Download Human Capital and the National Innovation Strategy for

Human Capital and the National
Innovation Strategy for
Competitiveness
The case of Chile
Hernán Araneda
Head, Centre for Innovation in Human Capital
Fundación Chile
Prepared for the OECD/Germany Workshop
Advancing innovation: human resources, education and training
Bonn, 17-18 November 2008
About Fundación Chile
Who we are:
Fundación Chile is a non-profit, privately owned
corporation, created in 1976 by an agreement between
the Chilean Government and ITT Corporation (U.S.A.).In
2005 BHP Billiton became a co founder.
Our Mission:
To increase the competitivity of human resources and
productive sectors and services, by promoting and
developing high impact innovations, technology transfer
and management for the country.
“There are three proven models worldwide that are
examples for emerging economies: The
industrialization model of China, The outsourcing
model of India and the model of Fundación Chile”
(OECD)
“…by 1982, Fundación Chile had its first salmon farm
up and running. Seven years later it sold it to a
Japanese company for $22 million” (Businessweek)
“In 2004, its first year, the laboratory turned out 1.7m
partially fattened lilly bulbs, using up-to-date
biotechnology. Vitro Centre is a joint venture between
local investors, Fundación Chile and a Dutch firm… (The
Economist)
Strong Brand Name Recognition
Chile’s background

16 million people, native language spanish

Upper Middle income country, per capita GDP US$ 12.000
(purchasing power parity)

Average GDP Growth 1990-2005: 5,5 %

Global Competitive Index 2007: 26

Significant progress in poverty reduction: 44% to 18%
(1986-2006).

Unemployment rate: 7.3 (best in 8 years)

High coverage in primary and secondary education

Participation in Tertiary Education has tripled in the last
15 years.
Chile is performing fine in several
rankings…
GDP : Annual Growth
Rates Selected
Countries: average
1990-2005
POVERTY
% of population
2006
18%
Source: ECLAC
China
9.0
Singapore
6.1
South Korea
5.9
5.5
Chile
Indonesia
4.5
Mexico
3.1
Poland
2.6
OECD
2.5
Argentina
2.4
2.0
Brazil
Hungary
Czech Republic
1987
44%
1.3
0.6
Corruption Perception
Index
Ranking
Among Latin
1st
American Countries
Overall Ranking
Among 146
Countries
20th
Source: Transparency International
(www.transparency.org), 2005
But…

Percapita income still lacks behind the OECD (40% of
OECD average income level)

Unequal income distribution (0.55 Gini; 0.75 excluding
the highest income decile)

Economy too dependent on commodities: more R&D
investment required

Relatively low labour productivity

Low quality of learning outcomes across the education
system (Simce, TIMMS, PISA, IALS)

Uneven distribution of opportunities in higher education
and training

Low participation of women in the labour force
The country’s most important goal: doubling
percapita income in the next 15 years to
become a developed country
IMF: per capita GDP
(US dollars, Sept. 2006)
Singapore
(29,743)
Taiwan (29,244)
Spain (27,542)
N. Zealand
(25,655)
25.000
CHILE
Estonia (17,802)
Lithuania (15,443)
Argentina
(14,838)
Latvia (13,875)
12.737
Malaysia (11,915)
USA (43,236)
Canada (35,779)
Hong Kong
(35,396)
35.000
Finland (32,822)
Australia (32,127)
UK (31,585)
Sweden (31,264)
France (30,150)
Slovenia
(23,159)
Korea (21,887)
… and this is a major
challenge. Only once in our
history have we managed to
double our per capita GDP in
16 years: 1988-2004.
Business as usual is not sufficient; We must
decisively move towards a Knowledge Based
Economy
Growth depends less on capital and labour
accumulation than on efficient use of these factors
(Total Factor Productivity).
We need to move from static comparative advantages
linked to natural resources to a stage where the
incorporation of more knowledge into products and
services is crucial.
In brief - the capacity to transform knowledge into
wealth, the capacity to INNOVATE.
Are we prepared?


Over the last decade TFP contribution has fallen
dramatically…and forecasts are frightening.
TFP would account for less than 25% of Chile’s growth in
the 2007-2011 which compares poorly with the figure
for competing economies (40% to 50% according to The
Economist Intelligence Unit)
TFP contribution to growth 2007-2011
Growth
TFP
Capital
Labour
1984-1997
7.1
2.8
2.1
2.2
1998-2005
3.6
0.9
2.4
0.4
CHILE
Selected
countries*
* Bálticos, Europa del Este y países de rápido crecimiento de Asia.
Three decisions to move forward Innovation
1. Increasing public funding to support the strategy
(new mining tax).
2. R & D tax incentive for companies.
3. Creation of a National Innovation Council for
Competitiveness – National Innovation Strategy


To propose a roadmap for a development process based on
competitiveness supported by human capital and knowledge.
To look after policy coherence

Defining strategic objectives

Defining the roles of agents

Resource allocation aligned with the strategic priorities
INNOVATION STRATEGY
HUMAN
CAPITAL
BUSINESS
INNOVATION
(value creation)
R&D
strategycally
oriented
EFFICIENT INSTITUTIONALITY
(long term vision, “accountability”, regionally focused)
SELECTIVITY
Focus on economic clusters
COMPETITIVENESS
Selectivity: focus on clusters
Outsourcing
Serv.medio
ambiente
0.17
0.16
0.15
1 billón de pesos
Alto0.14
0.13
Alimentos
procesados de
consumo humano
Sectores que se
destacan
0.12
Potencial de
crecimiento (%)
Industrias
creativas
Crecimiento PIB en 10 a ños
0.11
Acuicultura
Servicios
financieros
Vitivinicultura
0.10
Plataforma de negocios para LA
Horticultura
primaria
0.09
Porcicultura y avicultura
Minería no met álica
Construcci ón
Educaci ón superior
Medicina
Logística y
Farmac éutica
especializada
transporte
Consultor ía
Bovino Alimentos proc. para
y ovino
consumo animal
0.08
Medio
0.07
0.06
Fruticultura
primaria
Plástico
Comunicaciones
0.05
Industria
química
0.04
Comercio minorista
Lácteo
Minería del
cobre y
subproductos
Productos Turismo 1
de madera
Silvicultura
Celulosa
y papel
0.03
Bajo
0.02
Metalurgia
0.01
0.00
Alto
1.3 1.5
1.7
1.9
2.1
2.3
2.5
2.7
Medio
2.9 3.1
3.3
3.5
3.7
3.9
4.1
4.3
Bajo
4.5
Esfuerzo para lograr la
competitividad necesaria
(1)
Dentro del sector de Turismo fue considerado el
tradicional
subsector de Turismo de Intereses Especiales, que tiene un dinamismo much
o mayor que el sector de Turismo
BUSINESS
INNOVATION
Science with
strategic
orientation
Human
Capital
Consolidate a business system aimed at the
creation of value by means of innovation – in all its
forms and aspects – as a competitiveness strategy
in global markets.
Strengthen a platform for the creation,
dissemination and application of knowledge
in a permanent and consistent research
effort coherent with the country’s
productive and social problems.
To establish an accessible and top-quality
life-long-learning system which allows the
country to rely on the relevant human
capital the Knowledge Economy requires
nd
8
Ko
re
Ch
a
F
ec
in
Re lan
d
p
Ch
ec
Ho a
lla
nd
Ire
la
n
Hu d
ng
ar
G y
re
ec
Ar
e
ge
nt
in
a
Ch
ile
M
al
ay
sia
Sp
ai
M n
ex
Co ico
lo
m
b
P o ia
rtu
ga
l
Br
az
il
Nz
ea
la
Human Capital Stock
Average years of schooling (ages 25-65)
14
12
10
7,89
6
4
2
0
Tertiary education graduates in the
workforce
Prof. and techn. as a % of the
current workforce
Fi
nla
nd
Ho
l
Ch la nd
ec
R
Nz e p
ea
la
nd
Ire
lan
d
Sp
a
Hu in
ng
ar
y
Ko
Co re a
lom
b
M ia
ex
M ico
ala
ys
ia
Ch
ile
Br
az
il
50
40
30
20
10
0
Educational attainment
of the adult population: the stock problem
Distribution of the Population aged 25 to 64 years by highest level of education completed, 2003
100
90
80
70
%
60
50
40
30
20
10
0
Thailand
2003/04
Paraguay
2002
Peru 2002 Brazil 2002 Indonesia
2002/03
Primary
Lower secondary
Jordan
2002/03
Chile 2003 Argentina
2002
Upper secondary
Uruguay
2002
Malaysia
2002
Tertiary (type B) education
Russian
OECD
WEI mean
Federation mean 2003
2003
2002/03
Tertiary (tipe A) education
Source: Education Trends in Perspective – Analysis of the World Education Indicators. UNESCO-UIS/OECD 2005
Basic competence (prose):
50% of the population in performance level 1
Adult Functional Literacy Survey (1998)
100%
90%
80%
70%
PERFORMANCE LEVEL
60%
50%
40%
Level 4/5
Level 3
Lever 2
Level 1
30%
20%
10%
Ch
ile
cR
ep
ub
lic
Hu
ng
ary
Po
rtu
ga
l
Cz
e
Ge
rm
an
y
Sw
ed
Un
en
ite
dS
Un
tat
ite
es
dK
ing
do
m
0%
% of Enrollment in Higher Education
90
80
70
60
50
1991
2004
40
30
20
10
0
Chile
S.Korea
Estonia
Ireland
Latvia Lithuania
Primary & Secondary Education: high
coverage, low quality of learning outcomes
(TIMSS, PISA, SIMCE).
PRIMARY EDUCATION COVERAGE BY INCOME QUINTILE, 1990 - 2003
100
95,6 98,5
96,9 99,1
97,7 99,5
97,5 99,5
98,9 99,5
I
II
III
IV
V
90
70
60
50
40
30
20
10
0
Income Quintiles
1990
SECONDARY EDUCATION COVERAGE BY INCOME QUINTILE, 1990 - 2003
2003
100
80
94,5
98,8
87,1
80,8
77,2
73,9
96,9
94,2
92,0
87,7
90
Percentages
Percentages
80
70
60
50
40
30
20
10
0
I
II
III
IV
Income Quintiles
1990
2003
V
Tertiary education enrollment by income
quintiles
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
-
1990
1992
1994
1996
1998
2000
2003
2006
I
4,4
7,9
9,1
8,8
8,7
9,6
14,7
19,8
II
7,7
9,8
10,2
15,4
13,3
17,7
21,4
25,1
III
12,4
13,0
17,4
21,5
23,2
31,7
33,1
33,3
IV
22,0
23,9
32,1
35,2
38,9
43,0
46,9
47,2
V
40,7
41,2
54,8
60,0
65,4
67,4
73,6
67,1
Participation in training
ADULT PARTICIPATION IN TRAINING
(15 to 60 years people)
16
14
13,9
13,6
Percentage
12
9,1
10
8
6
4
2
0
CASEN Survey 1998
CASEN Survey 2000
CASEN Survey 2003
Most participants in training come from big companies…
PARTICIPATION RATE IN TRAINING PROGRAMS BY ENTREPRISE SIZE
45,0
38,6
40,0
35,0
Rate
30,0
26,0
25,0
18,3
20,0
15,0
10,0
6,0
5,0
0,0
1 to 9
10 to 49
50 to 199
Number of workers
Source: SENCE and CASEN Survey 2003
200 or more
LLL drivers and issues (1)

High coverage in initial education but low quality of
learning outcomes (TIMMS, PISA, etc.)

A significant % of adult population without initial
education lacking basic skills

Students lacking academic and employability skills for a
friendly school-to-work transition

Increasing demand for post-secondary learning
opportunities: education seen as the vehicle for social
mobility (high private returns, etc.)

Expansion of the market of post-secondary ed. and
training providers (esp. private universities) but no public
information about graduates labor market outcomes

Concern about quality and relevance of programs,
accreditation frameworks still to be piloted
LLL drivers and issues (2)

Disjointed “systems” providing LLL and training
opportunities,

Public effort on training limited to a tax incentive for
companies; no funding arrangements for individual
workers.

Vocational education not well funded by government: poor
quality and relevance for industry

A significant amount of (competent) workers without
formal recognition for their skills

Lack of a shared vision and agenda among ministeries
relevant for LLL: education, labour, economic
development.
LLL drivers and issues (3)

Adult education, technical-vocational education,
workforce training and career guidance systems
seen as missing pieces in the 90’s reforms

Learning outcomes and not only “inputs” and
“processes” as the best approach once universal
coverage is achieved

Lack of a coherent public policy on vocational
education (both secondary and postsecondary)
Strategy

Main purpose: design and piloting new arrangements,
capacities and funding mechanisms supporting LLL

Multisectorial: Min of Education; Min Labour & Social
Affairs; Min of Economic Development; Industry
Associations; companies

Combination of remedial actions; learning innovations;
institutional innovations; ”demostrative projects”

Diverse clientele:
adults with low educational attainment (unemployed
/ bad jobs);
young people attending VE;
Workforce
A systemic view from
the National Competency System
Labour Market
Intermediation /
Information
Services
HR Management
(recruitment, selection,
performance appraisal,
training, sucession plans,
rewards, etc.)
Industry
Endorsed
Competency
Standards
Competency
Assessment &
Certification
System
NATIONAL LABOUR COMPETENCY SYSTEM
Technical
Vocational Education
(secondary,
postsecondary)
National
Training System
Where we stand
15 economic
sectors
15 industry specific associations, 150
leading companies
500 occup
standards, +
employability skills
models (8
competencies) +
entrepreneurship
skills
MOBILIZE
2.STAKEHOLDERS
Movilizar Actores DEFINE
Claves
OCCUPATIONAL
3.Definir
Estándares
AND
EMPLOYABILITY
SELECT
AND
1.Seleccionar e
SKILLS
IDENTIFY
Identificar
Sector
STANDARDS
INDUSTRY
Productivo
UPDATE
8.Actualizar Estándares
STANDARDS
según
Necesidades
AS NEEDED
-Web site competency
standards
-New regulation
-Media coverage
PROMOTE
AND
7.DISSEMINATE
Promover y
Difundir
40.000 workers certified
Employability skills for
7.000 students
KEEPING
MANTENIENDO
LA
THE
VENTAJA
COMPETITIVE
COMPETITIVA
EDGE
VALIDATE
STANDARDS
4.WITH
Validar
STAKEHOLDERS
Estándares
con Actores
Claves
ADAPT CURRICULA
EVALUATE AND
5.Adaptar
Currículum
y
AND TRAINING
TO
6.
Evaluar
y Certificar
CERTIFY
WORKERS
/
Formación
según
STANDARDS
Trabajadores
STUDENTS
Estándares
Methodology
transfer to
300 VET
providers
Where do we stand against the LLL
agenda?

Several pilots and demostrative projects articulating
supply and demand at a regional level. Impact
evaluation going on (WB).

Some of the regulations needed in place or in final
stage of approval (ie National Competency System)

Competency “movement” underpinning curriculum
development in most higher institutions across the
country. “Modules” and “Competency Based VET
Programs” being developed.

National Agenda for Innovation and Competitiveness, a
new driving force for LLL in the country, as far as it
supports human capital in strategic economic clusters
Current issues

Competing policy agendas still a problem: M.Education
too busy with the unfinished school reform and
M.Labour with the pension reform and persistent youth
unemployment

A new policy for secondary and postsecondary TVET

Qualifications framework informing pedagogical
innovation and new learning materials

Quality framework for QA and accreditation

Diversifing funding mechanisms for learners beyond
initial education

Innovation in education & training.