1. Policies to Support Innovation Driven Growth 2 nd Operational Meeting of the PAM Panel on External Trade and Investments in the Mediterranean José Palacín United Nations Economic Commission for Europe Geneva, 5 May 2011

2. Structure of the presentation Innovation and Competitiveness National Innovation Systems Common problems Policy mix/target settings Different types of policies

3. Innovation as a source of competitiveness Innovation is the creation of new products or processes or the improving of existing ones Innovation is a key way to retain or gain competitiveness Innovation results in higher added value

4. Innovation and competitiveness

5. National innovation systems Innovation is a complex process: emerges from a continuous interaction between –firms, –suppliers and buyers –knowledge institutions like universities or research and development (R&D) organizations –Government policies International dimension

6. National innovation systems Source:OECD

7. Common problems in emerging markets Only a few large enterprises innovate The share of innovative SMEs is very small Weak linkages. Research disconnect Innovation policy success limited by framework conditions.

8. The role of the public sector Market failures – innovation will be underprovided. Specific financing problems Not only financial resources are required: long-term vision, coordination, strategic guidance

9. Policies required Targets to be defined on the basis of the understanding of the national innovation system. Targeting simultaneously various components of NIS (interrelations) Effectiveness of instruments depends on synergies reached

10. National innovative capacity Source: UNECE

11. Generation of knowledge Increasing R&D In particular, higher business R&D Importance of R&D serving to absorb foreign technologies Non-technological innovation- Services Users-led innovation

12. Absorptive capacity Human capital development Business sector involvement (identification needs) Lifelong learning Role of universities: teaching, research. International cooperation and mobility.

13. Diffusion of innovation Importance of linkages The role of partnerships Clusters Support organisations

14. Stimulating demand for innovation Framework conditions Fiscal support Public procurement Sustainability: environmental regulations as a source of support for innovation

15. Improving innovation governance Diversity of national experiences but need to avoid fragmentation Innovation agencies as partners Coordination mechanisms with stakeholder involvement National innovation constituency

16. A map into the future Policy learning as part of the cycle of policy-making: embedded evaluation Importance of strategic intelligence based on a range of instruments

17. Some final remarks Strong public policies are critical to overcome market failures regarding innovation The promotion of innovation concerns many different policy areas- not only technology Linkages and mobility are key to the generation and diffusion of innovation. This importance should be reflected in both domestic policies and international cooperation initiatives.

18. Some publications

19. Contact information www.unece.org/ceci Jose.palacin@unece.org