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© Sujai Shivakumar, Ph.D. 1
Addressing the Innovation Imperative
Science and Technology Landscape in a Changing WorldEnhancing US Collaboration with the EU and Member States
December 12, 2011Washington DC
Sujai Shivakumar, Ph.D.Board on Science, Technology, and Economic Policy
The National Academies
© Sujai Shivakumar, Ph.D. 2
Global Challenges for the 21st Century• Fostering Economic Growth through Innovation
– Driving domestic Growth and Employment • Developing New Sources of Energy
– Commercializing renewable alternatives to oil– Increasing the capacity to fuel growing global demand for
electricity• Addressing Climate Change
– Growing a Green Economy; A major Growth opportunity• Delivering Global Health
– Transforming large investments in research to affordable and personalized treatment and care
• Improving Security– Through all of the above
• Addressing these Global Challenges requires Innovation
Leading Countries and Regions are Responding to the Innovation Challenge
• They are providing five things:– High-level Focus on Growth and Strength– Sustained Support for Universities– Rapidly Growing Funding for Research– Support for Innovative Small Businesses– Government-Industry Partnerships to bring new
products and services to market
• They are investing very substantial resources to create, attract and retain the industries of today and tomorrow.
© Sujai Shivakumar PhD. 3
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China’s Goal: To Become an “Innovation-Driven Economy”
by 2020• Boosting R&D Investments– Expenditure on basic research doubled between 2004 and
2008– Tax incentives for enterprises that invest in R&D
• Building R&D Infrastructure and Facilities• Focus on building world class universities to
create a Skilled Workforce• “Indigenous Innovation” supported by
Government Procurement and Financial Support– Financing for large projects– Facilitating Credit and investment capital for SMEsSource: Mu Rongpin, 2010 UNESCO Science Report
R&D Expenditures: Asia’s Surge
© Sujai Shivakumar, Ph.D.
The rapidly growing R&D expenditures of the Asia-8 economies (China, India, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand) surpassed those of the EU-27 in 2003.Source: NSF 2010 S&E
Indicators
U.S.U.S.
AsiaAsia
E.U.E.U.
The Rise of Global Innovation poses new
ChallengesEurope and the United
States
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New Challenges for the US and EU
• New Competitors in New Markets– Emerging powers like China and India have critical masses of
highly educated scientists and engineers, rising R&D spending, and large, rapidly growing domestic markets for high-tech products.
• New Patters of Collaboration– Information technologies make knowledge, money, and people
flow across borders with ever-greater speed and ease– Growth in open collaborative innovation networks linking
corporations, researchers, investors and institutions around the world
• New Innovation Hubs– Innovation hubs like Silicon Valley and greater Boston, face greater
competition from dynamic new commercialization zones, such as Taipei, Shanghai, Tel Aviv, and Bangalore.
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What is the Global Impact of China’s Innovation
Strategy?• Competitive pressures are providing consumers
with lower priced manufactured goods, but…– Imposing high environmental costs– Displacing workers and companies around the world
• Large scale free-riding on the global innovation system is not sustainable for China or for the US and EU– China is leveraging its large domestic market to get foreign
firms to transfer their technology—short term approach– Weak IP allows copying of foreign technology—but cripples
innovation in ChinaSource: Carl Dahlman, “The World Under Pressure,” 2011
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How is Europe
Addressing the
Innovation Imperative?
10
EU Innovation Funding Mechanisms: Some of the Most
Innovative in the World• 7th Framework Program (€ 50 Billion)
– Support to private companies, universities, public authorities, and researchers in developing countries
• Competitiveness and Innovation Program (€3.6 Billion)– Seeks to provide SMEs better access to finance and
business support services in the regions • EU Cohesion Policy (€86 Billion)
– Structural and Cohesion funds spending on innovation, growth, jobs as well as sustainable development goals
• Lifelong Learning Program (€ 6.2 Billion)– Erasmus and Leonardo Programs
Source: Delegation of EU to Washington, Jan 2010
© Sujai Shivakumar, PhD11
The European Paradox
Large international share of scientific publications
Low number of patents and share in high tech products trade
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Resolving the Paradox: Europe’s Best Innovators are
Changing• Finland, Sweden, the Netherlands,
Germany & France are among those– Making Substantial public R&D investments
– Internationalizing the innovation environment
– Reforming universities and public research institutes
– Mobilizing private capital for start-ups and growth companies ( eg. by providing tax incentives)
– Introducing new partnership programs for greater productivity in the services sector (private & public)
13
How is the United States Addressing the Innovation
Imperative? Strengths and Challenges
National Shares of Global R&D
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Source: OECD, Main Science and Technology Indicators, 2008.
U.S.
Germany
France
UK
Japan
Korea
China
Others
Other EU
Federal R&D investment as a percentage of GDP has been
declining
© Sujai Shivakumar, PhD. 15
The Major Risks to the U.S.
• Complacency about our competitive position in the world
• Limited attention to the composition of the economy, including trade and investment policy
• Focus on current consumption rather than investment for the future– A lack of investment in R&D on the scale of our
fathers and our competitors
• Failure to focus on the commercialization of research and on manufacturing
© Sujai Shivakumar, PhD. 16
What must we need to do to Remain Competitive in the
21st Century?Preserve our AdvantagesReinforce our StrengthsEncourage Cooperation
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Major U.S. Advantages in Innovation• Openness to science and innovation
– Trust in Science & Scientific Institutions
• Positive Social Norms– High Social Value on Commercial Success – Forgiving Social Norms allow more than one try
• Entrepreneur-friendly Policies– Markets Open to Competition– Gentle Bankruptcy Laws permit rapid recovery– Taxes give Prospect of Substantial Rewards
• Strong Intellectual Property Protection: • Encourages Research & Diffusion of Research
Reinforce our Strengths• Boost R&D investment:
– The U.S. must fund R&D at the higher levels authorized under the America COMPETES Act
• Sustain University Research• Build and Reinforce Successful Public
Private Partnerships: – Renew and Expand programs like SBIR
• Attract Foreign Talent: – Reform immigration laws to attract foreign
scientists, engineers, and entrepreneurs
© Sujai Shivakumar, Ph.D. 19
Building Innovation Clusters
• State and Local Initiative: Traditionally, state and local governments have sought to stimulate cluster growth
• Lack of Critical Mass: In many cases, however, state and local efforts lack critical mass– Funding; Facilities; Sustained Policy Support
20
New Federal Initiatives for Clusters
• Energy Regional Innovation Clusters– DOE initiative to develop regional clusters in solar power,
energy-efficient buildings, nuclear energy, and advanced batteries.
• Regional Innovation Strategies Initiative– Commerce-EDA initiative to map clusters and provide
grants to support local cluster programs
• Nanoelectronics Research Initiative• NIST initiative brings together industry, government, and
academia to develop next-generation semiconductor technologies
• Index, a 11-university consortium, is based at the State University of New York-Albany.
21
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Conclusion
U.S. –E.U. Cooperation can help us both Address this Innovation Imperative
© Sujai Shivakumar, Ph.D. 23
The U.S. Remains an Outstanding Partner for STI
Cooperation• Our open innovation ecosystem allows you
to:– Connect with a robust and open innovation
network– Draw on the US R&D and University Systems– Access one of the worlds largest and most open
markets– Attract the attention of some of the largest &
most dynamic overseas investors
© Sujai Shivakumar, PhD24
Our Common Challenge• The Challenge for Europe and the United
States is to Adjust to the new Globalization Dynamic
• This involves initiating change through competitive incentives: – Incentives for entrepreneurial activity for
Small Firms, Large Firms, and Universities– Incentives (not mandates) for cooperation
among all actors
• Cooperation and Mutual Learning is the best way forward
25
Thank You
Sujai Shivakumar, Ph.D.Board on Science, Technology, and Economic Policy
The National Academies500 Fifth Street NW
Washington, D.C. [email protected]: 202 334 1337
http://www.nationalacademies.org/step