The document summarizes key points from the OECD Science, Technology and Industry Outlook 2012. It discusses how the 2008 financial crisis negatively impacted innovation through reduced business R&D expenditures, patent applications, and trademarks. Government responses included recovery plans focusing on S&T and increased university budgets. Policy trends emphasized skills development in STEM and entrepreneurship, knowledge transfer, and internationalization of higher education. Looking ahead, uncertainties remain around demand while austerity pressures national innovation systems.

1. OECD Science,
Technology and Industry
Outlook 2012
From the higher education perspective
Dominique GUELLEC (DSTI/CSO)
Sandrine KERGROACH (DSTI/CSO)
Directorate for Science, Technology and Industry
Country Studies and Outlook Division (DSTI/CSO)

2. What’s innovation for?
Oslo Manual: “Implementation of a new or
significantly improved product (good or service), or
process, a new marketing method, or a new
organisational method in business practices, workplace
organisation or external relations”.
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3. Innovation to strengthen growth
(OECD Innovation Strategy 2010)
• Factor of productivity and job creation
• Engine of growth in both advanced and emerging economies
Current macroeconomic context
• Sluggish labour productivity growth for several years
• Growing competitive pressure by emerging economies on
knowledge-intensive segments of markets => need to climb the
value added ladder
• Economic crisis hit innovation and R&D and conditions for
recovery are still fragile
=> Restoring growth and competitiveness
=> New sources of growth
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4. Innovating for social and global challenges
Green innovation
• Urgent need to address climate change and tackle natural disasters
• Greening of innovation policy in most OECD countries
Ageing society
• Innovation can help the elderly remain healthy, autonomous
and active (e.g. biomedicine, robotics, and IT)
• Still, declining workforces pose a risk for long-term
innovation capacity
Innovation for development
• Engine for economic and social development (e.g.
health, food/water, education, social inequalities, etc.)
• Tech, non-tech, incremental and social innovation
=> New market and learning opportunities!

5. Why does education matter for innovation?
• Process of knowledge creation, absorption and adaptation
• Requires a pool of technical and soft skills (e.g. green skills?)
• A broad innovation culture (e.g. public understanding of
S&T, entrepreneurial spirit) to value the contribution of S&T and
innovation to society
• Lifelong Learning to ensure a permanent upgrade of human
capital and to help elderly to remain active => formal education
• Exploit new pockets of skills (e.g. women) => Empower new
ways of thinking, preserve diversity, and ensure equity.
• Education is an area of innovation too : increased attention
paid by innovation policy makers to the role public sector may play
to stimulate/diffuse innovation (new public services delivery, new
organisational arrangements, etc.)
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6. Outline
• The OECD STI Outlook 2012
• Impact of the crises on innovation : focus on highly skilled
employment and future skills demand
• Country responses to the crises: recent changes in innovation
policy and particular attention paid to education
• Innovation and innovation policy outlook: how may higher
education institutions (HEIs) be affected?
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7. The OECD STI Outlook :
What’s new in the field of STI policy?
• + 20 year tradition
• Review key
Science, Technology and
Innovation (STI) trends
• Biennial event for the STI
policy community and analysts
around latest policy
information and indicators
• OECD Flagship publication
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8. 43 countries participating
to the STI Outlook policy survey 2012…
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9. Drawing a unique inventory of major recent
national STI policy developments
Overall STI Governance
strategy Innovation
policy Science
governance base
Green Business
innovation R&D and
innovation
Competences
New
and capacity
challenges Recent to innovate Entrepre-
shifts in neurship
national
innovation
policy Public-sector
innovation
Culture for
innovation Human
resources for
innovation Interactions ICT
HR policies infrastructures
Clusters and
Globalisation
Education regions
Open IPRs
Commercialisation science 9

10. The four components of the STI Outlook 2012
CRISIS AND COUNTRY
OUTLOOK PROFILES
SOCIAL AND POLICY
GLOBAL PROFILES
CHALLENGES
10

11. Innovation in the crisis and beyond
CRISIS AND
OUTLOOK
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12. The 2008 financial crisis
and the subsequent public debt crisis…
• Business cycle downturn: retraction of industrial production and
world GDP, trade collapse, raising unemployment
Reduction in the demand of products (e.g. higher-quality innovative
products)
Raise uncertainty about future demand
• Credit crunch: deleveraging of banks and large firms and reduction in
liquidities in the financial system
=> Restrict innovation investments, consumption, firms‟ financing
opportunities (e.g. SMEs that rely more on external financing)
• Market speculation on the sustainability of sovereign debts
Pursue fiscal consolidation in a context of growing pressure on
pension and health budgets
Limit public financial intervention
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13. … had a strong negative impact on business
innovation and R&D
Index 2006 = 100
Business R&D expenditures PCT patent applications Trademarks
Source: Highlights of the OECD STI Outlook 2012, based on OECD, Main Science, Technology Indicators (MSTI) 13
Database, June 2012 and World Intellectual Property Organisation (WIPO), Statistics on the PCT system, July 2012.

14. A deep drop followed by a fragile recovery
Patent Filings are hit by the crisis
PCT Filings; 5 months moving average; yearly growth rates (%)
15
US EU World
10
5
0
-5
-10
Collapse of
Lehman Brothers
-15
14
Source: WIPO.

15. The crisis and the recovery have been uneven
across industries…
Sales, R&D and employment growth for firms in high-, medium-high and low-technology
industries, 2008-09 and 2009-10 (%)
2008-09 2009-10
Companies in high-tech industries Companies in medium-tech industries
Companies in medium-tech industries Companies in low-tech industries
Companies in low-tech industries
(N. 475)
(N. 359)
(N. 359) (N. 103)
(N. 103)
% Sales
Sales R&D Employment Sales
Sales R&D Employment
Employment Sales
Sales R&D Employment
15
10 9.9 9.4
5.5 5.6
4.5 3.9 4.4 4.3 3.8
5 3.0
1.5
0.6
0
-0.6
-1.4
-5 -2.9
-3.8
-6.5
-10
-15
-16.3
-20 15
Source: OECD STI Outlook 2012 based on EU (2011), EU industrial R&D investments Scoreboard.

16. Certain countries have better resisted 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 2010
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Source: OECD STI Outlook 2012 based on OECD Main Science and Technology Indicators (MSTI) Database, June 2012.

17. The ‘creative destruction’ process broke down
Creation of new businesses Bankruptcies
Australia Finland Germany Australia Japan Finland
Denmark United States Germany Netherlands
150 150
Collapse of Collapse of
140 140
Lehman Brothers Lehman Brothers
130 130
120 120
110 110
100 100
90 90
80 80
70 70
60 60
50 50
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Source: OECD STI Outlook 2012 based on OECD (2012), Entrepreneurship at a Glance.

18. Unemployment of highly skilled has increased
Quarterly unemployment rate for high-skilled workers for selected countries, 2005-11
France United Kingdom
Canada Spain Estonia
Greece Ireland
% Italy Netherlands % Norway Portugal United States
16 16
14 Collapse of Collapse of
14
Lehman Brothers Lehman Brothers
12 12
10 10
8 8
6 6
4 4
2 2
0 0
Source: OECD STI Outlook 2012 based on OECD Main Economic Indicators Database and national Labour Force
Surveys, March 2012.
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19. In response, governments introduced short-
term measures and longer-term reforms
- Recovery plans (2009) were heavily loaded in S&T and
innovation related expenses (infrastructures etc.)
- Resilience of government R&D budgets that partly offset drop
in business R&D
- Provision of financial resources to businesses (e.g. direct
funding, collateral, tax reliefs, VC funds), especially SMEs
- Emphasize on smart specialisation
- Structural reforms (labour market, framework conditions for
entrepreneurship, reform of universities, etc.)
Clear priority given to education and public research
institutions
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20. Main innovation policy trends
POLICY
PROFILES
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21. High priority and increased resources
allocated to Higher Education
• New Higher Education strategy / plan
(Estonia, Ireland, Israel, Netherlands, New Zealand, Slovenia) or
high policy priority given to HE (Denmark)
• Increased budgets for higher education and universities
(India, Israel, Poland, Sweden, Switzerland, etc.)
• Development of HE capabilities including infrastructures
(Canada, Colombia, France, India, etc.)
• Maintained or increased hiring of researchers at university
during economic downturn (Italy)
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22. Changes in the governance of HEIs
• Reform of HEIs management and funding: confirmed trend
in many countries towards greater autonomy and more competitive
grant funding (away from „block‟ funding) – introduction of
performance- and indicator-based allocation mechanisms
• Strengthen evaluation of HEIs : enforcing HEIs evaluation by
law (Hungary), establishing contracts/performance agreements with
central government (Finland), building evaluation capacity, e.g. new
methodology/guidelines/standards, SciSIP initiatives, etc.
• Agencification: e.g. introduction of accreditation agency
(Slovenia, Switzerland, etc.), independent funding agency
(France, etc.), evaluation and coordination agencies
(Argentina, etc.)
• Shifts towards more thematic research in many countries
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23. Strengthen education for innovation…
Improve the teaching of STEM
• Earlier STEM education (Colombia, Germany)
• New teaching methods: increased hours of instruction
(Germany, Ireland, Norway), new curricula, standards
(Australia, Ireland, UK), new assessment practices
(Austria, Norway, Poland)
• Teacher training (Australia, Austria, Japan, etc.)
Increase tertiary enrolment and attract more people to STEM
• Financial incentives to students (Australia‟s income-contingent
student loans, doctoral/postdocs fellowships etc.)
• Tutoring (Sweden‟s free remedial classes, etc.)
• Role models and mentorship, prizes, senior positions (e.g.
attract women to S&T studies) (Flanders, Spain, South Africa, etc.)
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• Set quantitative targets increase the share of youth with higher

24. … Beyond STEM
Improving the teaching of entrepreneurship
• Strategy, guidelines and action plan for entrepreneurship
education (Denmark, Finland, Norway, etc.)
• Introduction of new learning practices, curricula and targeted
school activities (Belgium, Estonia, Ireland, Norway, New Z., etc.)
• Revision of the National Qualification Framework (Norway)
• New teacher training (Australia, Austria, Japan, etc.)
Improving entrepreneurial environment at universities and
research institutions
• Increase the number of business start-ups (grants, courses, etc.)
(Germany, Norway)
• Introduce new criteria of evaluation (number of spin-
offs, patenting activity, research income from private sources, etc.)
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25. Accelerate knowledge transfer to industry
and society
Improving the conditions of technology transfer
• Professionalisation and scaling-up of TTOs
• Raise awareness of IPRs in the research community (courses)
and the general public (e.g. China: media campaigns and education
in primary and high schools)
• Implement incubators, technoparks (Finland, Netherlands)
• Encourage sectoral and international mobility of researchers
and highly skilled (secondments, industrial PhD, grants, lower
regulatory barriers, e.g. regarding grant or pension portability, or
immigration laws, transferable skills, etc.)
• Tax incentives for firms to contract public research
Open science
• Infrastructures to access data
(Hungary), repositories/archives, open data (licenses etc.) 25

26. Internationalisation of HEIs
• Higher Education Internationalisation Agenda / strategy
(Netherlands)
• Open up educational and research programmes, including
funding mechanisms (Australia, Finland, Ireland, Norway and
Slovenia)
• Amended legal and framework conditions to allow foreign
researchers and institutions to participate in research programmes
and access research infrastructure funded by national sources.
• Increased presence in foreign countries (Sino-Danish Centre
for Education and Research, Germany‟s Max Planck Centres in
seven countries and Fraunhofer Centres in six countries, and
France‟s Institut Pasteur in Korea, etc.)
• Measures to encourage international mobility of researchers and
doctoral students abroad and return (grants, bi-national
programmes, international collaboration on R&D projects, etc.)
• Training and education (languages, intercultural skills, etc.)
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27. Sluggish outlook for global and national
innovation systems
1. Uncertainties about depressed demand
2. Limited access to finance (deleveraging and budgetary
pressures) tends to restrain investments and consumption
3. Entrepreneurship have not recovered yet : VC, start ups and
SMEs have been hit the hardest.
4. Shift in technological leadership towards emerging
countries and relocation of innovation activities
5. Austerity is now gaining in most countries and S&T budgets are
also under pressure – but recognition of the central role of
innovation for engineering a sustainable recovery.
6. Foreseeable growth perspectives and the financial situation of
most governments indicate that this downward pressure is
likely to be maintained in the coming years.
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28. Long-term unemployment rate
has increased for all
Persons unemployed a year or longer as a share of the population aged 25-64
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Source: OECD STI Outlook 2012 based on OECD (2011), OECD Employment Outlook 2011, OECD, Paris.

29. The crisis has negative long-run effects on
skills
• Depletion of skills due to long spells of unemployment, a lower
exposure to technology, loss of tacit knowledge
• Lack of firm creation to absorb unemployed workers
• Reallocation of skilled workers to lower skilled jobs because of
limited employment opportunities
• May accelerate long-term trends towards a segmentation of
production processes and short term assignments of highly skilled
• => Permanent scars for innovation processes
Policies aimed at avoiding employment losses and supporting
training are essential to avoid damage to innovation
systems.
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30. For more information…
www.oecd.org/sti/outlook
dominique.guellec@oecd.org
sandrine.kergroach@oecd.org
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