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![Page 1: Innovation: A Dutch European perspective Luc Soete University of Maastricht MERIT Washington, January 27 th -28 th, 2003.](https://reader035.fdocuments.in/reader035/viewer/2022070412/5697bf861a28abf838c88383/html5/thumbnails/1.jpg)
Innovation: A Dutch European perspective
Luc SoeteUniversity of Maastricht
MERIT
http://www.merit.unimaas.nl
Washington, January 27th-28th, 2003
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Outline
• Leave it to my colleague Dominique Foray to describe in detail impact of digital technologies on process of innovation: just a couple of remarks
• Focus here rather on knowledge gap between US and Europe: also a reflection of the lower diffusion of ICT in Europe
• Four issues: • EU-US gap in private R&D• mismatch public-private research • human capital gap • innovation gap
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Impact of ICT on knowledge production
• Increase in productivity of R&D thanks to the increase in the codification of knowledge and of digital communication between researchers
• Increase in spreading and diffusion of knowledge thanks to digital transparency
• Increase in rate of return to “learning” thanks to digital education forms, distant learning, versioning
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Impact of ICT on knowledge productivity
• IT (I factor equivalent to increase/speed in data manipulation, embodied in machines/instruments) increases the social rate of return to research and development, but private rate depends on appropriation and its limits
• CT (C factor aspect of access, networking) increases possibilities for catching up but depends crucially op open access, know-who, barter exchange of knowledge
• ICT increases social and private rate of return to learning (formal and informal education, training)
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1. The emerging knowledge and efficiency gap between EU and US
• A long term perspective: lagging behind, catching up and again lagging behind in private R&D
• Reflected in the shift in the relationship with productivity growth between the 60’s and 90’s
• EU-US Business Enterprise R&D gap has grown rapidly over 90’s
• Concentrated in ICT sectors and biotechnology
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Figure 1: Business Financed R&D as a % of Value Added
0,00
0,50
1,00
1,50
2,00
2,50
3,00
US
EU
NL
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Figure 2a: Relationship between BERD (1967) and productivity growth (1967-1972)
0.00
0.50
1.00
1.50
2.00
2.50
0 1 2 3 4 5 6 7 8 9 10
Anual Growth of labour productivity, 1967-1973 ( Average growth in GDP per man hour)
BE
RD
%G
DP
196
7
IT
DN
BE
SE
UK
NL
EU
FR
JP
US
DE
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Figure 2b: Relationship between BERD (1995) and productivity growth (1995-2000)
0
0.5
1
1.5
2
2.5
3
0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1 2.3 2.5
Anual Growth of labour productivity,1995-2000 ( Average growth in GDP per man hour)
BE
RD
/GD
P, 1
995
IT
DN
BE
SE
UK
NL
EUFR
JP
USDE
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0.0
20000.0
40000.0
60000.0
80000.0
100000.0
120000.0
140000.0
160000.0
180000.0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Millio
n $
1995 C
ns
t. P
r a
nd
PP
P
US
EU
GAP
Figure 3a: Trend in the BERD GAP between EU and US
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Figure 3b: Trend in the BERD gap by sector
-20
-10
0
10
20
30
40
50
US
EU
US-EU
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Diagnosis
• Dutch insights… • Fragmented RD in the 70’s across EU countries,
strongly linked to national champions efforts• Specialisation across the EU of business RD during
80’s/90’s. Impact of 1992 Single Market on rationalisation of R&D of large MNC’s
• “Attraction” of US in the late 90’s a new phenomenon: concentration of R&D worldwide.
• Efficiency of outside links of R&D activities as important as internal one’s. Hence interest of firms to locate their R&D labs in best local conditions
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2. The growing mismatch between public and private knowledge
• No significant gap in public research between EU and US at least until 2000
• Phenomenon of “Dutch knowledge disease”: • Improving quality and strengthening research capacities, but
no specialisation. Trend towards national research “autarchy” • Duality between internationalisation of private R&D as
opposed to nationalisation of public R&D. Growing mismatch
• Similar trends in the rest of Europe? Hence strong need for “ERA” not just of public research, but of public-private research interaction
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Figure 3c: Trend in the gap in public R&D
-10000.0
0.0
10000.0
20000.0
30000.0
40000.0
50000.0
60000.0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
(milli
on 1
995
$, c
onst
ant p
rices
and
PPP
)
US
EU
GAP
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Figure 4: Trend in public, inclusive higher education, R&D
0
0,2
0,4
0,6
0,8
1
1,2
EU
NL
US
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0
10
20
30
40
50
60
USA
Netherlands
United KingdomSweden
DenmarkIreland
BelgiumAustria
GermanyItaly
France
FinlandSpain
JapanGreece
Portugal
Figure 5: Highly Cited Publications per 1000 Researchers in Govt or Academia
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3. A Human Knowledge Gap
• Significant gap between EU and US in employment of S&E in Business sector
• Ageing of European S&E: from teachers down to professors and S&E researchers
• Renewal rate of human capital in Europe low, immigration levels low, emigration high in those countries with low levels of private BERD
• Need for a reformulation of Barcelona and ERA?
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Figure: 6 S&E as % of labour force (growth rates 1995-2000)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
EU 15 US Japan
Business Government Higher education
(2.1)
(0.6)
(2.5)
(3.3)
(3.5)(0.5)
(3.2)
(3.8)
(1.6)
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Figure 7: S&T graduates by EU member country
0
5
10
15
20
25
1993 1994 1995 1996 1997 1998 1999 2000
D
F
RL
NL
FN
UK
US
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4. The Innovation Gap
• In the end it is the innovation gap which is most important: many factors play a role:
• Patent costs in EU compared to US• Capital costs
• The Lisbon consensus: “the most dynamic and competitive region in the world, while maintaining/activating Europe’s social model”
• Has the real question been asked: link between innovation and risk taking and labour market security, in particular hiring and firing?
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Figure 8: Patent costs in EU, US and Japan
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American firms grow faster
EU0%
20%
40%
60%
80%
100%
USA
Creation of EU and US firms among the World top 1,000
Since 1980
1950 - 1979
Before 1950
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Smaller firms need R&D
Annual growth of GDP 1991- 2000 (%)
Proportion of innovative firms doing R&D (%)
0
2
4
6
8
10
12
0 10 20 30 40 50 60
EUFRES DE
DK
B
FIN
P
AU
NL
IT
IRL
UK
SW
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Figure 9: Regulatory barriers index (OECD)
00.5
11.5
22.5
33.5
44.5
5
US UK CA DK FI FR AT SP GE IT SW NL PT
ind
ex
val
ue
Product market regulation Administrative burdens
Burdens on start-up Employment Protection 1998