Research Institute of Economy, Trade and Industry (RIETI)
RIETI BBL Seminar
Handout
September 14, 2012
Speaker1: Andrew W. WYCKOFF (OECD)
Speaker2: Dominique GUELLEC (OECD)
http://www.rieti.go.jp/jp/index.html
INNOVATION IN THE
ECONOMIC CRISIS AND
BEYOND
Dominique Guellec
Caroline Paunov
Country Studies and Outlook Division
Directorate for Science, Technology and
Industry
OECD
Structure of the presentation
1.
Innovation and the macro economy
2.
Innovation in the current crisis
3.
Policies
4.
The Outlook for innovation?
2
3 key factors of the current business cycle for
innovation
Downturn in
Economic Activity
Weaknesses in
Financial Systems
High Levels of
Sovereign Debt
What to expect for innovation?
Two factors for aggregate innovation: i) innovation performance of the
existing system and ii) firm dynamics/ entrepreneurship
Reduced demand for products
→ competition (“creative destruction”)
→ resource reallocations
Public budgetary situation
Reduced demand for products
→ cash flows reduce innovation possibilities
→ demand for high-tech products
→ competition (“rents” for innovation)
Reduced liquidities
Uncertainties
Public budgetary situation
Innovation in the crisis and beyond
1.
The economic crisis that started in 2008 has negatively
affected business innovation and R&D in all countries.
2.
The crisis and the recovery have been uneven across
countries, industries and categories of firms.
3.
Some have featured better: countries in Asia, including Korea
and China; large multinational firms in high tech industries.
4.
VC, start ups and SMEs have been hit the hardest, and have not
recovered yet (entrepreneurship still low).
5.
The crisis has revealed and amplified weaknesses (and
strengths) which pre-existed, across countries, sectors and firms.
5
Business enterprise R&D has partially
recovered after the 2008-9 shock
BERD funded by business, yearly growth rate (%)
10.0
5.0
0.0
Japan
United States
Total OECD
-5.0
EU-15
-10.0
-15.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
6
Source: OECD.
A deep through followed by a fragile recovery
Patent Filings are hit by the crisis
PCT Filings; 5 months moving average; yearly growth rates (%)
15
US
10
EU
World
5
0
-5
-10
-15
2007
Source: WIPO.
2008
2009
2010
2011
2012
7
Large firms have recovered quickly
Growth rates in R&D investments and sales of top EU and US corporate R&D investors, 2008-10 (%)
8
Source: EU (2011), R&D Scoreboard.
Large medium-tech manufacturers (e.g.
automobile) have been hit strongly
Sales, R&D and employment growth for firms in high-, medium-high and low-technology industries, 2008-09 and 2009-10 (%)
2008-09
Companies in high-tech industries
(N. 475)
%
Sales
Sales
R&D
2009-10
Companiesininmedium-tech
medium-techindustries
industries
Companies
(N.359)
359)
(N.
Employment
Sales
Sales
R&D
Employment
Employment
Companiesininlow-tech
low-techindustries
industries
Companies
(N.103)
103)
(N.
Sales
Sales
Employment
R&D
15
9.4
9.9
10
4.5
5
3.9
5.5
4.4
5.6
4.3
3.0
1.5
0.6
3.8
0
-5
-2.9
-3.8
-1.4
-0.6
-6.5
-10
-15
-16.3
-20
9
Source: OECD STI Outlook 2012 based on EU (2011), R&D Scoreboard.
Business dynamics:
More destruction than creation
Creation of new businesses
Australia
Denmark
Finland
United States
Bankruptcies
Australia
Germany
Germany
150
150
140
140
130
130
120
120
110
110
100
100
90
80
70
60
Japan
Netherlands
Finland
90
80
70
60
50
50
10
Source: OECD STI Outlook 2012 based on OECD (2012), Entrepreneurship at a Glance.
Venture Capital Investment has
partially recovered in the US
Sum of deal value, quarterly amount, billion USD
9
8
7
6
5
4
3
2005
2006
2007
2008
2009
2010
2011
2012
11
Source: Extracted from the OECD STI Outlook 2012 based on Venture One, Money Tree.
Certain countries have better resisted to the
crisis than others: China, Korea
Business funded R&D, yearly growth rate (%)
35.0
30.0
25.0
20.0
15.0
Korea
Total OECD
10.0
China
5.0
0.0
-5.0
-10.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: OECD, Main Science and Technology Indicators (MSTI) Database, June 2012.
2010
12
An further step in the rise of the innovative
strength of China and Korea
United States
Netherlands
Germany
United Kingdom
Japan
France
Korea
China
Other Countries
100%
90%
20.2
19.9
20.6
19.9
19.6
19.4
19.3
19.6
20.3
19.6
19.1
18.0
80%
0.8
1.7
4.4
1.6
2.1
4.3
0.9
2.3
4.6
1.1
2.6
4.5
1.4
2.9
4.2
1.8
3.4
4.2
2.6
4.0
4.2
12.7
15.1
5.1
5.2
4.7
9.0
11.0
3.7
4.8
4.3
7.5
10.3
3.4
4.4
4.1
16.5
18.2
5.9
4.4
5.7
4.1
18.1
17.3
17.6
19.6
21.4
3.0
2.7
10.7
10.3
2.5
1.9
70%
60%
50%
40%
5.2
5.1
13.5
13.0
3.1
3.1
4.9
13.0
3.6
4.5
12.7
3.9
4.1
12.4
3.5
3.7
3.4
3.5
11.7
11.2
11.1
3.3
3.0
2.8
30%
20%
40.8
39.8
37.4
35.6
35.4
3.3
11.6
2.7
19.2
3.2
10.8
2.9
34.3
34.3
33.8
31.6
29.4
27.4
26.9
2005
2006
2007
2008
2009
2010
2011
10%
0%
2000
2001
2002
2003
2004
13
Source: OECD, STI Outlook 2012.
The policy reaction to the crisis
Policy responses: Recovery plans (2009)
were heavily loaded in S&T and innovation
related expenses.
Examples of measures:
- Funding of public research organisations
(accelerating ongoing projects);
- Loan guarantees to SMEs.
- Tax breaks for businesses performing
R&D
14
Counter-cyclical STI policies
Government support to business R&D as % of GDP
%
Direct funding of BERD
Indirect support through R&D tax incentives
No cost estimate of R&D tax incentives
0.50
0.45
0.40
Direct and indirect government support to
business R&D, 2005
or nearest year available
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
15
Five sources of long-term risks for innovationbased growth in OECD economies!
1 Damages to
human capital
• Depletion of available skills for innovation due to long-term
unemployment
• Loss of valuable “tacit knowledge“ for firms with dismissals
2 Damages to
investment
• Foregone investments affect future rate of innovations
• Possible “scars” to the innovation infrastructure, not for the
big ones so far though
3 Relocation of
innovation activities
4 Financial market
conditions
5 Public support for
innovation
• Probably takes much longer to materialise, yet if unequal
growth performance persists there might be risks
What about innovation policy?
While strong innovation performance contributes to raising growth
prospects high levels of public spending in its support can be a
challenge for tight budgets.
- seeking greater efficiencies in public sectors‘ innovation support
- concentrating funding in sectors of strategic relevance
- exploiting co-operative arrangements with the private sector
Support positive
trends
Avoid possible damages of the
downturn (esp. long- term risks)
!!
The Outlook for Innovation and public support to
innovation?
Both constructive and negative forces at work in the
coming years:
- The macroeconomic and budgetary picture will
not be favourable. BUT:
- Innovation keeps a distinctive competitive factor
in a globalised economy, both companies and
governments are aware of that.
- Social and global challenges keep calling for more
innovation
- Sustained opportunities in a number of industries:
ICT, bio, nano
18
Thank you
Oecd.org/sti/outlook
Dominique.guellec@oecd.org
Caroline.paunov@oecd.org
19