1 / 29

Reform of Hong Kong’s Public Research Funding System

Reform of Hong Kong’s Public Research Funding System. Chintay Shih and Shin-Horng Chen College of Technology Management, Tsing Hua University, Hsinchu, Taiwan and Chung-Hua Institution for Economic Research, Taipei, Taiwan. Outline. Introduction A Snapshot of R&D in Hong Kong

sailor
Download Presentation

Reform of Hong Kong’s Public Research Funding System

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Reform of Hong Kong’s Public Research Funding System Chintay Shih and Shin-Horng Chen College of Technology Management, Tsing Hua University, Hsinchu, Taiwan and Chung-Hua Institution for Economic Research, Taipei, Taiwan

  2. Outline • Introduction • A Snapshot of R&D in Hong Kong • Hong Kong Public R&D Funding • Innovation Governance of Hong Kong Public R&D Funding • Policy Recommendations • Conclusions

  3. 1. Introduction • Central theme: Public R&D • What to be done in order to improve the innovation governance of HK public R&D; the sound “soft infrastructure” required for the promotion of R&D and innovation in general, public R&D in particular • The way in which the HK government, the ITC in particular administrates the R&D funding schemes • Innovation and Technology Support Programme (ITSP) under Innovation and Technology Fund (ITF) • Accounting for 53.75% of the approved projects and 83.5% of the approved amount respectively • The way in which the research institutes interact with the funding agencies

  4. Structure of the Funding Schemes Administrated by the ITC ITC (Innovation and Technology Commission) Innovation & Technology Fund (ITF) Applied Research Fund (ARF) Patent Application Grant (PAG) New Technology Training Scheme DesignSmart Initiative • Innovation and Technology Support Programme (ITSP) • R&D Centres Programme • Guangdong-Hong Kong Technology Cooperation Funding Scheme (TCFS) • Forward-looking and innovative applied R&D projects • The amount approved under the ITSP amounted to 83% of the whole ITF from its initiation to May 2008. • The investment period of the Applied Research Fund has expired in end March 2005 and the Fund has ceased making new investments. • University-Industry Collaboration Programme (UICP) • Teaching Company Scheme • Matching Grant for Joint Research • Industrial Research Chair Scheme • General Support Programme (GSP) • Small Entrepreneur Research Assistance Programme (SERAP)

  5. 2. A Snapshot of R&D in Hong Kong (1/3) • R&D expenditures in 2006: HK$ 11.95 billion (US$ 1.54 billion); accounting for 0.81% of GDP • Relatively low by international standards, lower than Taiwan (2.58%) and China (1.42%), and even much lower than a few other economies of similar size • A positive trend: Growing momentum of the private (business) sector in R&D investment • 53% of the total R&D expenditure in 2006 • R&D expenditure invested by the HK government either fluctuated over time or at most grew at a modest rate. • Since 2004, growing at a rate of less than 8% annually

  6. 2. A Snapshot of R&D in Hong Kong (2/3) • Predominant role played by the service sector in business R&D • The wholesale, retail and import and export trades, restaurants and hotels sector: 58% • The financing, insurance, real estate and business services sector: 24% • An extra part of R&D for manufacturing hidden in the wholesale, retail and import and export trades, restaurants and hotels sector • Trading firms with sub-contract processing arrangements • De-linking of R&D and manufacturing in terms of location • R&D activities undertaken by the financing, insurance, real estate and business services sector related mainly to information technology

  7. R&D Expenditure in the Business Sector by Industry Sector, 2002-2006 Notes: Figures in < > represent the percentages to total. The percentages in a year may not add up to 100 due to rounding. Source: Adapted from HKCSD (2008a).

  8. 2. A Snapshot of R&D in Hong Kong (3/3) • A mismatch between public R&D and private R&D, esp. in terms of the strategic areas selected by the ITC for the R&D Centre Programme • R&D expenditure in the business sector mainly on information technology (42.5%) and electrical & electronic engineering technology (33.6%) • R&D for Chinese medicine and nanotechnology by the private sector negligible • The business sector in HK engaged substantially in R&D outsourcing • Its size more than half the total business R&D • Intra-corporate cross-border network, esp. within the PRD Economic Zone, as the dominant type of R&D outsourcing adopted by the HK-based firms or establishments

  9. Total Expenditure for in-House R&D activities in 2007 by Technology Area by Industry Sector (HK$ million) Note: (1) Figure include expenditure for in-house R&D activities conducted by a local party for itself and / or for other organisation.# Figure less than 0.05%.@ Electrical and electronics engineering technology associated with (a) computer hardware (such as integrated circuits) was included in the area of computer hardware technology; (b) communication technology was included in the area of communication technology. Source: Adapted from HKCSD(2008b).

  10. 3. Hong Kong Public R&D Funding (1/2) • Innovation and Technology Support Programme (ITSP) under the Innovation and Technology Fund (ITF) • The lion’s share of the research institutes’ funding from ITSP • The amount approved under ITSP: 83% of the whole ITF • A new three-tier structure in funding proposals under the ITSP since 2005 • Tier 1: R&D centres in six areas • Automotive parts & accessory systems • Logistics & supply chain management enabling technologies • Textile & clothing • Nanotechnology & advanced materials • Information & communications • Chinese medicine

  11. 3. Hong Kong Public R&D Funding (2/2) • The designated functions for these centres • To conduct industry-oriented research • To facilitate IP commercialisation • To provide technology and market intelligence • To provide a platform for exchange of IT/technology • To promote technology development, transfer and knowledge dissemination • Some of them like project offices, with limited in-house R&D capacity and a limited number of staff members • ASTRI established in 2000 to conduct industry-oriented applied R&D • Photonics technologies, internet applications, wireless communications and IC design

  12. 4. Innovation Governance of Hong Kong Public R&D Funding

  13. Public R&D Investment and Portfolio (1/3) • Insufficient level of R&D intensity: 0.81% • China’s R&D : 1.42% in 2006 and to reach 2% by 2010 • Beijing, Shanghai and Guangdong in 2005: 5.5%, 2.3% and 1.1% respectively • Taiwan and Singapore: Both setting a goal to raise R&D intensity to the 3% level around 2010 • The resource allocation of public R&D in HK intrinsically short-termism • R&D initiatives funded by ITC by and large short-term-oriented, dispersed and reactive type, at most individual programme-specific or technology policy by nature • Short of long-term, integrated type of R&D and innovation initiatives, or “innovation policy” in a broad sense • ASTRI: Mainly doing development work, not genuinely forward-looking research • Because of the short time spans of the projects

  14. Public R&D Investment and Portfolio (2/3) • Lessons learned in OECD • Budgetary practices often promote short-term thinking and in some cases undermine strategic, long-term policy making • To reduce fragmentation and create critical mass and excellence in the public research sector • Finland: Strategic Centre for Science, Technology and Innovation (SHOKs) • A new way of coordinating dispersed research resources to meet targets important for Finnish business and society • Companies, universities and research institutes working together to formulate a jointly-agreed research plan to meet the application needs for practical application by member companies within a 5-10-year period

  15. Public R&D Investment and Portfolio (3/3) • Recommendation: HK to have amore balanced R&D portfolio • Public R&D investment in long-term strategic topics • A more flexible governance relationship between the funding agencies and the research institutes needed • Public R&D expenditure in service innovation, systemic service innovation in particular • Controversies around the factor of de-linking of R&D and manufacturing in terms of location • “Enclave” vs. leverage on the mainland • To build strength on strength and serve as a “testbed” for brand new service innovation • Demanding needs to trigger service innovation • The success of “Octopus Card” • Digital TV services?

  16. A Four Dimensional Model of Service Innovation Source: den Hertog (2001, p.4). • When promoting systemic service innovations, the government needs to adopt a holistic and flexible approach, which will be different from that to the promotion of manufacturing-centric R&D or technology-centric initiatives.

  17. The Funding Mechanism and Institutional Arrangements (1/6) • The research institutes in HK deficient in their R&D portfolio & short of capital for making strategic investment • The funding schemes by ITC: Short term-oriented, dispersed and reactive type • ASTRI: constrained to pursuing development work and/or me-too projects • Compounded by ITC’s requirement of 10 % of industrial contribution basically for each project • The business sector in HK: A strong preference for short-term profitability • DoIT’s funding schemes in Taiwan for research institutes: Different types of research and/or strategic investment • Ranging from pioneering technology research, the building-up of infrastructure required, to large-scale R&D facilities • The assessment procedures varying across different types of the funding schemes

  18. The Types of Funding Schemes for Research Institutes, Administrated by the DoIT in Taiwan (Unofficial Translation) • ITRI, with financial support from the DoIT, can propose and conduct long-term R&D projects, say up to four or five years. • Annual reviews for checking progress still needed • The assessment procedure for the Pioneering Technology Research Program is conducted by ITRI itself in order to provide appropriate room and flexibility for the formation of more creative projects. • External and overseas reviewers with international reputation called upon to the assessment committee.

  19. The Funding Mechanism and Institutional Arrangements (2/6) • 10 % of industrial contribution to ensure industry-orientation • Some local professionals: This requirement troublesome and rigid • ASTRI: Some flexibility shown by ITC, allowing ASTRI to get an average of 10% from a number of projects rather than a full 10% for each project • Our views: Not so unreasonable as it looks • The problem: ITC’s R&D funding schemes for research institutes not so diversified as the case of the DoIT in Taiwan • Recommendation: ITC to provide a wider variety of R&D schemes for the research institutes • Some of the schemes still demand industrial sponsorship, while others allows the research institutes to involve strategic R&D even without industrial participation right from the beginning.

  20. The Funding Mechanism and Institutional Arrangements (3/6) • Some unease with the regulation that approval from the Finance Committee of the Legislative Council required for project requesting more than HK$15 million each from ITF • From October 2008, the financial ceiling is increased from HK$15 million to HK$21 million • For such projects to kick off, the research proposals have to go through five panels. • internal review, industrial review, technology review, ITC review and board of directors, plus the Legislative Council • Recommendation: As funding practices in many countries, the technology review committee given authority to make decisions, before reporting to ITC for final approval

  21. The Funding Mechanism and Institutional Arrangements (4/6) • Project management on the part of ITC criticized • Not to tolerate any changes in the projects • Outputs from the R&D projects specified beforehand • DoIT in Taiwan: Tolerate failures in some cases, while evaluates the performance of the research institutes from a long-term perspective • Esp. regarding forward-looking and risky programme, as the Pioneering Technology Research Program • Recommendation: ITC to reduce administrative micromanagement • Changes in projects up to certain extent allowed and endorsed mainly by the review committee rather than all the way by the ITC, except for major changes

  22. The Funding Mechanism and Institutional Arrangements (5/6) • The R&D centres not truly engaged in R&D activities • Some of them: serving simply as a project office, creating an additional layer of bureaucracy between ITC and the other innovation actors • The projects funded by the R&D centres not that different from those funded by some other major schemes by ITC • Recommendation: Upon completion of their project time span, ITC to conduct an intensive evaluation on the performance of the individual R&D centres • To review the R&D centers’ business plan, to be formulated by the centers and their major stakeholders, which should be in line with ITC’s long-term strategy, if any. • ITC to make a critical decision for the consolidation of the Programme in the near future • A mismatch between public R&D and private R&D

  23. The Funding Mechanism and Institutional Arrangements (6/6) • Shortage of dedicated professional (technology manager) for the promotion of technology transfer on the part of the research institutions and universities • ASTRI’s R&D personnel to shoulder the work of R&D and the promotion of technology transfer at the same time • Taiwan: Research institutes have dedicated units for technology transfer and/or technology management • DoIT providing the research institutes with resources required through the Infrastructure-Building Program. • Recommendation: ITC to step up its efforts in this regard • HK to take advantage of the training and supporting system built by the Association of University Technology Manager (AUTM) in the US and/or the Association of University Technology Managers (AURIL) in the UK to train and recruit the technology managers required

  24. 5. Conclusions • If HK’s R&D investment keeps move at the same pace or cannot manage to catch up with its neighboring economies for years to come, it will be unrealistic for HK to become an “innovation hub” in the region • If the funding mechanism and institutional arrangements continue to work based on administrative mindset, HK’s innovation governance will be undermined. • Recommendation: To solve the above problems from a long-term perspective, the HK government as a whole to follow the example set by its neighboring economies to promulgate a HK version of “Science and Technology Basic Law” that can facilitate the speeding-up of public R&D investment with “additionality” and the sound development of innovation governance

  25. Thank you for your Attention Comments More Than Welcome

  26. R&D Expenditure by Performing Sector, 2002-2006 Notes: Figures in < > represent the percentages to total. The percentages in a year may not add up to 100 due to rounding.Figures in square brackets represent the ratios to GDP. The GDP estimates are based on the data on expenditure-based GDP estimates at current prices released on 27 February 2008.@ Figures are subject to revision later on. Source: Adapted from HKCSD (2008a).

  27. Innovation and Technology Fund:Distribution of Approved Projects among Different Industrial Sectors (as at 30/9/2008) Note: There may be a slight discrepancy between the sum of individual items and the total as shown in the tables owing to rounding. Source:http://www.itf.gov.hk/eng/statistics/StatTable104View.asp?StatTypeId=104&StatId=517&StatCaption=Distribution+of+Approved+Projects+among+Different+Industrial+Sectors.

  28. Funding Indicators of the Major Funding Schemes under the Auspices of the ITC, 2006-2008 (1/2)

  29. Funding Indicators of the Major Funding Schemes under the Auspices of the ITC, 2006-2008 (2/2) Notes:ΨThe figures do not include applications submitted by or projects undertaken by the five R&D centres and the ASTRI, which are reported under the indicators “R&D centres’ projects” and “ASTRI projects”.φAll projects (including TCFS projects and feasibility studies) undertaken and/or monitored by R&D centres are included. For the Hong Kong R&D Centre for Information and Communications Technologies (ICT R&D Centre), the actual figures for 2006 have been updated to include feasibility studies.@The figures do not include projects undertaken by the ICT R&D Centre hosted by the ASTRI, which are now reported under the new indicator “R&D centres’ projects”. Separately, the actual figures for 2006 have been updated to include feasibility studies undertaken by the ASTRI. Source: Adapt from ITC, Controlling Officer’s Report (2008).

More Related