Innovation Systems and Development Strategies Thomas Andersson Santiago, Chile 13 May 2004

IKED…  IKED addresses the emerging issues of the knowledge-based economy (KBE), with a holistic view and a cross-sectional approach  Bridges between research/analysis and policy-making  Has a Nordic base, leveraging the Nordic region’s strength in KBE as well as the Nordic need of learning from others to confront current challenges  Has a global reach – working with countries and institutions, aiming for concrete reforms  Has partners/clients ranging from the most advanced to transition and least developed economies  Collaborates with and includes all key stakeholders, including the private sector and consumer side, in its activities/projects in order to promote contructive dialogue and concrete results

IKED Integrated Approach Integrity and internal analysis Networks between government, business and experts Direct involvement in key reform processes Policy fora with continuous exchange and international impetus

Flagship Publications 2004 ASEM Proceedings: Globalisation and ICT: The Role of Government, Private Sector and Civil Society in an Information Society for All World Competitiveness Proceedings: Innovative Clusters – A New Challenge Towards a New Growth and Innovation Policy in Norway Towards Effective Policies for Innovation and Enterprise in the Baltic Sea Region Handbook for Evaluation of Innovation Policy Flagship Conferences organized/co-organized by IKED Future Nordic Welfare Society (Stockholm, February 5, 2003) An Information Society for All, ASEM (Malmö, March 10-12, 2003) The Competitiveness Institute (Gothenburg, September 15-17, 2003) Baltic Development Forum (Riga, October 5-7, 2003) World Knowledge Forum (Soeul, October 15-17, 2003) Virtual Opportunity Congress (Sydney, December 16-17, 2003) INSME Roundtable (Malmö/Helsingborg, February 25-27, 2004) Measuring and Analysing Digital Divides (Beijing, March 24-26, 2004) Welfare policies in the Era of Globalisation (Havana, April 26-29, 2004)

Source: UNCTAD, World Investment Report Manufactured exports’ share in world exports by technology groupings

Source: ITU (2002). The Digital Divide and ICT Infrastructure

IKEDIKED 2004 Broadening basis for growth Room for higher productivity - R&D and ICT can generate higher labor productivity and TFP - Synergy effects/enabling conditions - Favorable cross-border resource flows - Using time better: hours worked, life-long health - Encompassing SMEs - Regional and sectoral broadening - Untapped potential population groups: immigrants, women, minorities -

Supply: Science, R&D Demand: Market Ideas technologies Innovations Scientists Clients Contractors Competitors INNOVATION SPIRAL Increased potential both directions through ICT

Improving exchange mechanisms among actors Universities Society Individuals Companies Reward Building new companies Skills Competitive intelligence Product development Entrepreneurship Environmental sustainability ICT-infrastructure Career Conditions for competition University/ Private sector cooperation Labour markets Education Social capital Applied research IPR Tax systems Venture capital Financial markets Demand for knowledge Strengthening framework conditions to support innovation processes Innovations, Commers- ialisation Growth and welfare Actors

SWEDEN FINLAND USA JAPAN SWITZERLAND WORLD FINLAND US SWEDEN CANADA KOREA DENMARK SINGAPORE AUSTRALIA KOREA NETHERLANDS ICT Weighted country positions Innovation Tentative, based on international estimates

Investment in knowledge assets, % GDP MexicoGreecePortugalItaly Spain Hungary Ireland Czech RepublicAustria EU Belgium AustraliaUnited KingdomNorwayFrance Germany Netherlands Denmark OECD JapanCanada Switzerland FinlandKorea United StatesSweden % R&DSoftwareHigher Education IKEDIKED 2004

Government role in R&D varies considerably across countries, % of GDP 2000 IKEDIKED 2004

Selected variables Innovation System

Barriers to entrepreneurship Source: OECD IKEDIKED 2004

GDP-growth and entrepreneurship U.S. U.K. Switzerland Sweden Spain Portugal Norway Netherlands Luxembourg Japan Italy Ireland Iceland Greece Germany France Finland Belgium Denmark Austria Start-up Rates, GDP Growth, Source: OECD Source: OECD, 2001

Application of Rule of Law Varies by Region (based on aggregation of surveys/polls *) OECDEast Asia Middle East South Asia Eastern Europe Latin America Sub- Saharan Africa Former Soviet Union High Index of Rule of Law Appli- cation Low Index Source: Kaufmann, Kraay and Zoido-Lobaton (1999). "Aggregating Governance Indicators" and "Governance Matters" PWRP 2195 and

Patents invented in collaboration with foreign inventors (%) Share of scientific publications with a foreign co-author (%) Japan EU Italy Germany United States France OECD United Kingdom Canada Japan EU United States OECD United Kingdom Canada Germany France Italy International co-operation in S&T IKEDIKED 2004

“ Bilateral Investment Treaties ”, 2003 Source: UNCTAD Source: UNCTAD, 2003

Challenges for National FDI Policies Maximizing benefits of FDI Minimizing negative effects of FDI Attracting FDI Development objectives

Coordination to put in place comprehensive innovation policy Appropriate mechanisms for public funding of R&D Science-industry interplay: incentives for university and scientists to work with industry, upgrading science parks and incubators Reforms to strengthen conditions for provision of micro-funding and better functioning venture capital markets Valuing knowledge, competence upgrading in SMEs, enabling meeting specific needs through internal upskilling or strengthened networking with regard to external competence Plugging into global knowledge networks while underpinning traditional skills through institutional support Intensifying policy challenges

Scientists Innovation Policy Positioning: Traditional Research Education Industry Finance Trade Etc. Labour Unions Firms NGOs Environment I.P.

Scientists Innovation Policy Positioning: Implicit Research Education Industry Finance Trade Etc. Labour Unions Firms NGOs Environment

Scientists Research Education Industry Finance Trade Etc. Labour Unions Firms NGOs Environment Innovation Policy: Explicit positioning I. P.

Scientists Research Education Industry Finance Trade Etc. Labour Unions Firms NGOs Environment Innovation Policy: Explicit Positioning I. P.

Inward FDI stock, 2002 Note: The size of the region/country's box reflects the size of the FDI stock. Source: UNCTAD