Parallel session 4 - Wednesday 21 September 2016

1. Institute for Statistical Studies and Economics of
Knowledge
UNDERVALUED INNOVATORS: EXPANSION OF
THE HARMONIZED INNOVATION SURVEYS TO
MINING, UTILITIES AND AGRICULTURE
Prof. Leonid Gokhberg
Vitaliy Roud
21 September 2016

2.  Rationale to cover the sectors beyond the ‘core’
 Sectoral specificities of innovation
 Adjusting the methodology: unification vs high specialisation
 Cases: Mining and Quarrying
Utilities
Agriculture
 Conclusions
2
© National Research University Higher School of
Economics, 2015
Outline

3. • Pavitt’s taxonomy – deployed at
sectoral level:
 Special role of advanced
manufacturing and science-based
services as sources of technology for
other sectors
3
Technological trends change existing views on the
flows of knowledge in the national innovation systems
• Firm-level taxonomies:
 Presence of advanced (as well
as less sophisticated) innovation
modes in all manufacturing and
service sectors
• High-technology myopia
(focus on high tech manufacturing)
• Cross-sectoral diffusion of radical
platform technologies
• Low tech innovation, services
• Technological paradigms
 Narrow understanding of platform
(horizontal) technologies
ICT-driven shift in productivity
• Next production revolution
 Interdisciplinary and cross-
sectoral convergence of
technologies
1980-1990s 2000-2010s
Original concepts behind the OM Recent evidence

4. 4
Scope of the harmonized innovation surveys
Conventional OM coverage:
Manufacturing
Services (often KIBS)
Typically left outside:
Agriculture
Mining and Quarrying
Utilities
Construction
Transport
General traditional argument to limit the sectoral
scope (OM-2005): Low innovation activity
beyond services and manufacturing

5. Rationale to increase sectoral coverage (1): Technological
trends are transforming all existing and emerging sectors
5
Worldwide concentration of innovation effort on technological priorities
Climate change mitigation: lighting, electric power, transportation
Ageing, health and food security: chemistry, biotechnology, etc.
Information and communication management: “big data”, virtual payments, etc.
New manufacturing processes: chemistry, nanotechnology, composite
materials, new materials, additive technologies, lasers
Sustainable development heavily relies on advanced technologies
• Existing technology at a certain point enables growth only at cost of natural
capital depletion. Restrictive green policies limit the growth
• Sustainable development can only be enabled by disseminating new
technologies
ICT, robotics and automation, additive production, biotech&synthetic biology,
nanotech including composites, smart materials, etc.
A shift in the production landscape and disruptive sectoral changes
are led by convergence of advanced technologies
Technologies are a key factor determining productivity in all sectors
Mechanics of multifactor productivity growth:
(1) advances in global productivity frontier
(2) diffusion of new technologies from the global frontier firms to national frontier firms
(3) diffusion of existing technologies from the national frontier to laggard firms

6. Rationale to increase sectoral coverage (2):
economic significance
6
For certain economies these sectors account for:
- a higher share of GDP and employment
- considerable contribution to BERD and total R&D personnel
Source: OECD Statistics. 2014 or closest year
Chile
Greece
Poland
Portugal
Chile
Norway
Swizerland
Japan
Switzerland
0
5
10
15
20
25
0 5 10 15 20 25
ShareinLabor(%)
Share in GDP (%)
Series1 Series2 Series3 Series4 Series5
Chile
Australia
Canada
Chile
Norway
Australia
0
10
20
30
40
50
60
70
80
90
100
0 20 40 60 80 100
ShareintotalR&Dpersonnel(%)
Share in BERD (%)
Series1 Series2 Series3 Series4 Series5

7. 7
Sectoral coverage: harmonized guidelines vs. national
practices
Manufacturing
Services
Agriculture
Mining and Quarrying
Manufacturing
Utilities
Services
Construction
Sectoral coverage of national
innovation surveys reviewed in the
OECD Innovation Survey Metadata
project (% of countries)
14
89
100
86
94
17
There exist broad national practices to measure
innovation in non-’core’ sectors but lack of
harmonization hampers data stocktaking

8. 8
Sectoral specificities of innovation activities…
…explained by business models, market structure and industrial
organization
• heterogeneity of industry structures, dominant sizes of actors,
regulatory frameworks, and presence of the state
• Products and processes and the underlying technology base (definitions
of product and process innovation):
• e.g. agriculture: repetitive practices of interchanging crop types
complies to a formal definition of innovation products
• Innovation activities and expenditure on innovation
• e.g. agriculture: shift to the advanced fertilizers; construction: new
materials – little costs at the stage of initial introduction but high
further current costs – total cost of ownership/total cost of
innovation?
• Knowledge production/dissemination patterns
• institutional locus of formal R&D, impact of the appropriability
conditions on the innovation-related rent, typical schemes of co-
operation, etc.

9. 9
Adjusting the methodology: unification vs high specialisation
Methodological guidelines
Unified Sector-specific
Surveydesign
Unified survey,
unified
questionnaire
Feasible for sectors that match
the product/process definitions
Most of EU countries, Canada:
Mining, Utilities
Allows to control for certain
specificities; produces
comparable indicators
Russia: Mining, Utilities;
Construction
Unified survey,
modular
questionnaire
Russia: small industrial
enterprises
Broader account for
specificities
Russia: Agriculture
Specialized survey Ad hoc studies
Production of detailed and
specialized policy-oriented
indicators
Australia: Agriculture

10. anticlina
l theory
rotary
drilling
seismo-
graph
well
logging
offshore
drilling
digital
computing
directional
drilling
three-
dimen-
sional
seismic
three-
dimen-
sional
simulation
long
horizonta
l drilling
and
multi-
stage
hydraulic
fracturing
next gene-
ration three-
dimensional,
four-
dimensional
(time lapse)
and micro-
seismic
Source: Sandrea I., Sandrea R. (2007) Global offshore oil: geological setting of producing provinces, E&P trends, URR, and medium term supply outlook.
In mining, new technology means access to new resources
Offshore exploration wells drilled and new oil discoveries Offshore yearly oil discoveries and average field size
Technological innovations
in the upstream oil industry ...
... and their impact on oil
discoveries (case: offshore oil)
1893
1900s
1914
1924
1930s
1960s
1970s
1980s
1990s
2000s
2010s
Source: Jackson PM, Smith LK. (2013)
Exploring the undulating plateau: the
future of global oil supply. Philos Trans
A Math Phys Eng Sci.
Case Study: Mining and Quarrying

11. ВЛИЯНИЕ ТЕХНОЛОГИЙ НА ЭКОНОМИКУ ПРИОБРЕТАЕТ ЭФФЕКТ
«СНЕЖНОГО КОМА»: ЭНЕРГЕТИКА
7Technological and non-technological innovations are game-changers in the Utilities sector
Case Study: Utilities
Share of photovoltaics
in global electricity
production
Gross electricity generation (GW)
InstalledcostperkWh(USD)
Single point of contact
Price parity
Electricity retail price based on natural gas
Electricity wholesale price based on coal
Textured monocrystal
Iso-textural multicrystal
Monocrystal, sputtering contacts in vacuum
Renewable energy resources
x5
increase in annual
investment
since 2004
of new generation
capacities
share by 2030 (inclusive
of hydroenergetics)
ENERGY STORAGE SYSTEMS
SMART GRIDS
Min price for 1 kWh with the use of solar energy in the first six month of 2016
twice less than min price in 2015 (UAE, Mexico etc.)
Accumulator
batteries cost
reduction to
$200/kW by 2030
Smart grid global
market worth over
$400 bln by 2020
(CAGR=8%)

12. • Survey design: unified
• Methodological guidelines: sectoral examples of innovation
• Findings:
12
Mining and Utilites – measurement in Russia since 1995
In terms of intensity:
• Share of innovation companies in Mining and Utilities
similar to Low Tech
• Innovation expenditure is higher
• Innovation output in Mining outperforms Low Tech
17.4
6.3
20.8 21
39.8
9.3
1
10.1
8.8 8.2
8.9
3.2
64.6 70.6 48.6
37.2
34.1
67.4
9.8 3
9.7 10.9
6 9.1
1 2 3 4 5 6
Innovation expenditure by type of activity (%)
Series1 Series2 Series3 Series4 Series5 Series6 Series7 Series8 Series9
6.5 6.5
10.9
17.4
30.6
4.5
7.2
4.1
8.8
14.8
17.7
0.71.4 0.7
2.6 2.4
6.1
1.8
1 2 3 4 5 6
Innovation activity (%)
Series1 Series2 Series3
In terms of strategies:
• Mining ~ Medium High Tech
• Utilities ~ Low Tech
25.7
58.4 55.8
74.8 77.9
24.4
81
54.8
63
46.4 52.2
82.6
35.4
26.3 31.1 29.7 29.4 33.3
1 2 3 4 5 6
Share of innovation companies that perform:
Series1
Series2
Series3
Strong propensity to process
innovation

13. 9
Rise of the new technological revolution in
agriculture
Accelerated selection, seed growing and breeding technologies
Technologies for production of vaccines, antibiotics, antivirus preparations
for animal farming
Technologies for veterinary and phytosanitary control
Basic precision agriculture technologies (geolocation and satellite
navigation)
Technologies for producing
new types of fertilizers
Technologies for genetically engineered modification
Technologies for making basic
agricultural machinery
Case Study: Agriculture
Technologies for deep processing of
agricultural materials
Basic food
biotechnologies
Technologies for complete on-the-spot utilization and recycling of
agricultural industry’s waste
Urban agriculture technologies
Complex precision agriculture technologies (based on big data, machine
learning, artificial intelligence, including swarm intelligence)
Convergent smart bioenergy technologies
Technologies for system integration of agricultural sector’s logistics, based
on supercomputing
Technologies for production of personalized, functional and synthetic foods
Hydroponic and aeroponic
technologies
30% reduction of agricultural
production cycle time,
90% reduction of water intensity
Robotic greenhouses
40–50% reduction of fruit and
vegetables retail price in the
Russia’s Far North
Global pesticides market, bln. USD
Radical shifts in products,
processes, organizational
and marketing methods in
agriculture
Product:
biopesticides
synthetic
pesticides

14. 14
Case study: Agriculture
Russia (2017)Australia (ABARES-2010)
Survey design: unified, modular
Methodological guidelines: sector-specific
Focus on detailed specification of the
compatible definitions:
• product, process and non-technological
innovation (clarifications and examples)
• innovation expenditure (instructions and
examples)
• sales of innovation products (definitions for
new crops/breeds)
• factors hampering innovation
(+ climate/nature/environment risks)
• Innovation objectives
(+ reduction of weather-related uncertainty,
+ reduction of biological risks
+ soil enrichment/recultivation)
Survey design: specialized
Methodological guidelines: sector-specific
Focus on detailed process and organizational
innovation:
Product
innovation
New crop types
New crop cultivars
New livestock types
New livestock breeds
Process
innovation
Cropping equipment
Fertiliser practice
Weed, pest and disease management practices
Soil management practice
Weed-related natural resource management
Pest-related natural resource management
Soil-related natural resource management
Other crop practices
Livestock feeding practice
Livestock handling practice
Livestock health practice
Grazing management practice
Other livestock practices
Pasture type
Irrigation and water management practices
Organisational
innovations
New approach to labour use
New members to farm management
Marketing
innovation
New approach to marketing farm’s production

15. • Rationale to include non-’core’ sectors into innovation
surveys
• An obvious need for internationally harmonized
methodologies
• Umbrella-style general definitions accompanied by
sector-specific additional details
• Modular design of international innovation surveys
• To begin with: a stocktaking OECD/Eurostat exercise
15
Conclusions

16. 16
Thank you!
lgokhberg@hse.ru
http://issek.hse.ru
https://foresight-journal.hse.ru/en/