Download IMPACT OF INNOVATION AND TECHNOLOGY TRANSFER ON

Roman Gurbiel
IMPACT OF INNOVATION AND TECHNOLOGY TRANSFER
ON ECONOMIC GROWTH: THE CENTRAL AND EASTERN
EUROPE EXPERIENCE
Warsaw School of Economics
Center of International Production Cooperation,
Al. Niepodległości 162 (bud. F, p. 913)
02 554 Warszawa, Poland
tel. (+48-22) 646 61 27
fax (+48-22) 646 61 15
e-mail: [email protected]
Warsaw, July 2002
1
CONTENTS
Abstract...............................................................................................................................................3
1
Specifics of Technology Transfer and the Innovation Process ..............................................3
2
Technology and Economic Growth - Theoretical Issues ........................................................6
3
Competitiveness – Central and Eastern Europe Technology Gap ........................................9
3.1 CEE in the Competitiveness Ratings
9
3.2 Finland – a New Technology Powerhouse
11
4
Central and Eastern Europe Innovation Potential – Constraints and Challenges ............12
5
Summary...................................................................................................................................16
6
Bibliography .............................................................................................................................18
2
Abstract
The main objective of this paper is to present the experiences of Central and Eastern European
Countries (with special emphasis on Poland, the Czech Republic and Slovak Republic) in
innovation and technology transfer policies during economic transition and the challenges faced
during EU enlargement.
Innovation and technology transfer are the key drivers of economic growth in today’s world
economy. Thus an appropriate economic policy should concentrate on strengthening these processes
throughout the country and easing the flow of information and technology between the main players
– innovators, companies, state agencies and financial institutions.
Transition economies are the special case. Most of Central and Eastern Europe countries
experienced large GDP declines in the 1990’s which was resulted from large extent from an overall
decline in competitiveness and increasing technology gap in comparison to western countries. This
may imply certain difficulties taking into consideration the integration process with the European
Union and associated with it specific circumstances like liberalisation of trade and production factor
flow between member countries (e.g. capital, labour and technology).
The paper consists of both theoretical and practical issues. The first part of the paper describes the
relations between innovation and technology transfer and economic growth with a concentrating on
the path of economic growth for transition countries and key differences in comparison with more
economically advanced economies. This built a framework for conducting a more empirical
analysis of appropriate processes in particular countries.
1
Specifics of Technology Transfer and the Innovation Process
Technology transfer is a key factor strongly impacting on economic growth both in the short and
long term. The access to technology and its usage in economic processes to large extent decides as
to the competitive position in the international labour division.
Structural changes of the entire economy are almost not possible without an effective technology
transfer and well-defined country’s innovation system. These two factors led the spectacular
(despite current problems) improvement in competitiveness and economic success of the newly
industrialised Asian Pacific economies.
Technology transfer is a complicated process, which includes several closely related elements like –
technology (embodied and disembodied; e.g. subparts / machines, patents / licences) and knowledge
(e.g. organisational behaviour). Sometimes transfer technology is being understood in parallel to
innovation where the latter embodies of specific knowledge of a product or service.
Technology transfer can be defined as a flow between technology owner/holder and technology
buyer/user. It enables closing the gap in access to particular technology in different ways: buying,
renting, lending or licensing. An important element strictly related to technology transfer is the
technology commercialisation – which is a technology transfer with a special emphasis on practical
3
usage of R&D efforts (e.g. closing a licence agreement with patent owner to exploit technology of a
specific product design).
The scale of diffusion of the transferred technology depends to a large extent on existing technology
infrastructure – e.g. the resources of the technical science and R&D potential, industrial production
advancement, technology start-ups and technology transfer financing system, instruments
encouraging the culture innovation across the country, the scale of the country’s openess to foreign
competition and production co-operation (at the beginning mainly transnational corporations
channels). Economic level is one of most important factors determining the intensity of technology
transfer. In effect the diversity in the level of quality and quantity of labour factors will be strictly
correlated with the potential flow of technology.
Technology transfer can have both a vertical and horizontal character. The vertical technology flow
is taking place across particular stages of added value creation in the value chain:
R&D → implementation → production process → distribution → final buyer
Horizontal technology transfer is conducted in similar production stages or economic environments
typical in the diffusion process:
laboratory ↔ laboratory; factory ↔ factory; country ↔ country
Technology transfer channels can transfer goods, services and production factors (workforce,
technology, capital). In this context investments related to technology transfer are analysed as
investments directly related to production (e.g. machinery) and partially related to production (e.g.
distribution equipment).
Innovation and Technology Supply
Technology supply depends to a large extent on innovation the capabilities of a particular country
or the so-called innovation potential. Innovation should be broadly understood as everything, which
is considered as a new. Innovation is the result of the practical primary usage of certain idea. It is
the embodied in a range of processes or products; thus we can distinguish process and product
innovations. For an example, the innovation process can be analysed as in Box 1.
Box 1. Innovation process scheme
(1) R&D (basic and applied research) → (2) invention (creation and documentation of technology) → (3)
innovation and technology implementation → (4) learning of effective technology usage → (5)
optimisitation of production and organisation methods → (6) appearing of micro and macroeconomic
effects of technology implementation (eg. lower material and personal costs needs, higher productivity)
The innovation potential of particular country is the sum of specific macro and microeconomic
factors, which encourage the process of innovation like income per capita, R&D, technology
infrastructure. Technology transfer indicators can be based on the foreign trade specifics and
4
international competitiveness1. In this context, they can include e.g. prices in export, shares in
appropriate international markets etc. One of the most often used indicators as to the intensity of
technology transfer is the technology gap, which can be understood as difference between
knowledge and capabilities of a particular country. There are several possibilities to define and
measure the technology gap which include comparisons of industries’ labour productivity and
capital intensities2. An interesting indicator is the level of profit generated in a single country by
foreign enterprises3.
The national technology transfer system can consist of several entities. The most important of
which are innovators (technology creators), commercialisators (companies) and central government
institutions (economic policy). A detailed technology transfer follows:
Picture 1
Technology transfer and innovation system participants
government institutions
(goals and resources of innovation
policy; legal affairs)
R&D institutes
(basic and applied research)
Large industry
(technology implementation and
export)
Higher education
(R&D)
Small and medium enterprises
(technology implementation)
Financial institutions
(Venture Capital funds, banks, public
funds)
Technology transfer brokers
(incubators, technology parks)
Technology transfer channels
Technology transfer channels are the medium between particular participants in the process. They
include ways of gaining the technology (e.g. buying, lending) and other important factors related to
the process (e.g. flow of people, documentation, products, and capital).
Technology transfer is conducted through different channels and different entities. Depending on
the means of creating and gaining of the technology its transfer can be considered either internal or
external. Internal technology transfer is conducted mostly inside a single entity or its affiliates. This
entity acts both as creator / innovator and user. The scope of internal process is limited by internal
1
see Durand M., Giorno C., „Indicators of International Competitiveness ...” in OECD Economic Studies 9/1987.
Sjoholm F., Technology Gap and Spillovers from Direct Foreign Investment, Stockholm School of Economics,
Working Paper 212/1997, p. 9.
3
Blomstrom M., Kokko A., Country Competition and Technology Transfer by Multinationals, Stockholm School of
Economics, Working Paper 4131/1992, p. 4.
2
5
R&D resources and implementation capabilities. External technology transfer relies on external
technology resources usually not related to buyer.
The scale of advancement in technology transfer depends on the advancement of R&D resources
and the capabilities for technology implementation in the production process of the transferee4. As a
result there are several possibilities for gaining technologies related to specifics of technology
transfer participants.
Table 1.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Technology acquisition schemes
Acquiring non-documented knowledge
Internal R&D
Reverse engineering
Secret acquiring trough internal R&D
Contract R&D
Strategic R&D partnership
Licensing
Purchase (domestic or foreign)
Joint Venture
10. Acquisition of a company with technology
I
I
I
I+E
I+E
I+E
E
E
E
E
I... technology transfer based mainly on internal R&D capabilities
E... technology transfer based mainly on external R&D capabilities
Source: UNIDO, Technology Management, 2000.
Most advanced technology transfer, especially in the low and middle-income economies, is
conducted through international production co-operation, where the production factors flow is most
complex including machinery, semi-finished goods and production factors (workforce, technology
and capital). The spillover effects to other parts of the economy related to this form of technology
transfer are also the largest. Foreign direct investments as one of most widely used channels of
international production co-operation to large extend decide about the location and level complexity
of technology transfer. Thus a long-term economic policy is needed.
2
Technology and Economic Growth - Theoretical Issues
Complexity of technology transfer imply construction of the theoretical model. An interesting basis
could be existing international trade and capital flows theories assuming differentiation of
production factors supply (workforce, capital, and technology) across countries and regions.
This can be extended by neotechnology theories like product life cycle theory, technology gap
theory and production scale theory. They argue that the cause of foreign trade is possible thanks to
existing differences of supply of production factors across countries. In technology gap theory
foreign trade is possible thanks to differences in economic development across countries; in
production scale theory the gain and competitive share is possible due to high specialisation and
decrease of costs per produced unit.
4
see Gurbiel R., „Możliwości finansowania transferu technologii w Polsce” /Possibilities of Technology Transfer
Financing in Poland/ in Technology Transfer - The Polish Perspective (conference paper), IPPT PAN/WS Atkins,
Warszawa 1997.
6
One of the theories, which can be applied in technology transfer analysis, is the R.Vernon’s product
life cycle theory. Vernon argues that reasons for foreign trade are technological advantages, which
are embodied in innovations. Because the access to the core technologies is limited, innovations are
spreading gradually and differently across countries from country innovator to country imitator
(receiving country). One of the reasons for this is that countries differ in the levels of economic
development and technology. Vernon’s theory assume time as a factor of gradual evolution – of
product (from innovation, growth, maturity to decline); markets (from country innovator to country
imitator) and production process (from complexity to standardisation).
Dynamics of technology transfer depend also on the strategy of a particular firm innovator. Some
firms prefer expansion by technology licensing others through foreign direct investment as the most
appropriate and safest solution for securing the technology and to prolong the rent from the
exclusivity of ownership.
According to product life cycle theory, production is being moved from the country innovator to
country imitator at the product’s maturity stage. In the first stage of product development the
production process is being conducted in the country of innovator (because of specifics of supply of
production factors and the character of local market demand). In the second stage, together with
diffusion of products, some export activities are established to middle developed countries. In the
third stage full technology diffusion takes place. Production process simplifies when the innovator
fails to resist its oligopolistic position.
This often leads to move production to foreign countries in order to find relative cheaper production
factors, to ensure better service of foreign markets and to internalise possessed technology.
7
Picture 2. Intensity of technology flows in the product life cycle theory
Production volume
Import
Export
Technology
transfer intensity
Highly developed countries (innovators; USA, Japan, Korea, EU countries)
Export
Import
Middle developed countries (early followers; Central and Eastern Europe
countries)
Export
Import
Low developed countries (late followers; Middle East Countries)
innovation
growth
Time
standarisation
production
consumption
Source: based on Vernon R.,”International Investment and International Trade in Product Cycle” in Buckley P. (ed.),
Internalisation of the Firm, Academic Press, London 1993.
Technical progress is the key factor in economic development and decreasing the technology gap
between countries. The intensity of technology transfer depends mainly on innovation potential of a
receiving country. The more advanced it is the more complicated the transfer will be.
The level of economic development is one of the main factors determining the intensity of
technology transfer.
8
Picture 3.
Technology inflow specifics and country’s innovation capabilities
Innovation
capabilities
Innovation
technologies
Adaptive
technologies
Base
technologies
Imitating
technologies
Technology transfer intensity
Source: based on The Interrelationship Between Investment Flows and Technology Transfer, UN, 1992, p. 14.
To ensure the effects of the technology transfer and its intensity a strengthening the process by
appropriate economic policy instruments. As we can see in Picture 3, there is a high correlation
between the intensity of technology transfer and a country’s innovation capabilities. As a an
example of the linkage between technology transfer and the economic policy; we can mention
development path of some Asian countries like Korea, Taiwan, Hong-Kong, Singapore. These
countries emerged in just a few decades as technology and production based powerhouses.
Aggressive technology acquisition and its efficient use in production processes played key role in
the economic development with a long-term goal to increase international competitiveness position.
Development of innovation potential followed the main policy of economic development, which
could be broadly characterised as moving from import substitution to export promotion. Protection
of local imports and strict import policies enabled to acquire basic technologies mainly through
import (some were acquired by licensing and foreign direct investments conducted mainly through
joint ventures, which were used as a vehicle to assimilate the technology). Once acquired
technologies were further developed using local R&D capabilities, based on broad linkages between
state and private research institutes.
Despite economic problems in the late 90-s Asian countries can be analysed as example of
transition from country imitator to innovator scheme. However a very different international
environment now precludes directly following this development path by other countries – like
Central and Eastern Europe which faces a much more open market environment.
3
3.1
Competitiveness – Central and Eastern Europe Technology Gap
CEE in the Competitiveness Ratings
Competitiveness of the economy in the long term depends on innovation potential of the economy
gained through effective technology transfer5. It is the key factor taking into account equalisation of
traditional competitiveness factors like cost of production factors6.
5
see OECD, Benchmarking Industry-Science Relationships, 2002.
9
The ownership and access to crucial technologies affects a country’s position of certain country in
the international competitiveness ratings. Without having home-developed technologies the
competing in the long term would be based on generally accessible technologies, mainly through
better use of an imported technology. This is especially important in the case of Central and Eastern
Europe Countries, which definitely lag behind more developed countries in the level of
competitiveness.
Table 2. Change in the international competitiveness position
USA
Singapore
Finland
Luxembourg
Holland
Hong Kong
Ireland
Sweden
1997
1
2
7
8
4
3
10
19
Central and Eastern Europe Countries
Hungary
37
Czech Republic
33
Slovakia
Slovenia
Russia
46
Poland
43
1998
1
2
6
3
4
5
7
16
1999
1
2
5
3
4
6
8
14
2000
1
2
4
6
3
12
5
14
2001
1
2
3
4
5
6
7
8
28
37
43
44
26
37
39
46
40
26
40
36
47
38
27
35
37
39
45
47
Source: based on IMD, World Competitiveness Yearbook 2001.
In the competitiveness research mentioned above conducted in 1997-2001 by IMD only few Central
and Eastern Europe countries have improved their rating’s position. The largest improvement in the
rating was achieved by Hungary moving from 37th to 27th position. The second best country was
the Czech Republic, which balanced between 35-40 position. It is interesting to mention that its best
position was achieved by the country in 1997. The worst – 47th position occupies Poland, which
failed to make any significant changes in the ranking since its first listing in 1997.
It is clear that CEE lags behind most developed countries from the OECD group. Prolonging this
situation in the long term will have a negative impact on future economic development. Especially
taking into account the changes in the world economy like – increasing competitiveness from newly
industrialised countries (the traditional ones like Korea or Taiwan; but also new players like China
or India).
6
see Gurbiel R., Dezintegracja a zagraniczne inwestycje bezpośrednie i transfer technologii. Przypadek podziału
Czechosłowacji /Disintegration and Foreign Direct Investment and Technology Transfer. Case of the Split of
Czechoslowakia/, SEMPER, Warszawa 2001.
10
3.2
Finland – a New Technology Powerhouse
In just ten years, Finland has become one of most innovative countries of EU. This was possible
due to changes in attitude to innovation, technology transfer and promoting linkages between R&D
sector and industry.
In 1999, the share of R&D expenditures in GDP exceeded 3%, which ranked Finland in the second
place in OECD countries only after Sweden. The total value of R&D expenditures amounted in
1999 to approximately EUR 3,7 billion – three times as much as in Poland. About 69% was spent
by private companies, which were dominated by the electronics and telecommunication industry.
Picture 4.
Finland’s R&D Expenditure to GDP and GDP Growth
3%
-2%
-7%
1990
1991
1993
1995
1997
1998
1999
R&D/GDP
1,9%
2,0%
2,2%
2,3%
2,7%
2,9%
3,1%
GDP growth
0,0%
-6,3%
1,1%
3,8%
6,3%
5,3%
4,2%
Source: Finland Statistical Office
Finland is characterised by a large number of R&D personnel employed both in public funded
research institutions and private companies. At the end of the 90-s there were engaged more than 60
thousand of research personnel (53% business sector, 30% universities, 17% other public funded
institutions).
11
Picture 5.
100
90
International R&D Position of Finland at the end of 90-s
No. of R&D personnel to 10 000 of employees
Japan
Finland (1997)
80
Sweden
USA
70
60
OECD
UE
50
Finland (1990)
40
30
Poland
20
Griece
10
Czech Rp.
R&D expenditures to GDP
0
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
Source: based on Science, Technology and Industry Scoreboard, OECD 1999, p. 1,2.
4
Central and Eastern Europe Innovation Potential – Constraints and
Challenges
R&D is the key element in the innovation and technology transfer process that decides about longterm economic development. Thanks to R&D expenditures new products and processes can be
created. Thus their share of a government’s central budget is highly significant.
Historically Central and Eastern European countries were clearly interested in their own R&D
development. This was a result of cold war and sustaining the military potential. However
concentration on military technologies without any transfer of these achievements into commercial
implementations had a negative impact on the whole economy. Opening the previously closed
economies was a kind of shock for local companies that were unable to compete.
Czech and Slovak Republics
Like other socialist countries Czechoslovakia built its R&D system based upon the Soviet model,
which consisted of the Czechoslovak Academy of Sciences, R&D branch institutes (divided as:
independent institutions, institutions belonging to industry, institutions belong to government
7
agencies) and university research units .
R&D expenditures in the 70s and 80s exceeded 2% of GDP. The number of personnel
professionally engaged in workforce amounted to 200 thousand with approx. a thousand research
units.
The economic transition, which started in 1989, also strongly influenced the research sector. There
was conducted deep restructuring, involving the introduction of competitive mechanisms based on
granted projects, closure of some non-performing institutes, and some were privatised.
7
Muller K., "Scenario for the transformation of science, technology and education" in Kukliński A. (ed.),
Sceince,Technology,Economy, KBN, Warszawa 1994, s.448-449.
12
A significant shortage of funds and lack of assimilation to the new market conditions decreased the
research base. In just two years after start of transition, in Czechoslovakia in 1989-1991 the number
8
of researchers decreased 36% (in Czech region 38%, in Slovakia 32%) and R&D institutes 37% .
The total financing of research sector decreased about 46% (in Czech Republic 42%; Slovakia
9
53%) . The large number of R&D institutes changed its orientation into more commercial forms,
however based on research activity. Several institutes started small-scale production based on inhouse developed technologies.
The split of Czechoslovakia into the separated countries of the Czech and Slovak Republics resulted
in some changes in the R&D sector as well. One of the main results was the end of federal research
programs and central directives for science policy. This automatically decreased the flow of funds
and co-operation efforts between Czech and Slovak R&D institutions.
The late 90-s did not bring a radical improvement to the science sector in the Czech Republic. In
2000 comparing to 1990 there were 50% less people involved in the R&D development (decrease
from 105,9 to 53,5 thousand). Since 1994 the share of public spending on R&D did not exceed
50%. The steadily growing share was represented by private sector. In 2000 R&D expenditures
were financed 44,5% from public funds (government and universities) and 45,0% from private
funds. About 3,1% funds came from foreign sources. All of these funds are low compared to GDP
but on the other hand this ratio is relatively high comparing to other Central and Eastern Europe
countries.
Similar negative trends were characteristic also in Slovakia where after the split were the funding
and employment decrease was significantly higher. One of the reasons for this was a specifics of the
Slovak economy, which was based on heavy machinery production and chemicals industry
(including military industry) which were largely weakened after the quick market opening in the
first years of transition period.
Table 3. R&D expenditures to GDP
Czech Republic
Hungary
Poland
Slovak Republic
European Union
1994
1,10%
0,88%
0,76%
0,96%
1,83%
1995
1,01%
0,73%
0,69%
0,98%
1,81%
1995
1,03%
0,65%
0,71%
0,97%
1,81%
1997
1,17%
0,72%
0,71%
1,13%
1,80%
1998
1,27%
0,68%
0,72%
0,82%
1,81%
1999
1,29%
0,68%
0,75%
0,68%
1,85%
Source: OECD, Main Science and Technology Indicators, 2001/1, p. 16.
To encourage technology transfer there were several instruments used – like business incubators,
technology transfer brokerage, technology parks (more than 12 in the Czech Republic); Business
Innovation Centres co-operating with European Union institutions.
Poland
Poland faced similar problem of R&D transition like other CEE countries. In 1995-2000 the number
of research staff decreased 6% from 83,6 to 78,9 thousand. This was followed by low values of
8
9
Reviews of national science and technology policy:Czech and Slovak Federal Republic, OECD 1992, p. 35,36.
Statistical Yearbook of CSFR, CSU, 1991, p.252.
13
funds spent on research. Since the beginning of transition in the share of gross domestic
expenditures on R&D to GDP did not exceed 1%. In 2000 this ratio amounted to only 0,7% which
was significantly less than EU average.
The decrease of R&D efforts had a negative impact on the number of patent applications, which in
the period 1990-2000 decreased more than 60% from 4105 to 2404 (there were granted
appropriately 3242 and 939 patents). In the same time, there was a large increase in non-resident
foreign patent applications from 1316 to 4894.
One of the effects of decreasing in innovation potential is a widening gap in international
transactions related to scientific and technological developments, which is presented in table below.
Table 4. R&D balance of payments (USD million)
1991
export
import
(export-import)
1995
9,4
5,8
3,6
1999
6,2
23,1
-16,9
2000
21,0
347,1
-326,1
23,8
457,9
-434,1
Source: See Statistical Yearbook of the Republic of Poland, 2001, p. 320.
The main weakness of Polish R&D system is a lack of effective technology transfer between
research and industry sector. This is a complex issue strictly correlated to the specifics of the Polish
10
economy, dominated (by share in production; year 2000 data) by rather low and middle
technology intensive industries like - food and tobacco products manufacturing (17,8%), energy and
water supply (8,7%), motor vehicles manufacturing (6,3%), chemicals products manufacturing
(5,8%). Most of these industries use import as the main transfer technology channel thus limiting
the demand for in-house R&D, which is used mostly for implementation purposes.
Recent reforms of R&D institutes did not change much the situation. Most of them have to deal
with a lack of funds to undertake necessary investments, which is a barrier to offer a competitive
supply of technology. In 2000 the existing research equipment was depreciated by 69%. New ideas
like technology parks and innovation centres are not sufficient to encourage rapid growth of
innovation potential.
Foreign direct investment as a significant channel for technology transfer
The success of the transition process of Central and Eastern Europe Countries was largely possible
due foreign direct investment inflow, which transformed the entire economies. It is because it
represents the highest form of international production co-operation engaging the broadest spectrum
of resources – capital, technology/knowledge and skilled workforce. Transnational corporations
brought not only fierce competition, which forced many local companies to restructure but also
technology and innovativeness, which spilled over to local industries.
Till 2000 in Central and Eastern Europe was invested about USD 124,7 billion mostly by large
transnational corporations which entered the local markets mostly buying local major companies.
This strategy is steadily changing. Finished privatisations and lack of healthy local companies to
10
Statistical Yearbook of Industry of the Republic of Poland, 2001, p. 44-46.
14
acquire forced many large international companies to start greenfield investments, which have been
especially invited by local authorities.
Table 5. FDI inflow to selected CEE countries (USD million)
1989-1994
1995
1996
1997
1998
1999
2000
(annual
average)
Central and Eastern Europe
3 444
14 268
12 730
19 188
21 008
23 222
25 419
314,3%
-10,8%
50,7%
9,5%
10,5%
9,5%
563
2 562
1 428
1 300
3 718
6 324
4 595
1 152
4 453
2 275
2 173
2 036
1 944
1 957
Poland
788
3 659
4 498
4 908
6 365
7 270
10 000
Slovak Republic
137
195
251
206
631
356
2 075
Belarus
12
15
105
352
203
444
90
Lithuania
24
73
152
355
926
486
379
Russia
850
2 016
2 479
6 638
2 761
3 309
2 704
Ukraine
186
267
521
624
743
496
595
Growth rate of FDI inflow
(%)
Czech Republic
Hungary
Source: UNCTAD, World Investment Report 2001.
An interesting case of technology transfer through FDI appears in the Czech electronics
manufacturing sector, which up until now attracted more than 200 of foreign companies. The total
amount of FDI invested in the sector exceeded in 2001 the amount of USD 570 million. The high
inflow of technology based foreign enterprises was mainly a general effect of friendly FDI
regulation offering broad spectrum of incentives and attractive business environment (e.g. relatively
cheap and educated workforce, long tradition in electronics manufacturing). Good results from the
initial investments encouraged some investors to locate in the Czech Republic part of their R&D
activities (including Motorola, Rockwell Automation, Honeywell and Vitatron).
Table 6 Largest foreign investors in the Czech electronics manufacturing sector
INVESTOR
COUNTRY OF
ORIGIN
Matsushita Electric Industrial Co.
Japan
ON Semiconductor
AVX Limited
UPC United-Europe Communications
Epcos AG
Foxconn Holdings B.V.
Tyco Group S.a.R.
Liechtex Establishment
Ralston Purina
AEG Kondensatoren und Wadler
GmbH
Schneider Electric SA
USA
U.K.
Netherlands
Germany
Taiwan
Luxembourg
Liechtenstein
USA
Germany
Vishay Europe GmbH
Germany
France
TYPE OF
BUSINESS
Consumer
electronics
Electronics
Electronics
Cable TV
Ferrites
PC
connectors
Electromotors
Batteries
Capacitors
Electronics
components
Electronics
15
TOTAL
NO. OF
INVESTME EMPLOYEES
NT
(mil.USD)
72,6
1 440
TIME
2000
55,0
50,0
45
43,2
40,0
35,5
28,0
26,0
25,o
500
3 400
520
510
2 200
1 800
80
200
280
1992
1992
1996
1999
2000
1993/2000
1992
1991
1999
22,0
150
1993
20,0
550
1991
Flextronics International
Punch International
Invensys
USA
Belgium
Luxembourg
ELCERAM
Infineon Technologies AG
Cherry GmbH
Black & Decker
Netherlands
Germany
USA
components
Electronics
Electronics
air conditioner,
washing machines
Electronics
PC and equipment
PC and equipment
Power tools
20,0
17,0
16,6
1 500
NA
320
2000
NA
2000
16,0
15,0
14,5
12,0
130
700
1 000
600
2001
1999
1992
2002
Source: CzechInvest
5
Summary
Innovation and technology transfer have strong impact on economic development and increase in
international competitiveness level of the economy.
Despite some progress made in recent years Central and Eastern European countries still lag behind
many of their European Union neighbours. Thus limiting of the technology gap between Central
and Eastern Europe countries and EU is of crucial importance to the success of integration process.
Because of lacking of effective technology transfer from R&D sector to industry, import and
foreign direct investments are the main channels of technology transfer in transition countries.
There is a strong need of securing funds for local R&D sector and to promote the linkages between
the sector and industry.
To encourage innovation philosophy across CEE countries an appropriate economic policy is
needed. This include e.g. tax instruments, limiting complicated administration procedures, building
and financing technology transfer institutions (business incubators, technology parks) and attracting
venture capital investors.
A significant opportunity for development of R&D sector in transition countries will offer
integration with EU, which enable to access to increasing possibilities in participation of EU funded
research programmes.
A recent study conducted on innovation potential summarised specifics of innovation profiles of EU
candidates countries as follows:
Box 2. Innovation Profile Specifics of Selected CEE Countries
Czech Republic
Innovation Drivers and Resources
•
Tradition of production cooperation in industry
•
FDI plays a role in providing advanced learning opportunities of workforce
•
Industry science relationships exist and are growing in recent years
•
Positive, indirect role played by non-govermental organisations
•
Growing supply of risk capital
16
Innovation Constraints
•
technology spin-offs from foreign-owned firms are limited
•
still lack of bridges between academic and industrial sectors
Innovation Policy Challenges
•
establish an integrated policy for framework policy
•
develop a legal framework favouring linkages and spin-off effects
•
introduce tax incentives for R&D and innovation
Poland
Innovation Drivers and Resources
•
long tradition of small scale entrepreneurship
•
growing innovation in manufacturing sector, mainly through acquisition of technology
•
large availability of business support organisations
Innovation Constraints
•
limited access to capital
•
low diffusion of quality and innovation oriented management techniques
•
relatively few links between research organisations and firms
•
danger of becoming branch plant economy with few foreign owned companies locating research or
strategic management functions
Innovation Policy Challenges
•
develop policy monitoring and evaluation practices
•
rationalise innovation support infrastructure
•
support labour market training
Hungary
Innovation Drivers and Resources
•
FDI brings in new products and processes
•
Suppliers networks around FDI help upgrade domestic firms
•
Availability of skilled people for industrial activities
•
Improving relationships between research sector and industry
Innovation Constraints
•
Foreign controlled firms rely on developments in parent company
•
Lack of venture capital activities
Innovation Policy Challenges
•
Secure funding for applied R&D
•
Envisage fiscal incentives for start-ups
• Ensure effective take off of venture capital supply
Source: see Innovation Policy in Six Candidate Countries: the Challenges Cyprus, Czech Republic, Estonia,
Hungary, Poland and Slovenia, September 2001, p. 24-41.
17
6
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