1

The global and European context for national and regional STI

policies

Peter Tindemans

Stockholm 26 April 2007

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Overview

• Main message: learn to deal with new and changing balance between the various levels that now unavoidably interact and contribute to STI policies– Global,– European,– National, – Regional – Institutional (i.e. relatig to individual institutions)

• Illustrations of the globalising stage for STI policies• The European theatre and current and necessary

dynamics, as revealed by comparisons with the US stage

• Things to do, to reflect upon when laying out national policies

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The global stage for STI• Asia outside Japan begins to show up in global R&D statistics• China (still a developing country!): GERD >100 B$, second after US (~ 340

B$), ~ 1.5% GDP, 10% of world GERD (India ~3% of world GERD)• Much less so far in patent statistics: few tenths of percent. Will change rapidly• University ranking (Shianghai Jiaotong)

• Indian Institute of Science, Bangalore only 300-400; first IIT 400-500: Artifact ranking? Less emphasis on research?

Asia Japan Australia/N-Z China

Top 100 9 6 2 0

100-200 15 3 4 2

200-300 16 2 4 6

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Asian university developments

• 7 Indian Institutes of Technology (system developed from 50-ies till 90-ies) + Indian Institute of Science (older)– ~ 2500 undergraduates, 1500 graduates– Highly selective: 2% admission rate (“doing PhD at

Cornell afterwards: peanuts”• Japan’s university reforms

– Mergers among 100 national universities; more concentration and cooperation across faculties

– More autonomy, stronger internal management– Significant increase in competitive funding, focusing

on larger grants and young scientists to set up shop.• Singapore: lured Bertil Andersson

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Conclusions

• Do we need to be afraid? No, economic law of comparative advantages

• Can we transform OECD Global Science Forum into a serious forum to discuss the full global STI stage?

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European theatre highlighted by US comparisons

• Three broad propositions1. Europe’s and nations’ R&D and Innovation landscape is and

must be very inhomogeneous (peaks and valleys): concentration versus dilution

2. Regional dimension gains in importance• In many countries some sort of decentralisation • In STI: innovative regions gain ascendance, and require more

policy attention. That may but need not necessarily be translated into more policy and funding responsibility at regional levels

3. We need a new balance between European and national funding

• Many cases and illustrations from US and Europe provide concrete examples of level at which to pitch policy responsibility and funding. The direction in which to go is clear, but in most cases no unique best solutions exist (one reason is: regions like nations come in many different kinds)

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An underlying mindset: accept and cherish diversity and inhomogeneity

• In terms of R&D concentration and innovation performance, continents and nations/states are very inhomogeneous

• Governments at all levels should have the courage to recognise and accept this

• The situation is not static, but it takes vision, time and money, as well as realism to change it.

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Some facts about the ‘continent’ US

• Overall funding of university research– 60 % federal (NSF, NIH, DoE, NASA, DoD)– 7 % states– (for completeness: 7 % industry, 25 % private

foundations, own income)• In addition, much federal (and federally funded) labs

(FFRDCs, NASA labs, NIH institutes, ..)• Heavy concentration of public and private R&D on

East and West Coast: only exception Detroit, Chicago: car manufacturers! A less well-known illustration: 1/3 of all SBIR/SBTT awards to California and Massachusetts

• Also within states often heavy concentration: Massachusetts, California, North-Carolina

• 200 universities carry out almost 100% of all R&D

Continental role for basic research, large facilities, ‘continental’ mission-oriented labs

Inhomogeneity and concentration

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HR

NL

UK

DE

DK

SE

CHFI

BEFR

ATIS

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NO IT

JP

US

TR

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ESEE

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CY

SI

PT

CZ

LT

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-4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0

Average grow th rate of SII

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Dotted lines show EU25 performance.

Innovation Leaders

Followers

Catching-up

Trailing

European countries innovation performance: the Innovation Scoreboard

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Summary Innovation Index

• Input – Innovation Drivers– e.g. S&E graduates– Broadband penetration

• Input – Knowledge Creation– e.g. public and business R&D expenditure

• Input – Innovation and Entrepreneurship– e.g. % SMEs innovating in house– Early stage venture capital

• Output – Applications– e.g. employment in high-tech services– Sales new-to-market products

• Output – Intellectual Property– e.g. EPO and USTP patents– Trademarks and community designs

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Regional specialisation in Europe

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Regional Innovation Index

• Human resources in S&T• Participation in life-long learning• Employment in medium-high and high-tech

manufacturing• Employment in high-tech services• Public R&D expenditures • Business R&D expenditures• EPO patent applications

All in all 208 regions in EU-25

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MIT Stanford ETHZ Cambridge Karolinska

Scope Broad1 Broad2 Science and engineering

Broad3 Medical

Budget, excl construction

1.4 B$4 2.6 B$4 750 M€ 780 M€ 440 M€

Number of students

10,200 14,900 12,700 17,800 8,000

Proportion undergraduate to graduate students

2:3 45:55 2:3 2:1 3:15

Budget for research

660 M$ sponsored R&D

900 M$ sponsored R&D

430 M€285 M€6

research grants

370 M€

Contract research industry

~15% <5%7 ~9%8 10-15%9 ~9%

Key data for some US and European universities

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Zooming in: California, Silicon Valley

• State California is big (population 36 M, state budget 170 B$), has powers in important areas such tax instruments (both as a source of income and economic instrument), regulations (e.g. environmental) and (higher) education, yet in STI in many respects more of a ‘region’

• Region Silicon Valley small (population 2.5 M, 3900 sq. km = 1/10 of Netherlands); not a single administrative unit

• What instruments do they use in the area of R&D and innovation?

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California policy mix in R&D and innovation• Funding public Higher Education plus indirectly infrastructure for

R&D at public universities• Funding, and is requested to improving science and math teaching

in K-14• Only selected investments in R&D, focused on special initiatives at

UC (or UC managed labs); all managed by UC– California Institutes for Science and Innovation (4, at different campuses

of UC; collaborations with industry; California provides once-only say 100 M$ each, requiring matching of 200 M$; usually new buildings, running costs partly from investment fund, rest from federal grants etc)

– UC Discovery Program (60M$/y; individual industry-sponsored (>50%) projects in selected areas at UC

– Helios project at Berkeley Livermore for carbon-neutral energy– Western Institute of Nanoelectronics (UC Campuses, Stanford plus 6

major manufacturers)• Tax policy, e.g. suggestions for tax incentives for angel investment

to reverse decline in seed and early stage funding• Regulatory policy (environment, accelerating broad band

deployment, …)• For free: the climate

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Lessons

• effective actions only when responsibilities/competences and money are available

• Focus on limited number of actions and policy areas

• Focus on strengthening institutions (effectively only UC) and working through these institutions

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Silicon Valley•No policies

•‘community’-type of organisation; Joint Venture: Silicon Valley Network

•companies, banks, law and accountants, schools, local government, universities, hospitals, museums,….

•Focus is SV in all its aspects: education, crime reduction, health care, business conditions, culture, housing and recreation, etc

•Goal: keep SV the thriving place it is by working on variety of initiatives

•Identify challenges, and take them back to one’s own organisation, or as basis for lobby at state level

•Create consensus on new themes: energy and clean technologies

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Analytical tool: The Silicon Valley Index

“Measuring the strength of the economy and the health of the community”

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The new theme: energy and clean technologies

Venture capital investment in clean technologies is surging, as shown by quarterly data

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Lessons for/from strong innovation regions such as Silicon Valley

• Competences/capabilities, critical mass and density (‘specific mass’), focus

– Strong universities and R&D institutes, strong companies,‘themes’; count density: number/’volume’/’mass’ per sq. km

– This is important aspect of ‘realism’ to heed for ‘voluntarist’ an ambitious governments

• Culture of cooperation and entrepreneurship

• Facilities– Venture capital; science, technology and industry campuses;

incubators; business development support

• Sense of direction, organising power– Uniting politics, business, knowledge and many others, such as in

Joint Venture: Silicon Valley Network

22Jan Cobbenhagen / BioPartner Center Maastricht

Dedicated Biotech life science companyUniversityResearch CampusScience Park

A cross-border region in Europe with critical mass:

NL-BE-DEEindhoven

Leuven

Size ~ Silicon Valley

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Eindhoven

Venlo

JülichGeleen

Aachen

Maastricht

Liège

Hasselt/DiepenbeekLeuven

Philips Research Lab

Philips CFT

ASML

TUEindhoven

TNO Industry

TNO Automotive

Océ

FZ Jülich

RWTH

Philips Research

University Hospital

Fraunhofer Institutes

Ford European Research Centre

U Maastricht

University Hospital

DSM

U de Liège

University Hospital

U HasseltIMEC

KU Leuven

75 km

Beerse

Geel

VITO

EU JRC

Janssen Pharma

(Johnson & Johnson)

Three-countries Region, many major public and private knowledge players

Helmond

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Developing what is requiredCompetences, critical mass and density (‘specific mass’), focus• Micro- and nano-electronics; ‘hardware’ side of ICT• Automotive • Health Care and Life Sciences• Chemistry• EnergyCulture of cooperation and entrepreneurship• Large cooperative projects companies/universities (e.g. molecular medicine and imaging, biomaterials)• Many entrepreneurial courses at universities• Several business networks Facilities• Several Venture capital companies• Science and business parks (open innovation, business development, incubators): High Tech Campus

Eindhoven, DSM Campus Sittard-Geleen, TechnologieZentrum Jülich• Active regional development agencies• Euregional Automotive competence centre: several technology support centres agreeing on

complementary investments in R&D and design servicesSense of direction, organising power: politics, business, knowledge• Sub-sub-regional: in Limburg Steering Committee, Agreed Agenda• Sub-regional: South East Netherlands Steering Committee, Agreed Agenda, backed up by national

policy• Regional: evolving (Life sciences, Euregio, ..), but varying competences and political and administrative

cultures, political boundaries don’t fit logic of ‘knowledge economy’. Ineffective national and EU support. Common cross-border vision still difficult

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‘Opening up’ of industrial research process

R&D Lab of company XFirm X

Developing technological core competences within the company X

University-industry

cooperation

Firm’s

own

research

lab

Public-private partnership

High-tech

SMEs

Pre-competitive R&D with

competitors

Value creation: products, processes etc

Worldwide search and evaluation of technology and knowledge

New firms, s

pin-offs

Firm X itself

Joint ventures

Licensing technologies

‘Open innovation’ Research Campus, with•Venturing

•‘Incubator’

•Technology transfer and support, …

“Exploring wider range of knowledge areas”

Creating more value faster“More focus and resources for firm’s own competences”

NothingIn the

past

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High Tech Campus - Eindhoven• 7,000 – 8,000 people by 2008• Synergy, efficiency and speed• Attractive conditions for R&D staff; state-of-the-art ICT• 25 new buildings + 8 renovated buildings (Philips Research)• Conditionally open to other firms and institutes

1994 2008

Source: Philips Research

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Regionalisation can be successful: the case of Flanders

• Belgium: probably most decentralised country in Europe. Flanders can conclude formal international treaties with e.g. Netherlands

• R&D and innovation, and HE, almost fully responsibility of regions, such as Flanders (exception space; EU policy making shared)

• Flanders (population 6 M) GERD ~ 3% of GDP• 1982 “Third Industrial Revolution” vision, resulted in 2

spectacular successes: IMEC (micro-electronics) and VIB (Flemish Institute of Biotechnology). Vision, money, realism.

• Leuven University has one of Europe’s best technology transfer enterprises: “Leuven Research and Development” (financially fully independent of university)

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Should innovation always be dealt with nationally or regionally? USA: the case of SBIR/SBTT

• Small Business Innovation Research/ Technology Transfer Programmes.

• SBIR: ~ 2% of R&D of US agencies has to be spent on R&D by SMEs (<500 employees); considerable size: 2 B$ (40% of FP6; another illustration of lack of focus of FP)

• SBTT: much smaller amount (~10% of SBIR) for joint R&D by a small company and a university or institute

• Effective, though success rate is low (17%) and complaints about bias towards companies knowing the trick

• Federal innovation programme, operated by individual agencies

• Agencies define priority areas; idea is that innovations result that will serve the agency and thus the country

• Happens also on larger scale: ‘Freedom Car’, ‘clean coal-fired power station’. DoE, DoD, NASA, etc

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Can Europe do the same?• So, effective ‘continental’ innovation stimulation (apart from

self-evident tax, regulation and procurement measures) feasible. However, this is not about stimulating innovative regions!

• Is a SBIR-like programme possible in Europe? NO, Europe does not have the equivalents of US agencies, not even in agriculture (‘lawyers versus extension service’).

• (Theoretically, it could be done as a sub-programme of FP, and it would be much better than all current SME-stimulation in the EU. But difficulty of priority setting, and the strictly European idea of limiting support to cooperative projects will doom it.)

• Similarly, large projects driven by societal needs (energy, environment, …) difficult to organise: lack of agencies, ‘juste retour’, strict interpretation of state aid regulations

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Things to when redesigning national policies

Context: new balance between European, national and regional funding responsibilities

• Focal points for EU R&D action– ‘ERCs’; FP=mission programmes, including R&D procurement,

and ‘SBIR’; – Large facilities

• Supporting innovative regions• A Cluster EIT helps strong innovative regions• A stronger system of European universities and research

centres• An improved environment: pensions/social security,

improving European patent system, mind set

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Changes in EU R&D actions

– Basic, academic, frontier research increasingly to be handled as ‘continental’ affair: so increase considerably budget for ERC, create more ‘ERCs’; decreasing role national research councils

– Focus FP on • a small number of major European ‘missions’ (e.g. energy,

contagious and epidemic diseases, space; • these would provide scope too for major mission-driven R&D

procurement actions) • and maybe on a SBIR-like programme (but forget

requirement to cooperate).

Can Joint Technology Initiatives help, or another example of too many actors and insufficiently focused goals?

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Requirements for orderly decision making on large facilities

• Budgets: size, availability, sustainability– USA FY2003: 4.4 G$ for R&D facilities (1.0 for DoE) versus Europe: ?? –a

guess, looking at LHC, DIAMOND, SOLEIL, Barcelona, ISIS-II, FRM-II, etc plus ESA, leads to 1.5 to 2 B€

– Availability and sustainability reasonably secure for ‘CERNs, ESAs’ and Nuclear fusion facilities (ITER)

• Reviews, strategies: now mixture of ad-hoc and structured reviews and assessments. Example UK, Germany, France.

• Budgetary process (defines underlying decision rhytm) and decision mechanism, preferably across scientific areas.

– USA has DoE (less NSF) and now NIH, the NAS/NRC foresights and evaluations, interagency consultations, several facility-driven ‘federal labs’

– Role of EU• Countries object(ed)• Present efforts: “G5”; EU Forum on Scientific Infrastructures; FP6

• Organization of community, national and European

From presentation 08-04-02 for Institute of Physics

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Has something changed since 2002?• ESFRI Road Map, October 2006• No progress on mechanism for decision making• Last large facility (ESRF) decided in 1988

– LHC is different and ‘simple’: budget (CERN budget) and decision making mechanism (CERN Council) exist

– ITER different too: budget (EURATOM) and decision making mechanism (Commission has mandate, and consultation mechanism with MSs)

– Human genome: Europe saved by private foundation, Wellcome Trust• Two major new ones around the corner?

– X-FEL (governmental discussions ongoing since 2003!)– ESS: two formal bids (Sweden –Lund; Spain/Basque Country –

Bilbao); a third coming (Hungary). • Consider creating Fund (0.5 B€/y) from annual EU budget

surpluses; or national research infrastructures budgets, and ESFRI-based, ‘variable geometry’ decision mechanism (like in ESA)

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Innovative regions

• Effective interplay between national, regional and EU policies needed

• ‘soft capital’ (culture, living and recreation environment, ‘community’ organisation, technology transfer mechanisms,…): region, universities/institutes in region

• How to strengthen ‘hard capital’ (strong institutions, VC, …)?– Regions: only focal areas and investments (cf California’s

HELIOS and Institutes for Science and Innovation)– National governments and agencies, except in some federal

(DE, BE) and strongly decentralised (ES) countries– Role EU, normally not. See however “Cluster EIT”

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An alternative EIT: a Cluster EITThink of Cold Spring Harbor, Scripps, Silk…

• Create ~20 European Institutes of Technology: 300 scientific and engineering staff plus postdocs, PhDs; annual budget 70 M€

• Theme from problems identified by industry as most significant next 10-20 years

• Let strong regional/national consortia built around one or very small number of universities/institutes compete. Structural Funds and regional strongholds throughout Europe (specialisation) provide reasonably level playing field

• High-level faculty and infrastructure, many visitors (including industry), academic backing, ‘city’-environment, shared techtransfer facilities with host university

• 1/3 core funding, 1/3 structural funding from consortium, 1/3 competitive

• Core funding ( 500 M€) from European Innovation Fund (fed by annual surpluses on EU budget), or one or small number of countries with high ambitions

Source: Peter Tindemans, Luc Soete, Hans Wigzell, Alex Zehnder, Driek Vergouwen (2007) for European Parliament http://www.merit.unu.edu/publications/docs/200704_EIT.pdf

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Challenges for national, not EU policies for university ‘system’

• more concentration (≠ more students per university• larger differentiation in mission (where are

colleges/undergraduate universities, polytechnics apart?) and quality

• increased autonomy• increased selectivity of admissions • more flexibile internal organization and funding

arrangements to stimulate interdisciplinarity • changing the mind-set of students and staff: focus on

outside world – ETH Zürich: 8% if students at entrance consider being

entrepreneur; 2% at departure • more flexible employment regimes (e.g. between

academia and companies)

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ERA???

• ERA discussion should, contrary to Green Paper, focus on these issues(‘the real things’)

• Changing mechanisms and priorities FP7 is only small part of the problem; the real problems are on the tables of national governments (including decisions to create new European mechanisms, and establish a new balance between EU and nations