Transcript The Knowledge Economy

The Knowledge
Economy -- the OECD
Approach
John Dryden, OECD
Conference on Using Knowledge for
Development in EU Accession Countries
World Bank, Paris, 20 February 2002
Outline
The scope of OECD work on the Knowledge
Based Economy
 Measurement – the OECD STI Scoreboard
“Towards a KBE”
 Analysis -- the KBE and the OECD Growth Project
 Policies -- a comprehensive growth strategy for the
KBE

The scope of OECD work on the
Knowledge Based Economy
A Knowledge Based Economy is one
in which knowledge is created,
acquired, transmitted and used
effectively by all economic actors
The scope of OECD work on the
Knowledge Based Economy
 Seize
the benefits of ICTs
 Harness the potential of innovation and
technology diffusion
 Enhance human capital and realise its
potential
 Foster firm creation and
entrepreneurship
 Get the fundamentals right
Outline
The scope of OECD work on the Knowledge
Based Economy
 Measurement – the OECD STI Scoreboard
“Towards a KBE”
 Analysis -- the KBE and the OECD Growth Project
 Policies -- a comprehensive growth strategy for the
KBE

OECD Science, Technology
and Industry Scoreboard
2001
Towards a knowledge-based
economy
2001 edition: what’s new?
 Over
160 indicators, 60% new
 Measuring the information
economy
 Improved classification of
technology and knowledge
intensive industries
 The Web Scoreboard
an integrated view
Creation and
diffusion
of knowledge
Global integration
of economic activity
Information
economy
Economic
structure and
productivity
The “KNOWLEDGE INTENSITY” is
increasing
Investment in knowledge as a percentage of GDP, 1998
%8
H igher education
S oftw are
R&D
6
4
2
0
Sweden
U n ite d S ta te s
K o re a
F in la n d
S w itze r la n d
Ca nad a
Ja p a n
O ECD
D e n m a rk
N e th e r la n d s
G e rm a n y
F r a n ce
N o rw a y
U n ite d K in g d o m
A u str a lia
B e lg iu m
EU
A u str ia
C ze ch R e p u b lic
Ire la n d
H u n g a ry
S p a in
Ita ly
P o rtu g a l
G r e e ce
M e xico
More R&D spending towards basic
research ...
Business enterprise
No breakdown
Private non-profit
Government
Higher education
0.8
Basic research as a percentage of GDP by sector of
performance
0.6
0.4
0.2
0.0
Mexico (1995)
Ireland (1993)
Spain
Portugal (1997)
Hungary (1997)
Switzerland (1996)
France (1998)
Germany (1993)
Iceland
Australia (1998)
United States
(1998)
Japan
Korea (1998)
Austria (1993)
Czech Republic
Norway
Italy (1998)
Poland
Netherlands (1995)
Slovak Republic
%
Building up the ICT INFRASTRUCTURE
Access paths per 100
inhabitants, 1999
Fixed channels
Broadband penetration
rates, January 2001
Cellular mobiles
Korea
14
Norway
Canada
9
Sweden
United States
Iceland
18
Austria
12
Finland
17
Luxembourg
11
Denmark
13
Switzerland
Sweden
Netherlands
Denmark
17
9
12
Average
annual
growth
rate
1995-99
100
50
0
Netherlands
Belgium
United States
Iceland
Australia
Finland
0
2
4
6
8
10
%
ICT manufacturing
Ita
ly
Ge
rm
an
y
Au
str
ali
a
M
ex
ico
Ire
lan
d
Fi
nla
nd
Ko
re
a
Sw
ed
en
Hu
Un
ng
it e
ar
d
y
Ki
ng
Un
do
m
it e
d
St
at
es
Fr
an
ce
Ca
na
Ne
da
th
er
lan
ds
Po
rtu
ga
l
De
nm
ar
k
Ja
pa
n
No
rw
ay
Sp
ain
B
Cz
elg
ec
ium
h
Re
pu
bli
c
The increasing contribution of ICT to
the economy
Share of ICT value added in business sector value added,
1999
ICT services
14
12
10
8
6
4
2
0
A growing share of knowledgeintensive sectors
Knowledge-intensive sectors as a share of total gross value added,
1998, Top 10 countries
High- and medium-high-technology manufactures
Post and telecommunications
Of which : high-technology manufactures
Finance and insurance
Business services
Ireland (1997)
Korea
Germany
Switzerland
Japan
Germany
OECD
United States
EU
Austria
Italy
Hungary
Sweden
EU
%
0
Netherlands
Sweden
OECD
6
United Kingdom
France
Czech Republic (1997)
12
United States
Hungary
Finland
18
Switzerland
0
5
10
15
20
25
%
Bridging access to the Internet
Internet home access among households
by income level, 2000
%
Households Internet access
100
First income quartile
Fourth income quartile
80
60
40
20
0
United
States
Finland
Australia
Canada
(1999)
Netherlands
(1999)
United
Kingdom
Turkey
Denmark
The contribution of ICT equipment
and software to output growth
Business sector, 2000
software
ICT equipment
0.87
0.68
0.62 0.57
0.48
0.38
0.38
0.36
0.35
at
es
Au
Fi
st
nl
an ralia
d
(1
99
9)
Un
Ca
na
ite
da
d
Ki
ng
Ja
do
pa
m
n
(1
99
Ge 9)
rm
an
Ita
y
ly
(1
99
9)
Fr
an
ce
Un
ite
d
St
percentage points
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
Outline
The scope of OECD work on the Knowledge
Based Economy
 Measurement – the OECD STI Scoreboard
“Towards a KBE”
 Analysis -- the KBE and the OECD Growth
Project
 Policies -- a comprehensive growth strategy for the
KBE

THE OECD GROWTH PROJECT:
A New Economy?
MINISTERIAL MANDATE 1999
 What
are the causes of growth
disparities in the OECD?
 What are the factors and policies that
can strengthen growth performance?
 What is the role of factors such as
innovation, knowledge, human and
social capital, service industries and
start-up firms - i.e. what is new in
economic growth?
Structure of the Project
 2-Year
Horizontal / multidisciplinary
project
 Initial findings reported to Ministers in
June 2000, Final report May 2001
 Follow up -- ICTs, knowledge-driven
growth and “benchmarking” policies
Growth of GDP per capita in the 1990s
Percentage change at annual rate (%), cyclically adjusted
3.5
1980-90
1990-98
1995-98
3
2.5
2
1.5
1
0.5
0
United
States
Japan
Germany
France
Italy
United
Kingdom
Canada
Iceland
GDP per capita was supported by
increased labour input
Average annual growth rates (%), 1990-98
3
GDP per hour worked
Labour utilisation
2.5
2
1.5
1
0.5
0
-0.5
-1
la
nd
Ic
e
Ki
te
d
Ca
na
da
ng
do
m
ly
Ita
an
ce
er
m
an
y*
G
pa
n
Ja
Fr
Un
i
Un
i
te
d
St
at
es
-1.5
What drives these patterns?
 Macro-economic
policy continues to
matter.
 Contribution from Human Capital and
Labour market reforms
 The role of innovation and the impact
of information and communications
technology.
ICT as a Source and Driver of
Innovation
ICT exemplifies the changes in the
relationship between S&T and economic
performance:
 driving patenting
 strong BERD
 close links to university and
consortiums of businesses
ICT producing and using sectors contribution
to labour productivity growth
Breakdown of labour productivity growth, 1996-99 (%)
3.5
3.0
ICT-producing
ICT-using
Other industries
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
Finland
Finland
(MFP)
France
Germany
Italy
Japan
United
States
NASDAQ and US Secure Servers
2500
Nasdaq
2000
1500
1000
500
0
90000
80000
Nasdaq Telecom.
Index
70000
60000
50000
40000
30000
20000
10000
Secure Servers
3000
Nasdaq Computers
Index
Number of Secure
Servers in the
United States
0
Source: OECD based on Netcraft (www.netcraft.com) and Nasdaq
The Changing Role of Human Capital
The quality of labour is improving
 Knowledge workers are more important
 Knowledge workers are more mobile

The quality of labour is improving
across
the OECD
Index of average
years of schooling
14
1998
13
1990
12
11
10
9
8
an
y
m
G
er
ad
a
C
an
S
ta
t
es
lia
te
d
U
ni
us
t ra
A
do
m
in
g
K
la
nd
te
d
he
r
U
ni
N
et
S
w
ed
en
nd
nl
a
Fi
an
ce
Fr
d
la
n
Ita
ly
Ire
S
pa
in
7
... and knowledge workers are more important
Employment growth by group of occupations, 1992-99, annual % change
3.3
Knowledge workers
2.2
Service workers
1.6
Management workers
0.9
Data workers
Goods-producing
workers
-0.2
-0.5
Note: Data cover US and EU countries.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
KNOWLEDGE is more “mobile”
%
30
25
20
15
10
5
0
Distribution of foreign students in OECD by host
country, 1999
Outline
The scope of OECD work on the Knowledge
Based Economy
 Measurement – the OECD STI Scoreboard
“Towards a KBE”
 Analysis -- the KBE and the OECD Growth Project
 Policies -- a comprehensive growth strategy
for the KBE

1. Get the fundamentals right.





Macroeconomic policy matters: sound public finances
and low inflation are needed to foster investment.
Openness to trade, investment, technology, ideas and
people is fundamental to innovation and growth.
Countries with improved growth performance have
been strong reformers of labour and product markets.
Reform of markets can instil greater competition,
more flexibility, and implies that countries are ready
when new opportunities for growth emerge.
Good fundamentals can help address the distributive
consequences of change.
2. Foster innovation for future growth




Ensure sufficient funding for the creation of basic
knowledge - as the seed for future innovation. ICT and
biotechnology are not the only answers.
Make government support for innovation more
effective - competitive mechanisms, public-private
partnerships and regular evaluation can help.
Increase interaction between firms, universities and
research institutes. Barriers to interaction, such as
constraints on labour mobility, are still important.
Address new issues related to intellectual property
rights, e.g. demands for IPR on basic knowledge.
3. Facilitate the diffusion of ICT




Competition forces firms to enhance efficiency,lowers
the costs of new technologies and enhances diffusion.
Still low competition in many OECD countries, trade
and investment barriers related to ICT, and slow
development of competition in telecommunications
markets.
Flexible regulatory frameworks are needed to increase
confidence in the use of ICT, and address concerns on
privacy, security, reliability.
Electronic government can increase government
efficiency, helps to strengthen network effects and can
build confidence.
4. Invest in human capital





Invest in early education and child care: this is often
more cost-effective than later interventions to remedy
drop-outs.
Raise school completion and improve its quality. In
many countries, this implies addressing teacher
shortages.
Improve the school-work transition and strengthen the
links between higher education and the labour market.
Provide wider training opportunities for adults - people
will need to acquire new skills over their working life.
Reduce obstacles to workplace changes and give
workers a greater voice in such changes.
5. Improve conditions for entrepreneurs




Reform regulations that slow down the development
of venture capital markets and secondary markets to
enhance the supply of finance to innovative projects.
Remove or reform barriers, such as red tape, that
hinder the creation of new firms, or the exit of
unprofitable businesses - bankruptcy laws in many
OECD countries do not allow entrepreneurs a second
chance, for example.
Make government programmes, e.g. one-stop shops
for administrative formalities, more effective.
Encourage a more entrepreneurial spirit in society education is often insufficiently geared towards
entrepreneurship.
Concluding remarks






There are “new” factors in knowledge-driven economic
growth, but old economic laws still work.
Governments do have a role in innovation: rapid
innovation and strong growth performance was partly
the result of effective policies.
Lagging countries have often not yet implemented the
reforms needed for stronger knowledge-driven growth.
Improving growth performance will take time.
It is uncertain how important ICT will be: the trick is to
pursue broad-based knowledge based policies and
remain open to innovation and new sources of growth.
Governments will need to manage adjustment to keep
the costs of change low.
John Dryden
[email protected]
www.oecd.org