The Race for Global Leadership in Innovation: An Analysis of National R&D Strategies

THE RACE FOR GLOBALLEADERSHIP IN INNOVATIONAAnn AAnnaallyyssiiss ooff NNaattiioonnaall RR&&DD SSttrraatteeggiieess

The Toronto Region Research Alliance (TRRA) is a public-privatepartnership supported by the governments of Ontario and Canada,and a wide range of regional stakeholders from the private sector,universities, colleges, and research hospitals.

MISSION

TRRA is a regional economic development organization promotingincreased investment in research and innovation to further economic prosperity.

GOALS

1. Increase awareness of the Toronto Region among global R&Ddecision-makers and influencers

2. Retain and grow foreign investment into regional organizations,and attract innovative foreign companies to locate here

3. Become the pre-eminent source of intelligence on regionalresearch assets and associated international trends

4. Promote enhanced research intensity among regional businesses

5. Advance initiatives to strengthen research and innovation capacity

VISION

To transform the Toronto Region into a top 5 global center forresearch and research-intensive industry

TORONTO REGION INNOVATION ZONE

TRRA defines the Toronto Region based on the location of keyinnovation clusters in a broad geographic area anchored by the City of Toronto, and includes the surrounding regions of Durham, Guelph,Halton, Hamilton, Peel, York, Waterloo and Wellington.

ABOUT US

TABLE OF CONTENTS

Executive Summary 2

Introduction 3

Scope 4

Canada’s Innovation Strategy 5

Innovation Plans at the Country Level 8

Stay ahead 8United States 8United Kingdom 9

Get ahead 11China 11South Korea 13

Exploit existing strengths 14Israel 14Netherlands 16

Address points of pain 18India 18African Initiatives 20

National prosperity 22Germany 22Finland 23

Conclusion 26

Overview of Key Drivers for Innovation 28List of Acronyms and Abbreviations 30Methodology 31Endnotes 32

1

EXECUTIVE SUMMARY

Nations worldwide are aggressively spending on science and technology (S&T). Knowledge-driven economicgrowth has become a top priority on national agendas, and governments are investing heavily in education,commercialization, entrepreneurship, and state-of-the-art research centers.

As part of its mandate to monitor and analyze trends in global research and development (R&D), the TorontoRegion Research Alliance (TRRA) reviewed innovation strategies of nine foreign countries and Africa in order to understand the main drivers for policy-setting around the world. Key drivers and priority areas were nation-specific and were identified from the study of national S&T strategies and policy papers. The analysis revealedthat there are five distinctive approaches to S&T: governments frame their national strategies to (1) stay ahead,(2) get ahead, (3) exploit existing R&D strengths, (4) alleviate points of national pain, or (5) maintain the currentlevel of prosperity.

While the challenge for developed-world countries is to stay ahead and maintain top positions in S&T, nations in the emerging world have strong ambitions for futureS&T competitiveness. Countries in the Asian market are putting up substantialresources into activities to get ahead and catch up to innovation leaders. Although

the United States (US) remains first in terms of gross R&D expenditures and technology leadership, aggressivestrategies across Asia, especially in China, have pressed the government to continue to spend on science. OverUS$100 billion of the American 2009 Recovery and Reinvestment Act was allocated to all aspects of science,technology, and innovation. China poses a major threat; it has set an ambitious target of becoming aknowledge-driven economy by the end of this decade and the global leader in S&T by 2050. Although China is still ranked relatively low in global competitiveness and accounts for a small percentage of high-value globalpatents and scientific publications, its share is growing.

The focus of some strategies is on exploiting a country’s existing strengths. These governments haveidentified their industrial advantages and are attempting to make these industries and related research moreinnovative and more competitive. The Netherlands is an example of a country with a strategy that uniquelyemphasizes its traditional areas of strengths in plants, food, materials, water, and chemicals. India and manycountries across Africa, on the other hand, are moving ahead with S&T which will alleviate points of domesticpain associated with socioeconomic issues including high poverty rates, uneven distribution of wealth, health,and water concerns. Lastly, innovation plans in countries such as Germany and Finland emphasize the broaderconcept of prosperity and, particularly, the use of S&T in maintaining the state of wealth. Innovation is viewedas key contributor to productivity and economic growth.

Within this global context, Canada has a strong agenda with a broad range of incentives and programs toexpand its innovation capacity. Realizing the global competition, the federal government has commenced an R&D review to collect input from business on the effectiveness of its policies and programs. This reportattempts to highlight the essential question: To what purpose is Canada investing in research and innovation?

National S&T strategies are clearly driven by a number of broader economic and social factors includinglagging economic productivity, recession, poverty, energy security, water scarcity, and wealth creation.Countries are trying to find S&T-based remedies to address emerging challenges. Furthermore, economies are realizing that they cannot continue to depend on industrial and manufacturing prowess alone. Futurecompetitiveness and the overall health of any economy will hinge on the strength of the knowledge sector.Nations are in a race for global leadership in innovation because science and technology are the chiefinstruments that create value in the form of increased productivity, profit margins, and social well-being.

2 THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

National S&Tstrategies

INTRODUCTION

Modern economies increasingly view science and technology (S&T) as a majorcompetitive edge and are exploring strategies to use innovation and intellectualcapital to drive economic development and growth. The current state of prosperity of some of the world’s largest economies, including the United States (US), Japan and Germany, can be partly attributed to their historic innovation strengths and

excellence in science and engineering. Their corporations and universities have taken leadership positions intechnology-intensive industries ranging from information and communications technology (ICT) and electronicsto biotechnology and high-performance materials.

"Innovation drives economic progress. For businesses, it will mean sustained or improved growth. For consumers, it willmean higher-quality and better-value goods, more efficient services and higher standards of living. To the economy as a whole, innovation is the key to higher productivity." Sir Andrew Cahn, Chief Executive of UK Trade & Investment1

Innovation and a strong focus on S&T are now more important than ever, both at the national and regionallevels. Most countries are moving toward idea-driven economies which recognize knowledge as one of themost important factors of production alongside labour and capital resources. Innovative economies are not onlymore competitive and resilient within the global setting, but gradually raise the standard of living for all citizensthrough productivity gains and enhanced products and services. Innovation generates ripple effects throughoutthe entire economy by creating jobs in existing or entirely new industries and is therefore considered essentialto future prosperity.

"Two centuries ago, the dominant economic theory was mercantilism… Today, theories of economic growth stress the importance of human capital to knowledge-based economies, and many countries aim to increase their stock of brainpower via immigration.” Christiane Kuptsch and Pang Eng Fong, International Institute for Labour Studies (2006)2

Countries are racing to transform themselves into ‘innovation nations’ by settingaggressive national S&T agendas, establishing world-class research centers andnurturing local entrepreneurs. National strategies stress the creation of networksand private-public collaborations that stimulate innovation by encouraging diffusion

of knowledge across institutions. Education has become a priority for building a workforce with the depth oftalent and skills essential for coping with sophisticated technology and complex financial and managementsystems. Therefore, graduates in science and engineering, doctoral candidates and number of professionalresearchers are viewed as major assets and a key measure of a country’s ability to adapt to emergingindustries. Governments and corporations are competing for global talent and are recruiting top graduates and researchers to universities and labs with generous incentives and fellowships.

This emphasis on S&T goes beyond mere technology-driven economic development.It is about finding solutions to problems deemed of vital national interest. Althoughthe extent of each problem may differ considerably between the rich and poor world,all governments are targeting R&D areas to address similar challenges includingageing populations, rising health care costs, disease, climate change, and poverty.

Above all, innovation agendas are drafted to strengthen the national knowledge base to limit threats tosecurity, be it national, political, food, or water security. This includes efforts to curb dependence on foreignresources, especially oil and gas imports. Countries are beefing up the talent and infrastructure with large-scale investments in defence applications, clean energy technologies, transportation, life sciences and healthcare, ICT and advanced manufacturing. Recent forecasts predict that over US$1.19 trillion will be invested inresearch efforts globally in 2011.3 In purchasing-power terms, the US will continue to lead the world in grossR&D expenditures with over US$405 billion while China and Japan are predicted to be second and third withabout US$154 billion and US$144 billion spent in each country, respectively (Figure 1).

S&T and increasingimportance tonational economies

Rise of innovationnations

S&T to address thegrand challenges of the 21st century

3

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies4

SCOPE

Because many countries worldwide are rolling out ambitious strategies to boost domestic innovation andcultivate intellectual capacity for economic growth and competitiveness, the Toronto Region Research Alliance(TRRA) reviewed ten innovation strategies between June and December 2010. This research was carried out as part of TRRA’s mandate to monitor and analyze global developments in innovation and, particularly, tounderstand the main drivers for policy-setting. The countries selected for review were the United States, theUnited Kingdom (UK), China, South Korea, Israel, the Netherlands, India, Germany, and Finland, as well asinitiatives across the continent of Africa. They represent the developed and developing world, and innovationleaders and followers. This study determined that, depending on the interplay between the drivers, S&T priority areas and funding programs, nations are working toward five distinctive goals in innovation:

1. stay ahead,

2. get ahead,

3. exploit existing strengths,

4. alleviate national points of pain, or

5. maintain the general level of prosperity.

This paper begins with an outline of the Canadian innovation strategy and examples of recent initiatives andprograms. We then provide an overview of other national innovation agendas and identify how they fit into theafore-mentioned categories. This is not intended to be an exhaustive analysis but rather a snapshot of recentdevelopments on the innovation front across the world.

National R&D Strategies at a Glance

Fig. 1

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Source: Toronto Region Research Alliance analysis based on data from Battelle, 2011 Global R&D Funding Forecast.

Global R&D spending - Gross expenditures on R&D, by purchasing power parity (PPP)

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United StatesUntied Kingdom

ChinaSouth Korea

IndiaAfrica

IsraelNetherlands

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Stay Ahead Get AheadExploit ExistingStrengths

Address Pointsof Pain

Maintain Levelof Prosperity

5

The worldwide resurgenceof innovation and S&T didnot go unnoticed in Canada.

The first set of Canadian innovation policies in the1990s was mainly a response to two key issues:lagging productivity relative to the US and the exodus of Canadian scientists. It was in 1997 that the government adopted a comprehensive innovationstrategy, which began with increased funding fordirect and indirect costs of research, investments inuniversity infrastructure, and provision of high-qualityresearch opportunities at Canadian universities.Subsequently, the Canadian government increased

support for research through programs including the Canadian Foundation for Innovation (CFI), theCanadian Institutes of Health Research (CIHR), andthe Canada Research Chairs (CRC) Program.4,5

Canada is forecast to be theninth-largest R&D spenderin 2011 with US$24.3 billion(in purchasing powerterms).3 Canada’s spending

has grown at the same pace as the whole economyand the gross expenditures as percentage of GDP haveremained relatively constant over the last decade(Figure 2).6,7 With approximately 2.0%, Canada’s grossexpenditures on R&D (GERD) as percentage of GDPare slightly below the average of other G7 countriesbut substantially above the BRIC (Brazil, Russia, India,China) countries (Figure 3).8

Continuing the strong focuson S&T, the plan ‘MobilizingScience and Technology toCanada’s Advantage’ wasreleased in May 2007.9,10

Innovation is still believed to be the answer to what are perceived as Canada’s key national challenges:health care, national security, energy, natural resourcemanagement, and the persistent productivity problem.

CANADA’S INNOVATION STRATEGY

Canada’sexpenditures on R&D

Canada

GDP/capita (international $): 37,945

Population (thousands): 33,740

GERD (2011 at PPP, billions, US$): 24.3

2011 R&D as % of GDP: 1.8%

GERD as % of world: 2.0%

Mobilizing Scienceand Technology toCanada’s Advantage

The beginning

Fig. 2

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Source: TRRA analysis based on data from Statistics Canada, 2010

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GERD GERD as %GDP

Fig. 3

2000 2001 2002 2003 2004 2005 2006 2007

GERD/GDP in G7, BRIC countries and Canada (2000-2007)

BRIC average

Top Five Country Average

G7 average

Canada

Source: TRRA analysis based on data from Statistics Canada and UNESCO Data Center, 2010 (Note: GERD/GDP - Ontario 2.3%, Québec 2.6%)

0

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Strategic priorities in R&D have been set in response to those challenges. Future investments by both thegovernment and the granting agencies are set to targetenvironmental S&T, clean energy technologies, ICT,health research and related life sciences.

The 2007 budget granted anextra $85 million to fundingcouncils for research grantsand scholarships as well as$80 million per year forresearch that addresses

social and economic issues. Green technologiesreceived substantial funding through the $500 millionthat were awarded to Sustainable DevelopmentTechnology Canada (SDTC) in 2007 to create theNextGen Biofuels Fund™ for renewable fuels and $1 billion through the 2009 Clean Energy Fund. Anestimated $240 million was invested in GenomeCanada in the 2007 and 2008 budgets to advance theagriculture, crop, and bioproduct sectors. The 2009federal budget, ‘Canada’s Economic Action Plan’,allocated about $5.1 billion in initiatives that cancontribute to Canada’s excellence in entrepreneurship,people, and knowledge. The government set aside $2 billion for construction and infrastructureimprovements at Canadian universities and colleges.Federal labs received $250 million for repairs andupgrades. With its commitment to build an S&T hub in the Canadian Arctic, Canada is moving ahead tosupport research that ensures national security andsovereignty in the North.

The Canadian innovationstrategy also puts anemphasis on humancapital. Universities and

colleges received $9.7 billion in 2008-09 includingsupport for grants and loans to make education atthe post-secondary level more accessible to youth.The goal of the recently-launched Vanier CanadaGraduate Scholarship program is to retain and attractoutstanding doctoral candidates with awards valued at $50,000 per year for up to three years. Canadianprofessors and their groups will be supported insetting up new programs at Canadian universitiesthrough twenty new $10-million seven-year CanadaExcellence Research Chairs (CERC). The governmentalso struck agreements with the provinces andterritories in 2008-09 to channel $500 million peryear over six years into new skills training programs.

Although contributions fromthe federal and provincialgovernments and universitiesput Canada amongst the topG7 nations in public GERD,

private sector investments are lagging. A recentreport suggests that the lack of innovative strategiesamongst Canadian businesses has been the reasonfor the gap in productivity growth. Businessexpenditures on R&D have remained relativelyconstant over this decade and are well below those of other Organization for Economic Co-operation and Development (OECD) countries. Investments in high technologies, particularly in ICT, have been

Challenges withbusinessinnovation


Investments ininfrastructure and fundingprograms

Investments inhuman capital

Notable inventions: Canada

The discovery of insulin is one of Canada’s best-known medical breakthroughs. While working atthe University of Toronto under the supervision ofProfessor MacLeod, Frederick Banting andCharles Best developed a life-saving treatmentfor diabetes sufferers in 1921.

The BlackBerryTM series of handheld devices wasdeveloped by the Waterloo-based companyResearch in Motion (RIM). RIM was founded bythe University of Waterloo student Mike Lazaridis.What began as a two-way pager in 1999, quicklyevolved into a sophisticated mobile e-mail devicewith web browsing capability.

Saskatoon scientists Keith Downey and BaldurStefansson developed canola oil in the 1970s.Derived from selections of rapeseed, it isconsidered one of the healthiest oils.

Other:: Telephone (1867), anti-gravity suit (1941),electric wheelchair (1952), heart pacemaker(1950)

7

inadequate. Canadian exports to the US are facingtougher outside competition from Asian countries. It has been observed that Canada’s prosperity hasdepended too much on the natural resources sectorwhich has a dominant position internationally but iseasily affected by commodity cycles. Despite thisadvantageous position, Canada’s natural resourcesfirms have not sufficiently produced innovativeproprietary technologies but rather have adoptedforeign-made equipment and processes.12

“Because Canada’s productivity problem is actually abusiness innovation problem, the discussion about whatto do to improve productivity in Canada needs to focus onthe factors that encourage, or discourage, the adoption ofinnovation-based business strategies…

This is a complex challenge because the mix of relevantfactors varies from sector to sector and requires a muchbroader conception of innovation than the conventionalR&D-centred view, which, while important, is toolimiting.” Council of Canadian Academies (2009)11

The Canadiangovernment intends to promote privatesector investment andentrepreneurial culture

with policies aimed at creating a more competitivebusiness environment for domestic companies aswell as foreign firms looking to invest in Canada.The federal corporate tax rate is scheduled to godown from 22.12% in 2007 to 15% in 2012. TheNational Research Council Canada – IndustrialResearch Assistance Program (NRC-IRAP) willreceive an additional $200 million over two yearsand the venture capital arm of the Bank of Canada(Business Development Bank of Canada, BDC) willuse $350 million in new funding to expand initiativesfor small- and medium-sized enterprises (SMEs) inthe technology sector.

Canada’s first S&T strategy was partly a response to a decline in performance relative to our largesttrading partner, the US. But there is also widespreadrecognition that Canada as a whole must now takeadvantage of its excellent research instituitions andrelatively strong fiscal position to stake a claim inglobal innovation.

“The world [is] progressing whether Canadians [like] it ornot and we should jump on the innovation bandwagon orrisk being left behind and having our precious Canadianinstitutions eroded or (worse) eliminated.” Richard E. Mueller,Department of Economics, University of Lethbridge (2006)4

Creating a morecompetitive businessenvironment

8

STAY AHEAD

Countries in this category are widely perceived astraditional leaders in innovation. Developed-worldeconomies such as the US and UK have been at theforefront of S&T fields but emerging markets areinvesting substantial resources into innovative activitiesthat are generating new products and services andchallenging their leadership positions. Hence,countries trying to stay ahead have made innovation apart of their comprehensive economic strategy in orderto maintain their position on the top tier of the S&Tladder. Although their scientific and engineeringsystems are not necessarily weakening, other nationsare rapidly improving their innovation capacity, thusnarrowing the gap between leaders and followers.13

Although the United Statesis ranked first in technology,innovation and R&Dexpenditures, the growing

unease about S&T strategies in China and across Asiahave pressed the federal government to set asidesubstantial funds for innovation.14 President Obama’s‘Strategy for American Innovation’ released inSeptember 2009 allocated more than US$100 billion of the Recovery and Reinvestment Act for all aspects of science, technology and engineering – fromfundamental research and industrial R&D to education programs at all levels.15,16

“In most broad aspects of S&T activities, the United Statescontinues to maintain a position of leadership but hasexperienced a gradual erosion of its position in manyspecific areas...Asia’s rapid ascent as a major world S&Tcenter— beyond Japan—is driven by developments in Chinaand several other Asian economies....All are seeking toboost access to and the quality of higher education and to develop world-class research and S&T infrastructure.”U.S. National Science Board (2010)14

Basic research will receive a significant boost over thenext ten years with thedoubling of the budget

of three research agencies, the National ScienceFoundation (NSF), Department of Energy’s Office of Science (DOE SC), and the National Institute ofStandards and Technology (NIST).17 The 2011 budgethas committed US$13.3 billion – US$824 million morethan in the previous year – and sets them well oncourse to achieve US$19.5 billion by the year 2017.18

These investments support fundamental research thatenables technological breakthroughs for industries oftomorrow and simultaneously addresses suchchallenges as cancer and energy. NSF is anindependent federal funding agency for basic scienceand engineering and its new funds will be used tofinance renewable energy technologies and next-generation ICT. The National Institutes of Health (NIH)received US$1 billion from the recovery budget for DNAsequencing and the study of the cancer genome. Intotal, the NIH are setting aside US$6 billion for cancerresearch with potentially 30 new drug trials in 2011.19

“The United States now has to compete for every job goingforward. That has not been on the table before. It has beenassumed we had a lock on white-collar jobs and high-techjobs. This is no longer the case.” Craig Barrett, CEO Intel (2003)20

The main drivers for theAmerican innovation policyare high carbon emissions,health care, nationalsecurity, and America’s

declining education system. The US has always beenable to draw top foreign researchers and scientists toits prestigious universities, government or industrylabs, but globalization has led to a fierce competitionfor both blue- and white-collar jobs. Although the USstill attracts the largest proportion of foreign students,its share is being slowly eroded. The performance of the American education system is weakening ininternational comparisons. Recent graduation rates

Losing confidence in US’ S&T prowess

Drivers for theAmerican innovationpolicy

United States




2011 R&D as % of GDP: 2.7%


INNOVATION PLANS AT THE COUNTRY LEVEL

Investments in basicscience

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

9

at the post-secondary and university levels are some of the lowest reported of all OECD countries.21

Therefore, the R&D stimulus also emphasizedimprovements in science, technology, engineeringand mathematics education at the K-12 level toproduce the next generation of highly-skilledemployees. The American strategy also focuses onrestoring and modernizing the physical infrastructure,including roads, highways, bridges, electrical gridsand broadband networks to stimulate the economyand improve the flow of products and services. Theaggressive international competition is a threat toAmerican leadership in innovation and has causedpolicy makers and industry to take bold action.

Although the UnitedKingdom maintains itsposition amongst the topfive European innovationleaders, its performancehas eroded. The recentfinancial crisis left the UKwith a mounting national

debt. Britain’s GERD of 1.79% falls short of the 3%target set by the European Council at the LisbonSummit in 2000. Approximately 45% of UKexpenditures on R&D are derived from privatesources but venture capital investment in early-stagetechnologies dropped sharply from £214 million in2007 to £124 million in 2008. The UK InnovationInvestment Fund was created in 2009 as a £1 billionfund-of-funds for financial support of smaller privatefunds that can support businesses directly.

Notable inventions: United States

Leo Baekeland’s invention of ‘Bakelite’ in 1907was a pivotal moment in the modern plasticsindustry. This first synthetic plastic transformedthe production of every-day items such as hairdryers, electrical wires and steering wheels.

The US military began to develop acommunications network during the Cold War era that would withstand enemy nuclear attacks.The internet has its roots in the Department ofDefense Advanced Research Projects Agency(ARPA). The first message was successfullyexchanged in 1969.

After seeing his father suffer through heartdisease and open heart surgery, Dr. Robert Jarvikinvented the artificial heart in 1982. The goal wasto allow heart disease patients to survive whilewaiting for heart transplants.

Other: Assembly line (1913), nuclear reactor(1942), laser (1958), human papillomavirus (HPV)vaccine (2006)

United Kingdom




2011 R&D as % of GDP: 1.7%


UK financialperformance is suffering

Drop in VCinvestment


Notable inventions: United Kingdom

A British Royal Air Force officer Sir Frank Whittleis credited with the invention of the jet engine in1930. World War II expedited the development ofthe jet engine for military purposes.

DNA fingerprinting is a relatively recent discoveryby the British scientist Alec Jeffreys of theUniversity of Leicester. His research on geneticmarkers for illness and disease led him to astunning conclusion in 1984: all individuals have a unique biological code.

Tim Berners-Lee, an Oxford graduate and physics major, led the invention of the WorldWide Web (WWW) in 1989 at CERN, the EuropeanOrganization for Nuclear Research. He proposedthe definitions of URLs (Uniform ResourceLocators), HTML (HyperText Markup Language),HTTP (HyperText Transfer Protocol), the basicbuilding blocks and language of the web.

Other: Steam engine (1698), locomotive (1829),stainless steel (1912), human in vitro fertilization(1978)

Various RegionalDevelopment Agencies(RDAs) introduced theInnovation Vouchers

Scheme for SMEs to foster information exchangebetween researchers and private firms. Theprovision of £3,000 and £7,000 vouchers allowsSMEs to collaborate with research institutes oftheir choosing. This innovative scheme has proveneffective and 1,300 vouchers worth £4.5 million hadbeen distributed by mid-2009, only one year afterintroduction.22 Britain’s ‘New Industry, New Jobs’released in April 2009 includes a number ofindustrial strategies for innovation. For instance,‘Digital Britain’ provides a framework for upgradingBritain’s broadband infrastructure.23 ‘The LowCarbon Industrial Strategy’ will accelerate thetransition to a clean economy with innovative greentechnologies,24 and the ‘Advanced ManufacturingStrategy’ will enable manufacturing companies to take advantage of advanced technologies andmaterials.25

“Innovation accounted for up to two thirds of averagelabour productivity growth between 2000 and 2007.”UK Annual Innovation Report (2009)22

A number of UK initiativesare intended to acceleratethe propagation ofknowledge and technology

from academia down to industry. Knowledge TransferNetworks (KTNs), overseen by the UK TechnologyStrategy Board and boasting a membership of morethan 43,000 business members and 14,000 non-business members, are extensive networks thatconnect centers of excellence, universities,corporations, companies, funding bodies andorganizations across sectors. The EnergyTechnologies Institute was created in 2006 and is a private-public partnership for large-scalecollaborative energy projects. It brings togetherindustry partners, national research councils, anddraws on the expertise of many UK researchinstitutes in nine different areas, from offshore windto energy storage and distribution. The developmentof such knowledge networks took place in response tothe criticism that, although the UK is home to someof the world’s top-rated universities such as Oxfordand Cambridge, the overall commercialization rate islow. For a country that once led the world in industrialrevolution and trade, the current S&T plan is aboutmaintaining its leadership position in innovation in the midst of the growing global competition.

Knowledge TransferNetworks

Vouchers Schemefor SMEs

11

GET AHEAD

Countries in the developing world have set highambitions for future S&T competitiveness. Althoughthe Asian market still exports large quantities of low-value-added products, it is increasingly seen as a richsource of innovative ideas. Not only are the countriesin this region attracting large foreign businessinvestments due to their potential for S&T growth, but the nations themselves are spending substantiallyto modernize their innovation systems and to addresstechnology and patent infringements by tougheningdomestic intellectual property (IP) laws. The countriesin this category can take advantage of the concept of‘leapfrogging’ to immediately move to the mostadvanced tools and technologies and skip theincremental and potentially long R&D stages that led to them in the first place. However, the nationalgovernments are simultaneously investing ininfrastructure to undertake long-term researchefforts analogous to those of innovation leaders.

China traditionally served asthe workshop of the world.Design specifications, IP

and knowledge were typically imported, whileinexpensive Chinese-made goods were exported. That is now changing; China is creating an innovativeeconomy and has set an ambitious target of becominga knowledge-driven economy by the end of this decadeand the global S&T leader by 2050. Although China stillranks relatively low in global competitiveness, it hasmoved up from 35th in 2006 to 27th in 2010.26,27 Thecountry is a rich source of brainpower and producednearly 912,000 graduates in science- and engineering-related fields in 2006, compared to 478,000 in the US in the same year.28 The government is investing ininstitutes that will contribute to the overall S&T

development. For instance, the National Institute ofBiological Sciences in Beijing was created in 2003 as a strategic initiative to strengthen China’s S&T in lifesciences and biotechnology.29 The Beijing Institute of Life Sciences, under the auspices of the ChineseAcademy of Sciences (CAS), was established in 2008 tooversee CAS-affiliated biomedical institutes in Beijingincluding the Institutes of Microbiology, Genomics andBiophysics.30 These investments are generating results.China’s share of S&T publications has increased innearly all fields and this research frequently takesplace in the public sector.31 With over 1.42 millionresearchers, China is now second worldwide in thenumber of people in S&T behind the US.32

“China has achieved a spectacularly high rate of economicgrowth over a sustained period for more than two decades.Nevertheless, today China faces the challenge of makingthe transition from sustained to sustainable growth fromsocial, economical, ecological and environmental points ofview. Innovation has been identified as a main engine forthis new growth model, and the Chinese government haslaunched a national strategy to build an innovation-driveneconomy and society by 2020.” OECD (2008)33

Government strategiesreleased since 1978, withthe eleventh ‘Medium- toLong-Term Plan for the

Development of Science and Technology’ announced in 2006, reveal the steady transformation of China’sinnovation policy from a government-centric to market-centric endeavour.34 The country is moving away fromimported technologies while focusing on generatingindigenous innovation with domestic inventors who own the IP, thus confirming that knowledge is the newengine of economic growth and those who controlideas reap economic benefits. China as a whole stillmakes up a small proportion of global high-value S&Tpatents, which are defined as inventions with patentprotection in the US, the European Union and Japan;but it has grown slightly from 0.13% in 1997 to 1.0% in2006.35 Even the make-up of China’s foreign directinvestment (FDI) has evolved to reflect focus on knowledge-intensive activities. This marks a shiftfrom the past in which majority of foreign companiesused China as a low-cost locale for outsourcing ofmanufacturing operations. Multinational corporationsnow increasingly invest in Chinese expertise and thereare more than 900 R&D centers.36 Firms such asEricsson, AMD, Novartis and Siemens have establishedR&D hubs across China.

China


Population (thousands): 1,331,460


2011 R&D as % of GDP: 1.4%


China’s ambitions

Fostering indigenousinnovation

Notable inventions: China

In 1965, research scientists working at theBiochemistry Institute under the auspices of the Chinese Academy of Sciences synthesizedcrystalline bovine insulin. It was the first man-made bioactive protein, a ‘living’ molecule, andset off the field of synthetic biology.

After years of research, hybrid rice wassuccessfully developed by Yuan Longping, anagricultural scientist in the Hunan Province in1973. His research into hybrid rice breedingtransformed rice production.

The world’s narrowest carbon nanotubes,measuring 0.5 nm in diameter, were created byChinese scientists in 2000. Nanotubes exhibit avariety of electrical and mechanical propertiesthat are useful in materials and electrical devices.

Other: ‘Four great inventions of ancient China’:paper making (c. 200 BC), gunpowder (c. 800),compass (c. 1000), printing (c. 300)

A key driver of China’snational innovation policy is its rising energydemand and the externalpressure to curbconsumption. Latest

reports by the International Energy Agency (IEA)reveal that China has now moved past the US asthe world’s largest consumer of energy.37 China has already established itself as the leadingmanufacturer of solar cell panels and mayeventually become a strong contender in theproduction of wind turbine equipment. Withapproximately 70% of its current demand derivedfrom coal, there is a push to install solar and windcapacity for the domestic market. China is, in fact,poised to become the world’s largest generator of electricity from renewable sources.38

It is widely believed that China’s growingpopulation will shapefuture consumer trends.Emerging markets arecoming up with new and

innovative products at an astonishing pace. Millionsof potential customers in these markets are drivingthe development of products that satisfy localdemand and the design of supply systems that can efficiently reach the masses. Some segmentsof the Chinese population are already enjoyingrising incomes and the government aims tocontinue raising the standard of living by triplingper-capita income, from US$1000 in 2002 toUS$3000 in 2020.34 In fact, this is a key componentof the proposed twelfth economic plan covering the period 2011-15. The central government hasplaced the notion of a balanced economy, ruralmodernization and narrowing the income dividebetween rich and poor at the top of the economicagenda.39 The changing role of China in the worldand its growing ambitions have prompted othergoverments to respond with investments in S&T.Although China will undoubtedly play a major role in global innovation, the challenge for thegovernment is to sustain rapid growth withoutcreating internal economic imbalances and tension.

China’s growingpopulation will shapefuture consumertrends

Key driver ofinnovation policy is rising energydemand


South Korea has undergone a remarkabletransformation from acountry which sustaineditself on agriculture,

textiles and footwear to a technologically-competitivenation, particularly in the area of ICT. Much of itsbasic innovation infrastructure and capacity buildingtook place in the 1970s and 1980s, about two decadesfollowing the end of the Korean War. The last 20 yearshave been marked by a more coordinated approach toS&T policy. The nature of innovation in the countryhas gone through multiple phases, from one in which learning occurred largely through reverseengineering and imitation to one with the mark of a sophisticated knowledge-driven economy.40

The Korean governmenthas set an ambitious goalof not only reaching the top nations in S&T but also surpassing them inspecific fields by the year2025. The government set

out its long-term strategy in its 2000 document called ‘Vision 2025: Korea’s Long-term Plan for Science andTechnology Development’. Much of Korea’s prosperitydepends on the ICT sector. The IT 839 strategy wasrolled out in 2004 with emphasis on eight specific IT services, three infrastructure networks, and ninehardware and software industries with growthpotential, such as next-generation mobile devices,digital TV/broadcasting equipment, home networkequipment, etc. In fact, Korea is rolling out the mostadvanced communications network in the world, led by a consortium of government researchinstitutes and companies. The vision behind thestrategy is to promote investments in specific ICTareas, push the convergence of technologies, create

a fully-connected society and continue to set standardsin a field that has been a traditional area of strengthfor Korea.42

“Korea has [had] tremendous economic achievements in thelast 60 years. Torn apart by war and suffering from absolutepoverty, Korea was one of the poorest countries in theworld. Despite a late start in industrialization, Korea is nowthe 12th largest economy and is a worldwide leader in anumber of key industries, such as semiconductors [and]ship-building. However, Korea needs to find a new and moresustainable path for further development…” PresidentialCommittee on Green Growth (2009)41

The government has highhopes for biotechnology tobecome a major industryalongside ICT. The planBio-Vision 2016 was

revealed in 2008 and represents a commitment of about US$14.3 billion in biotech research andindustry in the next decade.42 First established in1985, the Korea Research Institute of Bioscience andBiotechnology (KRIBB) has now become the focalpoint of biotech research in the country, from thedevelopment of biotechnology platforms to technologytransfer and commercialization. Researchers at the Institute are building Korean competence inbiotechnology and are simultaneously searching for solutions to broad societal problems, includingageing, cancers, neuro-degenerative diseases, andbio-based oil substitutes.43 Although Korea has madetremendous strides over the last four decades withsignificant and early investments in S&T, the issue of limited natural resources and the resultingdependence on foreign oil still remains. Thegovernment set up the Presidential Committee onGreen Growth in 2009 and allocated US$80 billiontowards the development of green technologiesbetween 2009 and 2012.

Relative to other Asiancountries, FDI has played a rather insignificant role inSouth Korea’s technologicalevolution. The R&D

landscape in the country has been dominated by thenational government and the chaebol, Korea’s family-owned business conglomerates that have evolved intoglobal giants, including the likes of Hyundai Motors,Samsung, and LG.40 However, the emphasis on appliedscience has left Korea with deficiencies in basicresearch. The government is investing more thanUS$3 billion between 1999 and 2012 into an education

South Korea




2011 R&D as % of GDP: 3.0%


Evolution of theSouth Koreaninnovation system

Vision 2025:Korea’s Long-termPlan for Science andTechnology

High hopes forbiotechnology andgreen technologies

Korea’sconglomerates(chaebol)

13


Notable inventions: South Korea

Seoul-based firm SaeHan Information Systems was the first company to develop andmanufacture MP3 players in 1998. The ‘MPManF10’ was the first portable digital player and itwas capable of holding 32 MB of music. TheSouth Korean industry began to install MP3players into mobile phones in 2001.

Introduced in 2006, Wireless Broadband (WiBro)differed from other internet standards because it was designed to keep the internet connectionwhile moving at high speeds in a train or a car

Samsung, which started out as a manufacturer ofblack-and-white TVs, has set many industry andworld firsts including the development of 30-nm-class dynamic random access memory (DRAM),first full HD 3D LED TV and 3D home theaterin 2010.

OOtthheerr:: Digital TV production (1998), 3D thin-filmtransistor LCD monitor (1999), largest flexible e-paper (2010)

reform plan called Brain Korea with the objective to develop R&D talent and strengthen Koreanuniversities. These learning programs are naturalextensions of the Korean value system because the society as a whole has traditionally placedmuch emphasis on S&T education and technologyadoption. Korea’s rise from an agrarian society hasbeen attributed to the strong commitment to S&T-driven economic growth. South Korea has evolvedinto one of the most technologically advanced andbest connected societies in the world. But futureambitions will depend on its ability to createindustries outside of ICT, and to do so in face of limited natural resources, competition fromimmediate neighbours and security threats from the North.

EXPLOIT EXISTING STRENGTHS

Many nations have points of comparative industrialadvantages and economic strengths that reflect acountry’s history and development. Some nationalgoverments are leveraging these strengths to buildup capabilities in high technology. A study of theirinnovation plans reveals that they are focused onmaking existing industries more innovative andcompetitive or using the current businessinfrastructure and talent pool to diversify intobudding areas such as the renewable sector.

Israel is an example of a resource-poorcountry that is exploitinghistorical R&D strengthsto grow capabilities in

renewables, ICT and biotechnology. It is the countrywith the highest expenditures on R&D as percentageof GDP (4.9% in 2008), mainly due to large

Israel




2011 R&D as % of GDP: 4.2%


High private sectorexpenditures onR&D

15

contributions from the private sector. The Israeligovernment accounts for only 19% of the totalspending relative to the OECD average of 29%.44

High-technology makes up nearly 50% of allindustrial exports and is therefore crucial for thenational economy.45 Israeli ICT companies have thereputation as innovators and entrepreneurs. Becauseof the small size of the domestic market, Israelicompanies become export-oriented from the start.They have found tremendous success in niche ITmarkets, including Voice over Internet Protocol(VoIP), encryption, automated inspection of printedcircuit boards and firewalls.

After Israel became anindependent state in 1948,the government took onthe central task ofplanning industrialactivities which were

rather traditional in nature, such as agriculture and textiles. Contrary to present-day Israel, R&Dactivities in the early years were concentrated in public research instituitions and GERD aspercentage of GDP was under 1%. The economyremained relatively regulated until the 1980s.However, because of persistent national securitythreats, Israel made efforts in the 1960s to achievemilitary self-reliance and build a strong defenceindustry. The focus on national defencefundamentally shaped Israelis’ attitude to S&T. Thelabor force was virtually transformed because themilitary demanded state-of-the-art technologiesand highly-skilled scientists and engineers.Government policies in the 1970s started to focuson advanced R&D capabilities. The state began tosee the industry as the vehicle for conducting R&Dwhile allowing knowledge to flow out from academiaand defence to the private sector through private-public partnerships.46

This attitude spilled overinto other sectors andparticularly into ICT. This

sector was the driving force of the economy in the1990s; its share of GDP increased from 5% in 1990 to 14% in 2000. ICT multinationals have played anextremely important role in moulding Israel’s S&Tenvironment. The first set of firms set foot in Israelthrough establishment of R&D centers in the 1970s.47

IBM Scientific Center was created in 1972 and, withover 500 employees, is one of its largest centersoutside the US.48 The Intel R&D Center in Haifa

Early focus onnational securityand defence shapedS&T in Israel

Rise of ICT

Notable inventions: Israel

Modern drip irrigation was developed in the1960s by the Israeli engineer Simcha Blass.Developments in the plastics industry made theinvention possible. The system consists of plastictubes and nozzles to deliver water to plantsslowly and with precision.

Voice over Internet Protocol (VoIP), the firstinternet phone technology, began with a smallIsraeli company VocalTec Communications in 1995.VOIP converts voice signals into packets that aretransmitted over the internet and allows people to make low-cost long-distance telephone calls.

In 2001, the Israeli firm Given Imaginingintroduced the PillCam, a pill-sized capsule withan embedded camera and light source that canbe ingested for imaging the gastrointestinal tract.In some cases, it is a less invasive alternative toendoscopic exams that does not require sedation.

Other: Unmanned aerial aircraft (1982), firewallsecurity software (1994), instant messaging, icq(1996)


opened in 1974 and was the company’s first huboutside of the home country dedicated to technologydesign and development.49 More centers have beenestablished over the years by leading ICT companies –Google, IBM, Cisco, Microsoft, SAP, and Motorola.

The Office of the ChiefScientist (OCS) in theMinistry of Industry, Trade and Labour is the

government body responsible for setting S&T policy.Israel has recognized the need to make the economyless dependent on ICT. Attempts are underway to growIsrael’s market share in biotechnology, clean energy,and water technology industries. These have beenIsrael’s major research strengths in academic settingsbut have played a less prominent role in the pastrelative to ICT. The OCS will contribute €63 million to aventure capital biotech fund to be matched by privateinvestors in order to realize Israel’s full potential in the field, which could lead to ‘an increase of billions of dollars in the GDP on a yearly basis.’50 In addition,Israel is making use of knowledge accumulated fromits long-standing struggle with water scarcity andwater security. The Novel Efficient Water Technologies(NEWTech) program, led by the Ministry of Industry,Trade, and Labour, was formed in 2006 to collectivelybrand Israel’s water sector and boost innovativeness in water technologies.51 Israel’s expertise in waterreuse, desalination and drip irrigation attracted overUS$770 million worth of investments by 2008 andresulted in an export boom with US$1.6 billion in 2008.The program struck cooperation agreements withMinistry of Water in China, Water Commissioner ofMexico, water authorities in Beijing, Madrid,Melbourne, São Paulo, and Buenos Aires, as well asindustry-leading foreign companies including Siemens,General Electric, and Dow Chemicals.52,53 In spite ofthese efforts, Israel has been criticized for lack of anoverarching innovation strategy because its S&Tpolicies have focused exclusively on industrialinnovation.45 Going forward, the challenge for Israelwill be balancing its historical strengths with thetemptation to enter new markets that might riskdiffusing its limited financial resources.

Holland is a country withpremier trading hubs such as Amsterdam and

Rotterdam and one of the highest standings in globallogistics performance indices.54 It has been succesfulat attracting companies trying to tap into theEuropean market. As in the case of South Korea, the Dutch economy has been dominated to a largeextent by its multinational corporations, such as ING,Philips, Akzo Nobel, Heineken, Shell and Unilever(these last two companies are British-Dutchmultinationals). These corporations contributesignificantly to Holland’s economy each year. TheNetherlands has traditionally been considered one of the top destinations for foreign head offices withEuropean activities. The government therefore seesan opportunity in the fast-rising Asian companies thatare looking to expand their operations beyond Asia.The goal is to continue to position the Netherlands as the ‘Portal to Europe’.55

Historically, the Dutcheconomy has beenpropelled by the trade,distribution and services

sector. The objective is to build up the knowledgebase to make these sectors more competitive.Although the scientific quality of Dutch universities ishigh, the country has slipped in innovation rankingsand has found itself in the group of ‘innovationfollowers’. Studies of the Dutch innovation systemhave identified a number of weak points associatedwith the innovation capacity of the SME base, thecountry’s attractiveness for foreign R&D investment,availability of knowledge workers, and the need tocreate an environment more conducive to excellencein learning and research. They are now focusing onreversing this trend.

Netherlands




2011 R&D as % of GDP: 1.6%


Portal to Europe

Slipping ininnovation rankings

Biotechnology andwater strategies

17

Notable inventions: Netherlands

The electrocardiogram (ECG) was invented by the physiologist Willem Einthoven in 1902. Hedesigned a prototype for registering electricalheart signals and pioneered the field ofcardiology.

Rally driver driver Maurice Gatsonides was the inventor behind the speed camera. As asports car enthusiast, he designed a speed-measurement system to help him go faster inrally circuits. He saw potential in other marketsand founded Gatsometer B.V. in 1958.

It was in 1982 that Philips and Sony jointlyintroduced the scratch-free compact disc (CD)standard. The production began at a Philips’ plantin Germany. CD length was set at 74 minutes to fitthe entire recording of Beethoven’s 9thSymphony.

Other: Optical microscope (c. 1600), opticaltelescope (1608), navigable submarine (1620)

The Knowledge &Innovation Program (K&I)department, which is runwith the involvement ofmultiple ministries,

announced a long-term strategy in 2008 that focuseson pillars of innovation: talent, public and privatesector research, and entrepreneurship. K&I alsosets agendas for overarching themes deemedessential to society such as energy, water, healthcare, education, and sustainable agriculture. Thegovernment introduced two new schemes worth€280 million for 2009 and 2010 through the stimulusbudget. The Knowledge Workers program allowsindustry researchers and scientists to work at publicinstitutes for up to eighteen months, whereas theHigh Tech Top Projects program funds large-scaleR&D projects. This enables businesses to continueto employ R&D personnel.56 The goal of the nationalKnowledge Investment Agenda (KIA), tabled by theadvisory body Innovation Platform, was to propel the Netherlands into the top five most competitiveknowledge societies by 2016, from 8th place in the2008 global competitiveness index. KIA’s proposedpilot program called ‘1000 Ph.D.s’ is intended toboost Dutch graduate research by enticing highly-skilled Chinese talent to undertake doctoralresearch in the Netherlands, particularly, becauseHolland has been suffering from a shortage ofscientific talent.

The government has recognized theimportance of knowledgein attracting companieslooking for high-value

manufacturing and R&D locations. The long-termplan is to attract at least a hundred major globalcompanies, including those from emerging markets,that align with Dutch key industrial strengths. The government is advancing traditionally strongindustries including plants and food, materials,water, and chemicals. Initially, the state has set aside €2.5 million per year over three years to attract fifteen knowledge-intensive firms and R&Dinvestment in two areas: flowers and food andchemicals. The objective to garner a share of globalforeign investment is a remedy to a weakness inHolland’s innovation system: total investments inknowledge stood at approximately 1.7% of GDP in2009, which is well below the European target of 3%.Corporate investments in R&D were relatively lowwith about 1.0% of GDP, whereas the goal for Euro

Governmentschemes andprograms

Attracting andretaining knowledge-intensive firms

zone countries stands at 2.0%. The government hasattributed this to a lack of ‘onshoring’ of internationalR&D activities in the Netherlands. To encourageentrepreneurship and domestic innovation, the GrowthAccelerator program was created to achieve a numberof specific targets, for instance to increase the numberof innovative start-ups by 50% from the current 3,100,and increase the share of fast-growing firms from 8%to 12%.57,58,59 The Netherlands is investing in itsindustrial strengths and the supporting R&Dinfrastructure to reverse trends concerning theshortage of knowledge workers and decliningcorporate expenditures on R&D.

ADDRESS POINTS OF PAIN

Some of the world’s most populous nations are plaguedby deep-rooted socioeconomic issues: high povertyrates, uneven distribution of wealth, failing or inadequateinfrastructure and pressing challenges associated withhealth, sanitation, water and food. Unlike other nationsthat are clearly framing their S&T policies to becomeglobal leaders in innovation, the strategies in thiscategory are aimed at addressing points of national pain.The emphasis is foremost on meeting social needs andsatisfying local demand.

India’s rise in the fields ofinformation telechnology,telecommunications,health andpharmaceuticals isremarkable given thatIndia’s economy remainedrelatively closed to foreign

trade and investment until the late 1980s. Theserestrictions were lifted gradually in the early 1990s.Not only did the government become more accepting

of trade, it actively sought out foreign investment with tax incentives and regulatory reforms. The ICTindustry has witnessed a spectacular success inIndia, which has become one of the top-exportingnations in software and related services. FDI hasflourished; in the 2009-10 fiscal year alone, Indiaattracted US$26 billion in investments.60 Hundreds of companies have moved their service operations toIndia and about 650 multinationals, including IBM,Delphi, General Electric, and Hewlett-Packard, areexpanding R&D centers in the country. India hasworked to strengthen the innovation system tosupport these efforts, especially through nationallaboratories and the highly-regarded Indian Institutesof Information Technology (IITs). Led by the Ministryof Communications and Information Technology, thegovernment has established 39 Science TechnologyParks of India (STPI) since 1991 to offer facilities,computers, communication networks and services to export-oriented businesses.42

“The next ten years would be dedicated as a Decade ofInnovation. It may be a symbolic gesture but an importantgesture to drive home the need to be innovative in findingsolutions to our many challenges.” India’s President PratibhaPatil addressing a joint sitting of Houses of Parliament (2009)61

Although the informationtechnology sector, whichhas experienced mostrapid growth, employed

more than one million people in 2004, it still accountsfor a minor share of total employment. In fact, 89% of Indian workers find themselves in so-calledinformal sectors – largely agricultural activities.Since 1951, India has released eleven five-year plansthat set the strategy for the overall direction of thecountry. The years between 2002 and 2007 (‘TenthPlan’) was a period of strong economic growth withan annualized growth rate of 7.7%. Although povertyhas fallen from 36% of the population in 1993 to 28%in 2005, it still persists. The government hopes tolimit further economic inequality with an ‘inclusivegrowth’ strategy, which ensures that all benefit from India’s rise. The country’s renewed focus oninnovation, science and technology is meant toaddress the needs of the poor: (1) how to provideincome opportunities for those outside of India’sformal industry sectors, and (2) how to integratethose moving from the traditional economy into the new knowledge sectors of urban centers.62

India


Population (thousands): 1,155,348


2011 R&D as % of GDP: 0.9%


Opening up of theIndian economy

Success of the ICTindustry

India’s inclusivegrowth strategy


Notable inventions: India

The Jaipur Foot is a cheap below-knee prosthesisthat was created by the craftsman Ram ChandraSharma in 1968 for the developing world andlandmine-affected regions. With the naturalmovement and appearance of an ordinary foot,the prosthetic is more versatile than Westernalternatives.

The Indian-American microbiologist AnandaMohan Chakrabarty developed geneticallyengineered organisms that could metabolizecrude oil in 1971 at General Electric. His patentfor ‘oil-eating’ bacteria was highly controversialbecause it sought protection for a living organism.

In 2010, the Indian government released theprototype for the world’s cheapest laptop thatwas co-developed by India’s leading Institutes of Technology and Science. This touchscreencomputer costs only US$35 and is primarilyintended as an aid for students.

OOtthheerr:: Number zero (5th century), assembly-lineheart surgery (2001), Nano, the world’s cheapestcar (2008)

A unique aspect of India’spolicy is the extent towhich innovation isdirected towards

impoverished and rural communities. It is not only about channeling existing public and privateR&D efforts to produce technologies and devicesfor the poor, but also about fostering innovationand entrepreneurship at the grassroots level.‘Grassroots innovations’ originate in the communityand are based on tacit knowledge, traditional ideasand practices, which are typically less expensive yetmore efficient. An example is the Rain Gun, a low-cost irrigation system created by a 70-year-oldfarmer, which was successfully commercialized by the Rural Innovation Network. The current‘Eleventh Year Plan’ (2007-12) aims to increaseR&D expenditure from 1% to 2% of GDP to addressenergy and food security, water scarcity, waterquality, and terrorism.63

The Indian governmenthopes to improve higher-level education andincrease the overall

enrollment rate in post-secondary institutions from11% to 21% over the next decade. Although India’stotal number of graduates outnumbers many othercountries, it is estimated that only a quarter of allgraduates have the qualifications and knowledgedeemed of good enough quality for the industry.42

India’s elite instituitions, IITs and the IndianInstitutes of Management (IIMs), produce thecountry’s highly-coveted graduates and thecompetition for placement is fierce. However, amajor challenge lies in the ‘brain drain’ as manygraduates and potential doctoral students headoutside for better opportunities. Considering the current state of affairs, education is a topgovernment priority and, especially, because India’syoung and English-speaking workforce is a keyreason why some economists predict that India’seconomic growth rate will overtake China’s by2013.64 The innovation policy in the world’s largestdemocracy is therefore a means to alleviate pointsof pain that present major obstacles to growth.

Grassrootsinnovations

Improving higher-level education

19


Although a vast continent steeped in culturalrichness and diversity with tremendous differencesfrom country to country, Africa as a whole isgrappling with common issues ranging from food and water scarcity, weak and neglected civilinfrastructure to drought, desertification, anddisease. In the past, governments have relied onforeign aid and have, in most cases, failed to build up the R&D capacity necessary to address thesefundamental concerns.

“A problem for Africa as a whole, as it has been for China andIndia, is the hemorrhage of talent. Many of its best studentstake their higher degrees at universities in Europe, Asia andNorth America. Too few return…That is at least in partbecause of a chronic lack of investment in facilities forresearch and teaching.” Thomson Reuters (2010)65

Created in 2003 under the New Partnership forAfrica’s Development(NEPAD) and the AfricanUnion (AU), the African

Ministerial Council on Science and Technology(AMCOST) brings together ministers responsible for S&T from all AU member states. It is the venuefor policy planning and priority setting for the wholecontinent. Africa’s leadership has recognized thesignificance of S&T in solving fundamental issuesthat pervade many of their countries and released a plan for action in 2006. At the core, it is aboutfostering innovation that works towards theachievement of the United Nations MillenniumDevelopment Goals (MDGs). The Council proposedflagship programs calling for research in a number of areas, including conservation, sustainable use of biodiversity, biotechnology, energy, water,materials science and manufacturing, ICT, and space science technology.66

The African S&T plan ispushing for strengtheningmaterials science andmanufacturing research to repair neglected orconstruct non-existentinfrastructure including

roads, railway and telecommunications lines, whichpresents a major development challenge. BecauseAfrican institutions often lack the equipment andfacilities to undertake sophisticated ICT research, the strategy is embrace innovation in free and open-source software, whose development andimplementation costs are typically lower and cansimultaneously circumvent the infrastructure issuethrough such applications as e-banking, e-health, e-education and e-government. In fact, Africa’sgeography, climate and population distribution lend themselves to innovative e-business models.‘Mobile money’, the use of cell phones for financialtransactions including depositing, withdrawing andsending money, shows how existing technology canbe used in interesting ways to ease the lives of thosewithout bank accounts or in regions without systemsin place.67

Biotechnology applicationscan address issuesconcerning foodproduction, environmentalsustainability and disease.

There are tremendous possibilities for innovation inagriculture, from the development of biopesticides,biofertilizers, and irrigation systems to biotechnologytechniques to generate enriched crops withresistance to drought. Just like India, Africancountries are rich in indigenous knowledgeaccumulated from years of dealing with scarcity of natural resources but the connections betweenformal R&D institutitions and communities are weak or non-existent. National governments willundoubtedly have to rely on foreign investment and aid for building up formal R&D efforts.

A network of four regionalcenters of excellence was established throughthe NEPAD African

Biosciences Initiative (ABI) whose design was fundedwith $30 million from the Canada Fund for Africaoverseen by the Canadian International DevelopmentAgency (CIDA).68 The objective is to enable scientistsin each region to share laboratories and technical

Strategies inmaterials scienceand manufacturing,free and open-source software

African MinisterialCouncil on Scienceand Technology

African Initiatives

Wealth ofopportunities inbiotechnology

African BiosciencesInitiative

21

Notable inventions: Africa

The South African doctor Christiaan Barnardperformed the world’s first human hearttransplant in Cape Town in 1967. Although thenine-hour operation was a success, the patientdied 18 days after the surgery due to pneumonia –not heart failure.

The theoretical foundation for the computed axialtomography scan (CAT scan) was laid by theAfrican physicist Allan Cormack during his stay atTufts University in the US. The CAT scan generatesa map of soft tissues in the human body and helpsidentify diseases of the nervous system.

A ‘mobile-money system’ (or M-PESA) wasintroduced in Kenya in 2007 and quickly enabledaccess to financial services in an environmentwithout extensive banking infrastructure, but withhigh cell phone adoption. M-PESA is particularlypopular in rural areas and has been one of themost significant ICT innovations in Kenya.

Other: Oil-from-coal refinery (1950), PlayPumpwater system (2006)

expertise in biotechnology for applications in health and agriculture. The centers of excellenceinclude Biosciences East and Central Africa at theInternational Livestock Research Institute (ILRI) inNairobi (Kenya), the Southern African Network forBiosciences hosted at the Council for Scientific andIndustrial Research in Pretoria (South Africa), theWest African Biosciences Network headquartered at Institute Senegalais de Recherches Agricoles in Dakar (Senegal), and the Northern AfricaBiosciences Network at the National ResearchCentre of Cairo (Egypt).69

Africans carry a heavyburden of global disease,which makes medicalinnovation one of the

most important areas of focus. The AU, Council on Health Research for Development (COHRED)and NEPAD recently put forth a guide for nationalgovernments wishing to design and implement apharmaceutical innovation system for local drugdevelopment and production.70 One of therecommendations is a strategy based on regionalcooperation and sharing of resources similar to the afore-mentioned NEPAD-ABI because only ahandful of countries within Africa have the capacityto contribute to the value chain. Nigeria’s NationalInstitute for Pharmaceutical Research andDevelopment (NIPRD) is part of its national strategyto push the local production of essential drugs. The Institute conducts research in plant-baseddrugs and pharmaceutical raw materials and hasrecently received a US$230,000 grant from theWorld Bank to produce anti-diabetic phytomedicine.71

Essentially, the questions that remain for Africa are about how to achieve a sense of self-sufficiencyin S&T, combine the old with the new and how totake advantage of wealth of traditional knowledgethat exists in its communities. African leadershipsees S&T as an essential tool to solve pervasivechallenges that hinder the continent’s prospect for economic development.

Pharmaceuticalinnovation strategy


NATIONAL PROSPERITY

A number of national S&T plans fit into the prosperitycategory. These countries have integrated innovationinto a broad national economic strategy to maintainthe state of wealth and enable competitiveness in the global economy. Research and technologydevelopment are used to drive productivity, sustaingrowth, create jobs, and make domestic industriesmore resilient to foreign competition and economiccycles. Finland and Germany are amongst leadingcountries in innovation and, above all, their strategiesstress the importance of S&T to drive productivity,growth and jobs.

Germany is frequentlydubbed the economicengine of Europe but the country faced major

challenges in the 1990s which have only been recentlyovercome. German economic growth suffered afterthe reunification of East and West Germany in 1990and there was widespread unemployment anddependence on social security and welfare systems.This low-growth period persisted until 2006 whenGermany’s growth rate jumped to 2.9% fromapproximately 0.8%, which was the norm in the early2000s. The boom was driven by Asian demand forGerman exports and some early labour and socialsecurity reforms.72 A recent report argues that thisgrowth could only be sustained through a reform plan that strengthens the national innovationframework and revamps the corporate financing and taxation systems to support innovative start-ups.73

“In the medium and long terms, however, the currentfinancial and economic crisis will not stop the global race for knowledge from re-accelerating. Internationalcompetition for talent, technology superiority and marketleadership will continue to grow. In countries relativelypoor in natural resources, such as Germany, enhancedinnovation will provide the decisive basis for growth, new jobs and prosperity. Innovation is the key to a rapidrecovery.” German Federal Ministry of Education and Research (2009)74

Germany has had a long-standing reputation forengineering and science

excellence but its 2006 High-Tech Strategy formally set out to brand the country as the ‘Land of Ideas’.74

It recognized that challenges associated with health,climate and resource efficiency, transportation, and national security must be addressed throughadvancements in key enabling technologies: ICT, laser technologies, production technologies, materialstechnologies, biotechnologies, nanotechnologies,microsystems technologies, and services.

Germany is makingsubstantial investments in basic R&D to supportlong-term industrialdevelopments. The

Fraunhofer-Gesellschaft is a large German researchorganization with close ties to industry. Nearly 60Fraunhofer Institutes across the country conductindustrially-relevant research. About two-thirds of its €1 billion budget is derived from private contracts.The federal and state governments contribute one-third for basic research that anticipates industrial orsocietal questions that may arise a decade down theline.75 The Fraunhofer Institute for Solar Energy inMunich is the largest research center of its kind inEurope and was established in 1981 to pursue workrelated to solar technologies – from basic science toproduction technology and prototypes.

One of the core elements of Germany’s strategy is to empower the GermanMittelstand (Germany’sequivalent for SMEs). The government wants toensure that innovation and

prosperity do not only remain concentrated in the labsof large corporations but be spread among Germanstart-ups and SMEs. Several programs, including the KMU-innovativ scheme and Central InnovationProgramme for SMEs, improve access to financing

Germany




2011 R&D as % of GDP: 2.3%


Germany’s economicwoes in the 1990s

High-Tech Strategy

Investments inindustrially-relevantR&D

Empowering theGerman Mittelstandand leveragingprivate sector R&Dinvestment

and provide for collaboration and networkingopportunities. In addition, the €272-million High-Tech Startup Fund grants up to €500,000 for fledgling R&D companies. These measuresshowed early signs of success as German SMEexpenditures on R&D increased from €6.6 billion in 2006 to €7.4 billion in the following year. Thegovernment policy aims to leverage private sectorR&D investment so that each euro of governmentmoney spent delivers five euros from business. This is being achieved through the creation ofpartnerships and formal innovation alliances topool expertise and resources. Ten business-academic alliances were established in 2007 and2008 and €600 million of government funds wereleveraged in the form of more than €3 billion frombusinesses.76 The goal for the economic and S&Tengine of Europe is to secure long-term prosperitythrough strategic investments in R&D as well asbusiness innovation.

Finland has consistentlyranked amongst theinnovation leaders inEuropean and global

competitiveness indices. The Finnish governmentattributes this success to the quality of itseducation system and a long history of spending on R&D by both the public and private sector.However, Finland was the hardest hit Europeancountry in the recent economic crisis with a GDPdrop of 8% in 2009.77 This served as a starkreminder of the deep recessionary period in theearly 1990s that was brought about by the collapseof the Soviet Union, one of Finland’s largest tradingpartners, a slump in the forestry industry and thecredit crunch-like developments at home. The1990s were a time of industrial restructuring.

Notable inventions: Germany

Aspirin was invented in 1897 by Felix Hoffman, aGerman scientist working at Bayer & Co. Hoffmanbegan to experiment with substances derivedfrom willow plants that were an ancient remedyfor pain. After conducting tests on his father whosuffered from arthritis, Hoffman generated aversion of the drug that could relieve pain andinflammation without stomach irritation.

German inventors Jürgen Dethloff and HelmutGöttrup patented the world’s first plastic cardwith integrated circuitry in 1968. This laid thegroundwork for industries that are dependent on chip cards, including telephone cards, creditcards, and health cards.

In 1987, a research effort led by KarlheinzBrandenburg at the Fraunhofer Institute totransmit music over telecommunications linesculminated in one of the most popular musicformats in the world: the MP3.

Other: Printing press (c. 1450), automobile (1885),drip brew filter coffee (1908), small-formatcamera (1925)

23

Finland




2011 R&D as % of GDP: 3.1%


Transformation ofFinland’s economy


Notable inventions: Finland

The man behind text messaging was MattiMakkonen, a former engineer for Finland’stelecom and post authority. He invented the Short Message Service (SMS) protocol in the1980s for exchanging text messages betweenmobile devices.

The Linux Operating System was created byLinus Torvalds in 1991 at the age of 22. He madehis work available free on the internet. Linux hasgained a reputation as a reliable operating systemand is most popular with serious computer usersand programmers.

In 2001, the Finnish food company Valio launchedlactose-free milk that, unlike previous low-lactose versions, retains the taste of normal milk.Valio has pioneered lactose removal methodswhich have been licensed around the world.

Other: Modern ice-breaking technology (1890),the first practical cellphone (1989), icetouchscreen (2010)

Finnish exports in electronics and other high-techproducts increased as the share of wood products,pulp and paper declined. The S&T policies thatwere put in place before the 1990s served Finlandespecially well during this period and helped ittransform into a fully-fledged knowledge economy.For instance, the programs that were set up in the 1980s to support ICT, technology transfer andcommercialization, allowed Finnish companies,including Nokia, to benefit during the ICT boom of the 1990s. The ICT expertise had a positive spill-over effect in Finland’s natural resources and manufacturing sectors in terms of productivity gains.78

Although Finland wasone of the first nations in the 1990s to embracethe concept of a nationalsystem that integratespolicies on education,technology transfer

and R&D, a comprehensive innovation strategy was not put forth until 2008.79,80 The governmentacknowledged the need to improve existing systemsto maintain its level of prosperity and withstand achanging global reality and foreign competition.Finland’s proposal took a novel approach to theconcept of innovation. The strategy emphasizescustomer- or consumer-centered innovation,which, by trying to satisfy the needs in so-calledlead markets, can allow individuals or entirecommunities to contribute to the process ofinnovation. The government’s role is to stir updemand by influencing consumer behaviour andpublic perception, and simultaneously bolstersupply by providing innovative businesses withincentives, infrastructure and regulatory standards.Finland is participating in the European LeadMarket Initiative which has identified six leadmarkets: e-health, protective textiles, sustainableconstruction, recycling, bio-based products andrenewable energy.81

“The position of pioneer requires renewal…Finland’s long-term investments in expertise and technological research& development have produced good results, and itssuccessful science and technology policy has created abasis for many successful industries…the challenges ofgrowth and competitiveness can no longer be tackled only by means of a sector-based, technology-orientedstrategy. Instead, a demand-based innovation policy mustbe strengthened alongside a supply-based innovationpolicy.” Finland’s Ministry of Trade and Industry Steering Group (2008)79

Consumer-centeredinnovation and‘market pull’approach

A pervasive theme inFinland’s innovationstrategy is the concept of ‘internationalization’,

which is about accelerating the expansion of Finnishcompanies beyond the domestic market and buildingstrong international links. The national governmenthas had long-standing cooperation agreements withSouth Korea, Israel, Japan, China, Ukraine, Vietnam,and the US. It has also established FinNodeInnovation Centers in Shanghai, California’s SiliconValley, St. Petersburg and Tokyo to report back ondevelopments in host countries, to track investmentsand link Finnish institutes, innovators and companiesto global centers. The current strategy is alsostepping up the international marketing campaign topromote Finland’s regional clusters as R&D locationsfor business. Finland has been unable to attractR&D-intensive foreign companies and international

experts. Finnish companies and would-beentrepreneurs have also been more risk-adversethan their foreign counterparts. The innovationstrategy called for changes in the financing system to encourage individuals to be more entrepreneurial,as well as reforms in the tax system to attractinternational experts who might be deterred by high personal income taxes.

For this export-dependent country with a strong trackrecord in innovation yet a population of only about 5.3 million, the critical question revolves around howto influence global knowledge flows and value chains.The innovation policy is directed at sutaining nationalprosperity and economic growth despite an ageingpopulation, concerns over climate change,sustainable development, and competition from other equally export-oriented countries.

Internationalizationof R&D

25


CONCLUSIONRegardless of their state of development, nations are clearly making large investments in world-class researchcenters, education, commercialization, and entrepreneurship. The innovation snapshots presented in this papershow that there are several approaches to national innovation frameworks. While countries in the ‘stay ahead’category are targeting R&D areas to maintain leadership positions in S&T, other nations with ambitious targetsfor future S&T competitiveness in the emerging Asian market are spending substantially to modernize theirinnovation infrastructure to get ahead. India and many countries on the African continent, on the other hand, are battling entrenched problems associated with widespread poverty, disease, and crumbling infrastructure.Their governments see investments in S&T as a potential remedy to points of national pain. Some strategies areframed to exploit a country’s existing R&D strengths and bolster the industry and academic base in those areas.A number of national S&T plans fit into the prosperity category whose main objectives are not only to stay aheadof the pack but maintain the state of wealth and make the economy more resilient to economic recessions.

$24.3

$405.3

$38.4

$44.8$9.4

$10.8 $69.5

$153.7

$36.1

$6.3

CanadaP: 33,740G: $37,945

NetherlandsP: 16,531G: $40,715

United KingdomP: 61,838G: $36,496

United StatesP: 307,007 G: $46,436 Israel

P: 7,442 G: $27,673

IndiaP: 1,155,348 G: $3,275

South KoreaP: 48,747 G: $27,169

Finland P: 5,338 G: $34,652

China P: 1,331,460 G: $6,838

GermanyP: 81,880 G: $36,449

2011 GERD (PPP, billions, US$)

P - Population (thousands)G - GDP per capita (international $)

Country GERD as Percent of World

Canada 2.0%

UK 3.2%

China 12.9%

Germany 5.8%

South Korea 3.8%

Japan 12.1%

US 34.0%

Rest of the World 26.2%

Note: India (3.0%), Netherlands (0.9%), Israel (0.8%), Finland (0.5%) Source: Toronto Region Research Alliance analysis based on data from Battelle, 2011 Global R&D Funding Forecast.

Societies worldwide are demanding solutions to pressing problems: climate change,health, disease eradication, food, water, and national security. Although the extentof each problem may vary from country to country, governments are spending tofind S&T-based solutions to the same underlying issues. Inevitably, nations find

themselves in a race to discover cures for cancer, create revolutionary energy storage and water treatmenttechnologies, advance personalized medicine, and secure cyberspace to safeguard personal and nationalidentity. In virtually all academic and industrial settings, scientists and engineers are vying to develop the nextbreakthrough technology that could spawn entirely new industries or transform existing ones. R&D now topsmost national economic agendas and nations are racing to garner majority share of global innovation. Thereare certainly connections between a nation’s present innovation strategy, its state of economic development,history, and past innovation policies. In fact, the interplay between these factors offers opportunities forinteresting future research and study.

The Toronto Region Research Alliance hopes that this snapshot of S&T strategies around the globe will contributeto a meaningful discussion of Canada’s future innovation ambitions. TRRA is seeking input on the issues examinedin this paper. Based on the current Canadian S&T strategy, the authors invite the reader to comment on howCanada’s role can be understood within the context of the five categories that have shaped the discussion here.

If Canada were to frame its science and technology policy around one of the five themes, here are examples ofpossible outcomes. Canada is currently ranked ninth in the world in terms of gross expenditures on R&D. Forinstance, a Canadian innovation strategy looking to stay ahead, would have to maintain a lead over the nationspresently in the number ten to fifteen positions: Russia, Brazil, Italy, Taiwan, Spain, and Australia. If Canada wereaiming to get ahead, this would involve significant investments to catch up to those in leadership positions. Theleap from ninth to fifth place would require R&D spending to double to nearly $50 billion. An innovation strategylooking instead to exploit Canada’s existing strengths may focus R&D efforts on historically strong industries suchas natural resources, agri-food, or financial services. Under the theme ‘alleviating points of pain’, the innovationstrategy could address unique Canadian challenges including climate change in the Arctic, health care for anageing multicultural population, and depletion of natural resources. Lastly, if Canada were to frame its policyaround prosperity, the national strategy would maintain a balanced approach with investments in both core and emerging segments, in applied and discovery research, and education of future innovation leaders.

Given such realities as the size of the Canadian economy, population and make-up of the business sector,which approach should Canada embrace? Please forward your thoughts and opinions to: [email protected]

27

R&D tops mostinnovation agendas


OVERVIEW OF KEY DRIVERS FOR INNOVATION

COUNTRY

Canada

United States

United Kingdom

China

South Korea

Israel

Key Drivers for Innovation

Weak productivityWeak business innovationLow business R&D expendituresOver-reliance on the natural resources sector

Rapid decline in S&T rankAnxiety about the strong innovation strategies across the world Low-carbon and foreign-energy independent economyNational securityDeficiencies in the education systemHealth care costs

Below-average innovation growthRecession and national debtLow-carbon economyDeclining private equity and venture capital fundingLow business R&D expendituresWeakness in commercialization rates

Targeting global S&T leadership positionDeveloping indigenous innovation to limit reliance on imported technologiesMeeting domestic energy demandIncreased prosperity for citizens UrbanizationPopulation and healthNational defence and public security

Global leadership in specific scientific fieldsCompetition from other countries in the emerging marketBoosting international competitiveness of Korean universitiesWeak fundamental researchDependence on oil and commodity importsOver-reliance on export-oriented manufacturing (high specialization in ICT)Low fertility rates and ageing populationIncreasing foreign R&D investmentAttracting global talent

National securityLimited natural resourcesDiversification of the economy (high specialization in ICT)

Key S&T Areas

Environmental S&TClean energy technologiesICTHealth research and life sciences

Advanced materialsAdvanced vehicle technologies and electricvehicles Clean energy technologiesHealth research and health IT‘Grand challenges of the 21st century’ (e.g. personalized and regenerativemedicine, DNA sequencing of every cancer)ICT (cyber security, net neutrality, next-generation systems, quantum computing)

Advanced manufacturing and materials ICTClean energy technologiesLife sciences and health

Advanced manufacturing and materialsAgriculture BiotechnologyClean energy technologies ICT Mineral resourcesTransportationWater technologies

Advanced materialsBiotechnologyEnvironmental and energy technologiesMechatronicsICTProcessing technologies

Agriculture Biotechnology Clean energy technologiesICTWater technologies

29

COUNTRY

Netherlands

India

Africa

Germany

Finland

Key Drivers for Innovation

Slipping in innovation rankingsWeak SME innovation Shortage of knowledge workersImproving the quality of research and educationLow business R&D expendituresIncreasing foreign R&D investmentSafety and securityPositioning the country as ‘Portal to Europe’

High poverty rateUneven distribution of wealthPopulation and healthUrbanizationQuality of education

Water and food insecurityWeak and neglected infrastructurePreserving biodiversityHealth care and diseaseEnvironmental degradation, drought, desertificationQuality of educationLow expenditures on R&D

Health careClimate and resource efficiency MobilitySecurityTalent shortageAgeing populationLimited natural resourcesProsperity and competitiveness

Attracting and retaining foreign investment and expertsAgeing population and low immigration ratesIncreasing entrepreneurial activityMaintaining high levels of exports Impact of recessionDiversification of the economy (high dependence onICT and forestry)

Key S&T Areas

AutomotiveClean energy technologiesFood and nutrition High-tech systems (nanoelectronics, embedded systems,mechatronics/robotics)Life sciences and healthLogistics and supply chain Maritime PlantsPolymers, chemicals, and advanced materialsWater technologies

Agri-food Biotechnology and pharmaceuticals Green energy technologiesICTWater technologies

Agriculture Biotechnology, gene expression, bioinformaticsConservation science and biodiversityICTIndigenous knowledge and technologiesEnergy technologiesMaterials science and manufacturingMathematical sciencesSpace science technologyWater technologies

Advanced materialsBiotechnology Clean energy technologiesMicrosystems technologies Nanotechnology ICTInnovative servicesOptical (laser) technologiesProduction technologiesTransportation technologies

Bio-based productsICTe-healthProtective textilesRenewable energy RecyclingSustainable construction


LIST OF ACRONYMS AND ABBREVIATIONS ABI African Biosciences Initiative

AMCOST African Ministerial Council on Science and Technology

AU African Union

BDC Business Development Bank of Canada

BRIC Brazil, Russia, India, China

CAS Chinese Academy of Sciences

CERC Canada Excellence Research Chairs Program

CFI Canada Foundation for Innovation

CIDA Canadian International Development Agency

CIHR Canadian Institutes of Health Research

COHRED Council on Health Research for Development (Africa)

CRC Canada Research Chairs Program

DOE SC Department of Energy’s Office of Science (US)

FDI Foreign direct investment

GDP Gross domestic product

GERD Gross expenditure on research and development

ICT Information and communications technology

IEA International Energy Agency

IIMs Indian Institutes of Management

IITs Indian Institutes of Information Technology

ILRI International Livestock Research Institute (Kenya)

IP Intellectual Property

KIA Knowledge Investment Agenda (Netherlands)

K&I Knowledge & Innovation Program department (Netherlands)

KRIBB Korea Research Institute of Bioscience and Biotechnology

KTN Knowledge Transfer Network (UK)

MDGs Millennium Development Goals (United Nations)

NEPAD New Parternship for Africa’s Development

NEWTech Novel Efficiency Water Technologies Program (Israel)

NIH National Institutes of Health (US)

NIPRD National Institute for Pharmaceutical Research and Development (Nigeria)

NIST National Institute of Standards and Technology (US)

NRC-IRAP National Research Council Canada - Industrial Research Assistance Program

NSF National Science Foundation (US)

OECD Organization for Economic Co-operation and Development

PPP Purchasing power parity

RDA Regional Development Agency (UK)

R&D Research and development

SDTC Sustainable Development Technology Canada

SMEs Small- and medium-sized enterprises

STPI Science and Technology Parks of India

S&T Science and technology

TRRA Toronto Region Research Alliance

31

METHODOLOGY TRRA reviewed ten innovation strategies at the country level between June and December 2010. The countriesselected for review were: the United States, the United Kingdom, China, South Korea, Israel, the Netherlands,India, Germany, and Finland, as well as initiatives across the African continent. Their national governmentshave published innovation strategies which were studied to understand the key drivers for innovation, areas offocus and notable programs. The drivers and priority areas were nation-specific and were identified from thestudy of national S&T strategies and policy papers. Examples of drivers are lagging economic productivity,uneven performance in innovation indices, recession, poverty, the need to diversify the economy, wealthcreation and the declining quality of S&T relative to competing nations.

The study concluded that governments frame their national strategies to focus on five goals: stay ahead, getahead, exploit existing R&D strengths, alleviate points of national pain or maintain prosperity. TRRA recognizesthat each national innovation plan could display characteristics of more than one category. However, this is notintended to be an exhaustive analysis and, for the purpose of this paper, innovation plans were assigned to onlyone category.

Countries’ gross domestic product and populations for 2009 were obtained from the World DevelopmentIndicators database, World Bank (27 Sept. 2010). GDP per capita values are given in international dollars.According to the World Bank, ‘an international dollar would buy in the cited country a comparable amount of goods and services a US dollar would buy in the United States.’ The data for forecast gross domesticexpenditures on R&D and expenditures as a percentage of GDP were obtained from Battelle’s 2011 Global R&D Funding Forecast. Unless indicated otherwise, amounts are expressed in Canadian dollars.


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The Race for Global Leadership in Innovation: An Analysis of National R&D Strategies

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