1 science, technology and innovation in the asia-pacific region: trends and policy jerry sheehan...

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Science, Technology and Innovation in the Asia-Pacific Region: Trends and Policy

Jerry SheehanOECD Science & Technology Policy Division

Asian S&T Forum: Innovation IndicatorsOECD Washington Center14 July 2005

2

The broader context for STI

Science, technology and innovation are receiving greater policy attention as their links to economic growth are more widely appreciated; government funding is growing accordingly.

Significant policy reforms across OECD to improve contributions of public research, foster business innovation, strengthen industry-science linkages (e.g., via public/private partnerships).

Innovation policy has been slow to adapt to the needs of the service sector, which accounts for growing share of output and employment in OECD economies.

Concerns about supplies of human resources for science and technology (HRST) are mounting across OECD at same time as migration patterns are changing.

Science, technology and industry are increasingly globalized, requiring further adaptation of policy to ensure benefits accrue to national economies.

3

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

4

Ensuring supplies of HRST

Global demand is growing for scientists & engineers – Employment in HRST occupations grew twice as fast as overall

employment between 1995 and 2000.

– Number of researchers in OECD grew from 2.3 million in 1990 to 3.4 million in 2000 (5.6 to 6.5 researchers per 10,000 employees)

Efforts to increase innovation performance will further increase demand for HRST– EU R&D objective would require about half a million researchers.

– Japan and Korea aiming to boost researchers and graduate enrollments, while development complementary skills

Will supply meet demand (numbers, skills?)– Demographic changes

– Changing (waning?) interest in science and technology even as enrollments grow.

– Patterns of international migration changing?

5

Driving innovation in service sector industries

0

10

20

30

40

50

60

70

Wholesale & retailtrade

Transport &communciations

Financialintermediation

Businessservices

Manufacturing

%

Services innovation driven by: Acquisition of equipment and

knowledge (especially IT) Training & education (share of

highly educated is twice that in manufacturing in many countries)

Intramural and external R&D (primarily in business services: computing, software, telecommunications)

Patterns differ by industry sector (e.g., finance versus business services)

Share of innovative firms, CIS3 Survey, 1998-2000

Source: OECD Science, Technology and Industry Outlook 2004.

6

Responding to globalization: Foreign affiliates play larger role

Czech Republic (5)

Hungary

United Kingdomi (1)

Turkey

Sweden (2)

Poland (4)

Portugal (3)

Norway

Netherlands (2)

Luxembourg (1)Italy (1)

Ireland

Germany

France

Finland

Austria

Japan

United States

-10

-5

0

5

10

15

20

25

30

-10 -5 0 5 10 15 20 25

Employment

%

%

Turnover

Growth in output and employment in foreign affiliates (manufacturing), 1995-2001

Source: OECD Science, Technology and Industry Outlook 2004

7

Asian-Pacific STI: Different industry structures

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Japan United States(2002)

Korea (2001) Australia(2002)

New Zealand

Fewer than 50 50-249 250 or more

R&D by size of firm

0

20

40

60

80

100

UnitedStates

Korea(2003)

OECD EU Japan Australia

%High-technology Medium-high technology Medium-low- and low-technology

Source: OECD, R&D Database, June 2005.

R&D by industry sector

8

Different institutional role in R&D and innovation

0

10

20

30

40

50

60

70

80

90

100

Sw

ed

en

Ko

rea

Jap

an

Un

ited

Sta

tes

OE

CD

EU

-25

Ch

ina

Au

stra

lia

Ne

w Z

ea

lan

d

Me

xico

Industry Higher EducationGovernment Private Non-Profit

By source of funding By performer

Source: OECD Main Science & Technology Indicators, June 2005

0

10

20

30

40

50

60

70

80

90

100

Jap

an

Ko

rea

Sw

ed

en

Un

ited

Sta

tes

OE

CD

Ch

ina

EU

-25

Au

stra

lia

Ne

w Z

ea

lan

d

Me

xico

Industry Government Other Abroad

9

R&D investments: US, Asia-Pacific and EU

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Sw

ed

en

Fin

lan

d

Jap

an

Ko

rea

Un

ited

Sta

tes

To

tal O

EC

D

EU

-25

Au

stra

lia

Ch

ina

Ne

w Z

ea

lan

d

Me

xico

2003 1995

Gross expenditure on R&D as % GDP


10

Differences in the performance of R&D

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Sw

eden

Aus

tral

ia

Japa

n

New

Zea

land

Uni

ted

Sta

tes

OE

CD

EU

-25

Kor

ea

Chi

na

Higher Education Government

R&D in public research organisations as % GDP

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Sw

ed

en

Fin

lan

d

Jap

an

Ko

rea

Un

ited

Sta

tes

To

tal O

EC

D

EU

-25

Au

stra

lia

Ne

w Z

ea

lan

d

Me

xico

%2003 1995

R&D in the business sector as a % of GDP


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Patenting rates increasing across the region, but significant difference remain

0

20

40

60

80

100

120

MexicoNew ZealandKoreaAustraliaOECDEU15United StatesJapanSwitzerland

2001 1991

Triadic patent families per million population

12

Patenting linked closely to R&D spending

AustraliaAustria

BelgiumCanada

Czech Republic

Denmark

Finland

France

Germany

Greece

Hungary

Iceland

Ireland

Italy

Japan

Korea

Luxembourg

Mexico

Netherlands

New Zealand

Norway

Poland

Portugal

Slovak Republic

Spain

SwedenSwitzerland

Turkey

United Kingdom

United StatesEU25

OECD

ChinaRussian Federation

1

10

100

1 000

10 000

100 000

1 10 100 1 000 10 000 100 000 1000 000

Industry-financed GERD (log)

Triadic Patent Families (log)

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Direct government funding of business R&D

0.00

0.05

0.10

0.15

0.20

0.25

Sw

eden

Uni

ted

Sta

tes

Kor

ea

Tot

al O

EC

D

EU

-15(

2)

Fin

land

Aus

tral

ia

New

Zea

land

Chi

na

Japa

n

Mex

ico

2002 1991

Government-funded business R&D as % of GDP

Source: OECD STI Outlook 2004

US=0.44

▲

14

Tax incentives becoming more generous

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

Italy

Ger

man

y

New

Zea

land

Gre

ece

Sw

eden

Icel

and

Bel

gium

Fin

land

Sw

itzer

land

Net

herla

nds

Irel

and

Uni

ted

Sta

tes

Uni

ted

Kin

gdom

Aus

tria

Aus

tral

ia

Fra

nce

Japa

n

Hun

gary

Can

ada

Den

mar

k

Kor

ea

Nor

way

Por

tuga

l

Mex

ico

Spa

in

Large firms SMEs

Rate of tax reduction for 1 unit of R&D spending, 2004. (Calculated as 1 minus the B-index)


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Transition to a service economy?

30

35

40

45

50

55

60

United StatesAustraliaNew ZealandJapanKorea

%

19802001


Share of market services in total value added, 1980 and 2001

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Stimulating innovation in services

0

10

20

30

40

50

60

70

Ge

rma

ny

Ice

lan

d

Po

rtu

ga

l

Lu

xem

bo

urg

Sw

ed

en

Au

stri

a

Be

lgiu

m

Fin

lan

d

Ne

the

rla

nd

s

De

nm

ark

Fra

nce

No

rwa

y

Gre

ece

Italy

Sp

ain

Ne

w Z

ea

lan

d

Au

stra

lia

Ko

rea

Jap

an

% Services Manufacturing..

Share of innovative firms

Source: OECD, Enhancing the Performance of the Services Sector, 2005.

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Human resources: how many researchers?

0

2

4

6

8

10

12

14

16

18

20

Finland Japan UnitedStates(1999)

NewZealand(2001)

Australia(2002)

Korea OECD(2000)

EU25(2002)

China Mexico(1999)

of which: business enterprise researchers Others

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.

Researchers per 1000 employment


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Supplies of skilled human resources: Tertiary education

Share of tertiary-level graduates in total employment, by gender, 2003.

20.8

33.4

27.2 33.6

15.4 34.6

40.7

30.6

33.8

0

5

10

15

20

25

30

35

40

45

50

MexicoEU15 (2002)New ZealandTotal OECD(2002)

KoreaAustraliaUnited StatesJapanCanada

%Women Men

Share of 45-64 year olds in employed tertiary graduates,

2003

Source: OECD Education database, June 2005

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Supplies of scientists and engineers

30.8 33.4 13.0 33.2 31.3 29.0 33.4 32.8 39.3 35.2

0

5

10

15

20

25

30

35

40

45

Ko

rea

EU

-15

Jap

an

Me

xico

OE

CD

Be

lgiu

m

EU

-19

Au

stra

lia

Ne

w Z

ea

lan

d

Un

ited

Sta

tes

%Science degrees Engineering degrees Share of women % S&E in 1998

Percentage of S&E degrees awarded to women

Share of S&E degrees in all tertiary level degrees

Source: OECD Education Database, June 2005

20

Globalisation: a growing share of R&D is in foreign affiliates

0

10

20

30

40

50

60

70

80%

2001 1995

Share of business R&D controlled by foreign affiliates

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Where are US outward investments going?

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

1994 2000

EU Canada Japan Rest of the world

Outward investments growing in all major regions (in nominal terms)

Growth fastest in “rest of world” (5X)– China US$ 506M in 2000

compared to 5M in 1994– Singapore US$ 548M in 2000,

compared to <50M in 1994 Motor vehicles, Radio/TV/Comms,

Computing equipment and non-pharmaceutical chemicals are largest components

As a share of industry financed R&D, expenditures actually declined, from 12% in 1994; 10.8% in 2000).

Outward R&D investments, US$ millions


22

Reflecting increasing capabilities of other non-OECD countries

0.0

1.0

2.0

3.0

4.0

5.0

Isra

el

Ch

ine

se T

aip

ei

Sin

ga

po

re

Slo

ven

ia

Ru

ssia

n F

ed

era

tion

Ch

ina

Arg

en

tina

Ro

ma

nia

%

2002 1996

Combined R&D of China, Israel and Russia equalled 14.7% of OECD’s in 2001, versus 6.4% in 1995.

Patenting by non-Members has increased, but EU, Japan and US accounted for 92.7% of global patent families in 2000, down from 94.4% in 1991.

Most rapid growth in US outward R&D investments is outside EU, Japan and Canada

R&D as % of GDP


23

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

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Often linked to national plans/strategies

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 long-term research, extract greater commercial value


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Japan

Second S&T Basic Plan (2001-2005) to establish a nation based on creativity of S&T.

Significant reforms to innovation system– Change in legal status of national universities and public

research organisations– More competitive funding– Promotion of technology transfer from public research (1998

Law) Intellectual assets and value creation—how to

encourage firms to invest more in intellectual assets (R&D, patents, human resources, org. capital) to improve competitive performance.

IP Nation: strengthening of IPR rights and protection Improving productivity and performance in Services.

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Funding for priority fields in Japan

2002 2003 2004

Life sciences 3,934 19.4% 4,270 20.9% 4,362 20.9%

Information and Telecommunications

1,758 8.7% 1,696 8.3% 1,758 8.4%

Environment 1,006 5.0% 1,099 5.4% 1,175 5.6%

Nanotechnology and Materials

856 4.2% 912 4.5% 940 4.5%

Energy 7,050 34.8% 6,714 32.8% 6,826 32.6%

Manufacturing Technology

164 0.8% 198 1.0% 203 1.0%

Infrastructure 2,554 12.6% 2,561 12.5% 2,836 13.6%

Frontier technologies 2,953 14.6% 3,029 14.8% 2,814 13.5%

100 million yen

27

Korea

Aim to double public expenditure on R&D between 2002 and 2007.

Established Innovation Headquarters (within Ministry of S&T) to coordinate innovation policy and R&D strategy.

Evaluation issues gaining in importance, especially as relates to identification of promising research fields.

Concerns regarding supplies of human resources in S&T, as student interest appears to be waning.

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Australia

Backing Australia’s Ability– Generate ideas and undertake research: Competitive grants;

research infrastructure; National ICT research centre; tax concession.

– Accelerate commercialisation: COMET programme, cooperative research centres; one-stop shop

– Develop skills: programmes to improve S&T teaching– All of government approach: science and innovation

ministerial council chaired by Prime Minister– AUD 1 billion per year 2006/7 – 20010/11

Comprehensive evaluation of all innovation policies underway.

29

New Zealand Growth and innovation framework

– focus on ICT, biotech and creative industries– Growth and innovation advisory board – “whole of government” approach to innovation policy

I3 Challenge– Defining national needs– Strengtehning long-term research capability– Extract greater commercial value

Reforms to university research– Performance-based Research Fund for universities– Centres of Research Excellence in areas of national interest– Research consortia (est. 2002/3) to match public and private

sector R&D

30

China Strategy of “Revitalizing the Nation through Science

and Education” basis for substantial reforms– Restructuring of public research organisations– Transformation of R&D institutions into business enterprises

and/or technical service organisations– Incorporation of large R&D institutions into large enterprises

Openness to international markets and technology– Foreign direct investment as key channel for technology

transfer and upgrading of capabilities– Implications for IPR regimes

Developments in IPR policy– Considerable policy development related to ascession to

TRIPS– Remaining issues related to enforcement

31

Overall assessment of China’s innovation system

R&D expenditures growing, but still low, especially in business sector.

Structure of R&D system improving, but system still not operating efficiently– Universities a small share of national R&D and conduct

relatively little basic research.– Industry’s innovative outputs (patents, new products and

services) low compared to R&D inputs. Domestic enterprise sector weak contributor to

innovation. Mobility of human resources remains a concern, but

educational output improving.

32

Large firms v. technology enterprises

Large and medium sized firms Account for most of output

and profits, as well as 37% of R&D.

R&D capabilities expanding, but declining R&D intensity.

R&D labs not operating at full capacity, under-utilised.

Output low compared to share of inputs, but improving

Technology enterprises Start ups and spin-offs from

government labs. Plan to convert 4000

government institutes into tech enterprises.

Universities encouraged to establish enterprises.

Most focus on commercialising R&D

Technological strong, market oriented management.

33

Human resources for R&D

Total number of S&T workers growing, but low as share of total population

Share of scientists and engineers in S&T workforce has declined.

Education system promises to be source of workers– 61% of undergraduates are in science and engineering– Graduate enrollments increasing; science and engineering

accounts for 70% of masters and 80% of PhD students. Brain drain remains a concern, although repatriation

of students improving.

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Policy challenges

Redefining role of government in innovation system--shift from government led to market led.

Improving innovation capabilities of business sector--through financial reform, absorptive capacity

Enhancing technology diffusion & commercialisation of R&D, while protecting science base.

Tapping into global knowledge networks related to science, technology, and personnel.

Framework conditions conducive to innovation: competition policy, IPR, financial stability, etc.

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Related OECD Work STI Outlook 2004 (www.oecd.org/sti/sti-outlook)

– Chapter 2 : Recent developments in STI policy– National responses to STI policy questionnaire

Innovation Policy and Performance (chapter on Japan) Public-Private Partnerships for Research and Innovation: A Review

of the Australian Experience (www.oecd.org/sti/innovation) Work with China

– Chapter 9 of STI Outlook 2002: Science and Technology in China– Promoting IPR Policy and Enforcement in China (conference summary):

An Emerging Knowledge-Based Economy in China? (www.oecd.org/sti/working-papers)

– Starting innovation systems review of China Upcoming National Innovation Systems reviews

– New Zealand (2006)– Australia (?)– China (2005-06)

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For more information. . .

www.oecd.org/sti/sti-outlook

www.oecd.org/sti/innovation

STI Outlook 2004

STI Outlook 2001 Drivers of Growth

STI Scoreboard 2003

1 science, technology and innovation in the asia-pacific region: trends and policy jerry sheehan...

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