International Conference Industry and Innovation 2014 Sofia 3031 October 2014 SALVATORE ZECCHINI Chairman OECD Working Party on SME and Entrepreneurship Can a boost ID: 750274
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KEY POLICY CHALLENGES IN FOSTERING INNOVATIONInternational Conference “Industry and Innovation 2014”Sofia, 30-31 October 2014
SALVATORE ZECCHINI
Chairman
OECD
Working
Party on SME and
EntrepreneurshipSlide2
Can a boost to R&D and Innovation (RDI) prop up currently stagnating economies ?Multifactor Productivity (MFP) differences can explain part of differences in
per-capita
incomeRDI is a major component of Multifactor ProductivityMFP has provided a sizeable contribution to economic growth
2Slide3
From innovation policies to growth: A model link 3Slide4
MFP drives per-capita GDP differences (Source: OECD, Johansson et al. 2012)4Slide5
MFP as a main contributor to economic growth(Source: OECD, Johansson et al. 2012)5Slide6
Gvt expenditure in RDI rose even during the last major economic crisis(Source: EU Lessons…2013)6Slide7
But in countries most affected by crisis RDI funding first had an anti-cyclical effect, then declined
7Slide8
Bulgaria’s funding to RDI followed the same pattern(Source: EU Innovation Scoreboard 2014)8Slide9
Bulgaria’s performance in innovation is not so unfavourable (Source: EU Innovation Scoreboard 2014) 9Slide10
Focus: Main challenges for government support policies in RDIIs there a need to support RDI, particularly at a time of fiscal stringency?Who should be the target for support?How should support be structured?What are the most appropriate means to support?How to ensure efficient and effective implementation?
10Slide11
Innovation is a process involving many actors, forms and institutions in a non-linear sense.Product of continuous interaction of
many actorsIt is affected by economic, social and regulatory environmentProne to systemic failuresNeed to intervene on the many
components
of
national
innovation
system
The
two
main
weak
links
are
SMEs
and finance
11Slide12
Bulgaria’s innovation indicators(Source: EU Innovation Union Scoreboard 2014)12Slide13
Barriers to innovationSMEs difficult access to outside finance, lack of competition in the market place, unfavorable investment climate, the social culture,some regulatory constraints, the weak linkages between large and small companies, the dearth of cooperation between universities and entrepreneurs, particularly the start-ups.13Slide14
Where to intervene? On the main shortcomings of the national innovation system(Data source: EU Innobarometer 2014)14Slide15
Factors hampering innovation(% innovating firms with 10 to 49 employees, 2010 – Source: OECD)15Slide16
Factors hampering innovation(% innovating firms with 50 to 249 employees, 2010 – Source: OECD)16Slide17
Factors hampering innovation(% innovating firms with more than 250 employees, 2010 – Source: OECD)17Slide18
Still, 2/3 of surveyed firms innovated in the last 3 years (Data source: EU Innobarometer 2014) 18Slide19
SMEs invest in R&D and innovate less than large firms19Slide20
SMEs introducing product and process innovation in 2008 and 201020Slide21
Surprising: few innovative firms received any funding support (Data source: EU Innobarometer 2014)21Slide22
SMEs generally received much less government aid than large firmsSlide23
Tax incentives benefit more multinational corporations than start-ups and SMEs
23Slide24
Equally surprising: the majority of supported firms did not consider public support important!24Slide25
What policy approach, to overcome system failures, government failures, SMEs hardship, financial market failures, incomplete markets for
funding
RDI?25Slide26
Policy approaches are rather homogeneous across countries, with limited differences in their focus in spite of wide disparities in innovation
performance
Conclusion: there is no policy model valid for all the countries.The choice has to
be
based
on the
country
’s
characteristics
and
its
validity
tested
on the
ground
in
terms
of
innovation
performance
Barriers
to
innovation
: SME
financing
problem
, low
competition
,
poor
investment
climate
, social culture, low
technology
transfer,
weak
linkages
between
firms
and
universities
,
few
collaborative
projects
26Slide27
Government needs to develop a long term vision and a strategy with clear goalsIssues: Policy governanceTop-down
approach vs. bottom-upThe latter is more successfulCreate an innovation constituency within private business sectorChoice of policy instrument mixPoor
implementation
and
bureaucracy
27Slide28
Essential supportDevelop high skills, training, mentoring of firms, incubators, acceleratorsImprove firms’ absorption capacity and business environment
Promote
Production and Diffusion of innovationNew standard settings and regulationsDebt and equity funding of start-ups, innovative firmsPolicy coherence and effective policy
implementation
Public
procurement
Fine
tuning
of
tax
incentives
(
incremental
investment
)
28Slide29
Invest in an innovation culture within the society at large, not just the entrepreneursMain policy message resulting from more than a decade
of
experience:Create an enabling environment conducive to research, development & innovationandGenerate a culture that
promotes
innovation
.
Firms
themselves
should
have
an
important
role
in
shaping
government
policy and
monitoring
its
implementation
.
29