Transcript Innovation policy

RESTRUCTURING OF INNOVATION
SYSTEMS IN CENTRAL AND SOUTH
EAST EASTERN EUROPE
ASESSING THE BASIS FOR TRANSFORMATION
TOWARDS KNOWLEDGE BASED ECONOMY
Slavo Radosevic
School of Slavonic and East European Studies
Background
• 1990s: CEECs - R&D has not been directly
linked to recovery and growth
• 1990s: Growth = initial conditions * reform
policies
• Sources of long-term growth in the posttransition period: NSI?
Key arguments
•
•
•
•
Growth during the 1990s: Static modernization effects
driven by reallocations/FDI/subcontracting vs.
Dynamic modernisation effects (technology
accumulation/FDI spillovers)
Growth is not automatically accompanied by recovery
in R&D and domestic innovation (demand vs.
demand for technology)
Disjunction between accumulation of production
capability vs. technology capability of the CEECs >
weak systems of innovation unable to meet
challenges of KBE
Innovation policy between ‘surrogate modernisation’
and search for own solutions
Growth and recovery have not been accompanied by recovery
in demand for technology …….
R e s id e n t p a t e n t s , 1 9 9 9 /9 4
G D P 1999/94 v s R e sid e n t p ate n ts, 1999/94
1 .0 5
1 .0 0
UK R
B G RF
0 .9 5
0 .9 0
SK
0 .8 5
PL
0 .8 0
C ZR
y = -0 .2 8 3 x + 1 .1 4 5 8
R 2 = 0 .1 8 0 1
0 .7 5
0 .7 0
RO
HU
0 .6 5
0 .6 0
0 .6 0
0 .7 0
0 .8 0
0 .9 0
1 .0 0
1 .1 0
GDP c ons t 1 9 9 5 , $ m n, 1 9 9 9 /9 4
1 .2 0
1 .3 0
1 .4 0
Different rates of GDP ….. similar falls of GERD/GDP
2.2
140
2
120
1.8
PL-GDP
1.6
100
1.4
80
1.2
plrdgdp
rusrdgdp
1
RUS-GDP
60
plgdp
rusgdp
0.8
40
0.6
0.4
20
0.2
0
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
… while demand side constraints have improved ….
-20
Poland
Czech Republic
Hungary
Slovenia
Estonia
Romania
Bulgaria
-10
Lithuania
Latvia
0
Slovak Republic
Change in proportion of demand side difficulties of enterprises today (2001) and
at start up (established in 1998)
Clients short of funds
Too much competition
-30
Market price low
Business not sufficiently well-known
-40
-50
-60
Lack of marketing ability
… but, this improvement in demand side conditions has
not been followed by equally strong improvement in supply
side conditions
Change in proportion of supply side difficulties of today (2001) and at start up (established in 1998)
20
15
10
Lack of funds
Limited access to credit
Non or late paying customers
5
Limited access to trained workers
Lack of technology
Lack of raw materials
0
Latvia
-5
-10
Lithuania
Slovak
Republic
Bulgaria
Romania
Estonia
Slovenia
Hungary
Czech
Republic
Poland
GERD as share of GDP (%)
2.2
Bulgaria
Czech Republic
Estonia
Hungary
1.7
Lithuania
Latvia
Poland
Romania
1.2
Slovenia
Slovak Republic
Russia
Moldova
0.7
Belarus
0.2
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Decline…. stabilisation …….and partial recovery in early 2000 ….…
The shares of R&D funded by business enterprise sector have
remained relatively stable > business enterprise sector has
shared the destiny of the overall decline, absolute and relative,
of R&D sector
% o f to tal G ER D
Sh ar e o f R& D p e r fo r m e d in b u s in e s s e n te r p r is e s e cto r , 1992-99
90
Bulgaria
80
Cz ec h R
70
Es tonia
60
Hungary
50
Latv ia
40
Lithuania
30
Poland
20
Romania
Rus s ian F
10
Slov ak R
0
1992
1993
1994
1995
1996
1997
1998
1999
Slov enia
GERD financed by industry (in %)
90
80
BG
70
CZ
EE
60
HU
LT
50
LV
40
MT
PL
30
RO
SI
20
SK
10
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
… while the overall share of industry in R&D funding (except Slovenia)
remains stable …. i.e, no structural change
Why growth does not automatically generate demand for R&D?
Innovation expenditures in manufacturing by type of costs
100%
90%
80%
70%
60%
Other
50%
Mach&Eqpm.
40%
R&D
30%
20%
10%
0%
EU
Slovenia CzechR
Russia
Slovakia
Poland
Latvia
Romania
Turkey
Innovation in CEE, RU and TK is mainly about equipment (cf. low R&D
intensity of innovation)
A large share of high/medium tech…. but
without R&D
Employment in high-medium tech manufacturing vs BERD/GDP
3.5
BERD/GDP
3
S
2.5
FIN
2
CH
1.5
1
0.5
LV
CY
EL
D
B F
DK A UK
NO
NO
IRL
SL CZ
I
E
SK
HU
LT P EE RO BG
PL
0
0
2
4
6
8
High-medium tech empl/mnfg
10
12
Areas of competitiveness - Very important and extremely
important
100
90
% of firms
80
70
EE
60
50
40
SI
30
20
HU
PL
SK
10
0
Quality control
assistance
Management
People and
training
Patents,
licences, R&D
… the key source of competitiveness is in production capability
CEE-5
Own company
Foreign parent
Other foreign buyers
Other foreign suppliers
Other local subsidaries
Other local buyers
Other local suppliers
Other organisations
Areas and sources of competitiveness
Patents,
Quality
People and
licences,
control Management
training
R&D
assistance
0.82
0.61
0.55
0.51
0.23
0.52
0.52
0.35
0.79
0.72
0.50
0.66
0.35
0.3
0.21
0.36
0.32
0.32
0.5
0.29
0.26
0.19
0.3
0.29
0.35
0.57
0.31
0.3
0.16
0.28
0.28
0.31
Quality: proxy for production capability
(ISO9000 per capita)
1200
1000
800
600
400
200
0
UK IRL NL S
A
FIN DK D
I
B
HU F
SI
E
CZ
P
SK EL
HR EE PL LT BG RO LV
However, mastery of production capability in the overall economy is still low....
Change in number of ISO9000 certificates, 2001/1999 (%)
400%
350%
300%
250%
200%
150%
100%
50%
….though, taking place at a high rate.
CZ
MT
RO
EE
PL
BG
I
LT
EL
P
E
SI
CY
LV
SK
H
D
TK
BL
FR
S
NL
IRL
A
DK
UK
L
FIN
0%
Technology developing vs. technology using capabilities
R&D
Technology
Development
and Creation
Design and
Engineering
Technology Use,
Operation and
Maintenance
Technician and craft skills and
capabilities
Basic operators skills and capabilities
Source: Arnold et al (2000)
… In nutshell, evidence points to disjunction between production
and technology capability
Catch-up in production capability
(use of technology)
– Significant rise in labour productivity (partial proxy
for technology use)
– Growth of ISO9000
– High gap in productivity of FDI subsidiaries vs local
firms (Rojec, Hunya)
Catch-up in technology capability
(technology development)?
• Micro evidence
– from technology use to technology development:
limited functional upgrading
– Electronics: limited network alignment
– firm case studies: successful business models are
confined on production capability (cf. Videoton)
Catch-up in technology capability
(technology development)?
• Macro evidence
–
–
–
–
Labour force skill structure (high share of vocational skills)
FDI spillovers: negative or absent
Low and stable GERD/GDP
EIS trends: falling behind
• Summary:
– Micro – mixed evidence
– Macro- not ‘catch up’ but ‘hanging on’
– Local firms: the weakest link
EIS trend
Innovation Scoreboard Trend
(average based on 10 indicators)
60
50
40
30
20
10
0
EU
TR
BG
SK
CZ
LV
CY
EE
LT
SI
HU
PL
RO
 8 out of 12 ACCs are falling behind in knowledge based
activities
Common structural weaknesses of innovation
systems of the CEECs
• Inovation activity is restricted to few large domestic
enterprises which invest comparatively high share of
sales into innovation
• SMEs : the weakest part of innovation system > very
small share of innovative SMEs (except EE)
• Foreign firms are investing comparatively more into
R&D and innovation than domestic firms > big
productivity gap between domestic and foreign firms
• Very weak linkages between domestic LE and SMEs,
and between FDI and domestic firms > fragmented
innovation systems
Innovation policy: from ‘surrogate modernisation’ to
search for own solutions
• Early/mid 1990s: focus on bridging institutions
– Academy – industry relations; S&T parks; commercialisation
– Implicit assumption that public R&D and demand (final and
intermediate/firms) are not the problem but the LINK between them
– Neglect of production capability (except. SI) and of firms as a source of
supply of technology
• Late 1990s/2000s: differentiation among countries in the scope
of innovation policy
– Focus on production capability (cf. Slovenia)
– Degree to which innovation policy is oriented towards FDI (Hungary)
– Focus on R&D in industry vs R&D for industry (Estonia)
National innovation capacity framework
Absorptive capacity
R&D supply
Diffusion and linkages
Demand (market pull)
Number of innovation policy mechanisms of the CEE
acceding and candidate countries (end of 2003)
Absorptive
capacity and
human capital
Bulgaria
Czech R
Hungary
Estonia
Latvia
Lithuania
Poland
Romania
Slovakia
Slovenia
Total
Generation of
new knowledge
(R&D)
1
1
1
3
6
1
4
3
3
1
2
3
2
2
4
25
Diffusion of
knowledge and
networking
Demand
for
innovation
1
4
3
5
2
1
1
2
2
5
26
1
3
4
1
1
1
3
4
1
2
21
Total
3
11
10
10
4
5
8
8
5
14
78
Key challenge of innovation policies in CEECs
• ‘R&D/High tech’: the dominant paradigm in innovation policy
in CEECs despite data which suggest that innovation in these
countries is very much linked to equipment and with limited
R&D component
• This leads to very narrow ‘client base’ of innovation policy and
neglect of huge untapped demand related to quality, diffusion
and knowledge absorption
• Value chain vs. NSI: how to reconcile and integrate two policies
– Location of investments
– Extent and depth of technology intensive activities
– Spillovers to local firms
• FDI: marketing country for FDI
• Innovation policy: exclusively R&D/high tech focus
• Models to follow? Models to be developed?