M.Sc. in “Engineering Policy and Management of Tehnology”

1. M.Sc. in “Engineering Policy and Management of Tehnology” Innovation and the Dynamics of Technological Change: The case of Portugal Pedro Conceição and Manuel Heitor CENTER FOR INNOVATION, TECHNOLOGY AND POLICY RESEARCH, IN+ Instituto Superior Técnico, Technical University of Lisbon http://in3.dem.ist.utl.pt

2. QUESTION Which trends for science, technology and innovation policy, in a way to contribute for the challenges faced by engineering and technology to enhance innovation?

3. CONTENTS • 1. The CONTEXT: a CONCEPTUAL FRAMEWORK • FACTS and RESULTS • 3. HYPOTHESIS • STRATEGIES, POLCIES and RECOMENDATIONS • Reference Terms e Scenários • Strategies and Policies • ...http://in3.dem.ist.utl.pt/et2000/

4. The CONTEXT: uncertainty... • Nathan Rosenberg (2001): • “uncertainty in the realms of both science and technology ... have enormously important consequences and a main concern is how organisations and incentives migth be modified to accommodate these uncertainties.” • Source: OECD(2001), “Social Sciences and Innovation” Chris Freeman (2001): “There is an irreducible uncertainty about future political, economic and market developments ....,technological innovations may actually increase it, since they add to the dimensions of general business uncertainty, the dimension of technological uncertainty.” Source: SPRU (2001)

5. The scope:...the globalized “learning society”! ...uncertainty: THE RESULT • In a context of increased uncertainty and accelerated rate of technological change, for which knowledge and innovation are critical factors for social and economical development,the role of the university may be enhanced, but requires to be adapted! Learning Organisations Knowledge Institutions Intellectual Property Learning Networks Source: Conceição, Lundvall and Heitor (2002)

6. The CONTEXT • 1. The “new” economy: “the big boom” ????? • 2. Technological change: accelerating • 3. Social Dynamics: complexity and diversity • 4. “Governance”: a new model! OCDE: “FUTURES”, Hannover 2000 EC: “IPTS - Futures Report”, 2000

7. Technology replaces employment Industrial era I- Recession Economy without employment Services Demand Deficit Services Value creation Indústry Entrepreneurial economy Indústry Technology creates new industries and opportunities Agriculture Agriculture II- Growth The structure of the “new” economy Knowledge era

8. The importance of Technology in corporate development • Case study: Innovation in Italy (Evangelista & Sirilli, 1997) The convergence of sectors is emerging, with the growing importance of technology in corporate development

9. The CONTEXT • 1. The “new” economy: “the big boom” • 2. Technological change: accelerating • 3. Social Dynamics: complexity and diversity • 4. “Governance”: a new model! OCDE: “FUTURES”, Hannover 2000 EC: “IPTS - Futures Report”, 2000

10. Technological Change:materials, IPTS(1999) 1800 1960 10 000 BC 5000 BC 0 1000 1500 1900 1940 1980 1990 2000 2010 2020 GOLD COOPER METALS METALS BRONZE GLASSY METALS AL-LITHIUM ALLOYS DUAL PHASE STEELS MICROALLOYED STEELS IRON NEW SUPER ALLOYS DEVELOPMENT SLOW MOSTLY QUALITY CONTROL AND PROCESSING POLYMERS CAST IRON SKIN FIBRE GUMS STEELS ALLOY IVORY STEELS COMPOSITES RELATIVE IMPORTANCE SURFACE ENGINEERING LIGHT ALLOYS POLYMERS BRICKS (with STRAW) RUBBER WOOD SUPER ALLOYS CONDUCTING POLYMERS PAPER HIGH TEMPERATURE POLYMERS TITANIUM ZINCONIUM ETC STONE ALLOYS COMPOSITES FLINT HIGH MODULUS POLYMERS BAKELITE POTTERT CERAMIC COMPOSITES GLASS EPOXIES METAL-MATRIX NYLON CEMENT COMPOSITES POLYESTERS CERAMICS CERAMICS KEVLAR REFRACTORIES SUPERCONDUCTORS PORTLAND CEMENT TOUGH ENGINEERING CERAMICS FUSED SILICA CERMETS 10000 BC 0 1000 1500 1800 1900 1940 1960 1980 1990 2000 2010 2020 5000 BC

11. Technological Change: telecommunications

12. Technological Change: perspectives TECHNOLOGIES • more technologies to produce each product PROCESSES TECHNOLOGY • more products produced from a given technology PROCESSES The Convergence: telecommunications and computers ... The QUESTION: scope and scale PRODUCT Source: von Tunzelmann (1999)) PRODUCTS

13. information technologies materials biotechnologies energy information technologies Telematics Automation Computers Semiconductors Superconductors Biosensors Biochips Photovoltaic applications materials Computer based design of new materials New alloys Ceramics and composits Bio-leaching Biological ore processing Power lasers biotechnologies Instrumental analysis of dna sequences Membranes Biocompatible materials Recombin. DNA New drugs Enzymatic Synthesis Batteries Pacemakers Artificial Heart energy Supervision of energy processes Robotics Security systems Photovoltaic materials Fuel cells Superconductors New energy biomass New reactors Nuclear fusion Technological Change:Emerging interactions... to from

14. Technological Change: impact ...1 1. Knowledge Diffusion • corporate competitiveness depends on innovation capacity • globalization has increased market demand on nre products, processes and services QUESTION:inovation/ adoption of new technologies? 2. Knowledge Creation • Increasing interdisciplinarity and complexity of the knowledge base • Significant contribution of technology for scientific development QUESTION:Which, and how to develop the scientific base? 3. Knowledge Transfer • the need to promote systems of education and training diversified QUESTION:Which education and training systems?

15. Technological Change: impact ...2 • Entrepreneurial capacity : NTBF • Socio-economic inequality: • The need to promote local systems of knowledge creation and diffusion Knowledge Diffusion… • A strategic vision: • developing technologyplatforms • enphasizing clusters(the corporate value chain) ca de vlor. • ...to promote SOCIAL CAPITAL in a technology context

16. Creation and distribution of knowledge Technological innovationand development Economic growth and development What we know… • PROCESSES: complex and diversified • INVESTMENT: education; R&D; learning-by-doing • AGENTS: state, firms, universities, schools

17. What we know… “The Chain Link Model” “Communities of practice” Research Knowledge Technology platforms Potential Markets Invention/ analytical design Detailed design & Test Re-design & Production Distribution & market BUS Chain Linked Model of Innovation Kline & Rosenberg

18. CONTENTS • 1. The CONTEXT: a CONCEPTUAL FRAMEWORK • FACTS and RESULTS • 3. HYPOTHESIS • STRATEGIES, POLCIES and RECOMENDATIONS • Reference Terms e Scenários • Strategies and Policies • ...http://in3.dem.ist.utl.pt/et2000/

19. Innovation in EU source: Community Innovation Survey, OCT-PT

20. Facts and Results • Productivity • The knowledge-based industries • Resouces • Scale vs intensity • Structure of S&T System • Industrial structure • Institutional development • The regional dimension • Sustainable development • Social capital for the inclusive development

21. 1. Productivity

22. 2. Knowledge-based industries OECD(2000) Average annual real value added growth of knowledge based industries (1985 share year) Share in business sector value added in knowledge business industries (share year 1996)

23. 3. RESOURCES Expenditure by Manufacturing Firms on Innovation

24. 0,1 France Netherlands 0,075 Germany Denmark Finland Poland Norway US Japan Public R&D Expenditures per capita Korea Canada UK 0,05 France UK US Netherlands Canada Germany Czech Rep Finland Denmark Ireland 0,025 Japan Norway Sweden Spain Portugal Ireland Sweden Belgium New Zealand Hungary Spain Portugal Mexico Turkey 0 0 0,125 0,25 0,375 0,5 Private R&D Expenditures per capita Perspectives for “change”: Public vs private R&D expenditures FR D JP USA UK P97 P95 ES SE IR P81

25. …perspectives for “Change”: Growth of Public and Private expenditure on R&D OECD, S&T databases, October 2001

26. 4. Scale vs Intensity R&D Expenditure (OECD)

27. …perspectives for “Change”: Scientific “Productivity” and inter-institutional cooperation EC Benchmark of S&T Policies, September 2001

28. Industry-dominated systems Balanced Industry+ /government systems Balanced Industry/government+ systems Government-dominated systems 5. Structure of S&T system:Share of R&D funding (OECD)OECD, S&T Databases, Sept. 2001

29. Industry-dominated systems Balanced industry/government systems with universities being more important performers than public research institutions Balanced industry/government systems with public research institutions being more importantperformers thanuniversities Government-dominated systems Share of R&D expenditure (OECD)OECD, S&T Databases, Sept. 2001

30. USA Irland Netherlands Spain Hungary Portugal Share of R&D funding and expenditure (OECD)OECD, S&T Databases, Sept. 2001

31. American Universities: distinctive features • Nathan Rosenberg (2001) • 1. Decentralized and intensely competitive with one another • High fund competition, in contrast with the european practice of universities being the recipients of block grants from the Ministry of Education • 2. A large private university sector • An important reality for state universities, preventing them from falling into a civil service mode, and promoting an highly competitive job market, favouring mobility! • 3. Fast response on curriculum innovation • New course material to compete for higher tuition fees • (e.g., statistics in North Caroline and Iowa vs british universities)

32. The historical evidence: intensity of R&D support in US Conceição, Heitor and Oliveira(2001) Private federal

33. The historical evidence: cumulative R&D support in US Conceição, Heitor and Oliveira(2001) federal Private

34. A serious threat: “the tragedy of the commons” ...Paul David (2000) Property Public Provision Patronage ill-considered public support for expanding legal means of controlling access to information for the purpose of extracting private economic rents is resulting in the “over-fencing of the public knowledge commons” in science and engineering The need for open, collaborative research...

35. Portugal 35 30 25 40 35 30 20 25 20 15 15 10 10 5 0 1983 1987 1991 1995 5 0 1983 1987 1991 1995 YEAR YEAR Food, beverages & tobacco Textiles, apparel & leather Wood products & furniture Paper, paper products & printing Chemical products Non-metallic mineral products Basic metal industries Fabricated metal products Other manufacturing, nec 6. THE INDUSTRIAL STRUCTURE EU-13

36. 6. Industrial structure:Dynamics

37. 7. Institutional Development Market Regulation and Employment Protection Nicoletti, Scarpetta & Boylaud; OECD (2000)

38. 8. The regional dimension:technology and innovation gap • 1. Input:HUMAN AND MATERIAL RESOURCES • 2.output:SCIENTIFIC AND TECHNOLOGICAL CAPACITIES • 3. determining factors : • international cooperation • sme`s:support services • networks • FDI: integration in local economies • transports, communications, energy infrastructures … BUT, ALSO, INSTITUTIONAL FACTORS

39. Regional diversity in Western Europe Source:Sixth Periodic Report DG XVI, 1998

40. 9. The sustainable developmentinnovation and the environment “Master Equation” Environmental Impacte = (Population)*(GDP/Capita)*(Environmental Impacte /GDP) Increased eco-efficiency Promoting engineering and technolgy for innovation!

41. DMI, Direct Material Input per capita (1988-1995) Source : EEA, 2000, Environmental Signals for 2000 9. The sustainable developmentinnovation and the environment Economic growth in Portugal is associated with the highest european growth rate of materials consuption!

42. 10. Social capital for inclusive development OECD(2000)

43. CONTENTS • 1. The CONTEXT: a CONCEPTUAL FRAMEWORK • FACTS and RESULTS • 3. HYPOTHESIS • STRATEGIES, POLCIES and RECOMENDATIONS • Reference Terms e Scenários • Strategies and Policies • ...http://in3.dem.ist.utl.pt/et2000/

44. Perspectives for “change” • …Systems of Innovation and Competence Building! • The notion of localised technological change: • a joint process of production, learning and communication • a fully endogenous, with strong interdependence between specialisation and diversification • important, but limited role of demand • based on mix of generic and tacit knowledge • The science base: ” …the aim of policy should be to create a broad and productive science base, closely linked to higher education…”, Pavitt (1998)

45. THE ISSUE …1 The evidence: • “The major source of economic growth in developed countries has been science-based technology”, Kuznets (1966) • “The explosion in knowledge creation was concentrated in a few regions, and led to similarly concentrated distribution of income”, • World Bank (1999) • The most daunting problem is that of “spiritual inequality”, Fogel (1999)

46. Regional diversity in Western Europe Source:Sixth Periodic Report DG XVI, 1998

47. A fragmented regional innovation system: an institutionally blocked regional economy Large firms SMEs SMEs SMEs SMEs SMEs SMEs Large firms Sectoral Associations Regional Government Universities SMEs SMEs SMEs Regional economy SMEs SMEs SMEs SMEs SMEs SMEs SMEs Chamber of Commerce SMEs Technology Centers SMEs SMEs Business Services SMEs Large firms SMEs SMEs SMEs SMEs Technology Consultants SMEs SMEs SMEs SMEs

48. A learning region: An efficient regional innovation system Open gate: International R&D/academic excellence networks SMEs Cluster SMEs SMEs SMEs SMEs SMEs Valorisation of R&D and Tech. Transfer Office SMEs Large firms; Tech. Centers; Sect. Associa- tions SMEs Science base: Universities; Public R&D; Laboratories Open gate: International technology transfer networks Regional economy Large firms SMEs SMEs Open gate: International value chains SMEs Regional government SMEs Global economy SMEs SMEs SMEs Technology Centers SMEs Business intermediaries: Cham. of Comm.; Local Agencies BICs Business services & tech. con- sultants SMEs SMEs SMEs Sectoral Associations SMEs SMEs SMEs SMEs SMEs SMEs SMEs SMEs SMEs SMEs SMEs Open gate: International business consultants & specialized business services

49. Internal coherence of the regional innovation system by connecting its different key elements: R&TDI supply with well identified Demand and business needs, from SMEs in particular. Increase the amount and, more importantly the quality of innovation public spending through innovation projects (bigger and better spending in this field through regional policy). Rationalise the regional innovation support system by raising awareness, eliminating duplications, filling gaps and promoting synergies. Regional Innovation StrategiesLandabaso et al. (1999) Successful stories: The Regional Technology Plans Wales (UK), Limburg (Netherlands), Lorraine (France) and Leipzig-Halle-Dessau (Germany), Central Macedonia (Greece), Castilla Y Leon (Spain) and Abruzzo (Italy).

50. What type of Social Capital ? Source: Conceicão, Gibson, Heitor & Sirilli (2000)