Promoting catch-up innovations – the role of trade and investment Michiko ENOMOTO Economic Cooperation and Integration Division/UNECE Geneva, 31 May 2013

Why do we promote innovation? Economic crisis Environmental challenges Innovation and new technologies play a decisive role: economic and social development, economic growth, improved productivity and competitiveness, and improved quality of life.

3 What is innovation? Not only results of R & D… But also implementation of new or greatly improved product (good or service), or process, new marketing method, or new organisational method in business practices, workplace organisation or external relations. Definition (OECD Oslo Manual)

4 Invention vs innovation New inventions/technologies may lead to a patent Innovation only takes place when this novelty is used Then the benefits for the economy/environment emerge.

Kyrgyzstan and Tajikistan Innovation landscape Source: The Global Innovation Index 2012, INSEAD

Diversity among PAM member countries

Diversity among PAM member countries (source INSEAD/WIPO)

Frontier innovations Frontier innovations - new to world knowledge Most take place in high-income countries R & D in firms plays major role.

Catch-up innovations and technology absorption Catch-up innovations – new to country/firm To acquire, adapt and use existing knowledge---less costly and less risky than creating new Successful emerging economies imported what the rest of the world already knew; improved it, and exported it in a form the rest of the world wanted Strong absorptive capacity made this possible

Government as gardener Discovery and importing seeds Access to information, diaspora, open trade Planting seed and growing plants Joint ventures, FDI Watering Financing Preparing ground = good absorption capacity Good education, entrepreneurship, basic technological literacy Removing weeds Poor business environment Improvement of the seed Catch-up innovation – R & D. How to grow innovation plants?

Absorptive capacity “The [a firm’s] ability to recognize the value of new information, assimilate it, and apply it to commercial ends” (Cohen and Levinthal) Access to knowledge Cross-border connectivity Favourable legal framework for technology transfer Good business environment Education, vocational training Management and entrepreneurship.

How to foster catch-up innovations and to stimulate technology absorption? Access: Open trade (imports) Information and Communication Technology policies International collaboration in research networks Diaspora Business facilitation: Ease of business, foreign direct investment, labour mobility.

How to foster catch-up innovations and to stimulate technology absorption? Intellectual Property Rights legislation and enforcement Public procurement, standards and regulations Support for finance to early adopters/demonstrators.

How to increase absorptive capacity? Empowerment of local human resources: Education and life-long learning policies Enterprise-based worker training, management and entrepreneurship training Technical and vocational education and training.

How to increase absorptive capacity? Facilitate network with global suppliers Develop linkages to global value chains Rule of law, contract enforcement, competition Bankruptcy and re-entry facilitation Policies to attract and retain talented workers.

16 UNECE Innovation Performance Reviews Policy recommendations stimulate innovation activity in the country enhance innovation capacity improve the efficiency of the national innovation system Follow-up and capacity-building activities to support implementation.

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18 Green technologies UNDA project "Building the capacity of SPECA countries to adopt and apply innovative green technologies for climate change adaptation“ How to integrate environmental concerns into innovation policies? How to mobilise the financing to introduce green technologies (PPP)? How to bring together all stakeholders to make changes?

Thank you! ありがとう Michiko ENOMOTO (UNECE)