Global Technology Policies for Economic Growth

With the end of the Cold War, nations throughout the world are placing ever greater emphasis on economic growth. Over the last 50 years, advances in technology have been the single most important factor in creating growth in many economies, and thus policies to promote technological innovation rank high on the list of priorities for both developed and developing countries. In general, as countries progress up the economic ladder, national R&D intensity, (i.e., R&D/GDP), tends to increase along with per capita income. In addition, nations move through a discernible sequence of technology policies from an initial focus on infrastructure, through a set of actions designed to encourage technology acquisition from more advanced economies, to comprehensive education and research agendas targeted to the creation and development of new technology. In the United States, national technology policy for economic growth focuses on education, building a 21st century infrastructure, and creating a business climate that encourages growth, technological innovation, and risk taking.Throughout the last 50 years there have been significant changes in the competitive position of nations. In recent years, U.S. corporations have regained some of the competitive leadership they lost in the 1980s. This has been accompanied by significantly increased R&D spending by U.S. industry, particularly in the information and health care related sectors. U.S. industry funding of R&D overtook that from the government in the early 1980s and accounts for almost two-thirds of the national total.     

Strategic planning in public R&D organizations for agribusiness: Brazil and the United States of America

There is increasing evidence that public organizations dedicated exclusively to research and development (R&D) in agribusiness need systematic management tools to incorporate the uncertainties and complexities of technological and nontechnological factors of external environments in its long-term strategic plans. The major issues are: “What will be the agribusiness science and technology (S&T) needs be in the future?” “How to prepare in order to meet these needs?” Both Empresa Brasileira de Pesquisa Agropecuária (Brazilian Agricultural Research Corporation, Embrapa), attached to the Brazilian Ministry of Agriculture and the Agricultural Research Service (ARS) of the US Department of Agriculture (USDA) have developed a comprehensive strategic and operational planning process in order to answer these key questions in the 1990s. The main objective of this article is to present a comparative and preliminary analysis of concepts, methodologies, and processes utilized, and some results obtained by these public organizations.     

Characteristics of technology transfer in business ventures: the case of Daejeon, Korea

This article explores the characteristics of venture business and entrepreneurs in Korea to (1) identify technology transfer activities, (2) analyze the differences between technology transfer in linear and nonlinear venture businesses, and (3) guide more effective venture business policy and strategy. This empirical assessment reveals that entrepreneurs have insightful evaluations about their resources and capacities as well as expectations with regard to functions and features of science parks and incubators. Respondents from “linear model”-based start-ups tend to be older and have higher education, employ more basic research and development (R&D) and have more R&D-oriented careers, and have more varied work experience than “nonlinear”-based start-ups. The functions and features of science parks and incubators were generally not considered a critical influence on start-ups nor on the growth of venture businesses. Accordingly, alternative venture-nurturing strategies are discussed as being key to accelerate venture businesses growth.     

Will Italy meet the ambitious European target for R&D expenditure? Natura non facit saltus

The paper addresses the issue as to whether the Italian scientific and technological system can achieve the Barcelona targets set by the heads of state and government (3% of GDP devoted to R&D by the year 2010) and by the R&D guidelines set by the Italian Ministry for Education, University, and Research (MIUR) (to achieve the level of 1.75% of the ratio in the year 2006).The projections built in the paper show that such objectives are well beyond Italy's potential, and that according to a “natura non facit saltus” (NNFS) projection, the country will be able to raise the ratio from 1.04% in 2002 to 1.55% in 2010. Such projection rests on rather optimistic assumptions: higher priority attached to R&D in the government budget, an increasing propensity of firms to invest their value added in R&D, and an increase of researchers' salaries.The difficulty to achieve the objectives set at the European and national level is due to the low starting point, to the lack of additional investment from 2001 to 2003, and to structural factors such as insufficient supply of qualified human resources, the small size of high-tech industry, and constraints imposed by the reduction of public spending.The attainment of R&D policy objectives is more and more dependent on education, industrial, and public budget policies; the issue of a thorough review of the governance of the whole S&T system at the national level is therefore raised. The situation is accentuated by the fact that decisions taken at national level are conditioned by the European union (through the Framework Program, the regulations regarding state aid to firms, etc.) by multinational enterprises, which operate on a global scale, and by regions in the framework of their autonomy.     

Modeling stochastic innovation races

We consider a firm moving towards a stochastic final destination to be chosen from a discrete set after a decision period. The decision period itself may be deterministic or stochastic. We assume the firm can move at variable innovation (R&D) speed associated with a monotone nondecreasing variable cost, and it can also stop and move anywhere. There is a fixed cost per time unit “carried” by the firm as well, associated with keeping at the knowledge (technology) frontier. We investigate various types of the firm's optimal trajectory in the R&D race during the decision period. The model is adapted and applied to racing behaviour in the Japanese telecommunication industry.     

Invention, innovation, and economic evolution

This paper provides a synopsis of logic and adventure in the process of fundamental innovation. The contemporary viewpoint of R&D management would have us believe that innovation is a rational process subject to prediction, regulation, and control. The alternative viewpoint is advanced here that innovation is neither merely a mechanical nor solely a goal-driven process. In reality, innovative systems are inherently untidy systems. The most important clue to any possible uniformity in the behavior of such systems is to be found in their very multiformity. Thus, the process of innovation is first and foremost a self-organizing process. This theory, based on the author's work of the past several years in this area, has led to identification and explanation of several lawlike relationships in the origin of fundamental technical breakthroughs, transfer of technical knowledge, and long-term economic evolution. There are a number of important implications of these regularities for technology and science policy during 1980s and beyond. First, success in innovation critically depends upon pursuing several small-scale experimental projects at the same time. Thus popular attempts to avoid duplication in R&D activity constitute what is really a penny-wise but pound-foolish policy. Second, nothing is more important in the future than to promote greater decentralization in the conduct of R&D enterprise. Third, one way out of the current worldwide economic stagnation is to be found in the development of a few, already available, fundamental innovations such as those in the microelectronics, solar energy, and biotechnology fields rather than in the eternal search for more technical breakthroughs. Thus the need in the future is not so much for disproportionate increase in basic research in relation to technological development effort as it is for striking a congruence between various components of R&D activity.     

Government funding strategy in technology programs

Industrial R&D in a market economy is mainly implemented in the private sector, therefore public funding is a very important tool of government to guide private R&D activities. This paper investigates the experience of funding national programs in a number of industrialized countries, and reaches some preliminary conclusions: (a) To reduce opportunistic behavior and ingrain intrinsic incentive in firms, both competition and cost-sharing principles should be used concurrently in underwriting firms' R&D projects. (b) Competition principles can be applied across many candidate projects around the same time or a series of one-of-a-kind projects over a longer time horizon. (c) The major threat to application of competition principles is that there is no “real competition” due to few qualified candidates in specific technological fields or in some, especially small, countries. (d) In practice, the appropriate cost-sharing level is difficult to determine. Fifty-fifty is used as a rule of thumb in many countries to simplify the decision making and circumvent “bounded rationality.” (e) Full cost endorsement may be another “quantum” alternative for projects urged by government but not felt to be very relevant by firms.     

Public consumption composition in a growing economy

This paper explores the role of the composition of public consumption within a three sector R&D growth model. A competitive industry supplies a homogeneous good and a monopolistic sector manufactures a composite commodity differentiated in many varieties, whose size can be increased through investment in R&D. We investigate the effects of changes in the level and in the composition of public consumption on the steady state and on the economy’s transitional dynamics. By varying the aggregate composition of demand, the government can effectively move resources away from the traditional industry to foster innovation. Welfare effects are also evaluated. We show that the composition of government consumption affects the entire time path of utility.     

Dismantling the ivory tower: The influence of networks on innovative output in emerging technologies

In this article we examine how R&D networking affects an organization's innovative output. Using empirical data on 419 research organizations in transgene plant research over a 20-year period, we test several hypotheses relating their sociometric position in an R&D network to their innovative output. Attention is paid to the relative importance of in-house versus collaborative research. Least squares dummy variable models are used to analyze cross-sectional data across different time periods. The results show that (1) an organization's “network embeddedness” positively influences its innovative output; whereas (2) involvement in collaborative R&D has a curvilinear effect on innovative performance.     

Toward an analytical industry classification

Two kinds of difficulties retard progress in technological forecasting uncertainties inherent in the subject itself and imprecision in its concepts. The latter difficulty exists whenever words have to be used in a general or traditional sense due to the lack of an agreed-upon operational definition. One such word and concept is industry [1]. The object of this paper is to present an operational definition of “industry” for use in forecasting, R&D, or innovative contexts, and to show how predictive, rather than just analogue, statements can then be made about industry and industries.     

Innovation,product development and market value: evidence from the biotechnology industryinnovation in biotechnology industry

The subject of the paper is financial valuation of firm's knowledge assets and returns to innovation in the biotechnology industry, where such assets appear to play key role in the commercial success of a product. The biotechnology industry is extremely research-intensive, and successful R&D drives profitability. Further, the pharmaceutical product development advances in a number of well-defined stages that allow relatively precise measurement of product development outcomes. The study reports recent biotechnology R&D statistics, and provides estimates of private returns to innovation and product development activity in the biotechnology industry. The conclusions indicate that the financial market recognizes the value of drugs in product development stage, as it expects the innovative knowledge embodied in drug development projects to become marketable products in the future.     

Welfare and growth impacts of innovation policies in a small, open economy; an applied general equilibrium analysis

We explore how innovation incentives in a small, open economy should be designed in order to achieve the highest welfare and growth. The computable general equilibrium model we develop for the purpose allows for research and development (R&D)-driven endogenous technological change embodied in varieties of capital. We study policy alternatives targeted towards R&D, capital varieties formation, and domestic investments in capital varieties. Subsidising domestic investments, thereby excluding stimuli to world market deliveries, generates less R&D, capital formation, economic growth, and welfare than do the other alternatives, reflecting that the domestic market for capital varieties is limited. In spite of breeding stronger economic growth, a higher number of patents, and a higher share of R&D in total production, direct R&D support generates slightly less welfare than subsidising formation of capital varieties. The costs in terms of welfare relates to a lower production within each variety firm, which in presence of mark-up pricing results in efficiency losses.     

Measuring innovation in long product development cycle industries: an insight in biotechnology

This paper examines and measures innovation in the context of biotechnology firms by analysing the link between R&D, innovation performance and organisational growth. We conceptualise innovation performance as a latent construct with two dimensions: innovation efficacy and innovation efficiency. We use structural equations modelling to test the hypotheses on a data set from the biotechnology industry. Results support our innovation performance conceptualisation which is found to be especially useful to measure innovation in industries with long product development cycles. Findings also underline the importance of R&D knowledge creation for biotechnology firms.     

Joint R&D projects: Experiences in the context of European technology policy

Joint R&D projects have emerged as a significant model for the development of research and technological activities. Our study examines, through an exploratory analysis, the typology of joint R&D projects and the characteristics of R&D networks in which the projects are developed. In addition, the interrelation between the R&D projects in the context of European Technology Policy is analysed. Findings from survey data collected on joint R&D projects carried out in the context of European Framework Programmes indicate that three groups of R&D projects can be identified (invention, innovation and diffusion projects), and that each of these projects is managed inside the R&D network with a different degree of structuring and external opening. The analysis of interrelations between R&D projects also shows a low, non-linear and non-progressive interrelation. This conclusion is an important question to bear in mind in the design of scientific and technological policies.     

How to promote R&D-based growth? Public education expenditure on scientists and engineers versus R&D subsidies

This paper compares the positive and normative implications of two alternative measures to promote R&D-based growth: R&D subsidies to firms and publicly provided education targeted to the development of science and engineering (S&E) skills. The model accounts for the specificity of S&E skills, where individuals with heterogeneous ability choose their type of education. Although intertemporal knowledge spillovers are the only R&D externality, the analysis suggests that R&D subsidies may be detrimental to both productivity growth and welfare. Moreover, they raise earnings inequality. In contrast to R&D subsidies, publicly provided education targeted to S&E skills are found to be unambiguously growth-promoting and neutral with respect to the earnings distribution.     

Text mining as a valuable tool in foresight exercises: A study on nanotechnology

Since its inception in 2001, the Center for Management and Strategic Studies (CGEE) has as its main activity the conduct of foresight studies in support of the decision making process related to the establishment of ST&I policies and activities in Brazil. The methodology used by the center combines quantitative and qualitative methods. Explicit and tacit knowledge is mobilized in the process of developing complementary or differentiated visions of the future.Most of the studies conducted by CGEE begin with data monitoring activities, making use of text mining techniques. One case study carried out by CGEE on the field of nanotechnology is presented. In this case, text mining was used at the first stage followed by qualitative techniques. Results were used to guide government agencies to fund nanotechnology R&D to help raise the competitiveness of several sectors of the Brazilian economy.     

Analysis of the Interaction between Regional R&D Productivity and the Investment Strategies of Multinational Enterprises

The aim of this article is to analyze the interaction between regional R&D productivity and the investment strategies of multinational enterprises. The discussion is based on the hypothesis that R&D investments cause a reduction in the production costs and an increase in firms’ market share; furthermore, R&D costs may be affected by national industrial policies. Supposing the existence of asymmetries in local research productivity, necessary and sufficient conditions for a geographical diversification of resources have been found. Suggestions with respect to the optimal allocation of R&D investment are finally derived.     

A practical approach to R&D project selection

We present a technique to allocate available resources more systematically to competing R&D projects in a government laboratory setting. The technique is simpler than most models described in the literature, systematically utilizes the expertise of various organizational units in the corporation, and does not try to substitute complex calculations for good managerial judgment. The literature on R&D project selection models is briefly reviewed. Key factors identified are used to develop the approach. Details are presented on the sequence of the R&D project selection process through alternative levels of corporate management. Sample forms used for R&D ideas submittal and evaluation are included. Experiences gained from applying the approach in a large R&D laboratory are discussed.     

Will low technology products disappear?: The hidden innovation processes in low technology industries

Political discussions and analyses have usually been devoted to an understanding of the development of high technology products, although low technology products have dominated the industrial structure of the Organization for Economic Cooperation and Development (OECD) countries. The important role of low technology products in these countries raises the question of whether we can observe a technological paradox in the industrial structure of the more advanced nations, the dominant role of this sector in spite of its competitive disadvantages because of high wages. Using the Danish packaging industry as an example, a central thesis in the article is that innovation processes are important in low technology industries. They are also often an integrated part of the marketing and production functions of the firm. The innovation processes in the low technology industries are therefore too complex for traditional R&D analyses to handle. The article points out that—especially in small firms—the “practical man” and his “tacit knowledge” play a very central role in both product and process development, and that low technology, even in the future, will play a central role in the industrial structure of the OECD countries.     

R&D spillovers, information technology and telecommunications, and productivity in ASIA and the OECD

This paper examines the role research and development (R&D) plays in technology progress for a sample of OECD and Asian economies from 1980 to 1995. An empirical model is estimated which relates total factor productivity to domestic and foreign R&D activity, trade, and information technology and telecommunications (ITT). Model estimates confirm a positive relationship between national productivity and R&D activity exists in the long run. Further, the benefits of R&D can spillover countries through trade, in particular, trade in ITT equipment.