Mario Cervantes OECD

Innovation, Technology Transfer and STI Co-operation to address Global Challenges

17 March 2011

Outline

• Role of innovation in economic growth• Globalisation of R&D and innovation • Knowledge Markets • STI c0-operation for global challenges

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3

Innovation is key to growth... Contributions to labour productivity growth, 1995-2006, in %

* Investment in intangibles and multi-factor productivity growth account for between two-thirds and three-quarters of labour productivity growth.

-1

0

1

2

3

4

5

6

Intangible capital MFP Non-ICT capitalICT capital Tangible capital Labour quality

Decomposition of cross-country differences in GDP per capita into their determinants, 2005

(United States = 100)

GDP PPP per capita TFP Human capital Physical capital Employment

United States 100.0 100.0 100.0 100.0 100.0Canada 83.5 72.0 103.3 105.8 106.0

Japan 72.6 52.6 100.4 130.7 105.1

China 9.8 13.6 57.3 105.2 119.5

India 5.2 12.7 47.7 98.3 87.1

Brazil 20.5 29.3 70.1 103.1 96.8

Russian Federation 28.6 31.5 84.9 97.4 99.3

EU27 + EFTA 64.7 67.8 91.2 114.1 91.3

Total World 22.8 27.9 64.2 104.2 95.8

Source: OECD.

• …constitutes the major gap in GDP between OECD and emerging economies.

… and can help address global challenges such as climate change

Potential technological contributions to CO2 emission reductions

Note: WEO refers to the IEA’s 2007 World Energy Outlook.Source: International Energy Agency, Energy Technology Perspectives 2008: Scenarios and Strategies to 2050.

0

10

20

30

40

50

60

70

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Em

iss

ion

s (G

t C

O2)

WEO 2007 450 ppm case ETP2008 analysis

BLUE Map emissions 14 Gt

Baseline emissions 62 Gt

CCS industry and transformation (9%)

CCS power generation (10%)

Nuclear (6%)

Renewables (21%)

Power generation efficiencyand fuel switching (7%)

End use fuel switching (11%)

End use electricity efficiency (12%)

End use fuel efficiency (24%)

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(indexed on 1980=1.0, Annex 1 ratification countries)

Policy can induce greater innovation

Patenting in climate mitigation technologies relative to all sectors

New global players have emerged …

Contributions to growth in global R&D, 1996-2001 and 2001-2006(in billion constant US PPP and %)

37%

16%

23%

15%

7%

13%

10%

13%

11%

30%

12%

13%

0

20

40

60

80

100

120

140

160

180

1996-2001 2001-2006

Other non-OECD (2)

China

Other OECD (1)

Japan

EU-27

United States

Note: (1) Australia, Canada, Iceland, Korea, Mexico, New Zealand, Norway and Turkey (2) Argentina, Brazil, India, Israel, Russian Federation, Singapore, South Africa, Chinese TaipeiSource: OECD.

• About 10% of total R&D funding in EU27 in 2006

• Over 20% in Austria and the UK

• 2/3 is intra-company funding

R&D funding from abroad is important

In some OECD countries, foreign affiliates carry out more R&D than at

home

Technological receipts and payments ,1996-2006• EU15 transformed its technological deficit into a surplus

• Japan increased its surplus by 6 times

Rising international technology transfers

But knowledge and technology are unevenly distributed…

Patenting rises ; increasing opportunities for technology transfer and exchange

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International cooperation mostly within OECD countries

and among those with linked value chains or close proximity

•15% of patents filled in OECD

countries are invented abroad

•Small countries rely more on foreign

sources

•EU rely mainly on EU

•Japan and Korea on the US

Connecting to Global Research

• International mobility of

doctoral students up significantly

in New-Zealand, Canada,

Norway and in Spain.

• International doctoral students

are between 25% and 40% in

Canada, France, Belgium,

Australia and the United States.

Foreign students within the OECD area have doubled over

Firms today no longer innovate in isolation …Then: Closed Innovation

Approach: “not invented here”

Innovation: • Strategy independent of

overall business strategy• Performed in-house• Internal pool of

innovators

Outputs:• Incorporated in firm’s

products and services.• Product revenues

finance next cycles of in-house R&D

Now: “Open“ Innovation

Approach: “proudly found elsewhere”

Innovation: • Business strategy drives

targets• Technology developed

cooperatively or acquired• Work with many innovators

and users/consumers• Leverage own IP

Outputs:• Both internalized and

externalized (licensing, spin-offs, venturing)

… but collaborate on innovation internationally

Co-operation in science is increasing: co-authored S&T articles (whole count), 1997 and

2007

1997 2007

In sum….

• Deepening of the internationalisation of research

• Deepening of R&D globalisation, but appears more sensitive to asynchronous business cycles and shocks

• FDI and trade are important channels but their role in the creation of spillovers remains unclear

• Mobility of human resources is major channel.

• Clustering/regional proximity matter• Open innovation and open science are

increasing• Role of absorptive capacity in capturing spill

overs from trade and technology transfer, but how to support it?

One solution: Developing collaborative knowledge markets…

• Knowledge markets encompass a number of different mechanisms, or marketplaces, where buyers and sellers trade a variety of knowledge intensive goods and services.

• E.g.: IP exchanges, patent pools, networking, matching or brokering services

But also need for STI co-operation: a priority for OECD

• High-Level Oslo Meeting (03 2008) of the Committee for Scientific and Technological Policy (CSTP)– to address global challenges multilateral STI

cooperation is needed– existing policies and frameworks may not be

sufficient to meet requirements – delegates recognized

• the need to consider policies and rules affecting multilateral STI cooperation

• the possibility that new or improved mechanisms are needed

Importance of STI for addressing global challenges

• G8+7 Science and Technology Ministerial Meeting 15 June 2008 G8 countries and Brazil, China, India, Mexico, Philippines, Republic of Korea and South Africa– emphasis on the important role that

science, technology and innovation have to play in understanding global challenges facing our society and in developing appropriate solutions to those challenges

• The global nature of the key challenges facing the mankind…

• An emerging political consensus: Addressing global challenges (GCs) requires collective actions…

• S&T and innovation must make an important contribution to addressing key global challenges…

Rationale for International cooperation in S&T for green growth

Rationales for international cooperation in S&T for green growth

• Lack of existing framework for multilateral cooperation (MC) in STI,

• meanwhile emerging new approaches, players and initiatives needing government support

• Uneven distribution of R&D resource and capacity and gaps between technology supply and needs

Objective of the work

• identify principles and best practices for multilateral cooperation in STI

• Enhance the effectiveness of multilateral STI to address global challenges such as – climate change – global health– food security and agriculture– energy security

Principles and best practices for…

• Outreach, Agenda and Priority Setting• Funding and Spending Arrangements• Institutional and Access Arrangements• Putting Opportunities into Practice;

translating science into innovative solutions• Technology transfer and capacity building

Approach • Case studies in meeting global challenges –

successes and failures: • IPCC; CGIAR; GEO; EDCTP; GF AIDS, TB, Malaria; others…

• Good practice in governance• Measurement of expenditure• Complement with analysis bilateral co-operation• Complete case studies work in 2010; Principles

by 2012.• Steering Group - Australia, Austria, France,

Germany, Korea, Norway, Spain, Turkey, UK,US, EU: Chile, China, Israel and South Africa

But we need some of the other big players involved…..so come join.

Mario.cervantes@oecd.org