The Future of STI Indicators and the Challenges Implied

1. The Future of STI Indicators and the Challenges Implied Fred Gault Statistics Canada Polish Academy of Sciences Warsaw, May 25, 2006

2. Fred GAULT Fred Gault (Fred.Gault@statcan.ca) is the Director of the Science, Innovationand Electronic Information Division at Statistics Canada and is responsible for the development of statistics on all aspects of research, development, invention, innovation and the diffusion of technologies, as well as on related human resources. He is responsible for the development of statistics on telecommunications and broadcasting, Internet use, and electronic commerce. He is Chair of the Committee of National Experts on Science and Technology Indicators (NESTI) and former Chair of the Working Party on Indicators for the Information Society (WPIIS) at the Organization for Economic Co-operation and Development (OECD). Previously, at Statistics Canada, he was responsible for the development of statistics on business and personal service industries. Before joining Statistics Canada, he was Senior Lecturer in Theoretical Physics at the University of Durham in the U.K. He holds a Ph.D. in Theoretical Physics and a B.Sc.(Econ.) from the University of London, and is a Fellow of the Institute of Physics and a Member of the British Computer Society. Recent publications include Understanding Innovation in Canadian Industry (McGill-Queen’s 2003) which he edited, and National Innovation, Indicators and Policy (Edward Elgar 2006), co-edited, with Louise Earl.

3. Outline • Context for Indicators • Indicators: Recent Past • Using Indicators • Global Change • Changing Context • New Indicators • Challenges • More Information

4. Context for Indicators-1 • Comparison of Gross Domestic Product per Capita in OECD Countries • In 2002 US PPP $ for 2004* • U.S. $40,000 • Canada $31,000 • Germany $29,000 • Poland $13,000 • Perceived ‘GAP’ • Innovation, competitiveness, education, … *OECD(2005) Main Science and Technology Indicators

5. Context for Indicators-2 • Policy Intervention • Tax: R&D credits, capital investment promotion, training credits, support for apprentices, … • Finance: Venture capital, trade insurance, … • Procurement: Contracts and contributions • Grants to higher education and research institutes • Commercialization incentives • Regional initiatives • Science parks, special courses in colleges, cluster benefits, incubators, networks, …

6. Context for Indicators-3 • Legal Framework • Contract law, costs of incorporation and bankruptcy • Employment law, costs of doing business • Education • Developing a skilled labour force and researchers • International Co-operation • EU Framework Programmes

7. Indicators: Recent Past-1 • Activities • R&D funding and performance, personnel • Intellectual Property • Innovation • Use of practices and technologies • Human Resource Development • University graduates

8. Indicators: Recent Past-2 • Indicators of Activities • GERD, R&D personnel • Percentage of sales from new products • Diffusion of technologies and practices • Number of graduates, by subject • Patents • Publications and citations … • Measurement standards: OECD Frascati Family of Manuals • Composite Indicators • GERD/GDP or GERD/capita… • Patents/researcher • Sectoral variations – government, business, … • Targets • GERD/GDP of 3%, Lisbon Process

9. Using Indicators • Activity Indicators support: • Monitoring • Benchmarking • Foresight • Evaluation (at programme or institute level) • They contribute to: • Evidence-based Policy • What more is needed?

10. Global Change • The world is (becoming) flat?* • Technology • ICT infrastructure • Search engines and e-markets • People – Market Increase • Central and Eastern Europe • India, China … • Practices • Open Sourcing Out Sourcing Off shoring • In Sourcing Supply-Chaining • Priority Setting EU Framework Programmes * Thomas L. Friedman, The World is Flat (1st ed. 2005, 2nd ed. 2006), New York: Farrar, Straus and Giroux.

11. Changing Context-1 • Insights from measuring an activity in an organization are limited • Measure • Linkages and outcomes, as well as activities • Understand • Social and economic impacts and implications for education • Answer the question: • What does this institution get for its investment in: R&D, patents, innovation, human resource development, …? • Support evidence-based policy in a changing world

12. Changing Context-2 • R&D Examples • For foreign and domestically controlled firms • R&D performance • Sales and purchases of R&D services • Domestic and abroad • Including purchases by non-R&D performers • Funding from all sectors including ‘Abroad’ • R&D performance by domestic affiliates abroad

13. Changing Context-3 • Where is R&D done? • Consider % of GERD funded by business* • Germany 67% • U.S. 64% • Canada 46% • Poland 30% *OECD(2005) Main Science and Technology Indicators: Key FIgures

14. Changing Context-4 • Technologies and Practices • Information Communication Technologies (ICTs) • OECD ISIC Definition, Not a statistical challenge • Biotechnology • OECD Definition, but not an industry • Nanotechnology • No OECD Definition, not an industry, cross-cutting • E-business practices • Knowledge management

15. Changing Context-5 • Move to a systems approach • Actors • Governments, Business Enterprise, Higher Education, Research Institutions, Funding Organizations • Activities • R&D, invention, innovation, human resource development, enabling networking… • Linkages • Sources of • Ideas, technologies, practices, people, … • Networks and collaboration • Regional, suppliers, competitors, customers, public institutions, consortia in the EU … • Outcomes • Jobs, skills, profit, value-added, market share, … • Impacts • Changes in life style or business management, quality of life, (sustainable) growth

16. New Indicators-1 • What matters in a flat world? • Knowledge creation? Innovation? Commercialization? People? • In Canada, in manufacturing, for firms with 20+ employees, 94% do no R&D, 80% are innovative at the lowest level of novelty – new to the firm • Where does the knowledge come from to innovate? • Consider innovation and measure: • Sources of ideas, technologies and practices, (Open Innovation, Chesbrough 2003) • The activity of innovation (Oslo Manual 2005) • Outcomes

17. New Indicators-2 • Then link to • Financial and employment data • Analyse productivity, value added, skill levels, … • People create value • Measure • Supply and mobility • Life long learning

18. New Indicators-3 • Some examples and policy implications • Survey of Earned Doctorates • The Daily, July 5, 2005 • 20% of Ph.D. holders plan to leave Canada • 60% of foreign Ph.D. holders plan to remain in Canada • Data on Research Personnel • Estimates of Research Personnel in Canada • May 3, 2005, 88F0006XIE – No. 008 • 112,630 researchers in Canada in 2002

19. New Indicators-4 • Knowledge Indicators - Absorptive Capacity • Varies with • Availabilities of skilled workers • Culture of learning, work environment • Size of institution • Different for • Individuals • Teams • Firms, and for size of firm • Regions

20. New Indicators-5 • Leads to indicators of • Collaboration and knowledge flows • Co-authorship and co-patenting are examples • Contracts • Participation in Framework programnes • International co-operation • Outcomes and knowledge use • Skill level changes • Institutionalization of collaboration…

21. Challenges • Measurement, analysis and policy are complex • Single policy interventions may not produce the desired outcome • Need for dialogue between the measurers, the measured and, decision makers and policy makers. • OECD Global Science Forum Conference • Helsinki, July 12, 2006 • OECD Blue Sky II Conference • Ottawa, September 25-27, 2006 • Measurement Matters

22. More Information • Web Sites • www.statcan.ca • Our Products and Services / Browse Free Internet Publications / Science and Technology or Communications, or Conferences, for information on Blue Sky II • www.oecd.org • epp.eurostat.cec.eu.int • www.nsf.gov/statistics/seind06/ • Books/Periodicals • Chesbrough, Henry (2003), Open Innovation, Boston: Harvard Business School Press. • Florida, Richard (2002), The Rise of the Creative Class: and how it’s transforming work, leisure, community and everyday life, Philadelphia: Basic Books. • Florida, Richard (2005), The Flight of the Creative Class: The New Global Competition for Talent, New York: Harper Business. • Foray, Dominique (2004), The Economics of Knowledge, Cambridge Mass: The MIT Press. • Friedman, Thomas (2006), The Earth is Flat, 2nd edition, New York: Farrar, Straus and Giroux • Gault, Fred (ed.) (2003), Understanding Innovation in Canadian Industry, Montreal and Kingston: McGill-Queen’s University Press. • Earl, Louise and Fred Gault (eds.) (2006), National Innovation, Indicators and Policy, Cheltenham: Edward Elgar.