Success factors for the upgrading of a national research and innovation systemPolicy learning, institutional reform and innovation performance in Austria

Matthias Weber

ANU, Canberra, 30 July 2008

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What this talk is about …

What are the key features of Austria‘s among the leading research and innovation systems in Europe?

What have been the reasons behind this development? What are the next challenges ahead ? What can be learned from the experience for RTI-policy

in general?

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Overview

Part I: The basic figures – key indicators Input – expenditures and flows Output – internationalisation, patents, publications, etc. Some comparisons with other countries

Part II: The phases of change in RTI-policy Part III: The main drivers behind the change 1993-2008

Institutional change Instrumentation Policy learning

Part V: Conclusions Part IV: Outlook on current and future agendas

Part I: The basic figures and key indicators

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The Austrian Innovation System – from 1993 to 2008

1993: Low and stagnating R&D expenditures at ~ 1,5%2008: Above average R&D expenditures, still growing ~ 2,6%

1993: Public R&D expenditures mostly for universities, and as GUF

2008: Share of universities declining, confronting funding shortages

1993: Comparatively few R&D performing firms and employees in R&D 2008: Strong growth in no. R&D performing firms and R&D personell

1993: Firms are mainly adopters, not innovators2008: Share of innovative firms above average (esp. among SMEs), but emphasis still on incremental innovation

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The Austrian Innovation System – from 1993 to 2008

1993: Public R&D expenditures not geared towards economic and social returns 2008: Strong orientation towards economic returns, limited importance of social returns

1993: Few innovative clusters; resource-intensive industrial structure, low- and medium-tech 2008: Internationally recognised strengths in selected medium- and medium-high-tech areas

1993: High share of foreign investment in R&D, especially in technology-intensive sectors 2008: Further increase of foreign investment in R&D, reflecting appreciation of the quality of the research location

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The Austrian Innovation System – from 1993 to 2008

1993: non-university research sector is small and fragmented 2008: no significant improvement of public research centres, but establishment of a new kind of temporary RTI-infrastructure (competence centres)

1993: RTI policy focuses on individual organisations2008: RTI policy focuses on relationships between actors of the innovation system

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The shift towards a high level of R&D expenditures…

Federal & states

Foreign

Share of R&D in GDP

Corporate

Other

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… and moving towards the 3%-target

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… and 2/3 of corporate funding, of which 1/3 comes from abroad

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An increase well above OECD-average…

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Public R&D expenditures go mainly to universities, but stagnating after univ. reform

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Emphasis on medium-high-tech rather than high-tech sectors…

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… but some with very high R&D rates

Radio, TV & communication: 41 % Motor vehicles and components: 12 % Electrical generation and distribution equipment: 10 % Machinery and equipment: 8 %

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The output side – positive development of summary innovation index

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Summary Innovation index – 5th position in Europe in 2005

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Output indicators still weaker than input side …

Output applications

Output IPR

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Patenting activities of small countries – good performance in recent years

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… and based on a moderate level of specialisation – little structural sensitivity

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Changes in revealed comparative advantage between the early 90ies and early 00s

Part II: The phases of change in RTI-policy

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Phase 1: The early years - institutional funding and two funding agencies

Capacity-building at the universities in the post-war period Few dedicated public research capacities (e.g. nuclear, Academy

of Sciences) Creation of two highly autonomous funding agencies in the 60ies

Austrian Science Fund (FWF) Austrian Industrial Research Promotion Fund (FFF)

Essentially a „science-push“ approach Remained the main pillars of funding system until the Nineties

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Phase 2: First programming experiments in the eighties and early nineties

Individual project funding and administration by ministries very common

First programming experience in the late 70ies and early 80ies (Energy, transport)

European Recovery Programme (ERP) to fund innovation and new technologies in the crisis-struck state-owned industries

Diffusion-oriented measures (e.g. technology centres, innovation agency)

Emphasis on diffusion and adoption of new technology Some specific „problem-driven“ programme initiatives

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Phase 3: Second-generation programming since mid-90ies

Recognition of the need to move from a „follower“ to an „innovator“, Triggered by accession to EU in 1995 From importing and adopting technology to an advanced

innovation-led economy Upgrading the low- to medium-tech industrial structure Recognition of systemic deficits, e.g. in science-industry and

science-science relations Second-generation programmes, follow up to new

strategy thematic programmes in some technological and mission-

oriented fields Strong emphasis on structural programmes, addressing

systemic deficits

Inspired by National Innovation Systems approach

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Phase 4: Institutional adjustment and consoli-dation of the innovation system since 2000

Improve efficiency by correcting lack of coherence and organisational fragmentation

Institutional adjustment and consolidation of the innovation system Increase and stabilisation of R&D funding Reform of the funding agencies Strive for excellence at universities and new institutions (IST

Austria, Biotech centres, …) Regionalisation of innovation policy Council to improve policy coordination/competition and

strategic guidance Strengthen evaluation and learning Using of EU-policy in the national interest

New Public Management and context steering – separation of policy and implementation

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Phase 5: Third generation initiatives and refinement of portfolio since ~2004

New generation of improved thematic and structural programmes (e.g. COMET, KIRAS, IV2S, provision, etc.) Combining a range of activities (research, training,

dissemination, etc.) Introduction of tax credits (2002) Portolio view of all funding instruments – system

evaluation Institutional funding Direct funding Indirect funding

Recognition of complexity and multiple levers of change („MAP/MIP principle“)

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Phase 6: The next stage – strategic RTI-policy?

The next stage – strategic policy ? New instruments: demand-side policies Anticipation of needs and opportunities New role for ministries

Recognition of the need for strategic guidance, beyond structural improvement of the innovation system

Strategic policy in a complex and fast-changing environment Structuring Orientation Adaptation and anticipation

Goal-oriented steering - transition management Balance between long-term strategic objectives and autonomy

Part III: The main drivers behind the change 1993-2008 Institutional adjustment Intervention instruments Policy learning and the ability to change

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Major institutional changes – overview Institutional adjustment

University reform I.S.T. Austria National Foundation Funding agencies Regional institutions European embedding Policy coordination

Intervention instruments Direct funding (bottom-up, structural programmes, thematic

programmes) Institutional funding Indirect funding

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Major institutional changes – overview Policy learning and the ability to change

Monitoring and reporting mechanisms Evaluation The role of the Council for Research and Technology

Development RFTE Anticipatory intelligence Absorptive capacity

Part III: The main drivers behind the change 1993-2008 Institutional adjustments

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Institutional changes between 2001 and 2005

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University reform 2002

Formal autonomy of universities Independent legal entities since 2004 Performance agreements between the Ministry for

Science and Education and the universities Funding partly tied to performance in research and teaching Growing weight of international publications – „excellence“

Annual Intellectual Capital Reporting Increase in third-party funding

Increase of budget for Austrian Science Fund FWF

Universities of Applied Sciences/Polytechnics gain in importance

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Institute for Science and Techology Austria I.S.T. Austria

Part of the strategy for excellence in research – leading research university

Attracting the best brains for research and post-graduate training

International top-level basic research Established in Gugging near Vienna in 2006 Target for 2015

~ 300 researchers in 25-30 research groups Currently looking for a president Active transfer policy foreseen

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National Foundation for Research,Technology and Development

Established in 2003 Ensure a continuous financial flow to major research

funding and performing organisations Special Funds 2001

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Funding agencies

Separation of political level and implementation Establishment of Austria Wirtschaftsservice AWS (2002)

as a federal bank charged with financing and handling economic promotion schemes

Establishment of Austrian Research Promotion Agency FFG (2004) combining research and advisory services operating in the field of

national and international application-oriented research and technology promotion schemes

Major problems of integrating four different agencies Re-organisation of Austrian Science Fund FWF (2004)

Clear agency function and efficient internal management Unclear strategic responsibilities between ministries and

agencies Overlapping responsibilities between agencies

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Regional institution building

Continuous reinforcement of regional innovation capacities and infrastructures Intermediaries Regional research centres Active cluster policies in some States

State-Federal co-financing schemes Competence centres FFG – basic programmes: bottom-up funding

Limited coordination between State and Federal level Focus on States on innovation policy

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Embedding in and instrumentalisation of EU RTI policy

Accession to the EU in 1995, but participation in the framework programmes much earlier

Net (financial) benefits from participation, but in particular better integration in international research networks „Rate of return“ as the key argument in many policy debates

European Research Area Limited influence of EU-policy objectives (Lisbon, Barcelona)

on national agendas beyond fulfilment of reporting requirements

Instrumentalisation of EU-funding for national strategies and matching of national programmes to European funding priorities

Active participation in ERA-Nets

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Policy coordination

Decentralised and compartmentalised responsibilities in ministries Strong ability to shape initiatives within the confines of

responsibilities Limited incentives for horizontal coordination Absence of effective strategies that would have a binding

character Continous problems with vertical coordination between

ministries and agencies Mixed performance of State-Federal coordination

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Council for Research and Technology Development

Established in 2000 to advise government Strong role due to influence on funding strategy

Recommendations to guide budgetary allocations by Ministry of Finance

Justification required for new funding initiatives by ministries Competition between instruments and ministries

Strategy papers gave important impulses for policy debates

Imposes at least some horizontal coordination Sustainable development Gender and Human Resource issues

Part III: The main drivers behind the change 1993-2008 Intervention instruments

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Introduction of new policy instruments

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Portfolio of funding instruments (I)

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Portfolio of funding instruments

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Indirect promotion – tax incentives

Introduced in 2002 Three main mechanisms

Section 4 (4) 4 Research allowance: basic research, software, investment in buildings, land and machines, later on also contract research !

Section 4 (4) 4a for inventions Also 8% premium for loss-making firms

Estimated at about 500 Mio €/a Regarded as very „friendly“ to firms, in particular large

firms (no cap!) Currently overlaps with bottom-up project funding by

FFG under scrutiny

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Bottom up schemes

Strong reliance on bottom-up project funding by individual organisations Basic research by Austrian Science Fund FWF, and Applied industrial research by Austrian Research Promotion

Agency FFG Bridge & Translational Research to better link bottom-

up funding at the interface between basic and applied research

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Thematic programmes

Strengthening of thematic programmes in both technological and mission-oriented areas

Technology programmes Generic technologies like IT and life sciences „Promising niches“ like aeronautics

Mission-oriented programmes Energy, sustainable development, mobility, security, etc. Mostly combination of mission-oriented objectives and

industrial objectives Mostly collaboration projects in response to thematic

priority themes/tasks Comparatively high levels of funding combined with a

high level of requirements

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Structural programmes

Range of programmes aiming at improving linkages within the innovation system

Collaborative initiatives, often of a large scale Competence and Excellence

COMET - Competence Centers for Exellent Technologies/ das neue Kompetenzzentren-Programm

Kplus, K-ind/K-net - „old“ competence centre programme Human resources

brainpower austria FEMtech and w-fFORTE Research at school

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Structural programmes

Cooperation and Innovation AplusB – Academia + Business: support to spin-offs COIN - Cooperation and Innovation FHplus in COIN – competence building at polytechnics CIR-CE – Research cooperation with central/eastern Europe PROKIS – Support to cooperative research centres protecNET in COIN - SMEs REGplus – Cooperation of regional impulse centres Josef Ressel-Zentren – research labs for polytechnics Research Studios Austria – promotion of applied research

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Structural programmes – from Kplus to COMET

Kplus inspired by Australian CRCs Main focus on improvement of science-industry relations Bottom-up applications with priority-setting effect on the

research landscape Kplus most demanding – separate legal entities (BMVIT) Kind and Knet with a focus on networking and knowledge

exchange (BMWA) Meant to be temporary promotion in nature, but… Since 2006 replaced by COMET programme -

Competence Centers for Excellent Technologies Three levels of size, number and quality requirements Highly selective process As before, combination of activities : research, training,

dissemination

Part III: The main drivers behind the change 1993-2008 Policy learning and the ability to change

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Building a learning and intelligence capacity

Monitoring, analysis and reporting schemes TIP Technology, Innovation, Policy Counselling programme

since late 90ies Commissioned studies by ministries and council Annual Research and Technology report EU and OECD reporting mechanisms (ERAWATCH,

Trendchart, Country reviews, etc.) Emergence of an evaluation culture

Platform evaluation established in 1996 Programme and institution evaluations quite common BUT: Emphasis on legitimation rather than learning (e.g. IV2S)

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Building a learning and intelligence capacity

Anticipatory intelligence In general, limited forward-looking capacity and strategic

capabilities Technology & Socio-Economic Delphi in late 90ies Recently, several forward-looking strategy processes (Vienna,

National Research Dialogue, individual ministries, …) Absorptive capacity

Limited „in-house“ strategic intelligence capacity in ministries and agencies

Ability to „translate“ intelligence insights into needs of policy-making

Conclusions

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Conclusions No grand masterplan…

At best, orientating character of overarching strategies Broad range of often uncoordinated distributed initiatives

First get the structures and the basics right… Modernisation of the entire structural and institutional set-up of the

research and innovation system Quality of the human resource base Upgrading of the innovation landscape on a broad basis Mobilize industry by offering attractive framework conditions BUT: Limited attention to societal issues

Ability to introduce major changes Sometimes even against fierce resistance

Policy competition and coordination High degree of autonomy of policy entrepreneurs Improvement of quality of initiatives, but barriers to policy

coordination across ministries

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Conclusions

Building on a consolidated knowledge base and understanding of the RIS Systemic intelligence to identify and justify interventions

RTI policy as a continous improvement and adaptation process Evaluation and learning culture RTI policy to keep pace with processes of change in innovation

and research (e.g. open innovation, internationalisation, etc.)

Sufficient to catch up, but also enough to play in the „premier league“ ?

Outlook on current and future agendas

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What are the current concerns in Austrian RTI policy ?

Three main functions in complex innovation systems Structuring the innovation system

Effectiveness and efficiency of the funding system and instrument portfolio

Reform and re-positioning of public research organisations Orientating the innovation system

Need for more high-tech and pockets of excellence Making use of public procurement to foster innovation Emphasis on new missions and policy coordination Human resources in S&T !!

Adapting the innovation system Develop an ability of „strategic governance“ without central

steering Anticipation of future needs and opportunities

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The next phase: Challenges for „strategic RTI-policy“ of a leading R&I system

Requirements of being among the leading countries Adjustment of the economic structures to high-technology

and/or upgrading of medium-tech sectors Enforcing quality standards in research Establishing (some) areas of global excellence in science Integration in global knowledge networks

Strategic approach to seizing research and innovation opportunities in the global context Early and selective positioning in key emerging areas

Tackling major societal challenges Building on a consolidated system of research and innovation Introducing new complementary instruments

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The next phase: Challenges for strategic RTI-policy of a leading R&I system

Continuous adaptation of institutions and instruments Continue with the incremental learning process Build up process competence to design and implement joint

strategies Anticipation of opportunities and needs

Anticipatory element of strategic intelligence to be enhanced

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Important sources

Research and Technology Reports, in english since 2004 www.tip.ac.at

Studies and strategies of the Council for Research and Technology Development www.rat-fte.at

ERAWATCH and Trendchart reports cordis.europa.eu/erawatch

Platform Research and Technology Evaluation FT Eval (www.fteval.at)