How to Build a Knowledge Economy and How to Know When You Have One John Dryden Deputy Director Directorate for Science, Technology and Industry, OECD MEASURING AND FOSTERING THE PROGRESS OF SOCIETIES Second OECD World Forum on "Statistics, Knowledge and Policy" Istanbul, Turkey, 27-30 June 2007

What is a Knowledge Economy? Related concepts The New Economy The Information Economy (bio-economy, etc.,) The Service Economy The Innovation Economy The Knowledge-based Economy

Characteristics of a Knowledge Economy High value-added goods and services mainly because of the “knowledge content” of their factor inputs Performance of R&D High educational standards, human resources in S&T, workforce skills Strong innovation performance, innovations successful in the market Intensive and broad use of generic technologies, esp. ICTs Strong “high-tech” sectors, intensive use of “knowledge-intensive services” Value chains highly globalised Investment in “knowledge” now about the same as that in fixed capital (~8pc of GDP)

How to Build One? Copy the Lisbon Agenda? Research and Development – inputs, outputs and outcomes Human Resources – education, skills, mobility Innovation and linkages between the “actors”; “open innovation” Encourage (production and) use of generic technologies Framework conditions – open markets, absorptive capacity; attention to the demand side Open-ness and globalisation – knowledge flows and the global enterprise

How to Know When You’ve Got One? Hard to measure, as the concept isn’t tightly defined. It’s the results in terms of growth, incomes, productivity and employment – and other measures of well-being that take account of social and environmental “wealth” – that count Measures of international “competitiveness” Doubts about utility of composite “knowledge economy index” Need to take account of scope (intl, natl, regional, local); and aggregation (whole economy, sector, firm) Need data and analytical toolkit to develop battery of indicators in main issue areas

The OECD STI Scoreboard Published every other year, in print and online Over 200 internationally comparable indicators Free access on-line edition with Statlinks: direct URL links to underlying Excel sheets used in the graphs. STI Scoreboard 2005 available at: www.sourceoecd.org/scoreboard Multilingual summaries: www.oecd.org/sti/scoreboard

STI Scoreboard 2007 Forthcoming in October Comprehensive coverage of the different facets of the knowledge economy in 9 sections: R&D and investment in knowledge Human resources in S&T Innovation policy Innovation performance ICT: an enabler for the knowledge society Particular fields Internationalisation of S&T Global economic flows Trade and productivity 7

New in the 2007 Scoreboard 90 families of indicators, over 200 figures Around 25% of new indicators compared to 2005 edition. Examples: S&T indicators in biotech, nanotech and environmental technologies Patenting by universities, patenting by regions, science linkages in technology Employment by skills and earnings by level of skills International outsourcing of intermediary inputs New multi-colour double-page layout for easy readability

Investment in Knowledge R&D, Software and Higher Education as a percentage of GDP (2003) The knowledge economy is about more than R&D OECD economies taken together, invested 5% of GDP in knowledge in 2003. In US, close to half of this investment concerns software and higher education, whereas in EU countries the main component is R&D investment.

R&D Intensity as a percentage of GDP (2005) China is now one of the major players in the global knowledge economy In 2005, China stood just behind the Triadic countries in terms of share of R&D in total R&D; R&D investment represents 15% in total OECD R&D.

OECD output of university and doctoral degrees % of all OECD graduates receiving their degrees by region of graduation and field of study, 2004 European universities are a main source of science and engineering degrees in the world 43% of total OECD university degrees originate in Europe, compared to only 22% for the United States.

Employment by Foreign Multinationals Trends in the share of affiliates under foreign control in manufacturing employment in selected OECD countries between 1995 and 2003 Employment by foreign affiliates increased in France but decreased in the United States, Germany and Italy.

Labour productivity growth Contributions of key activities to annual growth of value added per person employed 2000 - 2005 Business services are a main catalyst of productivity in numerous OECD countries In Canada, Greece, New Zealand, the United Kingdom and the United States, it contributed to over 55% of the labour productivity growth.

Broadband Access by households Households with broadband access a percentage of all households (2003-06) Growing adoption by consumers but remaining divergences across countries In 2006, Korea remained the country with the largest share of households with a broadband connection via a computer or mobile phone (94%).

Patenting by Universities Share of patents filed owned by universities 2002-04 in total inventions Intellectual property policies for university innovation is giving results in the EU In 2002-04, more than 10% of patents applied by US residents are owned by public institutions, whereas in Europe (25), this share was around 4%. With respect to 1996-98, EU (25) doubled the share of patents owned by universities whereas US has decreased it slightly.

Biotechnology firms’ activities Percentage of biotechnology firms active by field of application (2003) Predominance of health-related applications in biotechnology The majority of firms are active in health (45%), followed by agro-food (22%), industry-environmental applications (19%), and “other” (18%).

Nanotechnology Patenting Worldwide total number of nanotechnology patents by application fields Nanotechnologies have the potential to generate diverse industrial applications Nanotechnology is multifaceted. It consists of a set of technologies on the nanometre scale rather than a single technological field.

The next edition of the STI Scoreboard will appear in October 2007 john.dryden@oecd.org sti.contact@oecd.org