Itzhak Goldberg Jean-Louis Racine The World Bank Restructuring of Research and Development...
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Transcript of Itzhak Goldberg Jean-Louis Racine The World Bank Restructuring of Research and Development...
Itzhak GoldbergJean-Louis RacineThe World Bank
Restructuring of Research and Development Institutes in Eastern Europe and Central Asia
Knowledge Economy Forum VIII – Fontainebleau, April 29, 2009
Innovation in ECA: Current Trends
3
R&D Inputs R&D Outputs Industrial Performance
How can we measure innovation system performance?
4
R&D Inputs R&D Outputs Industrial Performance
How can we measure innovation system performance?
5
ECA countries invest little in R&D
Sources: UNESCO and USPTO databases
Germany FinlandNetherlands
IrelandUnited Kingdom
BelgiumAustria
France
ItalySloveniaHungary Spain
Latvia CroatiaCzech RepublicRomania Slovakia Estonia
PortugalGreeceBulgaria
Poland
Turkey
Lithuania
Georgia
Azerbaijan Russia
Kazakhstan Ukraine
Belarus
0
50
100
150
200
250
300
350
400
0 0.5 1 1.5 2 2.5 3 3.5 4
R&D / GDP(%)
R&
D /
pate
nt (t
hous
ands
of P
PP
$)
EU-15ECA
6
0%10%20%30%40%50%60%70%80%90%
100%
Aze
rbai
jan
Bul
garia
Kyr
gyzs
tan
Mac
edon
ia
Kaz
akhs
tan
Bel
arus
Pol
and
Rom
ania
Ukr
aine
Slo
vaki
a
Hun
gary
Rus
sia
Lith
uani
a
Cro
atia
Slo
veni
a
Latv
ia
Cze
ch R
epub
lic
Spa
in
Ger
man
y
Sou
th K
orea
Est
onia
Mal
aysi
a
Finl
and
Turk
ey
Government Higher education Business enterprise Private non-profit
In ECA much of the R&D is performed by the government sector
Source: UNESCO database
Sector of performance of R&D
7
R&D Inputs R&D Outputs Industrial Performance
How can we measure innovation system performance?
8
ECA is not efficient at turning R&D investments into patents
Sources: UNESCO and USPTO databases
Germany FinlandNetherlands
IrelandUnited Kingdom
BelgiumAustria
France
ItalySloveniaHungary Spain
Latvia CroatiaCzech RepublicRomania Slovakia Estonia
PortugalGreeceBulgaria
Poland
Turkey
Lithuania
Georgia
Azerbaijan Russia
Kazakhstan Ukraine
Belarus
0
50
100
150
200
250
300
350
400
0 0.5 1 1.5 2 2.5 3 3.5 4
R&D / GDP(%)
R&
D /
pate
nt (t
hous
ands
of P
PP
$)
EU-15
ECA
9
R&D Inputs R&D Outputs Industrial Performance
How can we measure innovation system performance?
10
In ECA, the productive sector is not benefiting from R&D investments
Patents do not result in important productivity gains- Radosevic study
R&D does not translate to better product quality - World Bank/WIFO study
A Look at ECA RDIs Through Case Studies and Benchmarking
1212
Countries in the Sample
What do the case studies show?
A mixed bag•Some are responsive to the market,
others not.•Some operate close to international best
practice while others are far removed from it.
13
14
In some ECA countries, public resources are being spread thin across many RDIs
Total public and private sector funding per staff
0
50
100
150
200
250
300
350
SR
I***
Sin
tef
TNO
Frau
nhof
er
Ars
enal
**
Mix
ed
VTT
FED
IT**
Ele
c-1*
*
Bio
-1 ICT
Spa
ce
Occ
up
Ele
c-2*
Shi
p-1
Ene
rgy-
1*
Mec
h-1
Che
m**
Bio
-2
Ene
rgy-
2
Nuc
lear
-3
Bio
Che
m**
Nuc
lear
-2
Phy
sics
Shi
p-2
Bio
-3
Nuc
lear
-1
Thou
sand
s of
US$
adjusted for PPP
nominal US$
0
2
4
6
8
10
12
14
16
PA
RC
***
SR
I***
Sin
tef
TNO
Frau
nhof
er
Ele
c-2*
Mix
ed
VTT IC
T
Ars
enal
**
Shi
p-1
Spa
ce
Occ
up
Bio
-3
Mec
h-2*
*
Ele
c-1*
*
publ
icat
ions
per
hun
dred
sta
ffECA RDIs publish less in international journals…
Average annual number of publications per hundred staff
Source: Science Citation Index over a five year period
15
0
2
4
6
8
10
12
14
PA
RC
SR
I
TNO
Sin
tef
VTT
Occ
up
Shi
p-1
Ars
enal
ICT
Ele
c-2*
Ene
rgy-
1*
Ele
c-1*
*
…and their publications have less impact than in OECD countriesAverage number of citations of a publication
Source: Science Citation Index over a five year period
16
1717
Although some ECA RDIs are engaged in patenting…
Average annual number of patents per hundred staff
0
1
2
3
4
5
6
Chem
**
Frau
nhof
er
Bio-
1
SRI*
**
FEDI
T**
Nucle
ar-1
Mec
h-1
Bio-
3
Mec
h-2*
*
Bio-
2
Ship
-2
Occu
p
Sint
ef
Elec
-2*
Nucle
ar-2
Mix
ed
Ener
gy-2
BioC
hem
**
Elec
-1** IC
T
Phys
ics
Ship
-1
1818
… few are able to license their IP
0.0
0.5
1.0
1.5
2.0
2.5IC
TEl
ec-1
**Oc
cup
Bio-
1Bi
o-2
Bio-
3Sh
ip-2
Nucle
ar-1
Nucle
ar-2
Chem
**Sh
ip-1
Phys
icsEn
ergy
-2Bi
oChe
m**
Mixe
dSp
ace
Average annual number of licenses per hundred staff
0%10%20%30%40%50%60%70%80%90%
100%
Nuc
lear
-1
Bio
-3
Occ
up
Phy
sics
Ene
rgy-
2
Mec
h-2*
*
Mec
h-1
Che
m**
Nuc
lear
-3
ICT
Bio
-2
Shi
p-2
Bio
-1
Ele
c-1*
*
Ene
rgy-
1*
Ele
c-2*
Shi
p-1
Nuc
lear
-2
A number of RDI are following “technology-push” models …
Share of budget spent on “strategic” research with no immediate commercial application
19
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%M
ech-
2**
Ene
rgy-
2
ICT
Ele
c-2*
Shi
p-1
Che
m**
Ele
c-1*
*
Occ
up
Mec
h-1
Bio
-1
Ene
rgy-
1*
Bio
-3
Shi
p-2
Nuc
lear
-1
Phy
sics
Nuc
lear
-3
Bio
-2
Nuc
lear
-2
…many are ignoring demand
Share of budget spent on marketing and business development
20
Funding affects RDI strategy
21
RDI Reform Strategies
2323
Technology push
Market pull
Private goods
Public goods
↑Closure or
restructure to IV
GOGO, Corporatization or
restructure to II
GOGO, GOCO or Foundation
Quadrant I Quadrant II
Quadrant III Quadrant IV
Privatization or transition to II
Classification of RDIs
24
Publications measure “public goods” production
# publications per RDI employee, weighted by prestige of international journals and publishing houses;
impact of RDI publications on international scientific community, using the number of citations as a proxy
24
25
Technology Push & Market Pull
Assessing RDIs w/ Competitiveness Mission patents: domestic vs. international licenses share of industry funding collaborative projects and spin-offs
25
2626
Is it a public good?
Does it fulfill a strategic mission
and is it performing well?
Is there sufficient market-pull?
No action
Is there sufficient market-pull?
Privatize or
Assess restructuring potential to
increase public good
Closure / liquidation
Corporatize, GOGO or restructure
Closureor
Assess restructuring potential to
increase market-pull through
GOGO, GOCO or NGO
yes
no
yes
yes
yes
no
no
no1
2
4
5
3
6
7
8
9
RDI Restructuring Decision Process
2727
Restructuring Options for RDIs
Option
Relevance to public
goods RDIs
Effect on market- pull of RDIs
Effect on RDI
governanceincentives
Politicalfeasibility
1. Corporatization / autonomy Government- owned + - - ++
2. Insider restructuring, Government-owned + ± - +
3. Government-owned, contractor operated (GOCO) + + + -
4. Non-profit Foundation + - ± ++5. Insider privatization - ± - +6. Outsider privatization - + + -7. Liquidation/closure - + + --
28
Insider and outsider privatization
Lessons: Privatization of enterprises in the transition economies >>> critical selecting the right method.
Insider privatization - sale of the company’s shares to its managers and workers; and
Outsider privatization as a sale to an investor who is an outsider, i.e. neither as manager or a worker of the company
28
29
Government-owned, Contractor-operated (GOCO)
Government contracts out the management of the RDI to an outside contractor but maintains government ownership.
Contractor: university consortium, not-for-profit organization, or professional/ external management team or CEO.
29
30
GOCO cont’d
GOCO contracts to insulate from political pressures.
Attract talented personnel – no civil service rules.
Operational responsibility transferred to a contractor who is paid for these services.
Public funding for operating and investment expenses are agreed upon.
30
31
7 Options and Effects
For RDIs producing mainly public goods, option (3), GOCO is the most appropriate solution.
A second best solution is option (2), insider restructuring: it offers lesser governance incentives and thus less likely to take advantage of market pull.
31
32
7 Options and Effects cont’d
For RDIs producing private goods, outsider privatization is most appropriate when the RDIs has access to markets and can be transformed to a fully commercial company.
For RDIs producing both public and private goods a foundation or insider privatization may be a second best solution instead of closure.
32
33
7 Options and Effects cont’d
For RDIs which needs to be eventually closed, outsider privatization could be used as “market test.
33
34
Public Funding - Quadrants I & III
In principle, only RDIs in Quadrant I which produce public goods and there is little demand in the markets for their outputs - eligible for long-term public funding.
RDIs in Quadrant III – private goods and no market –candidates for closure or restructuring, should get no public funding, except possibly, short term support for severance pay for departing researchers..
34
3535
Technology push
Market pull
Private goods
Public goods
↑Closure or
restructure to IV
GOGO, Corporatization or
restructure to II
GOGO, GOCO or Foundation
Quadrant I Quadrant II
Quadrant III Quadrant IV
Privatization or transition to II
Classification of RDIs
36
Public Funding - Quadrants III & IV
The same logic applies to Quadrant IV – private good with market demand – which may need help in the transition.
The funding approach to RDIs in Quadrant III is mixed: Government owned government operated (GOCO) RDIs may have both private and public projects
36