INTERNATIONAL COMPETITIVENESS IN R&D AND INNOVATION Ádám Török Secretary General, Hungarian Academy of Sciences

Why is innovation important to the competitive performance of the economy? „middle income trap” Continuous and significant FDI inflows, but no in- depth structural change in industry („upgrading” missing) Strengthen the National Innovation System (NIS) Connection between NIS and firms

The Global Competitiveness Index (WEF) Source: World Economic Forum, 2014.

International competitiveness in innovation Research and development (R&D) - innovation Krugman (1994) – against the idea of perceiving competitiveness at the macro level The Krugman-debate: is international trade a cooperative or a non- cooperative game? Supply-side and demand-side approaches Product competitiveness – competitiveness of R&D Scientific excellence Academic performance Success in generating funding

R&D and Innovation in the European Union Measure the international competitiveness of R&D and innovation – GERD/GDP – BERD/GDP Lisbon Agenda: 3% (2010: 1,9%) – caveats: Rapidly deteriorating fiscal situation Economic slowdown EU2020: 3% (Hungary: 1,8% ) New methods of measurement? European Innovation Scoreboard Elements of the synthetic indicators of innovation performance Good proxy of a competitiveness ranking

European Innovation Scoreboard (2014) Source: Innovation Union Scoreboard, 2015.

GERD as a percentage of GDP (2013, %) Source: OECD MSTI, 2015.

GERD as a percentage of GDP ( , %) Source: OECD MSTI, 2015.

BERD as a percentage of GDP (2013, %) Source: OECD MSTI, 2015.

BERD as a percentage of GDP ( , %) Source: OECD MSTI, 2015.

European Paradox „European Paradox” the EU lag behind the US (plus South Korea and Japan) in terms of R&D and innovation EU spends relatively much on science and R&D, but it only has a limited effect on increasing competitiveness – output appears more in publications than in patents GERD/GDP varied between 0,39% (Romania) and 3,31% (Finland) (2013) Calderini et al. (2007) – patenting and publishing results are often alternatives to each other

Number of Citable Documents (articles, reviews and conference papers) (2013) Source: Scimago, 2015.

Total patent applications (direct and PCT nationat phase entries) - ( ) Source: WIPO,

Total patent applications (direct and PCT nationat phase entries) - CEECs ( ) Source: WIPO,

Reasons Underlying the Lag Strong US dominance in international higher education Ranking lists of universities (ARWU, THES, QS) – a complex problem of competitiveness analysis 1. Johns Hopkins University (2013: $ ), 2. University of Michigan (2013: $ ), …. 7. Harvard (2013: $ ) English as a lingua franca US – one national market of scientific output Institutional differences

10 years of the Hungarian innovation system State institutions – various sectorial interest groups or organizations, corporate actors Hungarian Academy of Sciences New or innovate R&D policies New application systems (e.g. Lendület Program) Specific form of „European Paradox” BERD/GDP – improved Certain elements of R&D and Innovation institutions were modernized.

THANK YOU FOR YOUR KIND ATTENTION!