Presentation at the Innovation Forum in Skopje, Macedonia on \'Successful Innovation Policies - Options for Macedonia\'

1. INNOVATION FORUM:
Developing an Innovation Strategy
for 2012-2020
Successful innovation policies –
strategic options for Macedonia
Wolfgang Polt
Joanneum Research
POLICIES – Center for Economic and Innovation Research
wolfgang.polt@joanneum.at
Skopje, 9 November 2011

2. Structure of the Presentation
 General Trends in R&D and
Innovation
 Main Trends and International
Good Practice in Research and
Innovation Policy (RIP)
 Portfolio and Mixes of
Instruments of RIP
 Lessons for RIP in Macedonia

3. • General Trends in R&D and
Innovation

4. Main Trends in R&D&I
 General increases in the knowledge intensity of
production of goods and services
 Specialisation increases and specialisation
patterns between countries differ … and will
continue to do so (industrial history, public
priority setting…)
 Share of business sector increases with level of
development
 Share of service sector in R&D and in innovation
increases
 New ‚mode of production of knowledge‘:
INTERACTION and OPEN INNOVATION !
 Increasing globalisation of value chains and
economic activities (also of R&D) … through
various channels (HR mobility, international
cooperation, inward/outward FDI…)

5. R&D Intensity is increasing – even in crisis!

6. Increasing Specialisation of economic activities

7. Substantial Parts of R&D take place also in ‚low-tech‘
sectors !

8. Collaborations between private enterprises and public
research institutions are increasing

9. • Main Trends and International
Good Practice in RIP

10. Recent trends and international good practice in RIP
 RIP has become a major policy area in many
OECD countries
 Increasingly to be seen: formulation of explicit
RIP strategies
 Setting quantitative/qualitative targets
 Explicitly addressing ‚policy learning‘
 Setting targets and identifying priorities
 Thematic
 Functional
 Refining funding instruments
 Increasingly ‚Competitive‘ / Programme funding -
Increasing the leverage effects of direct funding of
private R&D
 Increases in ‚indirect‘ support to R&D via R&D tax
credits
(see OECD Innovation Strategy 2010)

11. Recent trends and good practice in RIP
 Fostering Human Resources for R&D
 Output of S&T graduates
 Career path for young researchers
 Attract talent
 Increase participation of women
 Coping with globalisation of R&D
 Reforming funding and performing instiutions
 Increased emphasis on monitoring and
evaluation (‚strategic intelligence for RIP‘)
 Improving the ‚governance‘ of RIP
 Strengthening the NIS as a SYSTEM
 …especially industry-science relations !
(see OECD Innovation Strategy 2010)

12. • Portfolios and Mixes of
Instruments of RIP

13. (Regional) Innovation Policy Instruments- a taxonomy
Knowledge generation Knowledge diffusion Knowledge exploitation
Traditional instruments  Technology funds,  Science parks  Incubators
 R&D  Technology transfer offices  Start-up support
incentives/supports/grants and programmes  Innovation services
 Support for scientific research  Technology brokers (business support and
and technology centres  Mobility schemes, talent coaching)
 Support for infrastructure attraction schemes  Training and raising
development  Innovation awards awareness for innovation
 Human capital for S&T
Emerging instruments  Public-private partnerships for  Innovation vouchers  Industrial PhDs
innovation
 Certifications/accreditations  Support for creativity and
 Research networks/poles design
 Innovation benchmarking
 Competitiveness poles
 Competence centres
 New generation of scientific and technological parks and clusters !
 Venture and seed capital
 Guarantee schemes for financing innovation
?
Experimental instruments  Cross-border research centres  Open source-open science  Regional industrial policy
markets for knowledge  Innovation-oriented public
procurement
Source: Nauwelaers, C. and A. Primi (forthcoming), Innovation Policy and Regions: Policy Spaces, Strategies and
Challenges, Regional Development Working Papers, OECD, Paris

14. Innovation Strategies for Different Development Levels
Main strategy
Building on current Catching up: towards the
Type of region Supporting socioeconomic
advantages (science push/ creation of knowledge-
transformation
technology-led or a mix) based capabilities
Knowledge hubs
Knowledge and
technology hubs   
Knowledge-intensive
city/capital districts   
Industrial production zones
Service and natural
resource regions in
knowledge-intensive   
countries
Medium-tech
manufacturing and   
service providers
Traditional
manufacturing regions  
Non-S&T-driven regions
Structural inertia or de-
industrialising regions   
Primary-sector-intensive
regions   
Notes: main priority  strategic choice;  low priority.
Source: OECD (2011) Regions and Innovation Policy

15. Strategies and Policy Mixes for
Catching-Up
In the following, different levels of
development of innovation systems are
related to potentially most suited strategic
orientations for RIP and main instruments
associated with the respective strategic
orientation are depicted. Macedonia will have
to pick among those strategies and formulate
ist own ‚strategy/policy mix‘.

16. Policy Mixes for Different Development Levels (1)
Type of OECD region Degree of regional STI policy competences
by economic profile High Medium Low
Medium-tech
Strategy: modernising productive activities towards value-added
manufacturing and
service providers niches: “innovation ecosystem strategy”
Industrial production  Supporting science-industry  Technology platforms  Concentration of
regions with relatively linkages (personnel (linking technical schools regional action on non-
high knowledge exchange and placement and SMEs) traded sectors
absorptive capacities schemes; technology
advisory services;  Technology transfer  Supporting innovation in
technology diffusion) centres in relevant service or cultural
sectors, co-funded by industries
 Regional agencies for national government
innovation promotion,  Small-scale cluster
combining technology  Regional advisory support with an
transfer with other network; networks orientation towards
services fostering synergies and connection to global
complementarity networks
 Promoting innovation start- between national
ups (business angel agencies in the region  Innovation vouchers,
networks, mentoring and regional agencies targeting “innovation
schemes, regional seed and beginners”
venture capital funds)  Innovation vouchers for
SMEs
 Densification and
internationalisation of  Support for young
regional production clusters graduate recruitment in
firms
 Regional public procurement
oriented towards innovation
Source: OECD (2011) Regions and Innovation Policy

17. Policy Mixes for Different Development Levels (2)
Type of OECD region Degree of regional STI policy competences
by economic profile High Medium Low
Structural inertia or Strategy: stimulating knowledge absorption and entrepreneurial
de-industrialising dynamism
regions
Non-S&T-driven  Local knowledge  Supply-chain  Developing latent
regions with persistent centres ,branches of management initiatives demand for innovation
development traps national knowledge to reduce (innovation vouchers,
hubs (focus on fragmentation placement of students
diffusion) in SMEs)
 Innovation-oriented
 Education and training public procurement  Orienting polytechnics
activities in firms to new qualifications
 Redefinition of
 Supporting connection programmes for  Training for low skilled
to international regional technical and unemployed
production networks schools
 Support to clusters
 Regional fora to  Innovation awareness with innovation
identify growth raising, potential
prospects in niches entrepreneurship
 Supporting inclusion of
with value-added promotion events
region in international
 Innovation and production networks
entrepreneurship
culture promotion
Source: OECD (2011) Regions and Innovation Policy

18. Policy Mixes for Different Development Levels (3)
Type of OECD region by Degree of regional STI policy competences
economic profile High Medium and Low
Primary-sector-intensive Strategy: upgrading and retaining human capital, creating critical
regions
mass and increasing quality of connectivity
Generally rural areas in  Regional agencies for business development  Innovation support programmes
lesser developed OECD Training and lifelong learning courses (public (innovation intermediary), business
countries, specialised in offer, incentives for firms) development support (branch of
primary sector activities national agencies), connection with
 Student exchange programmes and talent trade and export agencies
attraction schemes
 Attracting national investments in
 Regional incentives for skills upgrading vocational and tertiary education
programmes in companies Incentives for
hiring qualified personnel in companies  Promoting national training,
lifelong learning schemes for
 Creation of knowledge centres in traditional companies and individuals
fields (agriculture, tourism…), branches of
national research organisations  Engaging regional stakeholders in
external production networks
 Innovation support programmes for
incremental innovations (innovation  Securing national infrastructure
intermediary, business development support) investments to enhance
connectivity
 Linkages of business support organisations
(chambers of commerce, etc.) to wider
networks
 Financing experimental innovative projects in
traditional sectors
 Connection of regional actors in national and
international production networks
Source: OECD (2011) Regions and Innovation Policy

19. • Lessons for RIP in Macedonia

20. Adopting a broad definition of
‚innovation policy‘
 Don‘t confine your innovation policy to
science/research and technology policy.
Include all measures to improve
innovation capabilities of enterprises on
a broad front
 Especially, don’t fall for a ‘high-tech
myopia’ !

21. Taking a portfolio view of innovation
policy instruments
 Innovation Policy instruments have become a
multi-facetted and differentiated ‘tool-box’
 They can inter/counter/act in their impacts…
 …and hence have to be designed and evaluated not
in isolation but as a portfolio!
 For this purpose, formulating an Innovation
Strategy should be a ‘whole-of-government’
effort
(findings from The ‘Policy Mix’ Project, 2009 and
OECD Innovation Strategy 2010)

22. Tailoring the portfolio of policy
instruments to the specificities of
your innovation system
 The appropriate policy mix is highly
context dependent (level of development,
path dependency)
 ‘Superstitious learning’ (i.e. simply copying
perceived ‘best practice’ from more
advanced countries) is to be avoided!
(again: findings from The ‘Policy Mix’ Project, 2009 and OECD
Innovation Strategy 2010)

23. Some (tentative) suggestions for
Macedonias Innovation Strategy (1)
 The Innovation Strategy for Macedonia must be
based on a careful assessment of both the state of
development, the needs of the respective actors
and their capabilities. As there is no ready-made
off-the-shelf solution available, the formulation of
such a strategy must involve and address these
stakeholders.
 In a policy mix suited for Macedonia, the
stimulation of innovation capabilities in enterprises
(especially in SMEs) and the improvement of Human
Capital must be among the first priorities.

24. Some (tentative) suggestions for
Macedonias Innovation Strategy (2)
 The main thrust of policy should be
 to incentivize enterprises to adopt innovations (tangible or
intangible)
 to engage in more systematic manner in product and
process innovation and
 to overcome barriers to interact with others (suppliers,
customers, public research institutes, universities) in the
process of innovation.
 Hence, investment subsidies for the purchase of
up-to date equipment“, training and development of
skills in innovation, management and organizational
improvements are likely to be effective policy
measures in this vein.

25. Some (tentative) suggestions for
Macedonias Innovation Strategy (3)
 Apart from this main thrust of policy, there could
be parts of the policy mix also addressing ‘nuclei’ or
‘islands’ of advanced technological or scientific
competences (if these can be detected). Thus could
be achieved by
 Fostering collaboration in innovation on bilateral basis
among firms and between frims and research institutions
(or to the extent possible of networks of firms)
 In some cases, addressing existing clusters, even if they
are not ‘high-tech’ is a viable policy option. Existing
efforts must be checked in this vein

26. Some (tentative) suggestions for
Macedonias Innovation Strategy (4)
 At the 'lower' but often much more appropriate end of the
policy spectrum are general measures to foster innovation
capabilities of enterprises.
 the build up of support institutions has proved to be of longer-
lasting positive effect, like business associations, Joint support
infrastructures etc.
 in more advanced stages, firms or firm associations have colluded
to create their own (research and innovation) infrastructures
like ACR in Austria or Steinbeiß Foundation in Germany.
 A measure which has become very popular in recent years are
innovation vouchers.
 Pros: very flexible instrument, can be tailored to very different
circumstances.
 Potential pitfalls: lack of support infrastructure and high quality
business services

27. Some (tentative) suggestions for
Macedonias Innovation Strategy (5)
 ..and there is of course the question of policy
implementation…
 Innovation Strategy needs a ‘whole-of-government’
approach to be coherent
 Needs target setting against which success can be
measured – and these targets have to be realistic….
 …needs the development of capabilities for ‘strategic
policy intelligence’ (foresight, monitoring, evaluation, policy
implementation)
 …needs to find the right balance between international,
national and regional policy layers
 And above all: needs to have qualified people in well
structured and sufficiently endowed and functioning
institutions to be implemented….

28. Thank you for your attention !