Carlos Chambel Hugo Valente Pedro Nazareth

1. Paul M. Romer – Working Paper 7723 (NBER) Carlos Chambel Hugo Valente Pedro Nazareth S & T Policy MSc in Engineering Policy and Management of Technology

2. This paper suggests : The innovation policy in the US has erred. The existing institutional arrangements in higher education limit supply. Specific programs that could increase supply.

3. Why is the innovation policy so important? Contributes for the technological progress Increases the trend rate of growth output Increases the standards of living and wealth

4. US income per capita = 1.8% / year Britain income per capita = 1.3% / year Sweden income per capita = 3% / year

5. People are not the only input ! The demand / supply equilibrium Tax advantages, credit, cash payments… … an additional dollar in subsidies does not translate into much additional private spending on R&D E = N * W Subsidy for purchase eqp used in R&D would be less costly than one that is based on total expenditures including salaries! M. Sc. Engineering Policy and Technology Management

6. Where have the scientists gone? Despite increased spending on research and development the USA is producing fewer and fewer scientists!

7. 30%-40% The supply system

8. The supply of Undergraduate Degrees • Educational institutions provide too little information about prospective benefits of being scientists. • Undergraduate institutions make getting an engineer degree harder, because they cannot expand their engineering departments due to university politics. • Because of this, only half of aspiring engineers attain a degree.

9. The Critical Issue: The need to understand the market for Ph.D. in order to formulate policies concerning the supply of scientist & engineers (independently of its influence on undergraduate programs) The supply of Ph.D. Degrees in Science & Engineering The fact: The supply increase in the 1990s of Ph.D. degrees in Science & Engineering has been accompanied by generally declining job prospects for degree recipients -It helps to explain why undergraduate students did not pursue degrees in some sciences (e.g. Natural Sciences) -Still, the need to explain the absence of an increase in undergraduatedegrees inengineering or other sciences where jobprospects for Ph.D. have remained strong

10. The Challenge: Increase the Ph.D. students fraction that can put their skills to work in the private sector The Market: A major part of the graduated flow… -During the 1980s the number of Ph.D. recipients (supply) in the U.S. increased -Most of the students planned to pursue academic research appointments, but the number of people holding faculty positions remained roughly constant Increased Ph.D. subsidizing contributed for a steadily worsening academic job prospects

11. An interpretation of the evidence: -Undergraduate inst. are a critical bottleneck in the training of scientists & engineers MSc. in engineering have shown steadily growth while undergraduate programs have not) -Information concerning quality of education and job prospects -Some internal aspects of the inst. (different departments revenues might promote graduate instead of undergraduate training -Graduate schools produce people trained only for employment in academic inst. as a side effect of the production of basic research results Evidence about Ph.D. preferences for engaging in activities in science despite salary reduction -Selection method that attracts people with this taste in Ph.D. -Ph.D. training that cultivates this taste (or both)

12. Discussion Learning from the US experience: -Job prospects for the Portuguese Graduate students: Is the share graduate students in academic jobs increasing? Is this according with the Portuguese growth policy? -Situation in Portugal: NSE versus non NSE (particularly case of private education increasing).