OECD World Forum on Key Indicators November 2004 “ A Model to Benchmark Innovation Capacity – the Need for Global Indicators” Jørgen Rosted Director, FORA – Centre for Economic and Business Research, Denmark

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - New Growth pattern >The OECD-study “New Economy – beyond the hype” illustrated differences in growth patterns among OECD countries and identified 4 micro-drivers of growth: >Human resources >Knowledge building and knowledge sharing >Information and communications technology >Entrepreneurship

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Growth follow-up project >Ministers asked OECD to follow-up on the growth study using benchmarking and peer-reviews to: > Evaluate the importance of the micro-drivers > Investigate policy implications

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Benchmarking analysis The new policy framework Specific framework conditions Clusters Business framework conditions Micro-drivers of growth Fundamentals Macro economy Business framework Conditions Micro-drivers of growth Benchmarking analysis Cluster analysis

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - A benchmark model to evaluate the importance of different business environments in a global knowledge economy Knowledge building & Knowledge sharing Entre- preneurship Information and communication technology Innovation Management and organization Human resources

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - An 8-step approach to systematic benchmarking of micro-drivers of growth >Define good performance and select performance indicators >Identify top-performing countries (check robustness) >Test the interactions among the drivers and their links to MFP growth >Define relevant policy areas and select indicators (check robustness) >Test for correlation between performance and policies

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - An 8-step approach to systematic benchmarking of micro-drivers of growth >The critical areas of the framework conditions are identified for each micro-drivers of growth >Weak points in national framework conditions are identified >Improve weak points by using peer review to learn from policies in best performers

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - OECD-report >The main Committees in the OECD directorate for Science, Technology and Industry (DSTI) have been working on “Micro-policies for Productivity and Growth” since 2001 >Committee on Industry and Business Environment (CIBE) coordinats the work >The report will be released in spring 2005

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Conclusions >Having the fundamentals and the macro-structure right is not enough >Countries also need to have the micro-structure right and only a few OECD countries have that >The OECD report will contain specific policy recommendation for each micro-driver

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - The Danish benchmark work builds on the OECD project >Denmark has actively supported the work and applied the results in Denmark >Reports on all four drivers of growth have been published – each identifying key challenges for Denmark

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Performance >6-10 indicators are used to measure performance for each of the four micro-drivers >The micro-drivers interact and are correlated with multi-factor productivity (MFP)

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Correlation between performance and MFP growth

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Framework conditions >8-16 policy areas are examined for each of the four micro-drivers >30-55 indicators are used to measure the policy areas for each micro-driver

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Correlation between policy and performance

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Spiderweb – Human ressources

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Danish report >A report summarizing the work in Denmark – The Innovation Monitor – is available at

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - The work required an indicator sytem >Measuring performance and framework conditions is a difficult task >To build the indicator system we collected data from both official statistical offices, international organisations and survey data from private sources >This gave us an indicator system specially designed to analyse micro-drivers

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Data coverage for performance indicators Micro-driverGood coverage Partly coverage Weak or no coverage Entrepreneurship ● Information & communications technology (ICT) ● Innovation - science and Technology ● Human resources ●

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Data coverage for entrepreneurship Policy areaGood coverage Partly coverage Weak or no coverage Administrative burdens ● Regulations ● Taxes ● Start-up Capital ● Secondary stock markets/ alternative exist possibilities ● Culture ● Government support ● Entrepreneurship infrastructure ● Education ●

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Data coverage for ICT Policy areaGood coverage Partly coverage Weak or no coverage ICT Infrastructure ● Prices on communication ● Access to ICT in education ● Advanced ICT competences ● Basic e-government ● ICT competences among consumers ● Employees’ ICT competences ● Advanced e-government ● Data security ● Other legislation that indirectly affects ICT use ●

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Data coverage for science and technology Policy areaGood coverage Partly coverage Weak or no Coverage Public investment in R&D● Quality of research● Subsidies and tax incentives● Access to venture capital● Cooperation in R&D ● Commercialization of research● Highly educated workers● Customers and suppliers● Competition policy● Relevance of research ● Access to technology ● Access to competencies●

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Data coverage for human capital Policy areaGood coverage Partly coverage Weak or no coverage Expenditure on education ● Scope and quality of basic education ● Incentives for education ● Scope and relevance of tertiary education ● Scope and relevance of lifelong learning ● Flexible organisation ● Management skills ●

Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - Indicator systems >Hundreds of global indicator systems are build for different purposes >There will be synergies and therefore productivity gains in closer collaboration >How could productivity gains be harvest? >The role of OECD?