Transcript **** 1 - Yoo Soo HONG

East Asian Economy <Lecture Note 8> 2013.12.5
East Asian Economy:
KBE and Innovation in East Asia
* Some parts of this note are borrowed from the references for teaching purpose only.
Semester: Fall 2013
Time: Thursday 2-5 pm
Professor: Yoo Soo Hong
Room: 423
Mobile: 010-4001-8060
E-mail: [email protected]
Home P.: http://yoosoohong.weebly.com
1
Knowledge (Innovation) Based Economy
2
Emerging Knowledge Economy

Increased generation/codification of knowledge (e.g., patents granted in the US: from
49,971 in 1963 to 175,983 in 2000)

Closer links with science base/increased rate of innovation/shorter product life cycles

Increased importance of education, up-skilling of labor force, and life long learning

Growing investment in intangibles (R&D, education, brands…) – OECD countries spend
more than $520 billion per year in R&D

Value added increasingly associated with investment in intangibles such as branding,
marketing, logistics/information management

Innovation and productivity increase more important in competitiveness and GDP growth

Increased Globalization and Competition

Constant change and competition implies the need of constant restructuring and
upgrading: the ability to create, access and use knowledge is becoming the fundamental
determinant of global competitiveness.
3
Knowledge
makes
the Difference
Knowledge Gap
and Wealth
of Nations
between Poverty and Wealth...
14
Thousands of constant
1995 US dollars
Rep. of Korea
12
Difference
attributed to
knowledge
10
8
6
4
2
Ghana
0
1960
1965
1970
1975
1980
1985
1990
1995
Difference
due to
physical
and human
capital
2000
4
Knowledge Economy
 Concept of KBE or KE
- An economy where creation, acquisition, circulation (dissemination) and
utilization of knowledge is the core (engine) of growth. (OECD)
 Why knowledge now?
- “Throughout history, relative economic performance has been closely associated
with the capacity of countries to participate in successive technology/knowledge
revolutions (agriculture, manufacturing, services, knowledge societies)”;
- “Knowledge has played a critical role in differentiating the long run economic
performance of countries”;
- “In the last 50 years, economic growth has been closely associated with
urbanization, emergence of new organizational forms, and regional and global
trade—all these trends, in turn, are closely linked to agglomeration of people
and ideas”
5
Stages of Economic Development
Factor-driven
Economy
Investment
- driven Economy
Source: Porter, Michael E. Competitive Advantage of Nations, 1990.
Innovation
- driven Economy
6
Development Stages in the Korean Economy
Stages of Development
1950s
Aid,
Labor
intensive
production
1960s
Imitation
Simple tech.
Import of old
plant/
machinery
1970s
Heavy industry
Assimilation
Minor
innovations
1980s
R&D
New product
development
1990s
R&D intensive
increase
in science
New product
innovation
Traditional
Imitative Catch-up
Innovative Catch-up
Agricultural
Economy
Factor-driven Economy
“Extensive Growth”
Outward-looking
Transition
Invesment-driven
to InnovationdrivenEconomy
Economy
Outward-looking
“Extensive Growth”
2000s
Innovation
frontier
Innovative
Economy
“Intensive
Growth”
7
Strong Correlation: GDP/Capita and KE Index
Regression KEI 2002 and GDP per capita 2002
40,000
35,000
GDP per capita 2002 (1995 constant US$2002)
R2 = 0.66
Ireland
Finland
USA
30,000
25,000
UK
20,000
Taiwan
15,000
Korea
Slovenia
10,000
Brazil
5,000
Turkey
Ethiopia
0
0.00
South Africa
India
Ghana
1.00
2.00
China
3.00
Poland
Jordan
4.00
5.00
Russia
6.00
7.00
8.00
9.00
10.00
Knowledge Economy Index 2002
Source: KAM
8
Africa GDP/capita = $2624
The Importance of Knowledge-Based Economy (KBE)
 Global economy is changing the landscape of economies in Asia
- Knowledge has increasingly become an important means for value
creation.
- The knowledge content of goods and services is increasing as
manufacturing is “dematerializing” and economies are becoming
“weightless”.
- Globalization and the ICT revolution are emerging in the modalities of
creating value.
 The Importance of KBE
- Knowledge-based economies is a global trend.
- PRC’s economy is expected to be the largest in the world and the Asian
economic landscape will continue to be pushed to high-growth.
9
 Asian government is facilitating and creating opportunities toward a
more knowledge-based economy and society.
 Four pillars of a KBE
- Education, including building a skilled workforce
- National innovation systems, including science and technology, R&D
- Building networks, including ICT infrastructure and social networks
- Policy and regulatory (business) environment
 New paradigms for managers and policy makers
- Distinction between knowledge and information
- Recognizing and managing intangibles
- Attention to tacit knowledge
- Stakeholder capital in a networked economy and society
- Value-driven development
10
The Four Pillars of the Knowledge Economy
Biz Environment and
Institutional Regime
Information
Infrastructure
Education
Innovation Systems
11
Models Toward a Knowledge-Based Economy(KBE)
 Asian governments envision and plan for a mix of KBE
- Thailand’s IT2010: “good use of ICT”
- e-Korea Vision 2006: “quantitative expansion of the Internet”
- e-Japan strategy: “knowledge-emergent society”
12
Knowledge-Based Economy Indicators for the Asian Region
13
The Four Pillars of a Knowledge-Based Economy
 Education and the skilled workforce
- Skills required in a KBE such as communication skill, critical thinking
and problem solving, sustainable use of resources, development of
self and a sense of community, expanding world vision
- New teaching and learning strategies are needed.
- Diaspora (migration of workforce) is critical issue and Asian countries
face the issue of retaining the skilled workers. “Brain drain” can be
“Brain gain” which raises the skill level of the home country.
14
 National innovation systems (NIS)
- “A subsystem of the national economy in which various organizations
and institutions interact and influence each other in the carrying out of
innovative activity.”
- Innovation and improvement in technical capacity are the result of
a complex set of relationships among actors creating, acquiring,
disseminating, and applying various kinds of knowledge.
- Actors are private enterprises, universities and public research
institutions, relevant financial institutions, and the government.
 An innovation is the implementation of a new or significantly improved
product (good or service), or process, a new marketing method, or
a new organisational method in business practices, workplace
organisation or external relations. Also, new material or new
resources finding is included in innovation. An innovation creates new
values.
15
 Building Networks
- Capacity of ICT to support the development of networks and to establish and
maintain connections among individuals, groups, and organizations is
considered to be of great use of and value to others.
- Benefits of ICT and Networks (The ICT revolution has fast-tracked the
innovation process)
- Toward an ubiquitous network society (social computing of voicemail, e-mail,
online chats, and collaborative applications)
- Elements needed in building ICT are an appropriate regulatory framework,
readiness and availability of human resources, research and education of IT
skills.
 Setting the policy and regulatory environments
- Policy: legislation, organization/reorganization, and regulations
- Planning: formulation of vision, strategy, and road map
- Infrastructure and programs: establishing and implementing the needed
physical, institutional, and social infrastructure and programs
16
Gross Expenditures on R&D in PPP by Country and as
Percentage of Global Expenditures 2010
17
The R&D Input Landscape
18
Framework for Cross-leveraging Knowledge Assets
Across the Asian Region
19
Technological Catch-up
20
Technology and Development
 Definition of Technology
- Technology is the knowledge useful for production of goods and
services.
 Importance of Technology
- The history of human being is the history of knowledge
(science and technology).
- Technology and productivity are the main engines of economic
growth.
- Technology is the main determinant of competitiveness.
- Technology affects welfare of individuals and the society.
21
Stages of Industrial Development in the World
Agricultural
Economy
• Land
• Labor
• Natural
Resources
Industrial
Economy
Knowledge-based/
Innovative
Economy
• Capital
• Science & Technology
• Labor
• Innovation
• Management
• Entrepreneurship
22
Technology and Development
Social Infrastructure, Culture
And Institutions
Resources for education,
health, communication,
Employment
Knowledge,
creativity
Economic Growth
Resources for
technology
development
Productivity
gains
Advances in
medicine,
communications,
agriculture,
energy,
Manufacturing, etc.
Technology Development
Source: UNDP. 2001
23
Technology and Economic Development
 Two Patterns (Stages) of Economic Growth
o Extensive Growth
- Increasing production by increasing input of production
factors
o Intensive Growth
- Increasing production by productivity increase
(More production is possible with the same resources.)
 Technology, Productivity and Economic Growth
Technology → Productivity → Trade and Industry → Economic
Growth
24
Technology and Economic Growth
First Stage
Increase in Productivity
Investment in
Creation of
Technology
Technology
Innovation
Strengthening International
Competitiveness
Increasing Trade
Second
Stage
Economic Growth
Virtuous Circle
(Increase sin Income, Demand, Investment, etc.)
25
Innovation and Economic Performance
Relative Economic Performance
- Technological innovation plays a key role in productivity increase, long-term
economic growth and enhancing living standards. (Innovation is the engine of growth.)
120
100
◆ USA
◆ Japan
80
◆ England
France
Korea
◆
◆ ◆ ◆ German
Taiwan
◆ Canada
◆ Mexico
Italy ◆
60
40
20
◆ China
0
0
20
40
60
80
100
120
Innovation Capability
Note: As of 2000.
26
Two different Development Stages
Extensive Growth:
Input-driven growth
Intensive Growth:
Innovation (productivity)-driven Growth
- Increase in inputs
(e.g. employment, education level,
stock of physical capital: mobilization
of resources)
- Increase in the output per unit of input
(e.g. better management, better
economic policy, increase in
knowledge, technological progress)
- Diminishing returns
- Constant returns
- Limited Growth
- Sustained growth
- Based on perspiration
- Based on inspiration
27
Development Stages in the Korean Economy
Stages of Development
1950s
Aid,
Labor
intensive
production
1960s
Imitation
Simple tech.
Import of old
plant/
machinery
1970s
Heavy industry
Assimilation
Minor
innovations
1980s
R&D
New product
development
1990s
R&D intensive
increase
in science
New product
innovation
Traditional
Imitative Catch-up
Innovative Catch-up
Agricultural
Economy
Factor-driven Economy
“Extensive Growth”
Outward-looking
Transition
Invesment-driven
to InnovationdrivenEconomy
Economy
Outward-looking
“Extensive Growth”
2000s
Innovation
frontier
Innovative
Economy
“Intensive
Growth”
28
Science Technology and Innovation
 Science is the process of generating knowledge based on logic and
evidence.
 Technology is the application of scientific knowledge to production, and
frequently involves invention, i.e, the creation of a novel object, process or
technique.
 Innovation is the process bringing together new ideas and technology, or
finding novel applications of existing technologies. Generally, innovation
means developing new ways of doing things in a place or by people
where they have not been used before. Modern innovation is usually
stimulated by innovation systems and pathways.
 The phrase ‘Science and Innovation’ implicitly includes science,
engineering, technology and the production systems which deliver them.
29
Five Dimensions of STI Capacity
National (and local)
government capacity to
formulate and
implement coherent
S&T programs and policies
Production of new
knowledge via R&D
Import, adapt, and
adopt knowledge
produced outside the
country
Source: Ansu, Yaw, 2007
Enterprise capacity to
utilize knowledge to
innovate and produce
higher value added,
globally competitive
goods and services
Technologically and
scientifically skilled
workforce trained to
equipment and
production processes
30
Stages of Catching-up Industrialization
Pre-
Initial FDI
industrialization
absorption
Internalizing
Internalizing
parts and
skills and
components
technology
Agglomeration
Arrival of
FDI
STAGE ZERO
Monoculture, sub
-sistence agricult
ure, aid dependency
Poor countries
in Africa
Simple manufacturing under foreign guidance
Vietnam
Creativity
STAGE FOUR
absorption
Full capability in in
-novation and product design as glo
-bal leader
STAGE TWO
STAGE ONE
innovation
Technology
(acceleration of FDI)
manufacturing
Internalizing
Have supporting
industries, but st
-ill under foreign
guidance
STAGE THREE
Management & technology mastered, can produce hig
-h quality goods
Japan, US, EU
Korea, Taiwan,
China-2
Thailand, Malaysia
China-1
Border to Middle
Income Economies
Source: Kenichi Ohno. 2009
31
Stages of Technology Capacity Building
Creation
Improvement
Assimilation
Acquisition
S&T & R&D
Stages
Development
Stages
Imitation
Internalization
Generating
Developing
Newly-Industrializing
Advanced
Country
Country
Country
32
The Example of Korea
Imitation Stage
Assimilation of imported technologies
Textiles and consumer electronics
Internalization Stage
Product based innovation
Automobile, shipbuilding, DRAM, CDMA, TFT-LCD
Generating Stage
Path-navigating innovation
Fuel cell, 4G mobile handset, next generation vehicle
33
Catch-Up Oriented Industrial Technological Capabilities in
Developing Countries
Accelerate Enhancement
Firm-Level
Capability
Enhancement
Capability
Enhancement
Efforts
Independent
Development
Closing to
Advanced Level
Capability Enhancement
Core Technologies, Advanced Technologies…
Take Leaders as Reference
Internal
Industry-Level
Aim for Independent Innovation
External
Supports
National-Project-Level
Industry Planning, Policy, Effects
Coordinated Development of System
Source: Hong, Su, Lu
34
R&D Expenditure / GDP by Region
35
R&D Expenditures in Asian Countries (in US$ million)
Reprinted from: Ismail, M. 2013. p.5.
36
High Technology by Sector
Reprinted from: Ismail, M. 2013. p.4.
37
Knowledge-based Development (KBD)
 The central ideas of the KBD
- Shifting value creation toward creation and useful application of human
knowledge;
- Creation, development, and deployment of three types of knowledge assets:
knowledge embodied in people (human capital), knowledge embedded in
formal or informal structures and processes (structural or process capital),
and knowledge, information and support from relationships, linkages and
networks (stakeholder capital).
- Attention to the three value domains of sustainable development (economic,
socio-cultural, and natural) and hence a strategic national perspective for
leveraging on a country’s unique mix of financial, intellectual, socio-cultural,
and natural capital.
 Leveraging on a country’s unique human capital
38
 Setting up structural capital that empowers farmers
 Innovating new sustainable enterprise models
 Knowledge networking for critical capabilities
 Building on indigenous social capital for enterprise development
 Optimum mix of overseas development assistance, private, and public
investment in various forms of capital
39
East Asian Regional Initiatives
 Formulation of a KBD Model
 Focused Anti-Poverty KBD development agenda
 Training of economic/development planners and establishment of an
e-community of KBD planners in Asia
 Cross-leverage knowledge assets across the Asian region
 Networking of Asian institutions in knowledge management and
organizational learning
 Assist in formulating KBE plans
 Policy study on cross-border e-commerce
40
National Science Strategies-NEA
2001 Knowledge Cluster Industrial Cluster initiatives
2006-2010 3rd Science Basic Plan
Regional Innovation Systems
Council for S&T Policy
(CSTP)
21st Century Centres of
Excellence
2003 Balanced National and Regional Development
Regional Innovation Systems
NURI (New University for Regional Innovation)
Brain Korea 21
2006 11th National 5year Guidance, Issues of balanced
development;
Regional Innovation Systems
863 plan (80s)
Torch program (1988- )
53 high tech zones
Reforms in Chinese
Academy of Sciences (CAS)
Knowledge innovation
program (2001-)
211, 985 1st , 2nd phase
Japan
South Korea
China
Establishing over 40 economic and technical zones to
attract foreign high-tech FDIs; Helping MNCs to
establish R&D center
41
Inter-organisational and Regional Learning
‐
Taiwan – Developing local technological capabilities of SMEs, ITRI; brain
circulation between Hsinchu and Silicon Valley and mainland China
-
Singapore –Big science initiatives, National Research
Foundation (NRF) , A*Star; attraction of foreign talents
and institutes
-
Daejon/Korea – KAIST, high tech amalgamation and entrepreneurship.
R&D concentration in Seoul.
42
MNEs and Academic Capabilities: China
•
750 R&D centres with foreign investment in China in big cities (e.g. Beijing,
Shanghai, Guanzhou and Shenzen) in 2005
•
Re-integration (R&D with production sales) and re-agglomeration (spatially
close to each other) in the Beijing-Tianjin city-region
•
Competition for talents in Beijing and Shanghai and decentralising efforts in
collaboration with the top universities in the regions
•
Localisation of the MNC R&D centres
•
Intra-country spatial dynamics
•
Building RIS with universities and MNEs
43
Global R&D Landscape (2012)
44
Interactions in a National Innovation System
Knowledge
Researchers
Funding
University
Funding
Research
Institutes
Knowledge
Funding
Grants
Grants
Global
Knowledge
Base
Technology
Government
Graduates
Indigenous
Knowledge
Base
Knowledge
Incentives
Tax
Industry
Source: Suh. 2000
•
•
•
Industrial & Technological Deepening
Transition to Knowledge Based Economy
Sustainable Economic Growth
45
45
Roles of the Three Main Players

Universities
– undertake basic science and technology research
– educate scientists and technologists needed by business and government

Governments
– design IPR system for business and universities
– commission science research e.g. for defense
– finance universities, subsidise business R&D

Business (Private) sector
– conduct R&D to develop commercial products
– launch innovative products
– start up new firms to exploit new science
46
Conceptualization of the R&D system
Source: Jeong Hyop Lee. “Evolution of Republic of Korea’s R&D System in a Global Economy”.
47
48
Innovation
49
Types of Innovations

Product innovation: introduction of a good or service that is new or significantly
improved with respect to its characteristics or intended uses. This includes
significant improvements in technical specifications, components and materials,
incorporated software, user friendliness or other functional characteristics.

Process innovation: implementation of a new or significantly improved
production or delivery method. This includes significant changes in techniques,
equipment and/or software.

Marketing innovation: implementation of a new marketing method involving
significant changes in product design or packaging, product placement, product
promotion or pricing.

Organisational innovation: implementation of a new organisational method in
the firm’s business practices, workplace organisation or external relations.

New resources or material: used as inputs of production
50
Industrial Power of Korea
(Most recent period)
Product
World market share
% (Rank)
Semiconductors
49 (1)
TFT-LCDs
46.5 (1)
Automobiles
9.8 (4)
80.0 (1)
LNG carriers
Petrochemical
products
45 (1)
Large diesel
engines for ships
Refrigerators
Air-conditioners
59.6 (1)
14.3 (1)
22.3 (1)
Company
Samsung Electronics,
Hynix Semiconductor
Samsung Electronics,
LG.Philips LCD
Hyundai-Kia Motors,
GM Daewoo
Hyundai Heavy Industries,
Samsung Heavy Industries,
Daewoo Shipbuilding &
Marine Engineering Co.
LG Chem, SK
Hyundai Heavy Industries,
Doosan Engine Co.,
STX Heavy Industries
Samsung Electronics,
LG Electronics.
LG Electronics,
Samsung Electronics
51
51
Roles of Government and Private in R&D in IT
Source : DaeJae Jin
52
Shift in STI Policy in Korea
Focus
 Strengthening ST capacity
 Supporting industrial development
View
 Domestic-orientation
Resource
Allocation
Governance




Leading KBE
Creating new industries,
Growth engine
Meet social demand
 Globalization utilization of foreign
resources
 Emphasize investment increase
 Unbalanced regional allocation
 Enhancing efficiency of R&D
 Balanced regional development
 Government-led
 ST personnel initiate
 Partnership among government,
people, region
 Increasing participation of citizens
in ST decisions
53
53
National Innovation Strategy
Innovation Resources
• Science & engineering workforce
• Access to higher and postgraduate
education
• Availability of risk capital
• High quality of information
• Infrastructure
Innovation Policy
• Subsidy and grant program
• R&D tax policy
• Education policy & funding
• Intellectual property protection policy
• Openness to international trade
and investment
National
“Knowledge” Stock
• “Basic” research investments
• Cumulative innovation record
• Overall technological sophistication
54
54
Strategies for Securing National Competitiveness
 Acquisition of World-top-class Technologies
- Korea should pour more R&D efforts to core technologies and emerging
technologies on the basis of strong basic science
 World Class Education for HRD
- For this and stronger international competitiveness, the Korean education
system should be reformed as quickly and broadly as possible
 Innovation-driven Economy and Innovation of NIS
- Through a balanced and efficient NIS, Korea should realize
an innovation- driven economy ahead of China
 Active Opening of the Economy
- All these require active opening of the economy to the world.
The whole country should be a ‘special economic zone’
55
55
Critical Lessons
-
Investing in S&T capacity is not a luxury for the rich; it is an absolute
necessity for poor countries that wish to become richer – there is no
choice.
-
The time to start investing and building capacity is when you are poor.
-
Countries at different stages of development, and employing different
learning strategies, need to invest in different aspects of S&T capacity –
plugging in, catching up, innovating: different tasks and challenges for
different stages of development.
56
Innovation Approaches
 Market-Driven Innovation
- Innovation for (Product ⇒ Technology)
Market
Product
Market /Demand Pull
Technology
Technology/R&D
 Technology-Driven Innovation
- Innovation for (Technology ⇒ Product)
Market
Technology
Product
Market /Demand
Technology Push
57
Comparison of the Operating Profits of Samsung
and Japanese Electronics Companies (Jul-Sep,
2009)
(Yen Billion)
Source: Compiled from Japanese Newspapers
58
58
Five Strong Points of Korean Firms Viewed by Japan
 Adversary or recession is the period to drive
- It is the best time to leap forward when the rival is retreating.
 Discard egalitarianism (=everything is equally important)
- Concentrate on growing or emerging areas without worrying barriers or
difficulties
 Commodities rather than products
- Instead of enforcing selling technologically superior products, develop
commodities wanted by buyers
 Do not depend on the domestic market
- Always conscious of the world market
 Endlessly learning and practice
- Diligently learn superior techniques to re-create own capability
59
Key Factors of the Korean NIS Development
 Outward-looking development strategy
- Government policy toward FDI and TT Focus on indigenous R&D
- Government-led industrial development
- Industry-targeting
- Favoring large enterprises R&D system biased for large
enterprises
- S&T for industrialization R&D system biased toward technology
development
- Rich pool of well educated HR in ST  High absorptive capacity
- Government-led development of S&T infrastructure  Relative
importance of GRIs
60
Strengthening innovation systems
•
Increases in government funding for R&D
•
Change in funding and governance of public research
– More project funding
– More targeting of priority areas (IT, biotech, nano, energy)
– Greater use of priority setting
•
Support for business R&D increasing
– Entrepreneurship and SME financing
– Shift in financing of business R&D away from direct funding and
toward tax incentives
•
Strenthening industry-science linkages
– Boost patenting & licensing of public research
– Proliferation of public/private partnerships
– Collaborative research
61
Asian-Pacific STI: Different Industry Structures
R&D by size of firm
R&D by industry sector
High-technology
%
Fewer than 50
50-249
Medium-high technology
Medium-low- and low-technology
250 or more
100
100%
90%
80
80%
70%
60%
60
50%
40%
40
30%
20%
20
10%
0%
Japan
United States Korea (2001)
(2002)
Australia
(2002)
New Zealand
0
United
States
Korea
(2003)
OECD
EU
Japan
Australia
Source: OECD, R&D Database, June 2005.
62
Different Institutional Role in R&D and Innovation
30
20
20
10
10
0
0
Mexico
30
New Zealand
40
Australia
40
EU-25
50
OECD
50
Mexico
60
New Zealand
60
Australia
70
EU-25
70
China
80
OECD
80
United States
90
Sweden
90
Korea
100
Japan
100
Higher Education
Private Non-Profit
United States
Industry
Government
Abroad
Japan
Other
Korea
Government
Sweden
Industry
By performer
China
By source of funding
Source: OECD Main Science & Technology Indicators, June 2005
63
Human Resources: Researchers
Researchers per 1000 employment
of which: business enterprise researchers
Others
20
•
Total number of researchers in
China = 811,000 in 2002, up
from 471,000 in 1991.
•
Most recent figures for US, EU,
Japan and Korea in 2001/2
were: 1.2 billion; 1.0 billion, 676
thousand, and 136 thousand,
respectively
•
Researchers per thousand have
increased in all Asia-Pacific
countries, US, and EU.
18
16
14
12
10
8
6
4
2
0
Finland Japan United New Australia Korea
States Zealand (2002)
(1999) (2001)
OECD EU25
(2000) (2002)
China Mexico
(1999)
Source: OECD Main Science & Technology Indicators, June 2005
64
Supplies of Scientists and Engineers
Science degrees
30.8
33.4
13.0
Engineering degrees
33.2
31.3
Share of women
29.0
33.4
% S&E in 1998
32.8
39.3
35.2
%
Share of S&E degrees in all tertiary level degrees
45
40
Percentage of S&E
degrees awarded to
women
35
30
25
20
15
10
0
United States
New Zealand
Australia
EU-19
Belgium
OECD
Mexico
Japan
EU-15
Korea
5
Source: OECD Education Database, June 2005
65
National R&D Priorities in Asia-Pacific Countries
Australia
Environmentally sustainability; promotion and maintenance
of good health; frontier technologies for transforming
industry; safeguarding Australia.
Japan
Life science, ICT, environment; nanotechnology and
materials.
Korea
Digital TV & broadcast; displays; intelligent robots; new
generation automobiles; semiconductors; mobile
communication; intelligent home networks; digital content &
solutions; batteries; biomedicine.
New Zealand
Biotechnology; ICT, creative industries.
United States
Homeland security; networking and information technology;
nanotech; priority areas of physics, biology of complex
systems; climate, water and hydrogen.
Source: OECD Science, Technology and Industry Outlook 2004
66
Often Linked to NPSstrategies
Australia
Backing Australia’s
Ability
Strengthen ability to generate ideas,
undertake research; accelerate
commercialisation; develop & maintain
skills
China
Revitalizing the
Nation through
Science and
Education
Improve opportunities for market-based
innovation to improve economic growth
and performance
Japan
S&T Basic Plan
Boost economic effects and social
benefits of intellectual assets
New
Zealand
I3 Challenge
Define national needs, strengthen longterm research, extract greater
commercial value
Source: OECD Science, Technology and Industry Outlook 2004.
67
Key Policy Goal: Economic Catch-up
•
Strengthen growth through innovation and adoption of technologies from
external sources.
• Effective inward transfer and technology adoption relies on indigenous
adaptation, innovation.
•
Post-1945 development of W. Europe, Japan, East Asian tigers, benefited
from inward technology transfer & adoption.
•
Contemporary developing economies can benefit from similar “catchup”
strategies.
• Requires strong links with international sources of knowledge, capital,
technology.
• Investment in physical & human capital to strengthen domestic capacity
to modify & improve imported technologies.
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Elements of “Pro-Catchup” Innovation Policy
•
•
•
•
Increase public and private R&D investment, especially in nongov’t R&D per
formers (universities, industrial firms).
– Support a diverse mix of performers of publicly funded R&D.
– Include competition, evaluation in public R&D programs.
Strengthen linkages with international sources of knowledge, technology.
– Tap into nonresident diaspora.
– Support student, scholarly exchange with foreign universities & research
institutes.
– Support inward foreign investment as a source of technology and comp
etition for domestic firms.
Support technology adoption by domestic firms, farms.
– Public “extension services” in agriculture, services, manufacturing.
Increase investment in human capital:
– Primary , secondary, & post-secondary education.
– Training of the employed workforce.
69
US Patent Application Trends
Source: USPTO
70
Trends in R&D/GDP
Source: OECD
71
Comparison of R&D/GDP
Source: OECD, UNESCO
72
Catch-up with US 1970-2010
(Constant market prices at 2005 ppps)
Source: OECD
73
OECD’s Recommendation for Innovation
by Development Level
74
Drawing Lessons from Country Experiences
 Strong leadership and political will
 Clear policy direction and adequate support for implementation
 R&D investment
 Strengthening linkages with the private sector
 Exploring innovative ways of achieving desired outcomes
 Use of ICT for marginalized groups
- Farmers, poor communities, underprivileged sectors have been provided
online support.
- Rural kiosks in India, Cybercare in Malaysia, Promotion local products in
Thailand, IT education in ROK
75
Observations and Lessons
-
Ability to produce new knowledge (R&D) is important, but the ability to absorb
and utilize existing knowledge may be even more important at early stages
of development – National systems of economic learning and technology
diffusion.
-
Absorptive capacity of enterprises and labor force must be developed –
spillovers (from FDI) are not automatic.
-
S&T capacity building policies should be devised within the context of an
overall industrial development strategy – not separately
-
Getting basics right-rule of law, business climate, etc. - is absolutely
necessary but not sufficient.
-
Goal of universal primary education should be complemented by expanded
access to vocational, secondary and tertiary education.
-
Political commitment is needed since it takes a long time for capacity building
to affect economic development and poverty.
76
-
A critical challenge is increasing the effective demand for R&D by
developing enterprise capacity to innovate and utilize knowledge.
-
Tension between expanding the supply of skilled workers and the private
sector’s demand for skilled workers-chicken and egg / brain drain vs. skill
shortage
-
How firms learn, from whom, and how they innovate is a key issue.
-
Freer trade and attracting FDI is necessary but not sufficient –
spillovers will not occur without accompanying capacity building efforts.
-
Increased spending on education and/or R&D will not improve economic
performance, if there are poor linkages between research institutes and
education sector on the one hand and enterprise sector on the other.
Linkages, quality and relevance are critical.
-
Need for focus and realism – don’t spread resources too thin; develop a
few niche areas; today’s comparative advantage vs. tomorrow’s needs;
existing strengths vs. new competencies – comparative advantage must be
created.
77
References
Brad, Carlos A. P. 2003. “Leveraging the Knowledge Economy”, World Bank
(PPT, Google).
Crafts, Nick. “Divergence Big Time: Economic Growth Since 1870”, (PPT,
Google).
Mowery, David C.. 2012. Notes on innovation policy and development.
Paic, Alan. 2011. “Enhancing South East Europe Competitiveness through
innovation and human capital development”, Bank of Greece-University of
Oxford (SEESOX) Conference Athens (PPT, Google).
Ray, A. S. & Bhaduri, S. “A game theoretic model of optimum IPR regime and
technological capability: Implications of TRIPS for developing countries”,
Jawaharlal Nehru Univ., India (PPT, Google).
78
Sheehan, Jerry. 2005. “Science, Technology and Innovation in the AsiaPacific Region: Trends and Policy”. (PPT. OECD)
Rodriguez, Francisco & Wilson, Ernest J. III. “Are Poor Countries Losing
the Information Revolution?”, University of Maryland at College Park
(PPT, Google).
Watkins, Alfred. 2005. “Building Science, Technology, and Innovation
Capacity for Development”, S&T Program Coordinator HDNED,
Presentation to STI Thematic Group (PPT, Google).
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