Transcript No Slide Title

ICT, Innovation and Policy
Implications in the New Economy
Thomas Andersson
Directorate for Science, Technology and Industry
OECD
Trend growth of GDP per capita in the OECD area over the past two decades
(Total economy, percentage change at annual rate)
1980-90
1990-98 (1)
Ireland
Korea
Luxembourg
Portugal
Australia
Turkey
Spain
Norway(2)
United States
Denmark
Netherlands
United Kingdom
OECD 24 (3,4)
Belgium
Austria
Japan
Finland
Greece
Italy
Canada
France
Germany (5)
Sweden
Mexico
New Zealand
Iceland
Switzerland
-2
0
2
4
6
%
8
Contributions of Labour Utilisation and
Labour Productivity to Growth of GDP
Per Capita
Average annual growth rates (%) 1990-98
7
6
2.1
1.6
1.0
1.2
1.2
1.8
2.1
1.3
5.4
2.1
2.2
0.9
Franc e
Ital y
United
Kingdom
Denmark
Finland
Ireland
Netherlands
Norway
Sw eden
Growth of GDP per capita
5
4
3
2
1
0
-1
-2
United
States
Japan
Germany
Labour utilis ation
Labour productivity (GDP per hour worked)
Change in labour productivity
(Output per employed person)
=
Effects of capital
deepening
+
Change in multi-factor
productivity
Ireland
Finland
Australia
United States
Norw ay
Japan
Canada
Austria
Denmark
Germany*
Sw eden
United Kingdom
France
Netherlands
Belgium
Spain
Italy
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0% -1.0%
0.0%
1.0%
2.0% -1.0%
1.0%
3.0%
5.0%
Investment growth in ICT equipment
and software
Average annual rate of growth of constant price non-residential investment
Total industries, based on harmonised ICT price index
IT equipment
1980-90
1990-99
1990-95
1995-99
USA
24.73
30.33
24.89
37.13
AUSTRALIA
27.51
19.18
21.61
16.14
CANADA
18.60
21.38
20.08
23.01
FINLAND
23.94
12.17
7.85
17.58
FRANCE
19.80
19.43
14.90
25.09
ITALY
17.18
16.92
10.19
25.33
Communications
equipment
1980-90
1990-99
1990-95
1995-99
3.92
9.80
6.17
14.35
5.78
8.78
7.31
10.61
6.91
9.07
3.61
15.89
9.09
16.60
12.69
21.49
6.41
9.85
4.77
16.19
8.74
7.40
5.09
10.29
Software
1980-90
1990-99
1990-95
1995-99
14.64
15.67
11.59
20.77
23.09
13.30
9.15
18.48
na
na
na
na
13.87
11.40
7.52
16.27
7.53
14.75
7.34
24.01
16.86
8.59
5.44
12.52
Source: OECD, preliminary estimates based on national accounts data (SNA93)
The US is not alone in experiencing
the “growth” effects of ICT
contribution of non-residential capital to
output growth in AUSTRALIA
ICT capital
1.50%
Non ICT capital
2.00%
Non ICT capital
contribuiton (%)
1.00%
0.50%
ICT capital
1.50%
79
81
83
85
87
89
91
93
95
97
1.00%
0.50%
0.00%
79
81
83
85
87
years
89
91
93
95
97
99
Non ICT capital
2.00%
ICT capital (excluding
software)
contribuiton (%)
2.00%
1.00%
0.50%
83
85
87
89
years
83
85
87
91
93
95
97
99
91
93
95
97
99
Non ICT capital
2.00%
Non ICT capital
ICT capital
1.50%
89
contribution of non-residential capital to
output growth in ITALY
1.00%
0.50%
0.00%
0.00%
81
81
years
contribution of non-residential capital to
output growth in FRANCE
2.50%
79
79
years
contribution of non-residential capital to
output growth in CANADA
1.50%
ICT capital
1.00%
0.50%
99
Non ICT capital
1.50%
0.00%
0.00%
contribuiton (%)
2.00%
contribuiton (%)
contribuiton (%)
2.00%
contribution of non-residential capital to
output growth in FINLAND
contribuiton
(%)
contribution of ICT and Non-ICT capital to
output growth in the USA
ICT capital
1.50%
1.00%
0.50%
0.00%
79
81
83
85
87
89
91
93
95
97
99
79
years
Source: OECD, preliminary estimates for total industries based on national accounts data (SNA93) and harmonised ICT price index
81
83
85
87
89
years
91
93
95
97
99
Increasing access to communications
Telecommunication access
paths (fixed + mobile) have
doubled in the last five
years.
1000
900
800
Million
700
The total passed one billion
in the OECD in 2000.
600
500
400
300
Mobile Subscribers in
OECD
Fixed Network Access
Channels in OECD
200
100
0
1994
Source: OECD
1995
1996
1997
1998
1999
Liberalisation is leading to lower
bandwidth prices across Europe
Band-X Bandwidth Price Index Source:Band-X
120
Composite World .
London Milan
London Amsterdam
100
London Frankfurt
London Madrid
London Brussels
80
Composite European
London Paris
60
40
20
0
Oct- Nov- Dec- Jan98
98
99
99
Source: OECD
Feb- Mar- Apr- Jun- Jul-99 Aug- Sep99
99
99
99
99
99
Oct- Nov- Dec99
99
99
Jan00
Mar- Apr- May- Jun- Jul-00 Aug- Sep00
00
00
00
00
00
Oct00
Average Price of 20 Hours of Internet Access and
Internet Host Penetration
Internet Hosts (September 1999)
180
United States
160
140
Finland
120
Iceland
100
80
Norway
Canada
Sweden
New Zealand
Australia
60
Denmark
Netherlands
OECD average
40
Luxembourg
Belgium
Japan
20
Italy
Korea
0
20
Switzerland
United Kingdom
30
40
50
Germany
Austria
Ireland
France
Greece Mexico Portugal
Turkey
Poland
60
Spain
Hungary
Czech Republic
7
80
90
70
Average Price for 20 hrs Internet access 1995-2000, in
100
Connectivity indicator by firm size
in several Member countries (%), 2000
100
90
80
70
60
50
40
30
20
10
0
Japan
micro
Italy
France
small
United
Kingdom
medium
Sweden
United
States
Canada
Germany
large
Note: The connectivity indicator measures the number of business that either have a web site, make
frequent use of external e-mail or use EDI.
Source: UK DTI
ICT use and the pick-up in MFP
growth
Average PC base per 100 inhabitants, 1999
(a) measured by PC hosts
70
United States
60
Sweden
50
Norway
40
Netherlands
Denmark
Australia
Canada
Finland
30
United Kingdom
Japan
20
10
France Austria
Ireland
Belgium
Germany
Italy
Spain
Greece
0
-1.0
-0.5
0.0
0.5
1.0
1.5
MFP acceleration 1980-90 - 1995-98, trend adjusted
Note:
coefficient = 0.56; T-statistic = 2.73.
Source:Correlation
OECD
2.0
MFP Growth and BERD Growth
3.5
3.0
Ireland
Finland
2.5
Norway
MFP
growth 2.0
1991 1998
1.5
Germany
1.0
0.5
Spain
Italy
United Kingdom
France
Belgium
Australia
Denmark
Sweden
United States
New Zealand
Netherlands
Canada
Austria
Greece
0.0
Japan
-0.5
Switzerland
-1.0
Iceland
-1.5
-5
0
Source: OECD (2000bf).
5
10
BERD growth 1991-97
15
20
THE INNOVATION PROCESS
NOT LINEAR
R
Design
Dev.
M
Ideas
technol.
scientists
suppliers
R: research
M: market
competitors
customers
Science linkage in selected countries
Measured by average number of scientific papers in US patents
3.5
United States
3.0
Israel
2.5
Australia
2.0
Canada
UK
1.5
France
1.0
Germany
0.5
Japan
0
87
88
89
Source: CHI Research
90
91
92
93
94
95
96
97
98
99
te
d
at
St
N
C
es
a
n
K eth a
or
d
ea erla a
(1 nd
99 s
5U
ni
9
te Ic 8)
d ela
K
in nd
gd
B om
el
Po
gi
u
la
n d No m
(1 rwa
99 y
8Sw 99)
ed
Eu
A rop Fin en
us
tr ean lan
al
i a Un d
(1 io
99 n
59
Ire 8)
G lan
er d
m
an
y
F
H
un Sw ran
ga itz ce
ry er
(1 lan
99 d
899
Sp )
Po ain
rt
ug
al
Ja
It
pa Den aly
n
m
(1 ar
99 k
59
A 8)
us
tr
ia
ni
U
Venture Capital Investment in Early Stages
and Expansion as a Percentage of GDP, 1995-99
0.20
Expansion
0.15
Early stage
0.10
0.05
0.00
Barriers to entrepreneurship and
venture capital
(“country of management” approach)
Venture capital investment in early stages and expansion as a percentage of GDP, 1998
0.25
United States
0.20
y = -0.0505Ln(x) + 0.0953
R2 = 0.1781
0.15
Canada
Netherlands
United Kingdom
Norway
0.10
Belgium
Finland
Sweden
Ireland
Germany
France
Switzerland
Australia
0.05
Portugal
New Zealand
Italy
Spain
Denmark
Greece
Japan
Austria
0.00
0
0.5
1
1.5
2
Barriers to entrepreneurship, excluding some items, around 1998
Source: OECD calculation
2.5
3
3.5
GDP growth and comparable start-up
rates
7
Ireland
6
Luxembourg
5
3
2
U.S.
GDP Growth, 1989-99
4
Netherlands Portugal
Greece
Norway
Spain
Iceland
Denmark
Japan
Belgium
Sweden
Finland
Italy
1
Austria
U.K.
France
Switzerland
Germany
0
4
5
6
7
8
9
10
Start-up Rates, 1988-96
Source: OECD
11
12
13
14
15
ed
en
N
E
ly
Softwa re
I ta
CD
he
rla
nd
s
Au
st
ria
G
er
m
an
Be y
lg
iu
m
Au
st
ra
lia
Ja
pa
n
et
O
R&D
EU
Fr
an
ce
D
en
m
ar
k
Fi
nl
an
d
N
or
w
ay
U
C
ni
an
te
ad
d
a
Ki
ng
U
do
ni
m
te
d
St
at
es
Sw
Investment In Intangibles
As a percentage of GDP, 1995
12
Pub lic spendin g o n ed uca tion
10
8
6
4
2
0
Changing Requirements For
Human Capital
• Increased demand (shortages) in knowledgebased industries, especially ICT and services
• Strong demand for researchers and scientists,
especially in the business sector and outside the
US
• Flexibility and employability
• To keep up, firms and workers must invest in
human capital
• Distance learning on demand
The significance of NIS
• Helps explain diverse economic
performance
• Helps focus on national characteristics
• Helps focus on systemic failures in addition
to market failures
• Helps refocus from optimum/equilibrium to
real problems/effectiveness
Actors and linkages in the innovation system
Macroeconomic and
regulatory context
Education and
training syst em
Commun ication
infrastructure s
Global
innovation n etworks
Knowledge g eneration, diffusion & use
Firms’
capab ilitie s
& networks
Oth er
research
b odies
Science
system
Supporting
Institutio ns
Product market
conditions
National innovation system
Nat ional inn ovation capacity
COUNTRY PERFORMANCE
Growth
Source : OECD.
Job creation
Comp etitivene ss
Factor market
conditions
Structural Framework Conditions for Innovation
and Technology Diffusion: Strengths and Weaknesses in OECD Countries
Product
markets

Financial
markets




Labour
markets


United States
Competitive regulation
Abundant information
on products, suppliers
and customers
Competition in financial
intermediation
Exposure of
corporations to capital
market scrutiny
Role of active investors





High labour-market
mobility and flexibility
Business culture –
internal incentives for
human resource
development
Equality
Broad–based upskilling


Social
cohesion


Business
network



Culture of co–operation
Venues for partnering
Information on potential
partners

Government
charges


S&T
structures


Business taxes, other
charges and compliance
costs
Basic research
Technical and industrial
research
Active science–industry
interface

 Strength
 Neutral
 Weakness







Continental Europe
Competitive regulation
Abundant information
on products, suppliers
and customers
Competition in
financial intermediation
Exposure of
corporations to capital
market scrutiny
Role of active
investors
High labour–market
mobility and flexibility
Business culture–
internal incentives for
human resource
development
Equality
Broad–based
upskilling
Culture of co–
operation
Venues for partnering
Information on
potential partners
Business taxes, other
charges and
compliance costs
Basic research
Technical and
industrial research
Active science–
industry interface
















East Asia
Competitive regulation
Abundant information
on products, suppliers
and customers
Competition in
financial intermediation
Exposure of
corporations to capital
market scrutiny
Role of active
investors
High labour–market
mobility and flexibility
Business culture –
internal incentives for
human resource
development
Equality
Broad–based
upskilling
Culture of co–
operation
Venues for partnering
Information on
potential partners
Business taxes, other
charges and
compliance costs
Basic research
Technical and
industrial research
Active science–
industry interface









Transition economies
Competitive regulation
Abundant information on
products, suppliers and
customers
Competition in financial
intermediation
Exposure of
corporations to capital
market scrutiny
Role of active investors
High labour–market
mobility and flexibility
Business culture –
internal incentives for
human resource
development
Equality
Broad–based upskilling



Culture of co–operation
Venues for partnering
Information on potential
partners

Business taxes, other
charges and compliance
costs
Basic research
Technical and industrial
research
Active science–industry
interface



Best Policy Practice and Policy Recommendations in
Individual Areas of Innovation and Technology Diffusion Policy
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
R&D
financing
Diffusion

/




/
/
/
/



/

/

/
/


/
/

Australia
/














/


/

Denmark







/




/




/
/
/
/




/
/


/

/
/
/






Policy
framework
Evaluation
Science
base
Finland


Canada
/

Netherlands
/
UK
EC
United States
Norway
Germany
Sweden
Japan
New Zealand
France
Ireland


/
/



/
/






/
/
/
/

/

/
Chapter 10
Chapter 11
New
New growth areas
technologybased firms
Internet
Env.


/
/
/






/



Chapter 12
Organisational
change and
intangibles


/
Key:  = case of best policy practice;  = minor policy recommendation;  = major weakness calling for policy adjustment.
Source: OECD (1998), Technology, Productivity and Job Creation: Best Policy Practices.
Best Policy Practice and Policy Recommendations in Individual
Areas of Innovation and Technology Diffusion Policy
Switzerland
Chapter 5
Chapter 6
Chapter 7
Policy
framework
Evaluation
Science
base



Korea
Mexico
Greece
Spain
Chapter 9
Chapter 10
R&D
financing
Diffusion
/
/

/

/
/


























/



















/
Luxembourg
Belgium
Italy
Czech Rep.
Portugal

Hungary
Poland
Turkey


Chapter 11
New
New growth areas
technologybased firms
Internet
Env.

Iceland
Austria
Chapter 8



































Chapter 12
Organisational
change and
intangibles












Key:  = case of best policy practice;  = minor policy recommendation;  = major weakness calling for policy adjustment.
Source: OECD (1998), Technology, Productivity and Job Creation: Best
Policy Implications
• Spreading the Risks
– government as a sponsor of high-risk research
– improving networks of innovation
– new types of finance and risk management
• Openness to a World of Ideas
• Human Capital
• Maximizing the benefits of ICTs
– regulatory reform
– increasing the absorptive capacity of services
What it means for Regulation
• Domestically, an integrated approach of
– Minimal non-discriminatory regulation, and
– Market-driven self-regulatory mechanisms
• Internationally, no global regulation, instead
– policy co-ordination underpinned by
– general policy principles
• Participation of the stakeholders in policymaking
Human Capital: Policy Issues
and Current Responses:
• Raising Quality of education, not just quantity
• Expanding IT literacy skills throughout education
systems
• Tailoring higher education in science and technology
to demands for “soft skills” and interdisciplinarity
• Building public/private partnerships to meet specific
IT skills needs
• Converging initiatives
Instruments for Policy
Implementation
•
Better prioritisation
•
Broader policy packages
•
Decentralisation
•
More outward-looking policy frameworks,
transparency and critical review
•
Co-operation with Stakeholders, including
Public-private partnership
Innovation Policy Positioning:
Traditional
Scientists
Environment
Research
NGOs
Education
Trade
Etc.
Firms
Finance
Industry
Unions
Labour
Innovation Policy Positioning:
Traditional
Scientists
Environment
Research
NGOs
Trade
Education
I.P.
Etc.
Firms
Finance
Industry
Unions
Labour
Innovation Policy Positioning:
Implicit
Scientists
Environment
Research
NGOs
Education
Trade
Etc.
Firms
Finance
Industry
Unions
Labour
Innovation Policy:
Explicit Positioning
Scientists
Environment
Research
NGOs
Trade
Firms
Education
Etc.
I. P.
Finance
Industry
Unions
Labour
Innovation Policy:
Explicit Positioning
Scientists
Environment
Research
NGOs
Trade
Firms
Education
Etc.
I. P.
Finance
Industry
Unions
Labour