1 Building Bridges: Universities and the Peruvian Innovation System Professor Scott Stern MIT Sloan School and NBER This presentation draws on collaboration between Scott Stern, Michael Porter, Mercedes Delgado, Christian Ketels, Fiona Murray, and work conducted at the MIT E-Center and the Harvard Institute for Strategy and Competitiveness. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of Scott Stern.
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Building Bridges:Universities and the
Peruvian Innovation System
Professor Scott SternMIT Sloan School and NBER
This presentation draws on collaboration between Scott Stern, Michael Porter, Mercedes Delgado, Christian Ketels, Fiona Murray, and work conducted at the MIT E-Center and the Harvard Institute for Strategy and Competitiveness. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of Scott Stern.
Significant export growth linked to natural resources and endowments
Change in Peru’s world export market share, 1997 to 2009Source: Prof. Michael E. Porter, International Cluster Competitiveness Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. Underlying data drawn from the UN Commodity Trade Statistics Database and the IMF BOP statistics.
Pe
ru’s
w
orl
d e
xp
ort
ma
rke
t s
ha
re,
20
09
Change In Peru’s Overall World Export Share: +0.09%
Peru’s Average World Export Share: 0.22%
Exports of US$2 Billion =
Fishing and Fishing Products
AgriculturalProducts
CommunicationsServices
Jewelry and Precious Metals
Metal, Miningand Manufacturing
ApparelFinancialServices
Publishing and Printing
Hospitality and Tourism
6
Significant reductions in poverty but still much work remains…
– Source: Informacion Socio Demografica, from El Instituto Nacional de Estadistica e Informatica (INEI), 2010
7
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
-30% -20% -10% 0% 10% 20% 30% 40%
Source: USPTO, World Bank
Average U.S. patents per million population,
2005 – 2009
CAGR of US-registered patents, 2005 – 2009
Peru has not yet established itself as a global innovator
Saudi Arabia
RussiaPortugal
Turkey
India
Poland China
South Africa Greece
170 patents =
Argentina
Brazil
Croatia
Lithuania
PhilippinesEcuador
Chile
ThailandPeruVenezuela
Mexico
Colombia
Ukraine
Estonia
Costa Rica
Uruguay
Kazakhstan
KenyaEgypt
Latvia
United Arab Emirates
8
The Peruvian Innovation Challenge
– Peru has experienced exceptional economic performance over the past decade
– Grounded in a shift towards sound macroeconomic policy, openness to international markets and partners, and the establishment of a higher level of basic security
– Leveraging natural resources and endowments
– But Peru has not yet established the foundations for an innovation-driven economy
– Resource-led or cost-based growth has natural limits.
– Peru must start setting the foundations – today -- for an innovation-driven, knowledge-based economy.
9
BUT…
WHAT IS THE ROLE OF PERUVIAN UNIVERSITIES AND OTHER
KNOWLEDGE INSTITUTIONS IN THIS NEXT STAGE OF PERUVIAN ECONOMIC
DEVELOPMENT?
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A New Agenda for Peruvian Universities
• Building an Innovator Workforce
• Catalyzing Innovation-Based Entrepreneurship
• Convening the Public and Private Sector to Build a Peruvian Innovation Economy
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Priority #1:
Building an Innovator Workforce
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Peru lags neighbors in investments and resources towards basic education at the primary, secondary and
tertiary level
– Source: UNCTAD Science, Technology and Innovation Policy Review, 2011
13
And Supports a Lower Level of Innovation Effort*
* As far as we can tell from incomplete data!
14
But…
Higher Education remains focused on
education training, law, and administration…
Key STEM areas such as computer science, biotechnology, and
nanotechnology register at very low
levels.
Starting at a low level, Peru can make great progress in enhancing research intensity
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Finla
nd
Taiw
an
Icel
and
Japan
New Z
eala
nd
Sweden
Denm
ark
Norway
Unite
d Sta
tes
(200
6)
Korea
Austra
lia
France
(200
6)
Belgiu
m
Canad
a (2
005)
Austri
a
Germ
any
Russi
a
Slove
nia
Luxem
bourg
Switzer
land (2
004)
Irela
nd (2
006)
Spain
Slova
kia
Estoni
a
Unite
d Kin
gdom
Portu
gal
Czech
Rep
ublic
Nether
lands
Hungar
y
Greec
e
Polan
d
Italy
(200
6)
Turkey
China
South
Afri
ca
Peru (e
stim
ate)
Source: National Science Council, R.O.C., Indicators of Science and Technology, Taiwan, 2008; OECD Science, Technology, and Industry Scoreboard 2009. Data 2007 except where noted.
HOW CAN PERUVIAN UNIVERSITIES ENHANCE THE INNOVATOR
WORKFORCE?
Agenda Items for Peruvian Universities
Establishing a much higher level of commitment to all levels of education
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“Mens et Manus”
Mind and Hand….
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The MIT Inca Bridge Project
hsendorf
Research: John Ochsendorf and colleaguesTeaching: Heather Lechtman, Linn Hobbs and MIT Undergrads!
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Agenda Items for Peruvian Universities
• Establishing a much higher level of commitment to all levels of education.
• Prioritizing investments in areas of science, engineering, and technology education that are complementary to Peruvian clusters and comparative advantage
• Ensuring “Mens et Manus” – higher education must be positioned towards the development of an innovator workforce that meets the needs of an innovation-oriented Peru
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Priority #2:
Catalyzing Innovation-Based Entrepreneurship
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Peru has an important tradition and strength in a number of universities (though more are needed)…
MIT serves as the fulcrum for the Cambridge biosciences cluster…
25
– 7/17/2008
143
150160
134
152
159
133
121
149
122
0
20
40
60
80
100
120
140
160
Issu
ed U
.S. P
aten
ts
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fiscal Year
M.I.T. Issued U.S. Patents by Fiscal Year, 1999-2008
MIT Entrepreneurial Impact
JobsPercent of Companies
Median Employees
Median Sales ($Millions)
Estimated Total
EmployeesEstimated Total Sales ($Millions)
More than 10,000 0.3% 15,000 1,523 1,339,361 1,389,0751,000-10,000 1.8% 1,927 308 1,043,932 235,532
Less than 1,000
97.9% 39 <1 900,001 226,671
Total100.0% 155 <1 3,283,294 1,851,278
University alumni impact reflects the growing leverage over time of numbers, and has great potential.°Roberts and Eesley, based on ~25,800 active companies. All data are in “Entrepreneurial Impact: The Role of MIT”
– 26
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Bob Langer has published more than 1100 articles and been granted more than 760
• Establishing specific institutions and programs – tailored to the strengths of each univeristy – to enhance the potential for an innovator workforce and commercializing new technologies and business processes
– Classes combining practitioner and faculty focusing on opportunity identification and business plan development
– Business plan competitions that engage across disciplines, faculties and universities
– Removing roadblocks to commercialization (tech transfer, etc)
– Celebrating achievement and giving back through mentoring and the nurturing of the next generation
31
Priority #3:
Convening the Public and Private Sector to Lay the Foundations for the
Peruvian Innovation Economy
32
The Peru Cluster Environment
La Libertad (El Porvenir, Trujillo)Leather, Footwear
Lima (La Victoria)Apparel
Puno and ArequipaApparel from Alpaca
CuzcoTourism
Cajamarca (Bambamarca)Dairy, Processed Foods
Ancash (Chimbote)Fishing and Fish Products
IcaWine
Lima (Infantas, Los Olivos)Metal Manufacturing, Metal Furniture
PiuraAgricultural Products: Mangoes, Lemons, Brown Sugar Syrup
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Peruvian Clusters and Peruvian Universities
– Peru’s current clusters are based heavily on natural endowments, and have much room for further upgrading
– Even in areas with significant clusters – such as Cajamarca, Arequipa, and Moquegua in mining – there have historically been significant technological bottlenecks
– Though there are some strong universities universities have historically played a limited role in supporting the development of entrepreneurial firms that catalyze local clusters.
– There is a limited tradition of collaboration among actors for regional development
– There is a weak institutional capacity – which could be addressed by leading Peruvian universities -- hampering the development of clusters.
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HOW CAN UNIVERSITIES HELP NURTURE PERUVIAN CLUSTERS AND
• Upgrading of company operations and strategies across a group of companies
• Strengthening of networks to enhance spill-overs and other economic benefits of clusters
• Upgrading of cluster-specific business environment conditions
Cluster initiatives are collaborative activities by a group of companies, public sector entities, and other related institutions with the objective to improve the competitiveness of a
group of interlinked economic activities in a specific geographic region
Peruvian universities are the natural home for the institutions of collaboration that are are at the heart of a cluster-led economic strategy
While Peruvian universities have only recently become engaged with joint colalborations with Peruvian companies (and multinationals), the Peruvian university system should strive to serve as the hub for activities that are focused on upgrading productivity and enhancing the environment for innovation and entrepreneurship.
Peru has an enormous cultural legacy and vast natural and human resources....but these must be mobilized for action and Peruvian universities must be at the vanguard of this effort