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Innovation: A Dutch European perspective

Innovation: A Dutch European perspective . Luc Soete University of Maastricht MERIT http://www.merit.unimaas.nl Washington, January 27 th -28 th , 2003. Outline.

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Innovation: A Dutch European perspective

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  1. Innovation: A Dutch European perspective Luc Soete University of Maastricht MERIT http://www.merit.unimaas.nl Washington, January 27th-28th, 2003

  2. Outline • Leave it to my colleague Dominique Foray to describe in detail impact of digital technologies on process of innovation: just a couple of remarks • Focus here rather on knowledge gap between US and Europe: also a reflection of the lower diffusion of ICT in Europe • Four issues: • EU-US gap in private R&D • mismatch public-private research • human capital gap • innovation gap

  3. Impact of ICT on knowledge production • Increase in productivity of R&D thanks to the increase in the codification of knowledge and of digital communication between researchers • Increase in spreading and diffusion of knowledge thanks to digital transparency • Increase in rate of return to “learning” thanks to digital education forms, distant learning, versioning

  4. Impact of ICT on knowledge productivity • IT (I factor equivalent to increase/speed in data manipulation, embodied in machines/instruments) increases the social rate of return to research and development, but private rate depends on appropriation and its limits • CT (C factor aspect of access, networking) increases possibilities for catching up but depends crucially op open access, know-who, barter exchange of knowledge • ICT increases social and private rate of return to learning (formal and informal education, training)

  5. 1. The emerging knowledge and efficiency gap between EU and US • A long term perspective: lagging behind, catching up and again lagging behind in private R&D • Reflected in the shift in the relationship with productivity growth between the 60’s and 90’s • EU-US Business Enterprise R&D gap has grown rapidly over 90’s • Concentrated in ICT sectors and biotechnology

  6. Figure 1: Business Financed R&D as a % of Value Added

  7. Figure 2a: Relationship between BERD (1967) and productivity growth (1967-1972)

  8. Figure 2b: Relationship between BERD (1995) and productivity growth (1995-2000)

  9. Figure 3a: Trend in the BERD GAP between EU and US

  10. Figure 3b: Trend in the BERD gap by sector

  11. Diagnosis • Dutch insights… • Fragmented RD in the 70’s across EU countries, strongly linked to national champions efforts • Specialisation across the EU of business RD during 80’s/90’s. Impact of 1992 Single Market on rationalisation of R&D of large MNC’s • “Attraction” of US in the late 90’s a new phenomenon: concentration of R&D worldwide. • Efficiency of outside links of R&D activities as important as internal one’s. Hence interest of firms to locate their R&D labs in best local conditions

  12. 2. The growing mismatch between public and private knowledge • No significant gap in public research between EU and US at least until 2000 • Phenomenon of “Dutch knowledge disease”: • Improving quality and strengthening research capacities, but no specialisation. Trend towards national research “autarchy” • Duality between internationalisation of private R&D as opposed to nationalisation of public R&D. Growing mismatch • Similar trends in the rest of Europe? Hence strong need for “ERA” not just of public research, but of public-private research interaction

  13. Figure 3c: Trend in the gap in public R&D

  14. Figure 4:Trend in public, inclusive higher education, R&D

  15. 3. A Human Knowledge Gap • Significant gap between EU and US in employment of S&E in Business sector • Ageing of European S&E: from teachers down to professors and S&E researchers • Renewal rate of human capital in Europe low, immigration levels low, emigration high in those countries with low levels of private BERD • Need for a reformulation of Barcelona and ERA?

  16. Figure: 6 S&E as % of labour force (growth rates 1995-2000)

  17. Figure 7: S&T graduates by EU member country

  18. 4. The Innovation Gap • In the end it is the innovation gap which is most important: many factors play a role: • Patent costs in EU compared to US • Capital costs • The Lisbon consensus: “the most dynamic and competitive region in the world, while maintaining/activating Europe’s social model” • Has the real question been asked: link between innovation and risk taking and labour market security, in particular hiring and firing?

  19. Figure 8: Patent costs in EU, US and Japan

  20. American firms grow faster Creation of EU and US firms among the World top 1,000 Since 1980 1950 - 1979 Before 1950 EU USA

  21. Smaller firms need R&D Annual growth of GDP 1991- 2000 (%) Proportion of innovative firms doing R&D (%)

  22. Figure 9: Regulatory barriers index (OECD)

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