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Information and Knowledge Society Requires Value Added Investments

Information and Knowledge Society Requires Value Added Investments. International Conference Košice Invest 2010 19th October, 2010. Contents. Foreign Direct Investment Trends Foreign Direct Investments in R&D Slovakia - R&D Country New Types of Investments SARIO Promotion Activities

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Information and Knowledge Society Requires Value Added Investments

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  1. Information and Knowledge Society Requires Value Added Investments International Conference Košice Invest 2010 19th October, 2010

  2. Contents Foreign Direct Investment Trends Foreign Direct Investments in R&D Slovakia - R&D Country New Types of Investments SARIO Promotion Activities Recommendations

  3. Introduction "The most important factor behind location decisions are always people and networks of people" Prof. Ricardo Baeza-Yates, Universitat Pompeu Fabra, Barcelona

  4. Our SLOGAN "R&D in Slovakia – Discover the Potential"

  5. Foreign Direct Investment Trends FDI Inflows, Globally and by Groups of Economies, 1980-2009 In bln.USD Expected global FDI flows: • 1.2 trillion USD in 2010 • 1.3 – 1.5 trillion USD in 2011 • 1.6 – 2.0 trillion USD in 2012 Decline 16% 37% The changing world - the global financial and economic crisis acceleratedthe majority of processes in business (e.g. time reduction in innovation cycles) Source: World Invetsment Report 2010

  6. Foreign Direct Investment Trends Key World Drivers of FDI in R&D Climate Change Growing global competitiveness Growth of urbanization New specific customer demands Innovation and R&D networks Progress in ICT Key world drivers of FDI in R&D New forms of FDI (greentech, meditech, centres of excellence) More motivating investment incentives Search for cost-efficiency Access to new technologies and talents Growth of emerging markets Specialization of national strategies

  7. Foreign Direct Investment Trends R&D Expenditure Global 1000 Source: Department for Business, Innovation & Skills., THE 2009 R&D SCOREBOARD, 2010

  8. Foreign Direct Investment Trends Top 15 Global Companies by R&D Expenditure per Year 2009 Source: Department for Business, Innovation & Skills., THE 2009 R&D SCOREBOARD, 2010; # - accounts not prepared using IFRS

  9. Foreign Direct Investment Trends Terms The same meaning of terms: "Globalization of corporate R&D" "Internationalization of R&D" "FDI in R&D" "R&D-intensive FDI" Globalization of corporate R&D is an opportunity not just for the host countries but also for corporate subsidiaries, since the latter are more involved in the corporate group's innovation activities. What it means? Corporate subsidiaries are very important element in attracting FDI in R&D

  10. Foreign Direct Investments in R&D Motivations • FDI in R&D has 2 different motivations:  • Doing "adaptive R&D" modifies products, processes and technologies according to local needs and supports foreign production facilities, process improvement. (Demand driven FDI in R&D) • 2. Getting access to"state-of-the-art knowledge" means that companies invest in foreign countries with an expectation to benefit from excellent, local research and researchers, new technology sources of knowledge and specialized clusters. (Supply driven FDI in R&D) FDI in R&D - evolution or expansion of established subsidiaries - greenfield investments

  11. Foreign Direct Investments in R&D Types of Factors Arguments to Attract R&D Investments • Parent company strategies related factors • Understanding Company Strategies • Seek Linkage between: Companies National Innovation Systems • 2. Subsidiaries Capabilities related factors • Possibility of: Expansion • Production Process Improvement • 3. Host Country related factors • Availability of: World Class Research Talents Researchers • R&D Infrastructure UniversitiesWorld Companies Way for SLOVAKIA Source: Guimón, J.: Government Strategies to Attract R&D-Intensive FDI. OECD Global Forum on International Investment. March 2008.

  12. Foreign Direct Investments in R&DKey Drivers and Forms of FDI in R&D Drivers Forms Emerging countries Developed countries Home countries Source: Here or There? A Survey on the Factors of Multinational R&D Location, 2006, www.nap.eduJerry Thursby, Emory University and Marie Thursby, Georgia Institute of Technology, 250 respondents from various industries

  13. Foreign Direct Investments in R&D R&D Location Drivers • The availability of highly educated people (scientists, engineers...) • The quality of universities and R&D infrastructure • Level of university and industry collaboration in R&D • Fiscal and financial incentives to corporate R&D • Cost-efficiency in R&D • Attractiveness of National Innovation System • The presence of lead markets and companies in key technology areas • A clear and enforceable intellectual property rights regime • Quality of pre-investment, investment and after-investment services • Local availability of research and training services • Engagement in world research projects (e.g.: FP7) Source: Adapted according to Guimón, J.: Policies to benefit from the globalization of corporate R&D: An exploratory study for European Union countries

  14. Foreign Direct Investments in R&D Impacts of FDI in R&D Production Networking (1995-2005) OEMs – Suppliers Nets (2000-2010) Clusterisation (1995-2010) Clusters Networking (2010-2015) R&D Institutions Networks (2015-...) • National and regional innovation systems are becoming: • more internationalised • more linked to global production networks • more dependant on foreign decision-makers • 2. Business R&D is shaping the evolution of goverment´s policies: • emergence of new policy strategies • more proactive role of governmentpolicies ("attractive policies") • closer connection between innovation policies and FDI promotion policies • cities/regional development Important ROLE: Harmonisation of the national/regional innovation systems with corporate R&D strategies

  15. Foreign Direct Investments in R&D Policy Objectives and Instruments Policy Objectives Instruments Improve UNIs and R&D infrastructure; talent development and attracting talents; collaboration with foreign subs., improving IPR regime Enhance R&D investment climate International promotion of national R&D capacities, preinvestment and AC services, integration to global networks Promote inward FDI in R&D Absorb benefits from foreign presence AfterCare services, technology linkage programmes, promote collaboration Support international expansion of domestic R&D centres and UNIs, set up overseas technology units Absorb benefits from outward FDI in R&D Source: Guimón, J.: Policies to benefit from the globalization of corporate R&D: An exploratory study for European Union countries

  16. Slovakia - R&D Country Basic Advantages of Slovakia High-Tech and Medium High-Tech Domestic R&D infrastruture Natural and technical sciences universities Success stories in R&D Presence of clusters Availability of scientists and engineers R&D Incentives Quality of engineers Competitive R&D costs in EU Strategic Geographic location

  17. Slovakia - R&D CountryR&D Environment in Slovakia FDI and technology transfer (Rank out 133 countries) To what extent does foreign direct investment (FDI) bring new technology into your country? (1 = not at all; 7 = FDI is a key source of new technology) Very good base for FDI in R&D Production process sophistication (Rank out 133 countries) In your country, how sophisticated are production processes? (1 = not at all—labor-intensive methods or previous generations of processtechnology prevail; 7 = highly—the world’s best and most efficient process technology prevails) Source: The Global Competitivenes Report 2009-2010, World Economic Forum, 2010

  18. Slovakia - R&D Country R&D Organizations

  19. Slovakia - R&D Country National R&D Capacities Building up 45 Centres of Excellence in Slovakia Almost 60 research institutes of the SAS More than 30 foreign R&D centres in Slovakia Wide range of university centres and laboratories More than 20 domestic R&D organizations Building up 8 regional innovation centres

  20. Slovakia - R&D Country Highly Perspective Opportunities for Doing Business Automotive Industry & Supplier Sector Electrotechnics Electronics ICT& Software Development Medical Technologies Welfare&Care R&D New and Lightweight Materials Energetics& Renewables

  21. Slovakia - R&D Country Success Stories in R&D ON SemiconductorBratislava Development Centre Johnson ControlsEngineering Centre Trenčín R&D Center Alcatel-Lucent Bratislava R&D LEONI AutokabelSlowakia Trenčín Technology Lab Siemens Žilina Continental Automotive Systems R&D Centre Zvolen

  22. Slovakia - R&D Country Established US Foreign Investor in Slovakia: Johnson Controls ŽILINA KIA and JC-JIT NÁMESTOVO JC-Interior TRENČÍN JC-Engineering TRNAVA PSA MARTIN JC-Seat Covers Lozorno VW and JC-JIT LUČENEC JC-Foam BRATISLAVA JC Business Centre Source: Johnson Controls Engineering Centre, Trenčín

  23. New Types of Investments Example from Germany (1) • Perspective industries of new type of investments GERMANY Source: www.gtai.com

  24. New Types of Investments Example from Germany (2) • National Electromobility Development Plan for Germany Germany invests more than EUR 500 million - Objective: 1 million electric vehicles on German roads by 2020 Can we consider this to be an inspiration for Slovakia? Investments into electromobility infrastructure development Source: www.gtai.com

  25. New Types of Investments IDA Ireland Example Focus on Greentech & Services Innovation Industrial sectors: • Life sciences (Pharma&biotech, medical devices) • ICT • Financial services – global services • High-end manufacturing • Diversified industries and engineering • R&D and Innovation (centres of excellence, testing labs) • Cleantech Source: IDA Ireland Strategy – Horizon 2020

  26. New Types of Investments Low-Carbon Economy (1) Investing in Low-Carbon Economy Low-carbon foreign investments – can be defined as transfer of technologies, practices or products by TNCs to host countries, through equity (FDI) an non-equity TNC participation, generating significantly lower GHG emissions than would otherwise be the case. (WIR 2010) 3 Key Low-Carbon Business Areas and Industries Low-carbon technology manufacturing (wind turbines, solar panels, biofuels) Alternative/Renewable electricity generation Recycling TNCs are key actorsincontributing to the establishment of climate-friendly economies Source: World Investment Report 2010GHG – green house gas emissions, TNC – Transnational Corporation

  27. New Types of Investments Low-Carbon Economy (2) 2 types of Low-carbon Foreign Investments Introduction of low-carbon processes reducing GHG emissions related to how products are made (upgrade of existing TNC operations as well as new investments) Creation of low-carbon products and services lowering GHG emissions in how they are used (e-cars, "power saving" electronics and light bulbs, RES equipment, integrated transport systems) The main sectors (areas of emissions): • power and industry (inc. manufacturing as well as oil and gas) • transport, building and waste management • agriculture and forestry Governments should to identify opportunities for such investment in their countries and formulate strategies to promote it. Source: World Investment Report 2010GHG – green house gas emissions

  28. SARIO Promotion Activities Creation of Infomaterials Publication of Informative Promotion Materials Increasing of awareness about R&D (conferences, seminars...) Investment Seminars Abroad SARIO = Associated partner in cluster´s projects Communication & Networking with UNIs & other R&D institutions

  29. SARIO Promotion Activities Cooperation with Renowned Domestic Organizations Projects: AUTOCLUSTERS AutoNet PANASONIC CENTER, TOKYO (R&D Investment Seminar in Japan-2009) SARIO-TUKE

  30. Recommendations • Improving the FDI attracticion and promotion policy • Preparing tailored FDI Project Proposals • More visible to the investment community (marketing campaigns, missions, etc.) • Marketing of Slovak R&D infrastructure (UNIs, SAS,...) • Focus on Slovak talent development programmes, "special talent university learning classrooms" • Focus on Suppliers Development Programmes – Aftercare services • SARIO Advisory Board consisting of established investors – close collaboration • Prepare strategy for building electromobility infrastructure • Prepare strategy for attracting FDI in green tech R&D and cleaner production • Project Networking (SARIO as a partner in EU projects) • Updating of National Innovation System

  31. R&D in Slovakia – Discover the Potential "Our TREASURE is in our highly educated PEOPLE!" "...Discover the Potential"

  32. Thank you for your attention Ing. Vladimír Švač, PhD. Address: SARIO Martinčekova 17 821 01 Bratislava Slovakia Tel.: +421 2 58 260 343 Email:vladimir.svac@sario.sk

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