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Innovation Systems and
Development Strategies
Thomas Andersson
Santiago, Chile
13 May 2004
IKED…

IKED addresses the emerging issues of the knowledge-based economy
(KBE), with a holistic view and a cross-sectional approach

Bridges between research/analysis and policy-making

Has a Nordic base, leveraging the Nordic region’s strength in KBE as well as
the Nordic need of learning from others to confront current challenges

Has a global reach – working with countries and institutions, aiming for
concrete reforms

Has partners/clients ranging from the most advanced to transition and least
developed economies

Collaborates with and includes all key stakeholders, including the private
sector and consumer side, in its activities/projects in order to promote
contructive dialogue and concrete results
IKED Integrated Approach
Integrity and
internal analysis
Direct involvement
in key reform
processes
Networks between
government, business
and experts
Policy fora with
continuous exchange and
international impetus
Flagship Publications 2004
• ASEM Proceedings: Globalisation and ICT: The Role of Government, Private
Sector and Civil Society in an Information Society for All
• World Competitiveness Proceedings: Innovative Clusters – A New Challenge
• Towards a New Growth and Innovation Policy in Norway
• Towards Effective Policies for Innovation and Enterprise in the Baltic Sea Region
• Handbook for Evaluation of Innovation Policy
• Flagship Conferences organized/co-organized by IKED 2003-2004
• Future Nordic Welfare Society (Stockholm, February 5, 2003)
• An Information Society for All, ASEM (Malmö, March 10-12, 2003)
• The Competitiveness Institute (Gothenburg, September 15-17, 2003)
• Baltic Development Forum (Riga, October 5-7, 2003)
• World Knowledge Forum (Soeul, October 15-17, 2003)
• Virtual Opportunity Congress (Sydney, December 16-17, 2003)
• INSME Roundtable (Malmö/Helsingborg, February 25-27, 2004)
• Measuring and Analysing Digital Divides (Beijing, March 24-26, 2004)
• Welfare policies in the Era of Globalisation (Havana, April 26-29, 2004)
Manufactured exports’ share in world
exports by technology groupings
Source: UNCTAD, World Investment Report 2002.
The Digital Divide and ICT Infrastructure
Source: ITU (2002).
• Room for higher productivity
- R&D and ICT can generate higher labor productivity
and TFP
- Synergy effects/enabling conditions
- Favorable cross-border resource flows
• Broadening basis for growth
- Using time better: hours worked, life-long health
- Encompassing SMEs
- Regional and sectoral broadening
- Untapped potential population groups:
immigrants, women, minorities
IKED
IKED 2004
Supply:
Science,
R&D
Increased potential
both directions through ICT
Innovations
Demand: Market
Ideas
technologies
Scientists
Contractors
Competitors
Clients
INNOVATION SPIRAL
Strengthening framework conditions to support innovation processes
Improving exchange
mechanisms among actors
Conditions for competition
Entrepreneurship
Career
Reward
Actors
Tax systems
Building new
companies
Venture
capital
Financial markets
Universities
Individuals
Labour markets
University/
Private sector Social capital
cooperation
Companies
Society
Skills
Competitive
intelligence
Applied research
Innovations,
IPR
Commersialisation Product development
Demand for knowledge
Growth and welfare
Education
ICT-infrastructure
Environmental sustainability
ICT
Weighted country positions
SWEDEN
Innovation
FINLAND
FINLAND
US
SWEDEN
CANADA
USA
JAPAN
SWITZERLAND
AUSTRALIA
KOREA NETHERLANDS
KOREA
SINGAPORE
WORLD
Tentative, based on international
estimates
DENMARK
Investment in knowledge assets, % GDP 2000
%8
Sweden
United States
Korea
Finland
Switzerland
Canada
Japan
OECD
Denmark
Netherlands
Germany
France
Norway
United Kingdom
Australia
Belgium
EU
Austria
Czech Republic
Ireland
Hungary
Spain
Italy
Portugal
Greece
Mexico
IKED 2004
IKED
Higher Education
Software
R&D
6
4
2
0
Government role in R&D varies considerably
across countries, % of GDP 2000
75
Mexico
Portugal
65
Poland
Turkey
55
New Zealand
Greece
Iceland
Australia
Italy
Share of government
in total R&D
45
Government-financed R&D in million
USD
Hungary
Norway
Czech Republic
France
Netherlands
Austria
Spain
Germany
United States
Denmark
35
Canada
Finland
United Kingdom
Switzerland
Belgium
25
Sweden
Japan
Ireland
Korea
15
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Gross expenditure on R&D as % of GDP
IKED
IKED 2004
Selected variables Innovation System
40
Hig h -Tech . a s % of
m a n u fa ct. ex por ts,
1 9 9 9 (2 001 W DI)
35
30
Pr ofession a l a n d
tech n ica l w or ker s a s %
of th e la bor for ce
(2 000 ILO)
25
20
Ter tia r y scien ce &
en g in eer in g
en r olm en t (2 001 W DI)
15
10
5
0
East Asia
Europe and
Central Asia
MENA
Africa
LAC
G7
Barriers to entrepreneurship
3,00
Administrative burdens for corporations
Administrative burdens for sole proprietor firms
Communication and simplification of rules and procedures
Legal barriers to entry
Sector specific administrative burdens
Antitrust exemptions
Licences and permits system
2,50
2,00
1,50
1,00
0,50
Ita
ly
U
ni
te
d
Ki
ng
do
m
C
an
ad
a
Au
st
ra
li a
Ire
N
la
ew
nd
Ze
al
an
d
D
en
m
ar
k
N
or
U
w
ni
ay
te
d
st
at
N
es
et
he
rl a
nd
Po s
rtu
ga
Au l
st
ria
G
re
ec
Sw e
ed
en
Sp
ai
n
Fi
nl
an
d
G
er
m
Sw
an
y
i tz
er
la
nd
Ja
pa
n
Be
lg
iu
m
Fr
an
ce
0,00
Source: OECD
IKED
IKED 2004
GDP-growth and entrepreneurship
7
Ireland
6
Luxembourg
5
U.S.
GDP Growth, 1989-99
4
Netherlands
3
Norway
Portugal
Spain
Greece
Iceland
Denmark
2
Japan
1
Belgium
Sweden
Finland
Italy
Switzerland
Austria
U.K.
France
Germany
0
4
5
6
7
8
9
10
11
12
13
14
Start-up Rates, 1988-96
Source: OECD, 2001
Source: OECD
15
High
Index
of Rule
of Law
Application
Low
Index
OECD
East
Middle
South
Eastern
Latin
Sub-
Former
Asia
East
Asia
Europe
America
Saharan
Soviet
Africa
Union
Application of Rule of Law Varies by Region
(based on aggregation of surveys/polls 1997-99*)
Source: Kaufmann, Kraay and Zoido-Lobaton (1999). "Aggregating Governance Indicators" and
"Governance Matters" PWRP 2195 and 2196. http://www.worldbank.org/wbi/governance
Patents invented in collaboration Share of scientific publications
with foreign inventors (%)
with a foreign co-author (%)
30
40
25
1985-87
1993-95
20
35
30
1981
1995-97
25
20
15
15
10
10
5
5
0
0
International co-operation in S&T
IKED
IKED 2004
“Bilateral Investment Treaties”, 2003
0
1 to 30
31 to 60
61 to 90
Source: UNCTAD
Source: UNCTAD, 2003
> 91
Attracting FDI
Development
objectives
Maximizing
benefits
of FDI
Minimizing
negative
effects of FDI
Challenges for National FDI Policies
Intensifying policy challenges
• Coordination to put in place comprehensive innovation policy
• Appropriate mechanisms for public funding of R&D
• Science-industry interplay: incentives for university and
scientists to work with industry, upgrading science parks and
incubators
• Reforms to strengthen conditions for provision of micro-funding
and better functioning venture capital markets
• Valuing knowledge, competence upgrading in SMEs, enabling
meeting specific needs through internal upskilling or
strengthened networking with regard to external competence
• Plugging into global knowledge networks while underpinning
traditional skills through institutional support
Scientists
Environment
Research
NGOs
Trade
Education
I.P.
Etc.
Firms
Finance
Industry
Unions
Labour
Innovation Policy Positioning: Traditional
Scientists
Environment
Research
NGOs
Education
Trade
Etc.
Firms
Finance
Industry
Unions
Labour
Innovation Policy Positioning: Implicit
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
Innovation Policy: Explicit Positioning
Note: The size of the region/country's box reflects the size of the FDI stock. Source: UNCTAD
Inward FDI stock, 2002