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Information and Knowledge Society Requires Value Added Investments. International Conference Košice Invest 2010 19th October, 2010. Contents. Foreign Direct Investment Trends Foreign Direct Investments in R&D Slovakia - R&D Country New Types of Investments SARIO Promotion Activities

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Information and Knowledge Society Requires Value Added Investments

International Conference Košice Invest 2010

19th October, 2010


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Contents Investments

Foreign Direct Investment Trends

Foreign Direct Investments in R&D

Slovakia - R&D Country

New Types of Investments

SARIO Promotion Activities

Recommendations


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Introduction Investments

"The most important factor behind location decisions are always people and networks of people"

Prof. Ricardo Baeza-Yates,

Universitat Pompeu Fabra, Barcelona


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Our SLOGAN Investments

"R&D in Slovakia – Discover the Potential"


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Foreign Direct Investment Trends InvestmentsFDI Inflows, Globally and by Groups of Economies, 1980-2009

In bln.USD

Expected global FDI flows:

  • 1.2 trillion USD in 2010

  • 1.3 – 1.5 trillion USD in 2011

  • 1.6 – 2.0 trillion USD in 2012

Decline

16%

37%

The changing world - the global financial and economic crisis acceleratedthe majority of processes in business (e.g. time reduction in innovation cycles)

Source: World Invetsment Report 2010


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Foreign Direct Investment Trends InvestmentsKey World Drivers of FDI in R&D

Climate Change

Growing global competitiveness

Growth of urbanization

New specific customer demands

Innovation and R&D networks

Progress in ICT

Key world drivers of FDI in R&D

New forms of FDI (greentech, meditech, centres of excellence)

More motivating investment incentives

Search for cost-efficiency

Access to new technologies and talents

Growth of emerging markets

Specialization of national strategies


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Foreign Direct Investment Trends InvestmentsR&D Expenditure Global 1000

Source: Department for Business, Innovation & Skills., THE 2009 R&D SCOREBOARD, 2010


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Foreign Direct Investment Trends InvestmentsTop 15 Global Companies by R&D Expenditure per Year 2009

Source: Department for Business, Innovation & Skills., THE 2009 R&D SCOREBOARD, 2010; # - accounts not prepared using IFRS


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Foreign Direct Investment Trends InvestmentsTerms

The same meaning of terms:

"Globalization of corporate R&D"

"Internationalization of R&D"

"FDI in R&D"

"R&D-intensive FDI"

Globalization of corporate R&D is an opportunity not just for the host countries but also for corporate subsidiaries, since the latter are more involved in the corporate group's innovation activities.

What it means?

Corporate subsidiaries are very important element in attracting FDI in R&D


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Foreign Direct Investments in R&D InvestmentsMotivations

  • FDI in R&D has 2 different motivations: 

  • Doing "adaptive R&D" modifies products, processes and technologies according to local needs and supports foreign production facilities, process improvement. (Demand driven FDI in R&D)

  • 2. Getting access to"state-of-the-art knowledge" means that companies invest in foreign countries with an expectation to benefit from excellent, local research and researchers, new technology sources of knowledge and specialized clusters. (Supply driven FDI in R&D)

FDI in R&D - evolution or expansion of established subsidiaries

- greenfield investments


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Foreign Direct Investments in R&D InvestmentsTypes of Factors Arguments to Attract R&D Investments

  • Parent company strategies related factors

  • Understanding Company Strategies

  • Seek Linkage between: Companies National Innovation Systems

  • 2. Subsidiaries Capabilities related factors

  • Possibility of: Expansion

  • Production Process Improvement

  • 3. Host Country related factors

  • Availability of: World Class Research Talents Researchers

  • R&D Infrastructure UniversitiesWorld Companies

Way for SLOVAKIA

Source: Guimón, J.: Government Strategies to Attract R&D-Intensive FDI. OECD Global Forum on International Investment. March 2008.


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Foreign Direct Investments in R&D InvestmentsKey Drivers and Forms of FDI in R&D

Drivers

Forms

Emerging countries

Developed countries

Home countries

Source: Here or There? A Survey on the Factors of Multinational R&D Location, 2006, www.nap.eduJerry Thursby, Emory University and Marie Thursby, Georgia Institute of Technology, 250 respondents from various industries


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Foreign Direct Investments in R&D InvestmentsR&D Location Drivers

  • The availability of highly educated people (scientists, engineers...)

  • The quality of universities and R&D infrastructure

  • Level of university and industry collaboration in R&D

  • Fiscal and financial incentives to corporate R&D

  • Cost-efficiency in R&D

  • Attractiveness of National Innovation System

  • The presence of lead markets and companies in key technology areas

  • A clear and enforceable intellectual property rights regime

  • Quality of pre-investment, investment and after-investment services

  • Local availability of research and training services

  • Engagement in world research projects (e.g.: FP7)

Source: Adapted according to Guimón, J.: Policies to benefit from the globalization of corporate R&D: An exploratory study for European Union countries


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Foreign Direct Investments in R&D InvestmentsImpacts of FDI in R&D

Production Networking (1995-2005)

OEMs – Suppliers Nets (2000-2010)

Clusterisation (1995-2010)

Clusters Networking (2010-2015)

R&D Institutions Networks (2015-...)

  • National and regional innovation systems are becoming:

    • more internationalised

    • more linked to global production networks

    • more dependant on foreign decision-makers

  • 2. Business R&D is shaping the evolution of goverment´s policies:

    • emergence of new policy strategies

    • more proactive role of governmentpolicies ("attractive policies")

    • closer connection between innovation policies and FDI promotion policies

    • cities/regional development

Important ROLE:

Harmonisation of the national/regional innovation systems with corporate R&D strategies


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Foreign Direct Investments in R&D InvestmentsPolicy Objectives and Instruments

Policy Objectives

Instruments

Improve UNIs and R&D infrastructure; talent development and attracting talents; collaboration with foreign subs., improving IPR regime

Enhance R&D investment climate

International promotion of national R&D capacities, preinvestment and AC services, integration to global networks

Promote inward FDI in R&D

Absorb benefits from foreign presence

AfterCare services, technology linkage programmes, promote collaboration

Support international expansion of domestic R&D centres and UNIs, set up overseas technology units

Absorb benefits from outward FDI in R&D

Source: Guimón, J.: Policies to benefit from the globalization of corporate R&D: An

exploratory study for European Union countries


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Slovakia - R&D Country InvestmentsBasic Advantages of Slovakia

High-Tech and Medium High-Tech

Domestic R&D infrastruture

Natural and technical sciences universities

Success stories in R&D

Presence of clusters

Availability of scientists and engineers

R&D Incentives

Quality of engineers

Competitive R&D costs in EU

Strategic Geographic location


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Slovakia - R&D Country InvestmentsR&D Environment in Slovakia

FDI and technology transfer (Rank out 133 countries)

To what extent does foreign direct investment (FDI) bring new technology into your country? (1 = not at all; 7 = FDI is a key source of new technology)

Very good base for FDI in R&D

Production process sophistication (Rank out 133 countries)

In your country, how sophisticated are production processes? (1 = not at all—labor-intensive methods or previous generations of processtechnology prevail; 7 = highly—the world’s best and most efficient process technology prevails)

Source: The Global Competitivenes Report 2009-2010, World Economic Forum, 2010


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Slovakia - R&D Country InvestmentsR&D Organizations


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Slovakia - R&D Country InvestmentsNational R&D Capacities

Building up 45 Centres of Excellence in Slovakia

Almost 60 research institutes of the SAS

More than 30 foreign R&D centres in Slovakia

Wide range of university centres and laboratories

More than 20 domestic R&D organizations

Building up 8 regional innovation centres


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Slovakia - R&D Country InvestmentsHighly Perspective Opportunities for Doing Business

Automotive Industry

& Supplier Sector

Electrotechnics

Electronics

ICT&

Software Development

Medical Technologies

Welfare&Care

R&D

New and

Lightweight Materials

Energetics&

Renewables


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Slovakia - R&D Country InvestmentsSuccess Stories in R&D

ON SemiconductorBratislava

Development Centre

Johnson ControlsEngineering Centre

Trenčín

R&D Center

Alcatel-Lucent

Bratislava

R&D

LEONI AutokabelSlowakia Trenčín

Technology Lab

Siemens

Žilina

Continental Automotive

Systems R&D Centre

Zvolen


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Slovakia - R&D Country InvestmentsEstablished US Foreign Investor in Slovakia: Johnson Controls

ŽILINA

KIA and

JC-JIT

NÁMESTOVO

JC-Interior

TRENČÍN

JC-Engineering

TRNAVA

PSA

MARTIN

JC-Seat Covers

Lozorno

VW and JC-JIT

LUČENEC

JC-Foam

BRATISLAVA

JC

Business Centre

Source: Johnson Controls Engineering Centre, Trenčín


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New Types of Investments Investments

Example from Germany (1)

  • Perspective industries of new type of investments

GERMANY

Source: www.gtai.com


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New Types of Investments Investments

Example from Germany (2)

  • National Electromobility Development Plan for Germany

Germany invests

more than EUR 500 million -

Objective: 1 million electric vehicles on German roads by 2020

Can we consider this to be an inspiration for Slovakia?

Investments into electromobility infrastructure development

Source: www.gtai.com


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New Types of Investments InvestmentsIDA Ireland Example

Focus on Greentech & Services Innovation

Industrial sectors:

  • Life sciences (Pharma&biotech, medical devices)

  • ICT

  • Financial services – global services

  • High-end manufacturing

  • Diversified industries and engineering

  • R&D and Innovation (centres of excellence, testing labs)

  • Cleantech

Source: IDA Ireland Strategy – Horizon 2020


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New Types of Investments InvestmentsLow-Carbon Economy (1)

Investing in Low-Carbon Economy

Low-carbon foreign investments – can be defined as transfer of technologies, practices or products by TNCs to host countries, through equity (FDI) an non-equity TNC participation, generating significantly lower GHG emissions than would otherwise be the case. (WIR 2010)

3 Key Low-Carbon Business Areas and Industries

Low-carbon technology manufacturing (wind turbines, solar panels, biofuels)

Alternative/Renewable electricity generation

Recycling

TNCs are key actorsincontributing to the establishment of climate-friendly economies

Source: World Investment Report 2010GHG – green house gas emissions, TNC – Transnational Corporation


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New Types of Investments InvestmentsLow-Carbon Economy (2)

2 types of Low-carbon Foreign Investments

Introduction of low-carbon processes reducing GHG emissions related to how products are made

(upgrade of existing TNC operations as well as new investments)

Creation of low-carbon products and services lowering GHG emissions in how they are used

(e-cars, "power saving" electronics and light bulbs, RES equipment, integrated transport systems)

The main sectors (areas of emissions):

  • power and industry (inc. manufacturing as well as oil and gas)

  • transport, building and waste management

  • agriculture and forestry

Governments should to identify opportunities for such investment in their countries and formulate strategies to promote it.

Source: World Investment Report 2010GHG – green house gas emissions


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SARIO Promotion Activities InvestmentsCreation of Infomaterials

Publication of Informative Promotion Materials

Increasing of awareness about R&D (conferences, seminars...)

Investment Seminars Abroad

SARIO = Associated partner in cluster´s projects

Communication & Networking with UNIs & other R&D institutions


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SARIO Promotion Activities InvestmentsCooperation with Renowned Domestic Organizations

Projects:

AUTOCLUSTERS

AutoNet

PANASONIC CENTER, TOKYO

(R&D Investment Seminar in Japan-2009)

SARIO-TUKE


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Recommendations Investments

  • Improving the FDI attracticion and promotion policy

  • Preparing tailored FDI Project Proposals

  • More visible to the investment community (marketing campaigns, missions, etc.)

  • Marketing of Slovak R&D infrastructure (UNIs, SAS,...)

  • Focus on Slovak talent development programmes, "special talent university learning classrooms"

  • Focus on Suppliers Development Programmes – Aftercare services

  • SARIO Advisory Board consisting of established investors – close collaboration

  • Prepare strategy for building electromobility infrastructure

  • Prepare strategy for attracting FDI in green tech R&D and cleaner production

  • Project Networking (SARIO as a partner in EU projects)

  • Updating of National Innovation System


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R&D in Slovakia – Discover the Potential Investments

"Our TREASURE is in our highly educated PEOPLE!"

"...Discover the Potential"


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Thank you for your attention Investments

Ing. Vladimír Švač, PhD.

Address:

SARIO

Martinčekova 17 821 01 Bratislava

Slovakia

Tel.: +421 2 58 260 343

Email:[email protected]


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