Transcript Economic growth is as

Innovation for
Sustainable Forest Management
What is it &
why is it important?
Ewald Rametsteiner
ERASMUS IP Iisalmi, 16 May 2005
“If you stand still in times of changes you
are in fact drifting backwards”
... and changing times we have:
- new resources & suppliers
(e.g. Eastern Europe)
- new technologies
- new markets
(e.g. carbon, energy)
- changing consumer needs &
demographics
....
a large extent inaccessible
Asia
-
...so:
how is the forestry sector doing? Is it taking advantage?
Innovation
 Successful introduction of novelties
 Discontinous intentional change in the inputs, outputs
and processes of an enterprise
 Differs from invention – creation of something that
has not existed before
 „Innovation diffusion“ or „innovation adoption“ is
used if looked at a sector or economy as a whole
Innovation
 New to the firm – new to the market
 Radical – incremental
Innovations
Product
Goods
Process
Services
Technological
Organisational
Innovation research: From linear
to systemic understanding
Framework Conditions
Financial environment; taxation and
incentives; propensity to innovation
and entrepreneurship
; mobility
Linear Innovation  Non-linear / complex process
Consumers (final demand)
Producers (intermediate demand) systemic research
...
- structures, processes, interactions
- functions
system as a whole
Political
Researchof
System
Production System
Markets / Demand for Forest Products
System
Public sector
research
Large companies
Government
Intermediaries
Research
institutes
Brokers
SMEs
Education System
Governance
Higher education
Professional education
and training
Forests Resources / Supply
Product
Develop
Suppliers (intermediate
products)
Resource raw material producers
Idea
ment
Product
Test
Infrastructure
Banking,
venture capital
IPR and
information
Innovation and
business support
Standards and
norms
RTD policies
Marketing
Innovation phases
the firm perspective
Prior
Conditions
Knowledge
Persuasion
Decision
Implementatio
n
Confirmation
Innovation Diffusion
Innovation Diffusion &
Adopter Categories
Innovation & Entrepreneurship
– Why is it important?
Innovation are engines for
• economic growth,
CN&D EG
C&P
SD
• competitiveness,
EC
• income creation & firm profit,
• employment creation, esp. in rural areas,
• changes towards environmental improvement and
sustainable development,
• meeting changing consumer needs & demographics
Innovation
General Policy
 European Union
 Lisbon Strategy on competitiveness & innovation
 EU Research Framework Programmes 6 & 7
 EU Research Project Lines and infrastructures
 National Policies and Strategies
 Ministries or Agencies on Innovation
 Funding programmes and initiatives
 Focus on growth promising high-tech sectors
EU: Expected gains from reaching 3% R&D by 2010 compared to status quo
Growth
Jobs
Productivity
Product
quality
0%
5%
10%
2010
2030
15%
Innovation
Forest Sector Policy
 European Union
 Forest-based Sector Technology Platform “Innovation &
Sustainable Development” initiative
 New institutions, initiatives & programmes in new areas
(e.g. bioenergy, carbon)
 MCPFE
 Vienna Resolution 2 on economic viability & work
programme
 UNECE/FAO
 European Forest Sector Outlook Study: competitiveness
as major issue
 National policies & strategies
 Rather new topic, few coherent policies & programmes
(exception: Finland)
 Focus on specific topics, partly covered by policy makers
outside forest sector (e.g. biomass)
Innovation and
economic growth
CN&D EG
C&P
SD
EC
Neo-classical growth accounting
• based on capital and labour input - result: up to 80% due to
technological change (=technological innovation)
• if R&D, quality of labour etc. is accounted - result: about 30% of
growth
Endogeneous calculations
• Growth effect of spillovers and externalities (not all benefits can
be accrued by the inventor)
• monopoly rent diminishes over time due to imitators
Yes, but…why is economic
growth important?
 Economic growth is measured by gross domestic
product (GDP). Economic growth is defined as positive
rate of change in real GDP. A satisfactory rate of
economic growth is when the economy grows faster
than the population, thereby increasing standards of
living for individuals in an economy. (i.e. one where
positive per capita rates of growth in real GDP takes
place.)
 economic growth improves the overall standards of
living of individuals in an economy.
 economic growth is one way to reduce unemployment &
poverty in an economy.
Innovation and
competitiveness
CN&D EG
SD
 The OECD defines competitiveness as "The degree to
which a country can, under free and fair market
conditions, produce goods and services which meet the
test of international markets, while simultaneously
maintaining and expanding the real incomes of its
people over the long-term".
 Overall competitiveness, is a result of many factors:
macroeconomic environment, ICT, innovation, public
institutions – these all have a strong influence on
increased productivity.
 International competitiveness is seen as an important
component of economic growth
C&P
EC
Productivity, competitiveness
and employment
 Long-term international statistical trends show that there is
a strong correlation between national productivity and the
level of unemployment. (higher productivity = lower
unemployment)
 The more productive an enterprise, the more income it can
save for new investments and therefore create new jobs.
 Short-term negative effects of productivity on
unemployment are outweighted by long-term benefits.
 R&D investments account for about 50% of total factor
productivity growth, 1% of R&D capacity increase = approx
0,05-0,1 output growth
Innovation and
firm profitability
 …is difficult to prove as profits are influenced by a
wide range of factors
 Existing studies find:
 a positive but modest influence
 a positive correlation to market share and profit
margins
Innovation &
employment creation
CN&D EG
C&P
SD
EC
 A process innovation is labour saving, if the same
amount of output can be produced with less labour.
 the direct effect on employment is negative if output
remains the same.
 an indirect effect of higher employment is possible if
 Firms gain more from the increased productivity of
labour than from more capital input
 Market demand increases considerably
Innovation & employment
 For product innovations a positive (direct) effect of
successful product innovation on employment is
more likely if new products address new needs. If
new products act as substitutes for existing ones,
there will be positive employment effects only, if
product quality is higher than before and labour
intensive.
 A net employment impact of product innovation is
more likely to be positive if new products are
complements to existing ones.
Employment creation:
Bioenergy
Number of direct and indirect
jobs created for 1000 toe
consumed:
- forestry:
- wood waste:
- oil:
- gas:
4.2 – 6.3
2.3 – 3.7
1.4
1.2
Source: Eurobserver 2004
…and this mainly in rural areas!
Environment &
sustainable development
 New markets: carbon sinks
 New markets: bioenergy
 New trends: wood construction
 New business/marketing
models and tools: forest
certification
CN&D EG
SD
C&P
EC
Consumer needs &
socio-demographics
 Changing attitudes: nature
 Changing lifestyles: urban life
 Changing socio-demographics:
urbanisation, family, age
structure, mobility,..
 Changing consumption:
experience of nature, outdoor,
excitement, silence?
CN&D EG
SD
C&P
EC
Market Expectations of forest
owners/managers and forest
policy actors in Austria 2002
Einschätzung der Wichtigkeit von Märkten
4
3
4= hohe Wichtigkeit
3= mittlere Wichtigkeit
2= geringe Wichtigkeit
1= keine Wichtigkeit
2
Forest policy
expectations
medium term
1
Gentechnisch
Erholung/Tou Vertragsnatur
veränderte
Klimaschutz
rismus
schutz
Pflanzen
Bioenergie
Trinkwasser
langfristig - Wichtigkeit in 20 Jahren
3,6
3,8
2,2
3,4
3,1
3,5
3,4
mittelfristig - Wichtigkeit in 5 Jahren
3,2
3,5
1,8
3,3
2,8
3,2
3,3
Holz
Concluding remarks
 Innovation is seen as driver of economies
 Innovation effects are difficult to quantify
 The current focus on process innovation is not enough
Drucker: „as every businessman knows, efficiency
alone does not bring business success“
 Innovation is risky and prone to fail
 ..but not to innovate is risky too (or too risky)