Wolfgang Polt - Presentation at the Innovation Forum Skopje 09 11 2011

INNOVATION FORUM: Developing an Innovation Strategy

for 2012-2020

Successful innovation policies – strategic options for Macedonia

Wolfgang Polt Joanneum Research

POLICIES – Center for Economic and Innovation Research [email protected]

Skopje, 9 November 2011

Structure of the Presentation

General Trends in R&D and Innovation

Main Trends and International Good Practice in Research and Innovation Policy (RIP)

Portfolio and Mixes of Instruments of RIP

Lessons for RIP in Macedonia

• General Trends in R&D and Innovation

Main Trends in R&D&I

General increases in the knowledge intensity of production of goods and services

Specialisation increases and specialisation patterns between countries differ … and will continue to do so (industrial history, public priority setting…)

Share of business sector increases with level of development

Share of service sector in R&D and in innovation increases

New ‚mode of production of knowledge‘: INTERACTION and OPEN INNOVATION !

Increasing globalisation of value chains and economic activities (also of R&D) … through various channels (HR mobility, international cooperation, inward/outward FDI…)

R&D Intensity is increasing – even in crisis!

Increasing Specialisation of economic activities

Substantial Parts of R&D take place also in ‚low-tech‘ sectors !

Collaborations between private enterprises and public research institutions are increasing

• Main Trends and International Good Practice in RIP

Recent trends and international good practice in RIP

RIP has become a major policy area in many OECD countries

Increasingly to be seen: formulation of explicit RIP strategies Setting quantitative/qualitative targets Explicitly addressing ‚policy learning‘

Setting targets and identifying priorities Thematic Functional

Refining funding instruments Increasingly ‚Competitive‘ / Programme funding -

Increasing the leverage effects of direct funding of private R&D

Increases in ‚indirect‘ support to R&D via R&D tax credits

(see OECD Innovation Strategy 2010)

Recent trends and good practice in RIP

Fostering Human Resources for R&D Output of S&T graduates Career path for young researchers Attract talent Increase participation of women

Coping with globalisation of R&D Reforming funding and performing instiutions Increased emphasis on monitoring and

evaluation (‚strategic intelligence for RIP‘) Improving the ‚governance‘ of RIP Strengthening the NIS as a SYSTEM

…especially industry-science relations !

(see OECD Innovation Strategy 2010)

• Portfolios and Mixes of Instruments of RIP

(Regional) Innovation Policy Instruments- a taxonomy

Knowledge generation Knowledge diffusion Knowledge exploitation

Traditional instruments Technology funds,

R&D

incentives/supports/grants

Support for scientific research

and technology centres

Support for infrastructure

development

Human capital for S&T

Science parks

Technology transfer offices

and programmes

Technology brokers

Mobility schemes, talent

attraction schemes

Innovation awards

Incubators

Start-up support

Innovation services

(business support and

coaching)

Training and raising

awareness for innovation

Emerging instruments Public-private partnerships for

innovation

Research networks/poles

Innovation vouchers

Certifications/accreditations

Industrial PhDs

Support for creativity and

design

Innovation benchmarking

Competitiveness poles

Competence centres

New generation of scientific and technological parks and clusters

Venture and seed capital

Guarantee schemes for financing innovation

Experimental instruments Cross-border research centres Open source-open science

markets for knowledge

Regional industrial policy

Innovation-oriented public

procurement

Source: Nauwelaers, C. and A. Primi (forthcoming), Innovation Policy and Regions: Policy Spaces, Strategies and

Challenges, Regional Development Working Papers, OECD, Paris

!

?

Innovation Strategies for Different Development Levels

Type of region

Main strategy

Building on current

advantages (science push/

technology-led or a mix)

Supporting socioeconomic

transformation

Catching up: towards the

creation of knowledge-

based capabilities

Knowledge hubs Knowledge and

technology hubs Knowledge-intensive

city/capital districts Industrial production zones

Service and natural

resource regions in

knowledge-intensive

countries

Medium-tech

manufacturing and

service providers

Traditional

manufacturing regions

Non-S&T-driven regions Structural inertia or de-

industrialising regions

Primary-sector-intensive

regions

Notes: main priority strategic choice; low priority. Source: OECD (2011) Regions and Innovation Policy

Strategies and Policy Mixes for Catching-Up

In the following, different levels of development of innovation systems are related to potentially most suited strategic orientations for RIP and main instruments associated with the respective strategic orientation are depicted. Macedonia will have to pick among those strategies and formulate ist own ‚strategy/policy mix‘.

Policy Mixes for Different Development Levels (1)

Source: OECD (2011) Regions and Innovation Policy

Type of OECD region

by economic profile

Degree of regional STI policy competences

High Medium Low

Medium-tech

manufacturing and

service providers

Strategy: modernising productive activities towards value-added

niches: “innovation ecosystem strategy”

Industrial production

regions with relatively

high knowledge

absorptive capacities

Supporting science-industry

linkages (personnel

exchange and placement

schemes; technology

advisory services;

technology diffusion)

Regional agencies for

innovation promotion,

combining technology

transfer with other

services

Promoting innovation start-

ups (business angel

networks, mentoring

schemes, regional seed and

venture capital funds)

Densification and

internationalisation of

regional production clusters

Regional public procurement

oriented towards innovation

Technology platforms

(linking technical schools

and SMEs)

Technology transfer

centres in relevant

sectors, co-funded by

national government

Regional advisory

network; networks

fostering synergies and

complementarity

between national

agencies in the region

and regional agencies

Innovation vouchers for

SMEs

Support for young

graduate recruitment in

firms

Concentration of

regional action on non-

traded sectors

Supporting innovation in

service or cultural

industries

Small-scale cluster

support with an

orientation towards

connection to global

networks

Innovation vouchers,

targeting “innovation

beginners”



Type of OECD region

by economic profile


High Medium Low

Structural inertia or

de-industrialising

regions

Strategy: stimulating knowledge absorption and entrepreneurial

dynamism

Non-S&T-driven

regions with persistent

development traps

Local knowledge

centres ,branches of

national knowledge

hubs (focus on

diffusion)

Education and training

activities in firms

Supporting connection

to international

production networks

Regional fora to

identify growth

prospects in niches

with value-added

Innovation and

entrepreneurship

culture promotion

Supply-chain

management initiatives

to reduce

fragmentation

Innovation-oriented

public procurement

Redefinition of

programmes for

regional technical

schools

Innovation awareness

raising,

entrepreneurship

promotion events

Developing latent

demand for innovation

(innovation vouchers,

placement of students

in SMEs)

Orienting polytechnics

to new qualifications

Training for low skilled

and unemployed

Support to clusters

with innovation

potential

Supporting inclusion of

region in international

production networks



Type of OECD region by

economic profile


High Medium and Low

Primary-sector-intensive

regions Strategy: upgrading and retaining human capital, creating critical

mass and increasing quality of connectivity Generally rural areas in

lesser developed OECD

countries, specialised in

primary sector activities

Regional agencies for business development

Training and lifelong learning courses (public

offer, incentives for firms)

Student exchange programmes and talent

attraction schemes

Regional incentives for skills upgrading

programmes in companies Incentives for

hiring qualified personnel in companies

Creation of knowledge centres in traditional

fields (agriculture, tourism…), branches of

national research organisations

Innovation support programmes for

incremental innovations (innovation

intermediary, business development support)

Linkages of business support organisations

(chambers of commerce, etc.) to wider

networks

Financing experimental innovative projects in

traditional sectors

Connection of regional actors in national and

international production networks

Innovation support programmes

(innovation intermediary), business

development support (branch of

national agencies), connection with

trade and export agencies

Attracting national investments in

vocational and tertiary education

Promoting national training,

lifelong learning schemes for

companies and individuals

Engaging regional stakeholders in

external production networks

Securing national infrastructure

investments to enhance

connectivity

• Lessons for RIP in Macedonia

Adopting a broad definition of ‚innovation policy‘

Don‘t confine your innovation policy to science/research and technology policy. Include all measures to improve innovation capabilities of enterprises on a broad front

Especially, don’t fall for a ‘high-tech myopia’ !

Taking a portfolio view of innovation policy instruments

Innovation Policy instruments have become a multi-facetted and differentiated ‘tool-box’

They can inter/counter/act in their impacts…

…and hence have to be designed and evaluated not in isolation but as a portfolio!

For this purpose, formulating an Innovation Strategy should be a ‘whole-of-government’ effort

(findings from The ‘Policy Mix’ Project, 2009 and OECD Innovation Strategy 2010)

Tailoring the portfolio of policy instruments to the specificities of

your innovation system

The appropriate policy mix is highly context dependent (level of development, path dependency)

‘Superstitious learning’ (i.e. simply copying perceived ‘best practice’ from more advanced countries) is to be avoided!

(again: findings from The ‘Policy Mix’ Project, 2009 and OECD Innovation Strategy 2010)

Some (tentative) suggestions for Macedonias Innovation Strategy (1)

The Innovation Strategy for Macedonia must be based on a careful assessment of both the state of development, the needs of the respective actors and their capabilities. As there is no ready-made off-the-shelf solution available, the formulation of such a strategy must involve and address these stakeholders.

In a policy mix suited for Macedonia, the stimulation of innovation capabilities in enterprises (especially in SMEs) and the improvement of Human Capital must be among the first priorities.


The main thrust of policy should be to incentivize enterprises to adopt innovations (tangible or

intangible)

to engage in more systematic manner in product and process innovation and

to overcome barriers to interact with others (suppliers, customers, public research institutes, universities) in the process of innovation.

Hence, investment subsidies for the purchase of up-to date equipment“, training and development of skills in innovation, management and organizational improvements are likely to be effective policy measures in this vein.


Apart from this main thrust of policy, there could be parts of the policy mix also addressing ‘nuclei’ or ‘islands’ of advanced technological or scientific competences (if these can be detected). Thus could be achieved by

Fostering collaboration in innovation on bilateral basis

among firms and between frims and research institutions (or to the extent possible of networks of firms)

In some cases, addressing existing clusters, even if they are not ‘high-tech’ is a viable policy option. Existing efforts must be checked in this vein


At the 'lower' but often much more appropriate end of the policy spectrum are general measures to foster innovation capabilities of enterprises. the build up of support institutions has proved to be of longer-

lasting positive effect, like business associations, Joint support infrastructures etc.

in more advanced stages, firms or firm associations have colluded to create their own (research and innovation) infrastructures like ACR in Austria or Steinbeiß Foundation in Germany.

A measure which has become very popular in recent years are innovation vouchers. Pros: very flexible instrument, can be tailored to very different

circumstances.

Potential pitfalls: lack of support infrastructure and high quality business services


..and there is of course the question of policy implementation… Innovation Strategy needs a ‘whole-of-government’

approach to be coherent

Needs target setting against which success can be measured – and these targets have to be realistic….

…needs the development of capabilities for ‘strategic policy intelligence’ (foresight, monitoring, evaluation, policy implementation)

…needs to find the right balance between international, national and regional policy layers

And above all: needs to have qualified people in well structured and sufficiently endowed and functioning institutions to be implemented….

Thank you for your attention !

Wolfgang Polt - Presentation at the Innovation Forum Skopje 09 11 2011

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