Geneva 2013

Geneva 2013

Annual Ministerial ReviewUnited Nations Economic and Social

Council - ECOSOC

”Science, Technology and Innovation, and the potential of culture for promoting sustainable

development and achieving the Millennium Development Goals”

Gladys Triveño Chan JanMinister of Production of Peru

National Voluntary Presentation (NVP)

1

1. Economic context of Peru – Relationship between poverty, industry and innovation.

2. Context of the Science, Technology and Innovation (STI) in Peru

3. Instruments available for the development of STI

4. The future

CONTENTS

2

1. Economic context of Peru – Relationship between poverty, industry and innovation.

2. Context of the Science, Technology and Innovation (STI) in Peru

3. Instruments available for the development of STI

4. The future

CONTENTS

3

EVOLUTION OF GPD 2000-2012 (US$)

ECONOMIC CONTEXT

42000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0

50,000

100,000

150,000

200,000

250,000

300,000

Source: BCRP

Between 2000 and 2012, the GDP grew at an average annual rate of 5.8%, representing an increase of GDP per capita of 70.1%. This growth was driven by private investment, primarily in the mining sector, as well as by the dynamism of the export sector in a context of trade liberalization and well handled macroeconomics. These elements strengthened the domestic markets, which was reflected in a greater number of shopping centers and residential projects.

ECONOMIC CONTEXT

5

2004 2005 2006 2007 2008 2009 2010 2011 20120

10

20

30

40

50

60

70

58.755.6

49.1

42.4

37.333.5

30.827.8

25.8

EVOLUTION OF TOTAL POVERTY 2004-2012 (% OF THE TOTAL POPULATION)

Source: INEI- Encuesta Nacional de Hogares (ENAHO) 2004-2012

This growth allowed the significant reduction of total poverty from 58.7% in 2004 to 25.8% in 2012.

ECONOMIC CONTEXT

6

Fuente: BCRP, INEI

13.80% 13.80% 13.30%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2010 2011 2012

Despite this growth, the share of industry as part of GDP has not grown at the same rate, having stalled its share between 13% and 14% in recent years. This is an industry which is highly concentrated in consumer goods, with low levels of sophistication.

Source: BCRP

INDUSTRY SHARE AS PART OF GDP

RELATIONSHIP BETWEEN POVERTY AND INDUSTRY

1/ UNIDO (2010) 2/ World Bank (2009)

CountryCompetetive Industry

Perform Index 1/Poverty headcount ratio at $1,25 a day (PPP) (% of

total population) 2/Germany 0,52 0

France 0,31 0

Malasy 0,18 0

Thailand 0,17 0,37

Chile 0,07 1,35

Costa Rica 0,05 3,12

Peru 0,04 5,54

Cambodia 0,02 18,6

Less industrialized countries are those with higher levels of poverty, and vice versa.

8

Less industrialized regions of Peru are also the poorest: Apurímac, Huancavelica, Cajamarca, Huánuco, Ayacucho.

RELATIONSHIP BETWEEN POVERTY AND INDUSTRY

Poverty Share (%)

Indu

stry

Em

ploy

men

t Sha

re (%

)

Source: BCRP, INEI- Encuesta Nacional de Hogares (ENAHO) 2004-2012

POVERTY SHARE AND INDUSTRY EMPLOYMENT IN PERUVIAN REGIONS

1. Economic context of Peru – Relationship between poverty, industry and innovation.

2. Context of the Science, Technology and Innovation (STI) in Peru

3. Instruments available for the development of STI

4. The future

CONTENTS

9

10

Fuente: BID 2010 y Encuesta Nacional de Innovación en la Industria Manufacturera 2012

Suec

ia

Fran

cia

Dina

mar

ca

Alem

ania

Luxe

mbu

rgo

Hola

nda

Bélg

ica

Aust

ria

Italia

Rein

o Un

ido

Espa

ña

Noru

ega

Chile

Bras

il

Cost

a Ri

ca

Arge

ntina

Urug

uay

Pana

má

Colo

mbi

a

PERÚ

01

23

45

6

4.5

3.2

3.1

3.0

2.5

2.0

1.9

1.6

1.6

1.4

1.3

0.9 1.

2

0.6

0.2

0.2

0.2

0.1

0.1 0.1

5.6

3.6

4.2

5.2

3.3

2.6

4.3

2.8

3.8

1.2

3.5

2.8

3.6

2.2

1.6

1.2

2.6

2.5

Intensidad del gasto en I+D (como porcentaje de ventas)Intensidad del gasto en Innovación (como porcentaje de ven-tas)

Porc

enta

jeFrom global experience, it is well known that a sustainable industrialization process has one of its basis in technological innovation.

In Peru, the industry invests only 0.1% of its sales in R & D, which is reflected in a low number of patents filed by residents: 116 invention patents and 54 utility models in 2012. In Brazil, more than 4,000 patent applications are filed each year, while in countries like Japan this number is over the 300,000 applications.

RELATIONSHIP BETWEEN INDUSTRY AND INNOVATION

Intensity of R&D Expenditure (%)

Source: IADB 2010, Encuesta Nacional de Innovación en la Industria Manufacturera

GLOBAL COMPETITIVENESS INDEX 2012-2013

11

While the "global competitiveness index" ranks Peru at position 61 out of 144 countries (upper half), in the innovation pillar, the country is ranked at 117, i.e. the lowest quintile.

Source: Global Competitiveness Index Report 2012-2013

Investment in R & D is very poor: Peru invests only 0.14% of its GDP in R&D, while the Latin American average is 0.5% and the OECD countries average is 2.2%.

Main Investment in R & D is not carried out by the private sector. Investment in R&D is carried out mainly by universities, the public sector and NGOs (>

70%) with a low degree of linkage to industry. In the rest of Latin America, this investment is mainly performed by the private sector (55% on average).

The trade balance of knowledge is clearly insufficient.While exports based on primary products and natural resources in Peru have grown to 80% of total exports in the last 20 years, in countries like Colombia and New Zealand - also abundant in natural resources- this figure went from 82% and 86%, to 65% and 75%, respectively, with exports increasing in technological content.

STI INDICATORS

12

The low level of innovation is evident from the following indicators:

University-industry collaboration is low In Peru, only 11% of manufacturing firms, were associated with universities in the 2009-2011 period to carry out innovation activities. Only 2.2% were related to public research institutes.

The personnel in industry is not necessarily suitable for innovation Only 1.5% of the staff have graduate studies, mainly in management functions, but not in innovation-related functions. Only 18% are skilled technicians, and a majority of 60, are workers with only secondary education

Percentge of patent applications filed by residents is extremely low There is no culture of protection and appropriation of innovation. Patent

applications filed by residents per 100,000 inhabitants is 0.3 on average, while, for example, in Brazil this indicator is bordering 3 and in the U.S. is over 50 patent applications.

13

STI INDICATORS

Main indexed scientific pulbications (2000-2010)

STI IN PERU

142000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0

500

1000

1500

2000

2500

3000

3500

Patent applications 1/ filed by residents 1/ (2000-2012)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

20

40

60

80

100

120

140

160

180

However, there are some improvements

Source: RICYTSource: INDECOPI

1/ Includes invention patents and utility models

Percentages of industry firms that carried out innovation activities (2009-2011)

15

65.5

34.5

Realizó actividades de innovaciónNo realizó actividades de innovación

Otro

Alcanzar regulaciones o estándares internacionales

Reducir el consumo de energía

Ampliar la gama de productos

Abrir nuevos mercados en el exterior

Reducir el consumo de materias primas e insumo

Aumentar la flexibilidad de la producción

Alcanzar regulaciones o estándares nacionales

Reducir costos de la mano de obra

Mejorar el medio ambiente, salud y/o seguridad

Aprovechar las capacidades del personal

Ampliar participación en el mercado

Aumentar la capacidad productiva

Mantener participación en el mercado

Mejorar la calidad de productos

1.7

24.5

25.2

25.8

25.9

26.6

34.1

35.7

42.6

44.3

53.9

59.8

61.3

63.6

76.7

Empresa (%)Im

pact

o

Impact of innovation activities in the firm (2009-2011)

Source: PRODUCE, INEI, BID- Encuesta de Innovación en la Industria Manufacturera 2012

STI IN PERU

Carried out innovation activitiesDid not carry out innovation activities

To improve products qualityTo maintain market share

To increase productivityTo improve market share

To take advantages of personnel capacityTo improve enviromental, health or safety conditions

To reduce labour costsTo accomplish national regulations or standards

To increase flexibility of productionTo reduce the input comsumption

To access new markets abroadTo increase product catalogues

To reduce energy comsuptionTo accomplish international regulations or starndards

Others

Firms (%)

1. Economic context of Peru – Relationship between poverty, industry and innovation.

2. Context of the Science, Technology and Innovation (STI) in Peru

3. Instruments available for the development of STI

4. The future

CONTENTS

16

Other relevant policies to support STI policies:

• Against malnutrition: social programs for reduction of malnutrition, investing in new generations with better opportunities.

• Basic Education: New Public Educator Act improves quality primary and secondary education.

• Higher Education: Scholarship Program 18, works as a catalyst for greater opportunities for youth.

• Incorporation of researchers into the public career: Creation of the "scientists’" family as a category of officials in the public career within the Civil Service Law.

• Repatriation of researchers: Repatriation of professional researchers living abroad with the aim of hiring them to work in Public Research Institutes.

RELEVANT POLICIES

PLANS AND POLICIES

18

National Agreement –

State Policy N° 20- (2002)

National Plan of Science,

Technology and Innovation 2006-

2021

National Plan of Inclusive Industrial

Development

Strategic Plan of the Ministry of

Production (2012-2016)

National Competitiveness Agenda (2012-

2013)

Includes STI axis:

They propose:

a) To increase the state support for STI through increased budget, tax incentives and other forms of financing.

b) Human capital formation and increasing number of researchers through STI education, graduate fellowships abroad, and training at technician level.

c) Technology transfer, support for innovative projects, and dissemination of intellectual property.

d) Meeting the social and economic demands at national and regional levels. Prioritization of areas of comparative advantage and leadership. Production chain. Building technology infrastructure and ICT development.

e) Environmental Sustainability.

FUNDING

19

Competitiveness and Innovation Program for Peruvian Agriculture

(INCAGRO) - Ministry of Agriculture:

US$ 60 million (2001-2009)

Avai

labl

e Fu

nds

Time

Science and Technology Program Peru-IADB (FINCYT I) -

Presidency of the Council of Ministers:

US$ 36 million (2007-2012)

Research and Development Fund for Competitiveness (FIDECOM) - Ministry of Production:

US$ 77 million (2009 - onwards)

Science and Technology Program Peru-IADB (FINCYT II) - Presidency of the

Council of Ministers: US$ 100 million (2013- onwards)

National Fund for Science, Technology and Innovation

(FONDECYT) of the National Council of Science, Technology and

Innovation (CONCYTEC): US$ 38 million (2013 -onwards)

Framework Fund for Innovation, Science and Technology

(FOMITEC) of the Ministry of Production and National Council

of Science, Technology and Innovation (CONCYTEC):

US$ 115 Million (2013 -onwards)

The State has made available STI funding to firms and universities, doubling in 2013 the funds available in the last decade.

US$ 426 MILLONES

NORMATIVE INSTRUMENTS

20

• Legislative Decree No. 1124, amending the Law on Income Tax, and allowing the deduction of expenditure on R&D (2012)

• Law No. 29987, "Act declaring of national interest the promotion of science, innovation and technology through public-private partnerships" (2012)

• Law No. 30018, "Law on the Promotion of the Use of Patent Information to Promote the Transfer of Innovation and Technology" (2013)

• Supreme Decree No. 067-2012-PCM, which ascribes the National Council for Science, Technology and Technological Innovation (CONCYTEC) to the Presidency of the Council of Ministers - PCM (2012)

• Ministerial Resolution No. 343-2012-PRODUCE, Rules of Organization and Functions of the Ministry of Production, whereby the Department of Innovation, Technology Transfer and Business Services is created and assigned to the Vice Ministry of MSE and Industry (2012)

• Technical Standards for R&D Management: Technological Surveillance Systems (2012); Requirements Management R & D (2011); Requirements of an R + D (2009); Terminology of R & D (2009)

Legal and institutional framework for the promotion of STI activities and consolidation of a national STI system:

21

Industrial Technological Innovation Committee-CINTECIN (Chaired by the National Confederation of Private Business-CONFIEP and assisted by the Ministry of Production)

National Program for Strengthening Innovation for Competitiveness (Chaired by CONCYTEC, and comprised more than 16 public and private institutions)

Business-ECI Scientific Meeting (Chaired by Academia)

Working Group of the National Competitiveness Agenda 2012-2013 (Led by the Ministry of Economy and Finance, consists of more than 10 public and private institutions)

PUBLIC – PRIVATE Sinergy

ARTI

CULA

TIO

NTriple Helix

Improved funding conditions for innovation projects when the firm is associated with a university or research institute. FIDECOM Instruments (PIPEA, PIPEI) and FINCYT instruments (PITEA, PITEI)

ARTICULATION INSTRUMENTS

They become a technology support tool for industrial development and the generation of added value.

CITE Act No. 27267 (2000)

Three public CITE: CITEvid, CITEccal, CITEmadera

13 private CITE: Agrobusiness, logistics, software, design and apparel, textile-camels, food, forest, tropical fruits, cocoa.

22

LIMA:• CITE Madera

• CITE Ccal• CITE Logística• CITE Software

• CITE Confección

PIURA:• CITE

Agroindustrial

AREQUIPA:• CITEconfecciones• CITEagrondustrial

• CITEtextil camélidos• CITEagroalimentario

ICA:• CITE Vid

SAN MARTIN:• CITE Cacao

LORETO:• CITEfrutas tropicales• CITEforestal

UCAYALI:• CITE Madera

TACNA:• CITE

Agroindustrial

SUPPORT INSTRUMENTS

Centers for Technological Innovation CITE

23

Reseach Public Institutes - IPI

National Institute of Agrarian Innovation (INIA)

Peruvian Sea Institute (IMARPE)

Research Institute of the Amazonia of Peru (IIAP)

Peruvian Institute of Nuclear Energy (IPEN)

National Institute of Health (NIH)

National Institute for Research and Training in Telecommunications (INICTEL)

Geological, Mining and Metallurgical Institute (INGEMMET)

National Geographic Institute (IGN)

Geophysical Institute of Peru (IGP)

National Commission for Aerospace Research and Development (CONIDA)

SUPPORT INSTRUMENTS

Industrial Research

Security and HealthInfrastructure and

Institutes for knowledge generation

Natural Resource Exploration and

ExploitationIMPARPE

INGEMMENT

INIA

IIAPIGN

CONIDAINICTEL

IGP INSIPEN

ITP

Created in 2012, it contributes to the increase of competitiveness of the productive sector through innovation promotion and technology transfer to firms. It incorporates 3 public CITE.

It has four specialized divisions that generate knowledge and technology.

It proposes innovation with added value approach for the industry.

24

The Technological Institute for the Production- ITP

SUPPORT INSTRUMENTS

Pesca y acuicul-

tura

Cuero, calzado y afines

Vid/Agro Industria

Madera y

muebles

Propuesta de Valor: del ITP Divisiones Especializadas sectoriales

04 Divisiones Especializadas iniciales , que

generan conocimientos y

tecnología

Proponiendo Innovaciones, con un

mismo enfoque de Valor

Fisheries and

aquaculture

Leather and footwear

WoodVID/

Agroindustry

• Transport • Telecommunications • Energy• Industrial Parks/clusters• Special treatment Zones

Infrastructure

• Technology Trasnfer Centers• Scientific and Technology Parks• Startup Ecosystem• STI Funding and tributary incentives for innovation

Technology and Innovation

• Training (productive and technical, quality and management)• Technical formation• Graduate Programs in STI

Human Capital

• Quality Institute• Productive Developmente AgencyInstitutional Redesign

Instruments of the National Plan for Inclusive Industrial Development

Sustainibility

SUPPORT INSTRUMENTS

Quality InstituteIt includes national services of metrology, acreditation and technical standars

26

New Network of Scientific and Techonological ParksIt includes the design and implementation of 50 Parks in PPP, within the implementation process of the National Plan of Inclusive Industrial Development

TO GUARANTY AN ADEQUATE TECHNOLOGICAL AND SCIENTIFIC SUPPORT INFRASTRUCTURE FOR THE DEVELOPMENTE OF STI AND OF AN

INCLUSIVE INDUSTRYNew Network of Technology Transfer Centers CETTIt includes the design and implementation of 50 CETTs in PPP, within the implementation process of the National Plan of Inclusive Industrial Development

Instruments to be implemented by the National Plan for Inclusive Industrial Development

SUPPORT INSTRUMENTS

1. Economic context of Peru – Relationship between poverty, industry and innovation.

2. Context of the Science, Technology and Innovation (STI) in Peru

3. Instruments available for the development of STI

4. The future

CONTENTS

27

STI system articulation

• Institutions and appropriate governance system for STI are consolidated.

• State Support Instruments (CITES, IPIS, etc.) are oriented to industry.

• Sustantial improvement in the level of university-industry colaboration.

STI for industry

• Industry with sophisticated services and products by application of scientific and technical knowledge.

• Innovation culture is part of the industry culture .

Consolidate the support instruments

for STI

• To consolidate, improve and expand the funding instruments.

• To get the private sector to invest in innovation.

• To consolidate a critical mass of scientists and engineers working on CTI.

Institutions / Sustainibility

FOR THE STI DEVELOPMENT

FOR THE INDUSTRIAL DEVELOPMENT

Added Value

• To sophisticate industry through innovation.

• To diversify the production base.

• To increase the number of companies.

• To reduce gaps in quality and productivity.

Productive Basis decentralized

• To boost regional economies.

• To promote private investment (domestic and foreign) in the creation of new jobs.

Industry Growth Recovered

• To alleviate the most urgent problems that plague the industry today.

• To narrow gaps on competitive referents.

• To promote the internationalization of Peruvian firms.

Institutions / Sustainibility