World Bank program on : Technology development and knowledge economy Towards a Knowledge economy : The role of Governments Gilbert Nicolaon Kiev February 29, 2008

Knowledge (Research) and Economy

Research and Economy Early 20th century : Research is an « academic » discipline World War II : Successful application of R&D (Radar, Atomic Energy, Artificial clouds…) Post World War II : R&D « with no string attached »

Research and Economy 50s - 60s R&D « with no strings attached » 70’s : A major change in the U.S. : A closer link between R and economy 80’s : Western Europe follows the same path 90’s : Emerging economies +Eastern Europe 00’s : Spreading all over the world

A “Universal” challenge A gap between Research and Economy A need to fill this gap to Take advantage of public E&D effort Improve the competitiveness of national industry Improve economical growth and employment A challenge all over the world A MAJOR CHALLENGE FOR MOST COUNTRIES

The «Actors»

The « Actors » + Who is concerned ? Scientists and engineers Industrialists + Government A 3 PARTNERS COOPERATION

A «Universal» challenge To bridge the « gap » between public Research and Economy in order to : Take advantage of « national » R&D effort Support national economy Improve national competitiveness Improve employment Boost economical growth Export technological expertise Improve the balance of payments A CHALLENGE FOR ANY GOVERNMENT

A 3 Partners cooperation What do they expect? The Technology Providers : To get support for R&D The industrial Cos (Large + SMEs) : To get new products and processes The Governments (Ministries, agencies ..): To stimulate economic growth and employment BENEFICIAL FOR EACH PARTNER

A 3-Partner Cooperation What do they do? The Technology Providers : Provide innovative technologies The industrial Cos (Large + SMEs): Identify the market Manage the innovative process The Governments (Ministries, agencies ..) Establish a favorable legal environment Stimulate the process to boost the economy Provide assistance for project management

The Role of Governments

Governments’ « involvement » A An appropriate legal framework Some infrastructure Assistance for assessment and mgt. Partial funding + Incentives to stimulate the process

Governments’ « involvement » 2 major challenges : Researchers are not used to work for industry Industry is not used to pay for public R&D GOVERNMENTS HAVE TO SET UP INCENTIVES

Governments’ « involvement » A major goal for any Government But some major challenges A need for strong incentives Legal incentives Infrastructural incentives (Tech. Parks, Incubators,…) Financial incentives

Governments’ « involvement » Incentives for researchers Infrastructural (Incubators, Tech. Parks,…) Financial (Royalties sharing….) Legal Incentives for industry Financial (Cost sharing….) Fiscal (Tax Credit…..) STRONG INCENTIVES ARE NEEDED

Governments’ « involvement » To create a motivating legal framework : To encourage market oriented R&D To stimulate Research/industry partnerships To allow researchers to patent R&D results To allow researchers to create start-ups To boost technological services to industry To bring assistance to entrepreneurs

Governments’ « involvement » Financial incentives To support market oriented R&D Specific grants (To support Mk. Oriented R&D) Soft loans (0% interest, repayable in case of success) Tax credit (To stimulate industrial R&D) To stimulate Research/industry cooperation To stimulate researchers motivation Grants or loans for industrial cooperation Personal financial rewards

Governments’ « involvement » National innovation agencies Technical expertise AND ALSO Financial expertise Economical expertise Legal expertise

Some elements of an efficient innovation policy

An efficient innovation policy Strong incentives are needed Researchers have to be motivated Industrialists have to be motivated Financial + legal incentives Financial support for Research/industry partnerships Individual financial rewards for researchers STRONG INCENTIVES ARE NEEDED

An efficient innovation policy A legal framework stable over a long period of time is very important Innovation takes time Incentives should be stable over long period of time Legal (Tax) system should be stable THE RULES SHOULD NOT CHANGE WHILE THE INNOVATIVE PROJECT IS GOING ON

An efficient innovation policy The decision process should be fast Competition Market change Technological progress THE DECISION PROCESS MUST BE FAST

An efficient innovation policy An innovation policy should have several components In order to be efficient, it should be : Coherent « Light »

A few Programs + Numerous Regional programs United States : SBA Europe : Finland : TEKES France : Oséo-Innovation The Netherlands : Senter Spain : CDTI ….. + Numerous Regional programs Flanders (Be), Ile de France (Fr.)…..

International Programs World Bank Projects on Tech Development Far East (India, Korea…) Latin America (Mexico…) Eastern and Central Europe (Croatia…) European Union Framework Program Other European programs Eureka initiative Intergovernmental (Market-Oriented, Nationally-Funded) European Space Agency Technology Transfer program

E.U. programs Research for the benefit of SMEs Coordination of SMEs RTD co-operation ERA-NET Eurostar SMEs participation to RTD projects + Various supporting actions Network of National Contact Points Coordination and support actions

Governmental programs To strengthen national competitiveness Assistance for: Identifying partners Preparing a Business Plan IPR and legal matters To provide some public funding Financial support for project preparation Grants Soft loans

Research and Innovation

Research and Innovation MONEY KNOWLEDGE INNOVATION : KNOWLEDGE MONEY

Innovation BUT ….It is far to be enough ! A « good » technology BUT ….It is far to be enough ! In order to reach the market : A clear vision of R&D to Mkt. A fair analysis of the competition A rigorous Business Plan A « good » management team

Innovation The 5 components of innovation : Technical Economical (market, competition) Financial (Business plan) Legal (Partnership agreement, IPR) Managerial

An innovation policy + A CONTRADICTION ? Competences (*) in 5 different wide sectors Large teams of specialists of each sector + Customer targeting close to the « market » Numerous teams all over the country A CONTRADICTION ?

The « solution » A large headquarter Several small regional offices Technical + Economical Financial Legal Several small regional offices For « customer » targeting

Project evaluation Technical (quality of the technology) Economical (market and competition) Financial (Business plan) Legal (partnership agreement, IPR) Managerial (management team)

Project Appraisal The ANVAR (French) experience CONCLUSION A Technico-economical expert Usually an external scientist or engineer who has a good understanding of the market A Financial expert Usually a banker who has a good experience of the industrial sector concerned A Legal expert Usually from the Legal Dept. CONCLUSION An “overall” appreciation By an « Innovation Engineer »

A « good » project ? The limiting factors (The French experience) : Usually NOT Technical Financial (Underestimation of project cost) Economical (overestimation of the market) Legal (disagreement between partners)

A « good » project ? A good technology A rigorous business plan A carefully analyzed market A strong legal agreement A top level management MOST OF ALL A GOOD BALANCE BETWEEN ALL THOSE FACTORS

Thank you for your attention Gilbert Nicolaon Win.tech@club-internet.fr