unified survey, modular

questionnaire

 Russia: small industrial enterprises 

Broader account for specificities Russia: Agriculture

Specialized survey Ad hoc studies

Production of detailed and specialized policy-oriented indicators Australia: Agriculture

anticlinal theory rotary drilling seismo-graph well logging

offshore drilling digital computing directional drilling three-dimen-sional seismic

three-dimen-sional simulationlong horizontal drilling and multi-stage hydraulic fracturingnext gene-ration three-dimensional, four-dimensional (time lapse) and micro-seismic

Source: Sandrea I., Sandrea R. (2007) Global offshore oil: geological setting of producing provinces, E&P trends, URR, and medium term supply outlook.

In mining, new technology means access to new resources

Offshore exploration wells drilled and new oil discoveries

Offshore yearly oil discoveries and average field size

Technological innovationsin the upstream oil industry ...

... and their impact on oil discoveries (case: offshore oil)

18931900s

19141924

1930s1960s

1970s1980s

1990s2000s

2010s

Source: Jackson PM, Smith LK. (2013) Exploring the undulating plateau: the future of global oil supply. Philos Trans A Math Phys Eng Sci.

Case Study: Mining and Quarrying

ВЛИЯНИЕ ТЕХНОЛОГИЙ НА ЭКОНОМИКУ ПРИОБРЕТАЕТ ЭФФЕКТ «СНЕЖНОГО КОМА»: ЭНЕРГЕТИКА

7Technological and non-technological innovations are game-changers in the Utilities sector

Case Study: Utilities

Share of photovoltaics in global electricity production

Gross electricity generation (GW)

Inst

alle

d co

st p

er k

Wh

(USD

)

Single point of contact

Price parityElectricity retail price based on natural gas

Electricity wholesale price based on coal

Textured monocrystal

Iso-textural multicrystal

Monocrystal, sputtering contacts in vacuum

Renewable energy resources

x5increase in annual investment since 2004

of new generation capacities

share by 2030 (inclusive of hydroenergetics)

ENERGY STORAGE SYSTEMS

SMART GRIDS

Min price for 1 kWh with the use of solar energy in the first six month of 2016 twice less than min price in 2015 (UAE, Mexico etc.)

Accumulator batteries cost reduction to $200/kW by 2030

Smart grid global market worth over $400 bln by 2020 (CAGR=8%)

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• Survey design: unified• Methodological guidelines: sectoral examples of innovation• Findings:

Mining and Utilites – measurement in Russia since 1995

In terms of intensity:• Share of innovation companies in Mining and

Utilities similar to Low Tech• Innovation expenditure is higher• Innovation output in Mining outperforms Low Tech

1 2 3 4 5 6

17.46.3

20.8 2139.8

9.3

110.1

8.8 8.2

8.9

3.2

64.6 70.6 48.637.2

34.1

67.4

9.8 39.7 10.9

6 9.1

Innovation expenditure by type of activity (%)

Series1 Series2 Series3 Series4 Series5 Series6 Series7 Series8Series9

1 2 3 4 5 6

6.5 6.510.9

17.4

30.6

4.57.2

4.18.8

14.817.7

0.71.4 0.7 2.6 2.46.1

1.8

Innovation activity (%)

Series1 Series2 Series3

In terms of strategies:• Mining ~ Medium High Tech• Utilities ~ Low Tech

1 2 3 4 5 6

25.7

58.4 55.874.8 77.9

24.4

81

54.8 6346.4 52.2

82.6

35.4 26.3 31.1 29.7 29.4 33.3

Share of innovation companies that perform:

Series1Series2Series3

Strong propensity to process innovation

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Rise of the new technological revolution in agriculture

Accelerated selection, seed growing and breeding technologies

Technologies for production of vaccines, antibiotics, antivirus preparations for animal farming

Technologies for veterinary and phytosanitary control

Basic precision agriculture technologies (geolocation and satellite navigation)

Technologies for producing new types of fertilizers

Technologies for genetically engineered modification

Technologies for making basic agricultural machinery

Case Study: Agriculture

Technologies for deep processing of agricultural materials

Basic food biotechnologies

Technologies for complete on-the-spot utilization and recycling of agricultural industry’s waste

Urban agriculture technologies

Complex precision agriculture technologies (based on big data, machine learning, artificial intelligence, including swarm intelligence)

Convergent smart bioenergy technologies

Technologies for system integration of agricultural sector’s logistics, based on supercomputing

Technologies for production of personalized, functional and synthetic foods

Hydroponic and aeroponic technologies

30% reduction of agricultural production cycle time, 90% reduction of water intensity

Robotic greenhouses

40–50% reduction of fruit and vegetables retail price in the Russia’s Far North

Global pesticides market, bln. USD

Radical shifts in products, processes, organizational and marketing methods in agriculture

Product:

biopesticides

synthetic pesticides

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Case study: Agriculture

Russia (2017)Australia (ABARES-2010)Survey design: unified, modularMethodological guidelines: sector-specific

Focus on detailed specification of the compatible definitions:• product, process and non-

technological innovation (clarifications and examples)

• innovation expenditure (instructions and examples)

• sales of innovation products (definitions for new crops/breeds)

• factors hampering innovation (+ climate/nature/environment risks)

• Innovation objectives (+ reduction of weather-related uncertainty,+ reduction of biological risks+ soil enrichment/recultivation)

Survey design: specialized Methodological guidelines: sector-specificFocus on detailed process and organizational innovation:

Product innovation

New crop typesNew crop cultivarsNew livestock typesNew livestock breeds

Process innovation

Cropping equipmentFertiliser practiceWeed, pest and disease management practicesSoil management practiceWeed-related natural resource managementPest-related natural resource managementSoil-related natural resource managementOther crop practicesLivestock feeding practiceLivestock handling practiceLivestock health practiceGrazing management practiceOther livestock practices Pasture type Irrigation and water management practices

Organisational

innovations

New approach to labour useNew members to farm management

Marketing innovation New approach to marketing farm’s production

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• Rationale to include non-’core’ sectors into innovation surveys

• An obvious need for internationally harmonized methodologies

• Umbrella-style general definitions accompanied by sector-specific additional details

• Modular design of international innovation surveys

• To begin with: a stocktaking OECD/Eurostat exercise

Conclusions

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Thank you!lgokhberg@hse.ru

http://issek.hse.ru

https://foresight-journal.hse.ru/en/