1. OECD World Forum on Key Indicators November 2004 “ A Model to Benchmark Innovation Capacity – the Need for Global Indicators” Jørgen Rosted Director, FORA – Centre for Economic and Business Research, Denmark

2. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk New Growth pattern >The OECD-study “New Economy – beyond the hype” illustrated differences in growth patterns among OECD countries and identified 4 micro-drivers of growth: >Human resources >Knowledge building and knowledge sharing >Information and communications technology >Entrepreneurship

3. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Growth follow-up project >Ministers asked OECD to follow-up on the growth study using benchmarking and peer-reviews to: > Evaluate the importance of the micro-drivers > Investigate policy implications

4. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Benchmarking analysis The new policy framework Specific framework conditions Clusters Business framework conditions Micro-drivers of growth Fundamentals Macro economy Business framework Conditions Micro-drivers of growth Benchmarking analysis Cluster analysis

5. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk A benchmark model to evaluate the importance of different business environments in a global knowledge economy Knowledge building & Knowledge sharing Entre- preneurship Information and communication technology Innovation Management and organization Human resources

6. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk An 8-step approach to systematic benchmarking of micro-drivers of growth >Define good performance and select performance indicators >Identify top-performing countries (check robustness) >Test the interactions among the drivers and their links to MFP growth >Define relevant policy areas and select indicators (check robustness) >Test for correlation between performance and policies

7. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk An 8-step approach to systematic benchmarking of micro-drivers of growth >The critical areas of the framework conditions are identified for each micro-drivers of growth >Weak points in national framework conditions are identified >Improve weak points by using peer review to learn from policies in best performers

8. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk OECD-report >The main Committees in the OECD directorate for Science, Technology and Industry (DSTI) have been working on “Micro-policies for Productivity and Growth” since 2001 >Committee on Industry and Business Environment (CIBE) coordinats the work >The report will be released in spring 2005

9. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Conclusions >Having the fundamentals and the macro-structure right is not enough >Countries also need to have the micro-structure right and only a few OECD countries have that >The OECD report will contain specific policy recommendation for each micro-driver

10. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk The Danish benchmark work builds on the OECD project >Denmark has actively supported the work and applied the results in Denmark >Reports on all four drivers of growth have been published – each identifying key challenges for Denmark

11. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Performance >6-10 indicators are used to measure performance for each of the four micro-drivers >The micro-drivers interact and are correlated with multi-factor productivity (MFP)

12. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Correlation between performance and MFP growth

13. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Framework conditions >8-16 policy areas are examined for each of the four micro-drivers >30-55 indicators are used to measure the policy areas for each micro-driver

14. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Correlation between policy and performance

15. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Spiderweb – Human ressources

16. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Danish report >A report summarizing the work in Denmark – The Innovation Monitor – is available at www.foranet.dk

17. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk The work required an indicator sytem >Measuring performance and framework conditions is a difficult task >To build the indicator system we collected data from both official statistical offices, international organisations and survey data from private sources >This gave us an indicator system specially designed to analyse micro-drivers

18. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Data coverage for performance indicators Micro-driverGood coverage Partly coverage Weak or no coverage Entrepreneurship ● Information & communications technology (ICT) ● Innovation - science and Technology ● Human resources ●

19. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Data coverage for entrepreneurship Policy areaGood coverage Partly coverage Weak or no coverage Administrative burdens ● Regulations ● Taxes ● Start-up Capital ● Secondary stock markets/ alternative exist possibilities ● Culture ● Government support ● Entrepreneurship infrastructure ● Education ●

20. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Data coverage for ICT Policy areaGood coverage Partly coverage Weak or no coverage ICT Infrastructure ● Prices on communication ● Access to ICT in education ● Advanced ICT competences ● Basic e-government ● ICT competences among consumers ● Employees’ ICT competences ● Advanced e-government ● Data security ● Other legislation that indirectly affects ICT use ●

21. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Data coverage for science and technology Policy areaGood coverage Partly coverage Weak or no Coverage Public investment in R&D● Quality of research● Subsidies and tax incentives● Access to venture capital● Cooperation in R&D ● Commercialization of research● Highly educated workers● Customers and suppliers● Competition policy● Relevance of research ● Access to technology ● Access to competencies●

22. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Data coverage for human capital Policy areaGood coverage Partly coverage Weak or no coverage Expenditure on education ● Scope and quality of basic education ● Incentives for education ● Scope and relevance of tertiary education ● Scope and relevance of lifelong learning ● Flexible organisation ● Management skills ●

23. Copyright 2004 © FORA, Langelinie Allé 17, 2100 Kbh Ø - www.foranet.dk Indicator systems >Hundreds of global indicator systems are build for different purposes >There will be synergies and therefore productivity gains in closer collaboration >How could productivity gains be harvest? >The role of OECD?