1. R&I Policy in Latvia Recent Reforms Dr. Agrita Kiopa Deputy State Secretary – Director of Higher Education, Science and Innovation Department Ministry of Education and Science of Republic of Latvia

2. Key Statistics Million EUR % of GDP Funding from structural funds R&D Funding from higher education institutions R&D Funding from businesses R&D EU framework programme funding State funding R&D Total investments R&D, % of GDP INDICATORS Base value 20172020 Investment in R&D (% from GDP) 0.6 (2013) 1.21.5 Position in the EU Innovation Union Scoreboard modest (2013) modes t follower Efficiency in the processing industry (EUR per employee) 20,126 (2013) 24,50 0 29,000 Private sector investments in R&D (% of total investments) 21.8 (2013) 4648 Proportion of innovative companies (% of all companies) 30.4 (2012) 3540 Proportion of high-technology and medium-high-technology sectors in the export of Latvian goods (%) 23.8 (2012) 2731 The number of R&D personnel (public, private sector) 5593 (2013) 63007000 A smaller number of stronger publicly-funded scientific institutions 42 (2013) 3020 Proportion of graduates (ISCED level 5 and 6) in the STEM fields from the total number of graduates, % 19 (2012) 2527

3. Results of Assessment of Scientific Institutions (2013) Assessed 150 scientific units 4 and 5 points – 15 units 3 points – 33 units 2 points – 70 units 1 points – 22 units 0 points – 10 units PANEL OBSERVATIONS Absolute low level of financing Average level of quality and performance in the Latvian research system has scope for improvement Teaching and research should not be separated in a small country Perverse incentives in the system encourage fragmentation Human resource and research management skills need radical improvement Internationalization of people and themes is urgent

4. Role of Government – Enabler Core programmes to implement Science, Technology & Innovation Guidelines (2013) adopted in 2014 and in implementation: 1)Structural reform and fostering excellence of research institutions - concentrating research resources and developing research programs for internationally competitive Research Institutes and Universities 2)Reform of HE funding system – introducing performance model, integrating study with research, and alligning the two with needs of sustainable economic development 3)RIS3 implementation and monitoring system - institutionalizing entrepreneurial discovery, excellence, relevance and sustainability 4

5. Higher Education Council gives suggestions for the state funded study place allocation to MoES Higher Education Council with MoES and line ministries analyze this information in the context of funding allocated for the year MoES finalizes and approves the state funded study place allocation for the upcoming year Previous model of Higher Education Funding: One-pillar “Study –Place” Model HEI’s evaluate their capacity to produce specialists and suggest the distribution of study places Line ministries give their suggestions about the necessary specialists in their fields Employer representatives give suggestions related to the labour market needs in the relevant sector Ministry of Economics provides the labour market forecast for the upcoming years (medium-term forecast) The procedure defined in the legislation

6. Towards a Three-pillar Funding Model: Stability/ Performance/ Development Stability: “Study places” as the form of state budget allocation Performance: Performance agreements which specify target indicators Integrated state allocation for studies (study places) and research (basic funding) Development: Strategic specialization Funding for development Agreements for medium-term development stability change 0-scenario (stagnation) Slow development Development of the knowledge society

7. Links Created between Science, Technology and Innovatin and Social and Economic Development Needs: Implementation of the Three-pillar Funding Model for Higher Education 7 In state funded study places 53% of students (state HEIs ) Budget funding for study places Budget funding for study places Budget funding for research Budget funding for research Performance-based funding in 2015: External funding; MA, PhD in research (FTE) Performance-based funding in 2015: External funding; MA, PhD in research (FTE) ERDF funding 215 - 2018: Post-doc research Innovation grants Joint programmes Strategic specialization ERDF funding 215 - 2018: Post-doc research Innovation grants Joint programmes Strategic specialization Transition to the new funding model will begin in 2015: Revision and optimization of study places’ model Upgrading performance agreements Introduction of performance incentives Programming structural funds’ activities

8. RIS3 for Latvia: “Hybrid Strategy” Transformation of economy towards higher added value, productivity and more effective usage of resources 8 1. Structural changes of production and export in the traditional sectors of the economy; 2. Growth in sectors where there is or is likely to create products and services with high added value; 3. Branches with significant horizontal impact and contribution to economic transformation. Directions: Priorities: 1. High added value products 2. Productive Innovation System 3. Energy Efficiency 4. Modern ICT 5. Modern education 6. The knowledge base (Bio-economy; Biomedicine, medical technologies, biopharmacy and biotechnology; Smart materials, technology and engineering, Smart energy; ICT) 7. Polycentric development 1. Knowledge-based bio- economics 2. Bio-medicine, medical technologies, bio-pharmacy and biotechnologies; 3. Advanced materials, technologies and engineering systems 4. Smart energy 5. Information and communication technologies. Specialization areas: Objective: to increase innovation capacity and to create innovation system that promotes growth of economy

9. Result of Implementation of the Smart Specialization Startegy Change of economic model 9 New competitive advantages

10. The Concept of the RIS3 Monitoring: Three-level Monitoring System 10 The overall goals of the RIS3 RIS3 macro level indicators RIS3 micro level indicators The institutions involved: LSISC, MoES (+SEDA) MoE (+IDAL,) MoF (+CFCA, DFI) MoA (+RSS) MoEPRD, Cross-Sectoral Coordination Centre Defined in: (A)NDP 2014-2020; (B)Latvia’s NRP for “Europe2020” implementation; (C)National Industrial Policy Guidelines 2013–2020; (D)Science, Technology development and Innovation Guidelines 2014–2020.  INDICATORS achievable by the planned support tools/ programs;  DATA obtained from the management information system, project applications and reports.

11. Thank you for your attention!