Policies to Support Innovation Driven Growth

2nd Operational Meeting of the PAM Panel on External Trade and Investments in the Mediterranean

José PalacínUnited Nations Economic Commission for Europe

Geneva, 5 May 2011

Structure of the presentation

• Innovation and Competitiveness• National Innovation Systems• Common problems• Policy mix/target settings• Different types of policies

Innovation as a source of competitiveness

• Innovation is the creation of new products or processes or the improving of existing ones

• Innovation is a key way to retain or gain competitiveness

• Innovation results in higher added value

Innovation and competitiveness

National innovation systems

• Innovation is a complex process: emerges from a continuous interaction between – firms, – suppliers and buyers – knowledge institutions like universities or

research and development (R&D) organizations – Government policies

• International dimension

National innovation systems

Source:OECD

Common problems in emerging markets

• Only a few large enterprises innovate• The share of innovative SMEs is very small• Weak linkages.• Research disconnect• Innovation policy success limited by

framework conditions.

The role of the public sector

• Market failures – innovation will be underprovided.

• Specific financing problems• Not only financial resources are required:

long-term vision, coordination, strategic guidance

Policies required

• Targets to be defined on the basis of the understanding of the national innovation system.

• Targeting simultaneously various components of NIS (interrelations)

• Effectiveness of instruments depends on synergies reached

National innovative capacity

Absorptive capacity

Knowledge creation Innovation governance Diffusion capacity

Demand

Source: UNECE

Generation of knowledge

• Increasing R&D• In particular, higher business R&D• Importance of R&D serving to absorb

foreign technologies• Non-technological innovation- Services• Users-led innovation

Absorptive capacity

Human capital development• Business sector involvement (identification

needs)• Lifelong learning• Role of universities: teaching, research. • International cooperation and mobility.

Diffusion of innovation

Importance of linkages

• The role of partnerships • Clusters• Support organisations

Stimulating demand for innovation

• Framework conditions• Fiscal support• Public procurement• Sustainability: environmental regulations as

a source of support for innovation

Improving innovation governance

• Diversity of national experiences but need to avoid fragmentation

• Innovation agencies as partners • Coordination mechanisms with stakeholder

involvement• National innovation constituency

A map into the future

• Policy learning as part of the cycle of policy-making: embedded evaluation

• Importance of strategic intelligence based on a range of instruments

Some final remarks• Strong public policies are critical to overcome

market failures regarding innovation • The promotion of innovation concerns many

different policy areas- not only technology• Linkages and mobility are key to the generation

and diffusion of innovation. • This importance should be reflected in both

domestic policies and international cooperation initiatives.

Some publications

Contact information

www.unece.org/ceci

Jose.palacin@unece.org