gauteng innovation strategy 29 november 2010

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Gauteng Innovation Strategy

29 November 2010



Table of Contents

INTRODUCTION

STRATEGIC OBJECTIVES

INTERVENTION MECHANISMS

WAY FORWARD

2



Table of Contents

INTRODUCTION



WAY FORWARD

3



Innovation is the means by which we are able to do more, with less

A useful metaphor in an economy is in the kitchen. To create valuable final products, we

mix inexpensive ingredients together according to a recipe. The cooking one can do is

limited by the supply of ingredients, and most cooking in the economy produces

undesirable side-effects.

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If economic growth could be achieved only by doing more and more of the same kind of

cooking, we would eventually run out of raw materials and suffer from unacceptable levels

of pollution and nuisance.

Human history teaches us, however, that economic growth springs from better recipes,

not just from more cooking.

Paul Romer



Innovation and Development

Development objectives for Government:

Creating decent work and building a growing, inclusive economy

Strengthening the developmental state and good governanceBuilding cohesive and sustainable communities

Stimulating rural development and food security

5

Better health care for all

Promoting quality education and skills development

Intensifying the fight against crime and corruption



Innovation and Economic growth

Why is innovation important for us to focus on?

Is there a relationship between innovation and economic growth?

Is there a relationship between innovation and job creation?

What are the mechanisms by which innovation activity leads to a change in society?

6

How do we stimulate these mechanisms to perform better?

How do we measure success?



The fastest growing economies in the world also appear to havethe highest growth in patent production.

There is a 1-1 correspondence of the countries that have hadthe highest per capita GDP growth between 1985 and 2005, tothose who have increased most the number of patents per 1000citizens.

Although these figures do not explain the direction of causality,i.e. whether innovation creates economic activity, or the otherway around, they do clearly indicate the close relationshipbetween the two variables.

Rank Per Capita GDPGrowth

Growth inPatents per 1000

1 China China

2 Rep. of Korea Rep. of Korea

3 Thailand Thailand

4 Singapore Singapore

5 India India

7

0.51.01.52.02.53.03.54.04.5

1 9 7 9

1 9 8 1

1 9 8 3

1 9 8 5

1 9 8 7

1 9 8 9

1 9 9 1

1 9 9 3

1 9 9 5

1 9 9 7

1 9 9 9

2 0 0 1

2 0 0 3

2 0 0 5

Per Capita GDP (Index normal at 1985)ChinaIndiaSingaporeSouth AfricaThailandRepublic of Korea

0

5

10

15

20

25

1 9 7 9

1 9 8 0

1 9 8 1

1 9 8 2

1 9 8 3

1 9 8 4

1 9 8 5

1 9 8 6

1 9 8 7

1 9 8 8

1 9 8 9

1 9 9 0

1 9 9 1

1 9 9 2

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

Patents per 1000 Citizens (Index normal at 1985)

China

Republic of Korea

Singapore

South Africa

Thailand

Source: World International Patent Office, United Nations Statistics



Innovation in past periods is highly correlated with economicgrowth in current periods…

0%

1%

2%3%

4%

5%

6%

0% 1% 2% 3% 4% 5% 6%

P a

t e n t

G r o w

t h

Per Capita: GDP Growth 1995-1999, Patent Growth 1990-1994

-

-2%

0%

2%

4%

6%

8%

10%

-4% -2% 0% 2% 4% 6% 8% 10%

P a

t e n

t G r o

w t h

Per Capita: GDP Growth 1990-1994, Patent Growth 1985-1989

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Economic GrowthEconomic Growth

0%

2%

4%

6%

8%

10%

12%

0% 2% 4% 6% 8% 10% 12%

P a

t e n

t G r o

w t h

Economic Growth

Per Capita: GDP Growth 2000-2004, Patent Growth 1995 - 1999

Increase in patents ~ Increase in per capita GDP

South Africa’s patent growth 2000-2004: 3%

South Africa’s GDP per capita growth 00-04: X%

Importantly – Patent growth for South Africa between2005 and 2010: 3%

Does this mean that economic growth in SA will belimited to ~3% for the period 2010-2014? Indications are

that it will be…



What about employment?

Double-edge sword

Job losses: – Process innovation can lead to substitution of capital for labour because of productivity gains

through new technology – Product Innovation can also lead to job losses due to replacement of less competitive products;

Job creation – More efficient roduction rocesses lead to an ex ansion of roduction

9

– New products require more people to work in new factories

It is all about which of these effects dominate

Merikull found “ innovation positively affects employment growth resulting from the string effect of process innovation in medium- and low-tech industries”



Table of Contents

INTRODUCTION



WAY FORWARD

10



Innovation Strategy Statement for Guateng

To accelerate innovation in all its forms, in order to bolster and support the broader strategic objectives

of employement creation, and sustainable social and economic develo ment

11



Based on the relationship of innovation within each group, wetherefore have the following system

Private Sector Government

1

3

13

Society

2 4 1: Innovations which helpbusiness improve efficiencyand productivity

2: Innovations which satisfyconsumer demands (i.e. new

products)

3: Innovations which helpgovernment deliver services

4: Innovations which satisfy

citizen needs



The two objectives of the strategy are to support economicgrowth, and government service delivery

Objective 1:

To improve the competitiveness ofthe Gauteng economy, in particular aset of strategically identified sectors

Objective 2:

To improve the efficiency of theprovincial government in

delivering services

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Impact:

Improve internal efficiency of

organisationsImprove external or environmentalefficiencies

Create new local value orknowledge chains

Impact:

Improve ability of governmentto purchase and driveinnovations

Use government demand tostimulate innovation in strategicareas



Improving economic competitiveness

InternalEfficiencyInternal

EfficiencyIndustrialefficiencyIndustrialefficiency

IndustrialInnovation Unit

IndustrialInnovation Unit

Communicationand access to

information

Communicationand access to

information

Social Networks(Innov8)

Social Networks(Innov8)

Spaces forinnovationSpaces forinnovation

Science Parks(TIH, JSP)

Science Parks(TIH, JSP)

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Economic

Competitiveness

Economic

Competitiveness

Environmental

Factors

Environmental

Factors

Awareness

Awareness

Evangelism

Evangelism

Standards andRegulations

Standards andRegulations

SABSrepresentations

SABSrepresentations

Inclusive

Innovation

Inclusive

Innovation

Open Innovation

Networks

Open Innovation

Networks

Local Knowledgeand IP

Local Knowledgeand IP

Create localvalue chainsCreate localvalue chains

Incubation andentrepreneurship

Incubation andentrepreneurship

PromoteBusiness R&D

PromoteBusiness R&D

Subsidisation

e.g. Vouchersystem

Subsidisation

e.g. Vouchersystem



Improving the ability of government to deliver services efficientlyand effectively

Generic InnovationProcurement

Generic InnovationProcurement

Channels forinnovations togovernment

Channels forinnovations togovernment

Identifyprocurement

strategies withinPFMA / MFMA

Identifyprocurement

strategies withinPFMA / MFMA

17

GovernmentEfficiencyGovernmentEfficiency

Strategicinnovation

procurement

Strategicinnovation

procurement

Governmentdemanding specific

innovation

Governmentdemanding specific

innovation

GovernmentInnovation

Competition

GovernmentInnovation

Competition



The Industrial Innovation Unit will ultimately seek to improve themarket share of Gauteng-based industries

Company

Labour

Technology Products

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Market Share

By improving the productivity of labour and capital through innovative technologies, companies are able to produceeither BETTER or CHEAPER products. This allows them to capture a LARGER MARKET SHARE as they are moreCOMPETITIVE

TECHNOLOGYQUALITY

P RICE

COMPETITIVENESS MARKET SHARE



How will this be achieved?

Industries identified by the Gauteng Industrial Policy will be prioritised. These include low- andmedium-technology industries, as well as certain high-tech industries such as automotive production

Companies within those sectors will be invited to participate in industrial development, design andengineering programmes. Examples include rapid prototyping, industrial re-engineering and designmanufacturing

19

,

within the Innovation Strategy

Sustainable development and manufacturing will form a core part of this intervention, to ensure thatGauteng’s industries are at the forefront of environmentally conscious manufacturing and production



Innovation Vouchers can help foster innovation, and improveaccess to new ideas

The Innovation Voucher allows you to concentrate on running yourbusiness while knowledge providers come up with a solution

20

IDEA KNOWLEDGE PROVIDERSFinancesTime

ExpertiseNetworks

INNOVATION VOUCHERS



Innovation Vouchers allow organisations to ‘purchase’ researchfor their own ideas

Certain entities are registered as Knowledge Providers, including amongst others: – Private organisations – Universities and academic institutes

– Private individuals

Companies or individuals may then purchase “Innovation Vouchers” from the IDO for a certainamount, say R50k. This can then be redeemed at one of these Knowledge Providers for research

21

Companies could purchase Innovation Vouchers, and provide them as CSI to start up companies,NGOs, Charities, etc.

Caution needs to be taken to ensure that the voucher system is not abused

Similar systems have proven exceptionally successfully elsewhere in the world – the challenge is todevelop a system that is appropriate for Gauteng



Government Procurement can be used to drive innovationthrough competitions, focussed on public service innovation

1. Opencompetitionapproved by IDO

2. Opencompetitiondriven bystrategic

objectives

3. Applicationsreceived fromcompanies andprocessed

5. Phase 1demonstration of

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• Green Energy Technologies(including wave power, gasturbines, energy efficiency)

• Social Housing

• Health care provision

• Defence and Military Applications

• Low-emission vehicles

• Advanced Materials technology

. os

Interesting Ideasselected

feasibility – lasting 6 monthsand worth R500kto R1m

. ssessmen o

projects forPhase 2 Funding

7. Phase 2 – Prototypedevelopmentlasting multipleyears, R1 – 10m

8. Leads tocompetitiveprocurement bydepartment andproduct tomarket



INTRODUCTION



WAY FORWARD

Table of Contents

24



Only certain aspects of the strategy are being actively pursueddue to budgetary considerations

25



END OF PRESENTATION

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THANK YOU

Comments to be submitted by 10 December 2010 Eunice Lottering [email protected]

gauteng innovation strategy 29 november 2010

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