OECD Science, Technology and Innovation Outlook

English
ISSN: 
2518-6167 (online)
ISSN: 
2518-6272 (print)
DOI: 
10.1787/25186167
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The fully revamped and re-titled OECD Science, Technology and Innovation Outlook is a biennial publication that aims to inform policy makers and analysts on recent and future changes in global science, technology and innovation (STI) patterns and their potential implications on and for national and international STI policies. The report provides comparative analysis of new policies and instruments being used in OECD countries and in a number of major emerging economies (including Brazil, China, India, Indonesia, the Russian Federation and South Africa) to boost the contribution of science and innovation to growth and to global and social challenges.

 

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OECD
08 Dec 2016
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192
ISBN:
9789264268081 (EPUB) ; 9789264263062 (PDF) ;9789264263055(print)
DOI: 
10.1787/sti_in_outlook-2016-en

Hide / Show Abstract

The fully revamped and re-titled OECD Science, Technology and Innovation Outlook is a biennial publication that aims to inform policy makers and analysts on recent and future changes in global science, technology and innovation (STI) patterns and their potential implications on and for national and international STI policies. Based on the most recent data available, the report provides comparative analysis of new policies and instruments being used in OECD countries and a number of major emerging economies (including Brazil, China, India, Indonesia, the Russian Federation and South Africa) to boost the contribution of science and innovation to growth and to global and social challenges. In this edition, detailed country and policy profiles are available on line.

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  • Foreword

    The OECD Science, Technology and Innovation Outlook 2016 is the eleventh in a biennial series designed to review key trends in science, technology and innovation (STI) in OECD countries and a number of major non-member economies: Argentina, Brazil, China, Colombia, Costa Rica, Egypt, India, Indonesia, Lithuania, Malaysia, Peru, the Russian Federation, South Africa and Thailand. It aims at informing policy makers, business representatives and analysts about recent and anticipated changes in the global patterns of science, technology and innovation and about the current and possible future implications for national STI policies both at global and national level.

  • Acronyms
  • Executive summary

    Tomorrow’s world is set to be of another kind. Powerful forces, rising from deep socio-economic, environmental, technological and political trends – so-called “megatrends” – are influencing developments in economies and societies, shaping our future, often in unexpected ways. These multidimensional, mutually reinforcing and sometimes opposing megatrends will affect the direction and pace of technological change and scientific discovery and influence future STI activities and policies.

  • Megatrends affecting science, technology and innovation

    This chapter describes and analyses the main global “megatrends” that are set to have a strong impact on societies and economies, including science, technology and innovation (STI) systems, over the next 10-15 years. Megatrends are large-scale social, economic, political, environmental or technological changes that are slow to form but which, once they have taken root, exercise a profound and lasting influence on many if not most human activities, processes and perceptions. Such relative stability in the trajectory of major forces of change allows some elements of a likely medium-to-long term future to be envisioned, at least with some degree of confidence. The megatrends covered in this chapter are clustered into eight thematic areas as follows: demography; natural resources and energy; climate change and environment; globalisation; the role of government; economy, jobs and productivity; society; and health, inequality and well-being.

  • Future technology trends

    Technological change is set to have profound impacts over the next 10-15 years, widely disrupting economies and societies. As the world faces multiple challenges, including ageing, climate change, and natural resource depletion, technology will be called upon to contribute new or better solutions to emerging problems. These socio-ecological demands will shape the future dynamics of technological change, as will developments in science and technology. This chapter discusses ten key or emerging technologies that are among the most promising and potentially most disruptive and that carry significant risks. The choice of technologies is based on the findings of a few major foresight exercises carried out in recent years. The ten technologies are as follows: the Internet of Things; big data analytics; artificial intelligence; neurotechnologies; nano/microsatellites; nanomaterials; additive manufacturing; advanced energy storage technologies; synthetic biology; and blockchain. The chapter describes each technology in turn, highlighting some of its possible socioeconomic impacts and exploring related policy issues. A final section highlights some common themes across the ten technologies.

  • The future of science systems

    This chapter focuses on public research systems and the potential shifts that they are likely to experience over the next 10-15 years. While public research systems have their own specific trend dynamics – for example, with regard to research funding, where and how research is performed and reported, and researcher career paths – they are also affected by wider changes in economies and societies. This chapter explores what these changes might mean for public sector research, raising eight main questions about its future: What resources will be dedicated to public research? Who will fund public research? What public research will be performed and for what purpose? Who will perform public research? How will public research be performed? What will public research careers look like? What outputs and impacts will be expected of public research? And what will public research policy and governance look like?

  • Recent trends in national science and innovation policies

    Many governments, across the OECD and beyond, are facing unprecedented economic and societal challenges and consider science and innovation as part of the response. New data from an EC/OECD survey on science and innovation policies shows that governments have particularly focused policy attention and action in recent years on addressing more immediate economic imperatives and building more effective, impactful and responsible policies. Against a background of slow economic growth and tight budgetary conditions, many governments have shifted attention and support away from public research towards business innovation and entrepreneurship, with a view to promoting firms’ potential to drive a stronger and more sustainable recovery. Efforts have also been made to reinforce national policy evaluation capacity so as to gain efficiency and to better orient science, technology and innovation (STI) policies towards societal goals. This chapter presents recent trends in national science and innovation policies across OECD member countries and major emerging economies, including Brazil, China, India, Indonesia, the Russian Federation and South Africa. It considers the economic and financial conditions that determine innovation behaviour and that currently shape the innovation policy agenda. It presents the “hot” STI policy issues in countries as well as the most recent shifts in national policy mixes. This chapter builds on countries’ responses to the latest European Commission (EC)/OECD International Survey on Science, Technology and Innovation Policies (STIP) and recent OECD work on science and innovation policies.

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  • Expand / Collapse Hide / Show all Abstracts STI policy profiles: Governance (On Line Only)

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    • National strategies for STI

      National strategies for science, technology and innovation (STI) have become a major pillar of post-crisis growth strategies and serve several functions in government policy making. First, they articulate the government's vision regarding the contribution of STI to a country's social and economic development. Second, they set priorities for public investment in STI and identify the focus of government reforms (e.g. the funding of university research, evaluation systems). They also mobilise STI actors around specific goals, such as energy, environmental or health issues, and may help steer the investments of private actors and of increasingly autonomous universities and public research institutes towards priority areas or technologies. Third, the elaboration of these strategies can engage stakeholders (the research community, funding agencies, business, civil society, regional and local governments) in broad consultations that will help to forge a common vision of the future and facilitate co-ordination within the innovation system

    • System innovation

      Interest in system innovation is motivated by the realisation that system-wide changes are necessary to make economies socially, economically and environmentally sustainable. Although many national governments have put sustainability and green growth objectives at the centre of their economic development strategies, achieving this goal will require wide-ranging changes in their underlying economic, technological and social systems, from transport, water and energy systems to modes of consumption and waste management. Ensuring that socio-technical systems move towards greater sustainability is a major challenge for governments but also for civil society. At the core of the transition is a shift in governance structures that not only allows change to occur but also directs and orchestrates some of the changes.  The “smart city” and "circular economy" initiatives that mobilise technological and social innovations to make the production and consumption of a city’s goods and services more sustainable illustrate this point.

    • Strategic public/private partnerships

      For governments, public-private partnerships (PPPs) in science, technology and innovation (STI) can help make research and innovation policy more responsive to the changing nature of innovation and to social and global challenges. For business, partnering with public research can help solve problems, develop new markets or generate value through co-operation and co-production. For governments, PPPs are an attractive tool to address both market and coordination failures in research and innovation activities and leveraging private investment in STI activities. PPPs are also key instruments in addressing societal challenges of the coming decades -such as climate change, green growth or energy efficiency-.

    • Public engagement in STI policy

      Over the last decade, processes of public engagement – in which members of diverse publics express their views, concerns and recommendations – have become increasingly common features of STI policy. There are multiple rationales for public engagement in STI policy. First, public engagement can broaden the knowledge base on which to make STI policy decisions, enhancing the quality and relevance of the knowledge produced and helping to steer science and innovation toward socially desirable objectives. Second, engaging the public upfront on questions of controversial technology policy may stave off a public outcry and enhance trust between scientists and the lay public. Third, from the perspective of democratic governance, public engagement can enhance the meaningful participation of citizens in decisions that affect them deeply (Fiorino, 1990; Stirling, 2008). But public engagement can also help improve the relations of science and society by building a more scientifically literate, supportive and engaged citizenry.

    • Public sector innovation

      Innovation in the public sector refers to significant improvements to public administration and/or services. It can be defined as the implementation by a public sector organisation of new or significantly improved process, methods or services aimed at improving a public sector unit’s operations or outcomes.
      Public sector innovation involves significant improvements in the services that government has a responsibility to provide, including those delivered by third parties. It covers both the content of these services and the instruments used to deliver them. OECD countries pursue various types of innovation in public service delivery. Many of these approaches create services that are more user-focused, are better defined and better target user demand. Innovation can alter both the supply of services, by improving their characteristics, and demand for services, by introducing new ways to articulate demand for and procure them. Civil servants and public employees are at the core of these new ideas and approaches to achieve better service delivery.

    • Evaluation and impact assessment of STI policies

      In the field of STI as in other policy areas, the role of evaluations and impact assessments is to provide an informed assessment of public policy interventions in terms of their efficiency, their effectiveness and, often to a lesser extent, their relevance. The results of these exercises can contribute to the policy-making process in different ways, from supporting the accountability of public spending to enhancing policy learning.

    • Comparative table of national STI strategies or plans

      National strategies for science, technology and innovation (STI) have become a major pillar of post-crisis growth strategies and serve several functions in government policy making. Country responses to the latest EC/OECD International STIP Survey point to some common features in national STI strategies and also show cross-country differences in policy goals and priorities across OECD countries and key emerging economies.

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  • Expand / Collapse Hide / Show all Abstracts STI policy profiles: Globalisation of innovation policies (On Line Only)

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    • Attracting international S&T investments by firms

      International investments have grown rapidly in recent decades owing to the rapid rise of global value chains. Production processes have become increasingly fragmented, with goods and services produced in stages in different countries. Firms seek to optimise their production processes by locating the various production stages in different sites and countries on the basis of optimal location factors. While distribution, sales and production activities have led the way, science and technology (S&T) activities and R&D have also been increasingly located and/or relocated abroad.

    • Internationalisation of universities and public research

      Internationalisation is an increasingly important dimension of higher education and public research in OECD and partner countries. In line with economic globalisation, research co-operation and academic mobility have internationalised sharply in recent decades. With new technologies, collaborators in different countries can communicate easily and cheaply, and it is easier than ever before to obtain information about research communities in other countries. Financing from abroad – through initiatives such as the EU Framework Programme – has become a more important part of the research funding of many institutions. While internationalisation has increased opportunities for co-operation, it has also increased the competitive pressures on research and higher education, as universities are now being ranked on a worldwide basis. Some rankings even focus on the level of internationalisation of universities.

    • International mobility of highly skilled

      The international mobility of highly skilled individuals plays an important role in shaping national innovation systems. It is widely acknowledged that mobile talent contributes to the creation and diffusion of knowledge, particularly tacit knowledge as it is often shared through direct personal. Business and academia seek out abroad for specific knowledge or abilities or for drawing upon an expanded pool of talents. They also create or integrate international knowledge networks through their foreign staff. For talented individuals, mobility provides a means to exploit opportunities abroad, overcome barriers and resource constraints experienced at home, and fulfil their vocations.

    • Cross-border governance arrangements for STI

      Cross-border governance of science, technology and innovation (STI) involves the partial or total delegation of policy making from the national to the international level. It implies, among other things, international co-ordination of national policy initiatives, removal of obstacles to the movement of resources, setting of international standards and regulations, and transfer of authority to intergovernmental organisations or supranational structures. It is part of a wider dual delegation process that gives a greater say in STI matters to the international, but also to the sub-national, level of governance.

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  • Expand / Collapse Hide / Show all Abstracts STI policy profiles: Facing new societal and environmental challenges (On Line Only)

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    • Green innovation

      Concerns about the environmental unsustainability of past economic growth patterns and increased awareness of the impact of climate change have propelled green growth issues to the forefront of economic and innovation policies (see the policy profile on “National strategies for STI”). Awareness has moved to policy action as illustrated by the adoption of Paris Agreement on Climate Change and discussions on implementation to ensure the world can achieve the Paris Agreement’s long-term aims to limit the extent of climate change to “well below 2°C”. Green innovation must of course be part of the solution.

    • Innovation for an ageing society

      The continuing increase in life expectancy represents a remarkable achievement of humankind, but it raises significant questions about how it will affect countries’ economies, and the viability of health and social security systems. Across OECD countries, population ageing is the result of declining fertility rates, reductions in child mortality rates and an increase in longevity, which altogether can lead to significant increases in the share of older people in the total population (see Chapter 1 on “Megatrends for STI”).

    • Innovation for societal challenges

      Innovation can make a substantial contribution to dealing with societal challenges such as poverty, ageing, social exclusion and health. Rapid technological change, and in particular the wide application of information and communication technologies (ICTs), can also affect overall well-being, thanks notably to the sharp decline in the cost of ICTs, which are now largely accessible to all categories of the population, including in developing economies.

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  • Expand / Collapse Hide / Show all Abstracts STI policy profiles: Innovation in firms (On Line Only)

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    • Policy mix for business R&D and innovation

      The “policy mix” could be understood as the set of policy rationales, arrangements and instruments implemented to deliver public action in specific policy domains as well as their interactions. The “policy mix” concept refers therefore to: 1) the composition of the “policy mix”, i.e. the relative balance between its components, and 2) the interactions between its components. More specifically in the innovation policy domain, there is no clearly stated and widely acknowledged definition of the concept (Flanagan et al., 2011). And discussions around policy mix often question its normative features in terms of “coherence”, “co‑ordination”, “efficiency”, “appropriateness”, “balance”, “stability”, “predictability”, “comprehensiveness”, “legitimacy”, etc.

    • Government financing of business R&D and innovation

      Firms are major drivers of innovation but tend to underinvest in R&D. They engage in R&D to differentiate themselves from competitors, to be more successful in business and to increase profits. However, the costs and uncertainty of R&D, the time required to obtain returns on investment, and the possibility that competitors can capture knowledge spillovers – owing to the non-rival and non-excludable nature of R&D – often reduce their incentives to undertake R&D. The funding of innovative entrepreneurship raises further issues, addressed in the policy profile on “Financing innovative entrepreneurship”.

    • Tax incentives for R&D and innovation

      Public support for business R&D is justified as a means of overcoming market failures that depress the level of R&D and innovation activity in an economy. R&D tax incentives aim to encourage firms, which are the main intended beneficiaries, to invest in R&D by reducing their effective costs (OECD, 2010). Compared with most types of direct subsidies, R&D tax incentives tend to be designed to allow firms to decide the nature and orientation of their R&D activities, on the assumption that the businesses are best placed to identify research areas that can be brought to the market. R&D tax incentives are in principle more market-friendly and neutral than direct support instruments. In addition, direct subsidies under international trade and competition rules are subject to conditions that are less stringent or do not apply in the case of indirect forms of tax support, provided the relief remains non-discretionary and different types of firms and sectors are not automatically excluded.

    • Start-ups and innovative entrepreneurship

      Entrepreneurship is a major driver of innovation, productivity growth and job creation. Innovative start-ups bring new ideas into the market, in some cases tapping into knowledge generated but not commercialised by existing firms (Acs et al., 2013), generate high-wage employment and wield competitive pressure on existing enterprises, forcing them to stay abreast of market developments or exit the market. This process, which Schumpeter called “creative destruction”, contributes to productivity growth by improving resource allocation in the economy. There is also evidence of a positive empirical relationship between the rate of business entry and exit and productivity growth in an economy

    • Stimulating demand for innovation

      Demand-side innovation policy is often understood as a set of public measures to increase public and private demand for innovations, to improve conditions for their uptake or to improve the articulation of demand in order to spur innovation and facilitate diffusion (Edler, 2007). It usually aims at lowering barriers to the market introduction and diffusion of innovations (Uyarra, 2014).

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  • Expand / Collapse Hide / Show all Abstracts STI policy profiles: Sectoral innovation (On Line Only)

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    • New industrial policies

      The term ‘industrial policy’ has many meanings, not all of them specific to manufacturing. However, it is helpful to distinguish two distinct meanings. The first and narrower use of the term refers to government policy that aims to alter the structure of production in ways that enhance national welfare. Such policy typically focuses on manufacturing, but not exclusively so, and has often entailed some form of targeted policy, including subsidies or protection from competition.[1] The second usage refers to horizontal policies (i.e. not sector specific) that afford an enabling environment for industry or for business more generally.

       

       

    • Cluster policy and smart specialisation

      Clusters are a geographic concentration of firms, higher education and research institutions, and other public and private entities that facilitate collaboration on complementary economic activities. While some of the world’s leading clusters specialise in high-technology industries (e.g. Silicon Valley, Bangalore)), they are also found in sectors ranging from wine making to automobiles to biotechnology.

    • Service innovation and non-technological innovation

      In the face of lagging productivity and job creation, many OECD governments are looking for new sources of growth and have recognised the importance of services in this regard. Services already account for around 70% of gross domestic product (GDP) and most employment across the OECD. Services also contribute half or more of all the value added in total exports (OECD, 2013).

    • Innovation and the digital economy

      Governments in many countries are increasingly aware of the importance of harnessing the benefits of the digital economy for innovation, growth and social prosperity. This awareness comes as the cost of data collection, storage and processing continues to decline dramatically and computing power increases, social and economic activities are increasingly migrating to the Internet. Technologies, smart applications and other innovations in the digital economy can improve services and help address policy challenges in a wide range of areas, including health, agriculture, public governance, tax, transport, education, and the environment, among others. Indeed, information and communication technologies (ICTs) contribute not just to innovation in products, but also to innovation in processes and organisational arrangements.

    • Health innovation for rare diseases

      Is our therapeutic innovation system in sync with public health needs? Many factors affect the health of individuals and communities. Global, socioeconomic determinants such as income and social status, education, families and communities, food and nutrition, environment, life style, and health care services have led to an epidemiological transition, leading to reduced fertility, lower mortality and ageing of populations OECD, 2016a). Despite significant advances in basic science and technology the vast majority of diseases can neither be prevented nor treated; rare diseases constitute a large part of these (Institute of Medicine, 2010). It has been argued that the current system of therapeutic innovation is not adequate to follow global health, societal and economic trends (Barker, 2016; OECD, 2015b). With a focus on rare diseases, this policy profile discusses policy measures in order to stimulate therapeutic innovation in areas of unmet medical needs.

    • Innovation in the space economy

      The space sector is experiencing a profound transformation that is being driven by developments both inside and outside the space domain. The utilisation of space applications is growing worldwide, and satellite signals and data play an increasingly pivotal role in the efficient functioning of societies and their economic development. The efficiency and productivity gains derived are becoming more visible across very diverse sectors of the economy, although experiences in estimating impacts vary across countries.

    • Innovation in the oceans economy

      Interest has been growing in the huge potential offered by the future development of ocean-based industries. The many economic activities that make use of the ocean possess great potential for boosting economic growth, employment and innovation. The “ocean economy” is defined as the sum of the economic activities of ocean-based industries, together with the assets, goods and services of marine ecosystems (Figure 1). In many cases, marine ecosystems provide intermediate inputs to the ocean-based industries. Conversely, ocean industries can impact the health of marine ecosystems.

    • Innovation in the bioeconomy

      The bioeconomy encompasses industrial biotechnology, other modern biotechnologies, green chemistry, bio-based production and biomass production, and recent policy is aiming to develop the bioeconomy as part of the broader effort to achieve sustainability. However, the bioeconomy can mean more, e.g. pulp and paper production, even farming. How it is defined does make a difference.

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  • Expand / Collapse Hide / Show all Abstracts STI policy profiles: Universities and public research (On Line Only)

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    • Public research missions and orientation

      Public research plays a key role in innovation systems by providing new knowledge that can enhance the development of new technologies for societal or economic purposes. In this context, universities and Public Research Institutes (PRIs) fill a specific niche in undertaking longer-term basic research that is unlikely to have immediate economic returns (OECD, 2010a).  Although the volume of public R&D is less than 30% of total OECD R&D (OECD, 2014a), universities and PRIs perform more than three-quarters of total basic research (Figure 1). They undertake also a considerable amount of applied research and experimental development that has more immediate potential for translation into tangible societal benefits.

    • Financing public research

      Public research plays a key role in innovation systems and decision-making processes. It is the source of new knowledge, especially in areas of public interest, such as basic science or fields related to social and environmental challenges, which businesses are not always well equipped or motivated to invest in.

    • Open science

      Information and communication technologies (ICTs) - new data storage infrastructure, broadband Internet, high speed computing and analytical software tools - are radically modifying the way science is conducted and the way the results of research are disseminated. Whilst openness has always been one of the accepted norms of scientific practice, a new paradigm of 'Open Science' is emerging.  This encompasses a more collaborative scientific enterprise, open access to scientific data, open access to scientific journals and greater engagement of civil society - including industry.   In parallel, the availability and scale of data that is available for, and produced by, science has massively increased as has our ability to interrogate and analyse that data.  'Big data' and data driven research is now ubiquitous across all scientific disciplines and is opening up exciting new possibilities for addressing previously inaccessible scientific challenges.  Meanwhile, the ability to link data from different sources and fields is providing new insights into the complex global societal challenges.

    • Commercialisation of public research

      The commercialisation of public research is a major goal of national S&T policies and a key function of universities and PRIs, alongside teaching, education and the dissemination of knowledge (see also the Policy Profile on Public Research Mission and Orientation). Public research has been the source of many of today’s innovations, sometimes as a by-product of basic research and sometimes without any prospect of a direct business application. Well-known examples are the techniques of recombinant DNA, the global positioning system (GPS), MP3 technology and Siri, Apple’s voice recognition technology. Data on scientific sources of many of today’s nanotechnology, ICT and biotechnology patents provide additional evidence of the linkages between technological innovations and public research (OECD, 2013a).

    • Patent policies

      A patent is a legal title that gives the holder the right to exclude others from using a particular invention. If the invention is successful on the market, the patent holder will profit from its monopoly power. Patents therefore allow inventors to internalise the benefits they generate. Without such a mechanism, inventions could be imitated, which would reduce inventors’ return on their investment. Patents are granted in return for disclosure of the invention and therefore play a role in the diffusion of knowledge. Inventors and firms apply for patents at patent offices, which grant or reject patents for their jurisdiction, mainly the domestic market, in accordance with their legal statutes. Most patent offices are national organisations; the main exception is the European Patent Office (EPO).

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  • Expand / Collapse Hide / Show all Abstracts STI policy profiles: Skills for innovation (On Line Only)

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    • Strengthening education and skills for innovation

      Education policies play a central role in innovation, by supplying the foundations and skills innovative economies require to develop new processes, to adopt new products and to adapt to changes over time. Rising investment in intangible assets (i.e. software, designs, new forms of business organisation) has proved to be important for growth and productivity, and such intangible assets are often a direct manifestation of human capital built on rising educational attainment and investment in skills (OECD, 2015a). The incremental and pervasive nature of innovation also broadens the workforce that can contribute to innovation generation and diffusion. A large educated society enables more user-driven innovation or emerging practices such as do-it-yourself science or crowdsourcing that hold promise for the future.

    • Research careers

      Research activities are dependent not only on funding and a prior accumulation of tangible and intangible assets (i.e. technology, software, patented knowledge etc.) but also on the pool of researchers and other highly skilled professionals available. Researchers are “professionals engaged in the conception and creation of new knowledge. They conduct research and improve or develop concepts, theories, models, techniques, instrumentation, software or operational methods” (OECD, 2015a).

    • Labour market policies for the highly skilled

      The effective use of a skilled workforce is necessary for a well-functioning science, technology and innovation (STI) system. The policy challenges in ensuring an adequate mix of skills for innovation are likely to vary by country. First, the range of skills for innovation ranges from S&T capabilities to skills such as management, communication and entrepreneurship. Second, the type of skills required varies widely across industries and firm size (Toner, 2009). Third, the optimal mix of skills varies over time – in many countries computerisation and globalisation have contributed to large changes in labour demand, for instance in professions that require more abstract, cognitive skills (OECD, 2010a). Lifelong learning is therefore an essential part of both reacting to and fostering innovation. While education policies mainly support the supply of skills for innovation (see the policy profile on “Strengthening education and skills for innovation”), labour market policies aim to raise the level of knowledge and skills effectively used by the labour force.

    • Building a science and innovation culture

      Innovation requires developing and mobilising a broad range of skills throughout the workplace and society (Hanel, 2005; OECD, 2010; Toner, 2011). Considering the complex nature of the work required for innovation, desirable “skills” of individual and groups might be best understood as “capabilities” -- including the ability to synthesise relevant knowledge (from theoretical to practical expertise and know-how) and to think creatively -- and behavioural and social traits such as self-confidence, risk taking, leadership, teamwork, attitudes towards change. These capabilities and traits must operate within social contexts conducive to the growth and operation of such capabilities. Many countries seek to build “cultures” of science and innovation that will help develop these capacities in order to build public participation and support for science, as well as foster entrepreneurship. There is no single ideal “science and innovation culture” as it is the nature of national science cultures to be diverse (Jasanoff 2009). Yet many countries share this broader objective and aim to engage it through public policy.

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  • Expand / Collapse Hide / Show all Abstracts Assessing STI Performance (On Line Only)

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    • STI country profiles reader's guide

      The reader’s guide provides information into the STI country profiles (CPs) of the 2016 OECD STI Outlook (STIO). Those countries profiles are designed to provide a concise overview of science, technology and innovation (STI) policy and performance in OECD members and selected non-OECD economies.

    • Argentina

      The Argentine government recognises that innovation is a key source of growth and currently concentrates its efforts in several areas.

    • Australia

      Australia’s economy has been one of the world’s most resilient during the global economic crisis. Since 2005, labour productivity has increased faster in Australia than in many other OECD countries while income inequality has declined. However, since the fall in commodity prices in 2014, the country has faced considerable challenges in readjusting policies. Australia’s economy relies relatively heavily on primary and resource-based industries; coal and iron exports accounted for 29% of total exports of goods and services in 2014‑15. Although the economy is supported by strong macroeconomic frameworks and commodity price levels have tended to stabilise in 2016, maintaining growth in incomes and conserving the country’s established position in terms of international competitiveness will require further efforts. In order to address these challenges, the Australian Government developed the National Innovation and Science Agenda (NISA). NISA aims to build a stronger, more productive and diverse economy, with more efficient government and more productive businesses. NISA intends to transform the country into a leading innovator with high wage standards and social welfare safety. NISA’s subprogrammes and initiatives are divided into four key pillars: i) Culture and Capital, ii) Collaboration, iii) Talent and Skills and iv) Government as an Exemplar.

    • Austria

      Austria is a small and open advanced European economy which has seen rapid progress in its research and innovation system. Keeping up the dynamic development of the Austrian innovation system is an important task. After nearly two decades of sustained growth, the expansion of R&D expenditure has slowed in the aftermath of the financial crisis, and constraints on public R&D expenditure are tight in current budgets. A major challenge is therefore to increase the efficiency of current spending and to continue structural and institutional reforms in research organisations and public administration while launching new initiatives to address some of the main bottlenecks perceived in the research, technology and innovation system. Innovation is critical for generating sustained productivity growth, especially in advanced economies. In Austria, labour productivity varies considerably across sectors. While it remains on a constant high level in manufacturing, services and construction sectors lag behind. Overall labour productivity slightly declined since 2013. In 2011, the Austrian Council of Ministers announced its Research, Technology and Innovation (RTI) Strategy for 2011­20. The Action Plan for a Competitive Research Area, launched in 2015, presents the measures taken by the Federal Ministry of Science, Research and Economy in order to implement the RTI strategy.

    • Belgium

      Belgium is a small EU economy and is very open to international trade and FDI. Its economy is strongly service-oriented and it has a number of internationally competitive technology sectors (e.g. chemicals, life sciences and ICT). Belgium is a federal country composed of three communities (Flemish, French and German-speaking) and three regions (Brussels-Capital Region -BCR-, Flanders and Wallonia). STI competences and mandates span across all these government levels. The Federal Belgian policy focuses on thematic aspects on aerospace sector and supporting R&D efforts towards the 3% of GDP Lisbon target, e.g. by reducing costs of researcher employment through tax allowance on R&D wages. The Communities are the main source of scientific research support, and the regions are the main source of innovation and business R&D support. Presently, key STI plans include the BCR Regional Innovation Plan (2015-20) on improving innovation chain and typologies, Wallonia’s new Marshall Plan 4.0 (2015-19), and Flanders’ Governing Agreement (2014-19) streamlining the organisational structures. The annual policy letter series is drafted by the government of Flanders and presents an overview of recent shifts in employment, economy, science and innovation strategy.

    • Brazil

      While Brazil remains the world’s seventh-largest economy, growth has stagnated over the last two years as commodity prices, industrial activities and services have all declined. To boost the country’s economic performance and increase productivity through innovation, the government has introduced new legislation as well as the National Strategy for Science, Technology and Innovation (ENCTI) 2016-19, which sets out the main challenges for STI policy (see below). The strategy aims for gross expenditure on research and development (GERD) to reach 2.0% of GDP in 2019

    • Canada

      Canada is the world’s tenth-largest economy, an export-led economy, and a global leader in energy and natural resources markets. Challenging external economic conditions and the decline of global crude oil prices since mid-2014 have weighed on Canada’s economic performance and growth prospects. Economic growth is projected to increase gradually in 2016 and 2017 as the natural resources sector slowly regains momentum. However, shifts in the markets for global natural resources and energy call for a diversification of the Canadian economy. In October 2015, the federal government committed to developing an Innovation Agenda that would reshape how Canada supports innovation and growth. Commitments were made to expand support for business innovation networks and clusters, promote the clean technology sector and the adoption of clean technologies, and increase funding to support innovation and growth-oriented firms. In June 2016, the federal government launched a consultation on the development of an Inclusive Innovation Agenda. This engagement focuses on six inter-related action areas: promoting an entrepreneurial and creative society; supporting global science excellence; building world-leading clusters and partnerships; growing companies and accelerating clean growth; competing in a digital world; and improving the ease of doing business.

    • Chile

      While Chile has displayed resilient economic growth despite the reduction in commodity prices, the country will need to further diversify its economy to sustain this. Over 2011-14, Chile’s productivity growth exceeded the average for the OECD area. Total factor productivity has grown particularly outside the capital-intensive mining sector. However, the country continues to struggle with a fragmented innovation system. Moreover, Chile displays persistent limited social mobility and high inequality, preventing lower-income individuals and communities in lagging regions from participating in innovation activities. The country has introduced STI policies to deal with these challenges. In particular, the new government’s 2014-18 Growth, Innovation and Productive Agenda (GIPA) will help to strengthen innovation as a key driver for growth.

    • China

      Following three decades of an unprecedented high rate of economic growth, the People’s Republic of China has entered into the so‑called “New Normal” phase of growth, which highlights key transitions and shifts in policy focuses from fast growth to sustainable growth, from rural to urban, from public sector to private sector, from investment to consumption and from manufacturing to services. Succeeding in the transition to a new growth trajectory will require an unwavering commitment not only to structural reforms but also to making science, technology and innovation (STI) a key engine for growth. China has steadily increased STI investment for decades, with its GERD reaching 2.05% of GDP in 2014, surpassing the intensity of the EU28 (and EU15) as a whole. Since it launched reform and began opening up to the outside world, China has set up numerous science and technology (S&T) programmes and foundations, which have played a significant role in enhancing the country’s scientific and technological strength, improving its competitiveness, and supporting economic and social development. However, recognising that there is significant duplication, dispersion and inefficiency in these programmes, as well as fragmentation of S&T resource allocation, China initiated a new round of reform of its S&T system under the National Innovation-Driven Development Strategy first proposed in 2012 and then comprehensively revised in May 2016. The 13th Five-Year Plan, launched in March 2016, and the following 13th Five-Year Plan on Scientific and Technological Innovation, released in August 2016, have established a set of targets and policies for S&T development for 2016‑20 (e.g. R&D intensity to reach 2.5% of GDP by 2020). Consequently, public budgets are forecasted to increase in the coming years, but at a lower pace than in previous years.

    • Colombia

      Colombia has racked up high economic growth during the past decade and shown resilience during the global financial crisis. The remarkable growth in this period was fed by the oil and mining boom, foreign direct investment in the commodity sector and broad-based investment. This has fostered a process of convergence with OECD economies in terms of gross national income per capita. However, productivity and investment remain low outside the oil and mining sectors, which are suffering from falling commodity prices. Columbia still faces the challenges of boosting productivity growth and diversifying its economy. The barriers to this are numerous and span beyond the areas of research and innovation to include social issues such as informality and social problems. However, the country has also engaged in initiatives to raise the level of educational quality, enhance labour skills, promote investment in R&D and reform a distortive tax system. In this context, the government has included the following STI hot issues in its National Innovation Strategy (2010-14).

    • Costa Rica

      Costa Rica has experienced strong export-led growth. The country has achieved a progressive diversification of its export basket, with a growing export share consisting of electronics, instruments and medical devices, and services, mostly ICT‑related services. Costa Rica has also succeeded in attracting a rising flow of foreign direct investment, although this means that its economic performance has centred on industries of interest to multinationals. Domestic firms continue to display low levels of productivity and face challenges in becoming a part of global value chains. This is the context for the 2015‑21 STI Strategic Plan (PNCTI), which aims to boost growth.

    • Czech Republic

      The Czech Republic is an open European economy. GDP growth increased strongly in 2015, partly due to EU-financed public investment. Exports accelerated in late 2015 and are benefitting from favourable developments in the automotive industry, an economically important sector in the country. The importance of science, research and innovation for competitiveness has grown considerably. While aspects of the Czech STI system are catching up with OECD standards, the system as a whole is still lagging. GERD increased from 1.3% of GDP in 2009 to 2% in 2014. The National Research, Development and Innovation Policy update (2016‑20) (NRDIP) confirms the previously set targets for 2020 of GERD of 2.7% of GDP and public R&D expenditure of 1% of GDP.

    • Denmark

      Denmark is a highly developed European economy with strong business innovation and one of the most developed renewable energy technology sectors in the world. At the same time Danish labour productivity level is lower than the OECD average. In 2014 its gross R&D expenditures amounted to more than 3% of GDP, which is much higher that the OECD average (table 1). Its ICT and Internet infrastructure are good and the e-government development index is also quite high. However, the Danish government that took office in mid-2015 decreased the budget for research (1.01% of GDP), which in longer term could have impacts on the innovation system (C. Grimpe, Mitchell J., 2015). The Innovation Strategy: Denmark A Nation of Solutions (2012-20), launched in 2012, includes 27 policy initiatives focused on research, innovation and education and represents a shift to a demand-driven innovation policy approach with an emphasis on enhanced knowledge flows and stronger innovation capabilities in education. The Innovation Strategy was complemented in 2015 by the "Growth and development in the whole of Denmark" strategy (Vækst og udvikling i hele Danmark) – that intends to foster regional growth and development in the country through “regional smart specialisation”. The program includes more than 100 concrete initiatives focused on strengthening partnerships between research institutions and business and intensifying knowledge sharing and innovation in businesses.

    • Egypt

      Egypt is a lower middle-income economy that has grown little in per capita terms since 2011. High inflation, public debt, high unemployment rates and social inequalities pose important challenges. In this context, the government has committed to increase the level of investment in S&T in order to sustain growth and improve the quality of life. This is set out in the National Strategy for Science, Technology and Innovation for 2015‑2030. There are plans to increase GERD, which was 0.7% in 2013, to 1%. The global crisis and the events of the Arab Spring strongly affected economic policy.

    • Estonia

      Estonia is a small European economy, which has experienced turbulence since 2009 from severe contraction in the course of the global financial crisis. While economic growth was 1.6% in 2013, private consumption has boosted it back to a level of 1.9% in 2016 with a projection of 2.4% for 2017. Following the Knowledge-based Estonia II Research and Development and Innovation (RDI) Strategy (2007‑13), the government has created two medium-term strategies: the Estonian RDI Strategy (Knowledge‑based Estonia, 2014‑20) and the Estonian Entrepreneurship Growth Strategy (2014‑20). The overall aim of the development of RDI is to create favourable conditions for an increase in productivity and in the standard of living, for good-quality education and culture, and for the country’s overall development. The Strategy for R&D and Innovation targets GERD at 3% of GDP and BERD at 2% of GDP by 2020.

    • Finland

      Finland is a small knowledge-intensive economy with an industry that has not recovered yet from the economic crisis and other external shocks. The manufacturing sector has been downsizing reflecting both an industrial restructuring (particularly in electronics due to changes in Nokia’s business) and losses in competitiveness. The economy is dominated by high and medium-high technology and still has a strong specialisation in ICT, wood and paper industries, metal-machinery and basic metals. Although the Finnish STI system performs rather well by OECD standards (high investment in human capital and education), socio-economic indicators such as inequality, unemployment and productivity stagnate or reflect a downtrend. Labour productivity is below the OECD average and has stagnated since 2013. Exports remain weak due to eroded competitiveness, and the slowdown of the Russian economy. High-tech goods as a share of total exports dropped from 23% in 2005 to 6% in early 2016. The government is currently implementing an austerity agenda, intending to level off the GDP-to-debt ratio, and budget cuts also affect expenditure on R&D and innovation. The Strategic Government Programme of the Prime Minister has been launched in 2015 based on five strategic priorities: i) Employment and Competitiveness; ii) knowledge and education; iii) wellbeing and healthcare; iv) bioeconomy and clean technologies; and v) digitalisation, experimentation and deregulation.

    • France

      Business investment picked up in France in 2015, and the country’s economy started experiencing a modest recovery. However, sluggish growth in productivity and exports is still a challenge. In this context, the government is continuing to promote innovation-led growth through its STI policy.

    • Germany

      Germany has a major export-led economy driven by a wide range of internationally competitive firms, notably in the manufacturing of machinery and transport equipment, which make up nearly half of all German merchandise exports. The country’s economic growth rebounded quickly following the global financial and economic crisis in 2009. Germany performs well on many indicators of economic performance and well-being, including unemployment. In contrast, investment – an important driver of productivity growth – has been slow to recover. In light of weakening growth in labour productivity and an imminent decline in the labour force as a consequence of ageing, Germany needs to promote and invest in productivity-boosting STI policies. In addition, considerable variations related to people’s age and socioeconomic background, such as well-being, education and life expectancy, prompted the government to shift the focus of its new High-Tech Strategy (Hightech-Strategie – HTS): while initially attending to the market potential of specific technology areas, as of 2010 the HTS has concentrated especially on society's need to develop and implement forward-looking approaches to policies. The third edition of the HTS, adopted in August 2014 (after 2006 and 2010), sees “civil society” as a third actor, alongside industry and research, and focuses on a number of new topics (such as the digital economy and society, a sustainable economy and energy system, the innovative workplace and civil security). New instruments to fund innovation seek to strengthen cooperation between enterprises, universities and research institutions and to enhance society’s active involvement in science, technology and innovation. Accordingly, the country’s upward trend in R&D expenditure is continuing: in 2014, Germany spent 2.90% of GDP on R&D, up from 2.73% in 2009. GERD is targeted to reach 3% of GDP by 2020. In the current legislative period an additional USD 3.8 billion PPP (EUR 3 billion) is being spent on R&D, despite ongoing fiscal consolidation.

    • Greece

      Greece has undergone a pronounced and protracted economic recession since 2008. Fiscal consolidation, a growing public debt burden, negative inflation and uncertainty additionally weighed on investment and economic performance. Labour productivity is low in terms of OECD standards. Poverty and inequality have risen during the recession and persistent youth unemployment has repeatedly exceeded 50% in the last years, while private consumption declined by almost 30% between 2008 and 2014. In response, the Greek government has embarked on deep fiscal adjustments and wide-ranging structural reforms. A Memorandum of Understanding on financial assistance was signed with the European Stability Mechanism (ESM) in 2015. The ESM granted disbursements of up to USD 113 billion PPP (EUR 86 billion) until 2018 to boost confidence and rebound investment. Growth is expected to turn positive in the second half of 2016. A national strategy for the period 2014-20 addresses the weaknesses in the innovation system and aim at regaining competitiveness and sustainable growth: The National Research and Innovation Strategy for Smart Specialisation 2014-20.

    • Hungary

      Following the severe 2008 recession, Hungary’s economy has expanded strongly, based on export recovery and macroeconomic stimulus. However, Hungary’s income per capita remains among the lowest in the OECD area. This partly reflects a low level of productivity (productivity growth has decelerated since the crisis) and weak business investment in capital and human resources. While growing in recent years, R&D intensity in Hungary, at 1.37% of GDP in 2014, is still significantly below the OECD average, due to a lack of both private and public investment. Hungary has a strong industrial sector. However, business innovation capacities are mostly concentrated in foreign-owned companies and some large domestic companies. Public investment in research displays 33% of GERD (comparable to other European countries), and the national priorities are strongly influenced by EU programmes, especially structural funds. The Government is committed to strengthen the research and higher education system by building a strategic framework and implementing reforms. In June 2013, the government adopted the National Research and Development and Innovation Strategy (2013-20). This Strategy aims to stimulate STI demand, establish an efficient support and funding system, and develop an ecosystem for start-ups. Given the importance of EU programmes in Hungary, the National Smart Specialisation Strategy and all documents related to structural and social funds also have a key structuring effect on STI activities. The 2014 Higher Education Strategy also sets ambitious targets in terms of improving teaching and learning, developing word-class research, and enhancing higher education’s contribution to innovation and economic development.

    • Iceland

      Iceland is a Nordic island country with an open economy and a high standard of living. After the 2008 financial crisis, which severely affected the economy, Iceland is currently in the eighth year of robust economic growth, with low unemployment and inequality rates compared to OECD standards. Over the last decade it has diversified towards knowledge services and manufacturing to complement its resource‑based sectors, notably fisheries and metallurgy. In 2015, the service sector accounted for more than 70% of GDP, while industry, including the emergence of software production and biotechnology applications, accounted for 21%. Recent years have also seen a tourism boom, underpinned by significant wage increases in 2015 and the resulting boost in private demand. Labour productivity is above the OECD average, but recently declined slightly. A Science and Technology Policy and Action Plan (2014‑2016) was issued with a focus on: human resources and recruitment; boosting the share of competitive funding; co‑operation and efficiency; and the impacts and follow‑up of public research. A new Science and Technology Policy and Action Plan (2017‑2019) will be issued in May 2017. The new Science and Technology Policy and Action Plan (2017-2019) will be issued in May 2017. In January 2014, Iceland became the first non‑EU country (together with Norway) to be associated with the EU Research and Innovation programme Horizon 2020.

    • India

      India is one of the world's largest, fast-growing emerging economies, with a rapidly increasing population. Thanks to strong economic growth for nearly a decade, poverty has been cut in half. Growth faltered between 2012 and 2014 when it picked up again. Future growth prospects look good, although poverty continues to be a major challenge. Despite the abundant supply of a large, low-cost labour force, recent economic growth has relied mainly on capital investments and skilled labour. Innovation is seen as critical to India’s socioeconomic development. Through its national strategy, Decade of Innovations 2010‑20, the government aims to strengthen S&T capacities based on “a strong and visible Science, Research and Innovation System for High Technology-led path for India” (SRISHTI). The goal is to raise gross domestic expenditure on R&D to 2% of GDP with a doubling of the business contribution by 2020. The 12th Five‑Year Plan (2012‑17) emphasises reinforcing India’s education system, boosting investment in S&T and fostering translational research.

    • Indonesia

      Indonesia is the world’s fourth most populous country, and 43% of its 250 million inhabitants are under the age of 25. The Indonesian economy relies mainly on the exploitation of the country's rich endowments of natural resources, and its expansion is therefore tied to developments on global commodities markets, as primary commodities account for more than half of its exports. Indonesia has enjoyed strong and stable growth over the past decade, with GDP growth rates above 5% annually until 2014, and the country has taken important steps toward further opening up its economy. Strong economic performance has led to a considerable reduction in poverty and improvements in living standards. However, there have recently been signs of a slowdown in economic growth and investment, due mostly to lower commodity prices, regulatory uncertainty and infrastructure bottlenecks (e.g. transport congestion). GDP growth is projected to gather pace to reach 5.5% in 2017. As an economy in catching up phase, Indonesia also faces severe environmental challenges in the form of air pollution, deforestation and the depletion of its natural resources. The Vision and Mission of Indonesia S&T Statement (2005‑25) sets out a common vision for improving Indonesia’s global competitiveness and fostering its transition toward a knowledge-based economy. The Third National Medium-Term Development Plan (RPJMN, 2015‑19) is at the heart of the government’s agenda to stimulate inclusive, sustainable growth and its plans to boost the further development of STI in 100 regions. Recent policy emphasis on the role of S&T for achieving national economic development aims to encourage greater R&D investment in the future.

    • Ireland

      Following a prolonged economic recession preceded by a severe financial crisis, determined policy implementation has restored confidence in the Irish economy and underpinned the strong cyclical recovery now underway. The Irish economy is projected to continue its robust expansion in 2016 and 2017. Both exports and business investment, which surged due to a temporary impetus by multinational enterprises, are expected to moderate but remain solid. Unemployment is still high (5), although it has declined substantially in the last few years. An important challenge is to improve long-term growth prospects by making the Irish-owned business sector more dynamic, productive and innovative, while staying attractive to foreign investors.

    • Israel

      The rate of GDP growth in Israel has exceeded that of most OECD countries for more than a decade, and the employment rate has continued to rise steadily. Israel also has a vibrant high-tech sector and is the world’s second-most GERD-intensive country at 4.11% of GDP in 2014 (1). However productivity growth has been weak. An inefficient sheltered sector is dragging down overall economic performance. The country’s technology-driven growth has not been sufficiently inclusive, as is illustrated by data on income inequality (4). To maintain and increase Israel's global leadership in the face of intensifying competition, the government approved the ministerial proposal to establish the Israel Innovation Authority. This implies a strategic change and a broad mission. The government's innovation policy aims to encourage R&D activity in industries, mainly in the manufacturing sector, to link the innovation ecosystem to the public sector and to attract new employees from under‑represented groups of the population.

    • Italy

      Italy has continued the structural reforms and fiscal consolidation undertaken since 2011 to put the economy on a sustainable growth path based on sound macroeconomic fundamentals. Labour productivity has stagnated in Italy since 2005. The economic recovery will depend notably on the effectiveness of public initiatives to stimulate productivity and private demand and to facilitate the availability of bank credit. The government’s decree law Sblocca Italia (September 2014) introduced a series of provisions aimed at supporting the national productive sector and boosting competitiveness. The major actions funded through the decree law include: 1) strategic infrastructures, railway and highway networks; 2) new social security benefits/provisions; 3) the internationalisation of enterprises; 4) interventions against hydrogeological instability and for enhancing water infrastructures; 5) a more efficient exploitation of national oil and gas resources; 6) the renovation of buildings; and 7) energy recovery from waste. Top STI policy priorities also include an increase in public investment, the relaunch of the industrial system, reducing unemployment, and reform of education and research.

    • Japan

      After two decades of sluggish growth, despite recent signs of renewed dynamism, Japan's growth prospects, which are projected to be 0.6% in 2016 and 0.7% in 2017, are still clouded by an ageing population, a high national debt (expected to reach 234% of GDP by 2017) and other socio-economic challenges. Thus, the 5th S&T Basic Plan (2016-20), prepared by the Cabinet Office with the input of experts, identifies sustainable development, the safety and security of the country and its people, climate change and biodiversity as overarching fields for determining a medium- to long-term STI strategy. As the world’s third-largest economy after the United States and China, Japan is also the world’s third most R&D-intensive country, with 3.59% of GDP dedicated to R&D in 2014.

    • Korea

      The rapid development of Korea’s ICT and electronics sectors has made it one of the fastest-growing OECD economies over the past decade. Korea weathered the global crisis better than most OECD and non-OECD economies, and it is the world’s most R&D intensive country, with GERD at 4.29% of GDP in 2014. Korea does nevertheless face some challenges: slowing growth, rising inequality and unemployment, a rapidly ageing society and emerging environmental problems. The 3rd S&T Basic Plan (2013-17) sets out the new government’s road to economic prosperity and public well-being with the High Five Strategy to address long-term challenges. Its action plan was established in 2015. Furthermore, the Creative Economy Initiative introduced a major STI policy governance reform and new policy initiatives. Creative Economy is a strategy to shift Korea’s growth paradigm from an industrial economy to a knowledge economy by unlocking the productive potential of national STI and cultural ecosystems. In particular, the highest priority is given to advancing the S&T and ICT sectors and to refocusing Korea’s research and innovation system on entrepreneurship and the innovative application of technology.

    • Latvia

      Latvia is a small EU member state that joined the euro area in January 2014 and became a member of the OECD in July 2016. Four cornerstones of the economy are agriculture, chemicals, logistics and woodworking, with machinery production and green technologies as other prominent sectors. The economy is projected to soon recover from a sharp downturn in 2015 and early 2016. The main strategic frameworks in which the country operates are the Guidelines for National Industrial Policy 2014-20, the Guidelines for Science, Technology Development and Innovation (2014-20) and in particular the Smart Specialisation Strategy (RIS3, 2014-20) developed in the context of the European Regional Development Fund (ERDF). These documents emphasise Latvia’s priorities and serve as an overarching roadmap to transform the economy towards higher added value, productivity and more efficient use of resources. At the core of these strategies lie the following policy objectives: i) restructuring of production and export in traditional fields of the economy; ii) support of future areas of growth; and iii) concentration on fields with horizontal impact on the transformation of the economy. Although EU funds are, according to the EC, the main source of RDI funding, Latvia currently suffers from the expiry of several EU funding lines as well as from the sharp decline of economic relations with Russia.

    • Lithuania

      Following a 15% plunge in GDP in 2009, the Lithuanian government launched broad economic reforms. Combined with spending cuts and tax rises, these led to a quick recovery in 2010. Since then Lithuania has been one of the fastest-growing EU economies, with GDP rising by 4.1% a year on average over 2011‑2014. Labour productivity has increased steadily since 2009 (2). Lithuania’s GERD also has increased but is still far below the OECD average (1). The funds from abroad increased from 10.7% of GERD in 2004 to 34.3% of GERD in 2014. The government has launched the Lithuanian Innovation Development Programme (LIDP) 2014-20 to support competitiveness and economic growth through innovation. LIDP is being implemented according to the action plans which cover the two periods: 2014‑2017 and 2018-2020. Furthermore, the government has launched the National Programme for the Development of Studies, Research and Experimental (social and cultural) Development for 2013–2020 (NPDSRED). The Programme aims at strengthening the country’s competitiveness and increasing welfare by developing education, R&D and innovation systems. It is being implemented according to the action plans for two periods: 2013-15 and 2016-18.

    • Luxembourg

      Luxembourg is a small open economy with one of the world’s highest income per capita. In recent years, the government has invested heavily in building an advanced science base, virtually from scratch, and is now looking to consolidate these investments, with a strong focus on the efficiency and effectiveness of the science base and the roles it can play in supporting national innovation performance and structural change of the Luxembourg economy.

    • Malaysia

      Malaysia is one of the most dynamic emerging economies in Southeast Asia, with sustained rapid average growth of over 6.4% per year since 1970 but it has also been facing challenges, especially since 1990s Asian financial crisis. Malaysia has reached a gross national income of USD 22 280 per capita in 2012. In 2013, the government announced the National Science, Technology and Innovation Policy (NSTIP) (2013-20), which provides strategic guidelines for STI policy and investment for Malaysia’s transition to an innovation economy by 2020. The Science for Action (S2A) for the implementation of the NSTIP is one of the key strategic thrusts of the country’s 11th Plan (2016-20).

    • Mexico

      Since 2013, Mexico’s economic growth has stagnated, and labour productivity, which had been on a slow slope for several years, has not caught up to the OECD average, despite rising recently. In this context, the Mexican government is continuing to reinforce the instruments and strategies set forth by the National Development Plan (PND) (2013-18) for ensuring sustainable socio-economic growth. The Special Programme for Science, Technology and Innovation (PECITI) (2014-18) was designed to transform Mexico into a knowledge-based economy by: 1) increasing national investment in STI; 2) forming highly qualified human resources in science and technology (HRST); 3) strengthening regional development; 4) promoting science-industry linkages; and 5) developing the S&T infrastructure. The federal government budget for STI is expected to increase by 25.6% during 2014-18, with GERD set to rise to 1% of GDP by 2018.

    • Netherlands

      In the aftermath of the global economic crisis, economic growth in the Netherlands began to pick up in 2014, with gross domestic product (GDP) recently exceeding its pre-crisis peak. However, as in many OECD countries, labour productivity growth has been weak since the beginning of the global crisis. Strengthening investment in knowledge and innovation is a key to future productivity growth and competitiveness and is also necessary to address social challenges. The ‘top sectors’ approach, a form of industrial policy announced in 2011 and continued to date, focuses public resources on specific sectors and seeks to foster co-ordination of activities in these areas by businesses, knowledge institutions and government.

    • New Zealand

      New Zealand recovered well from the global crisis and is currently enjoying a strong and broad economic expansion and high wellbeing (OECD, 2016). Nevertheless, as an export-oriented economy that still relies heavily on the primary sector, there is room for diversification and the government is seeking to spur further investment in high-value manufacturing and services sectors through its actions in science and innovation. Investments in knowledge have been growing substantially since the crisis – public investments in science and innovation increased by 60% since 2007-08 and are expected to expand in the coming years. Yet, investment in R&D still remains low compared to the OECD average (GERD was only 1.15% of GDP in 2013 – down from 1.25% in 2009) and is lower compared to leading small OECD economies such as Finland, Israel and Sweden. Increasing investment in R&D and complementary intangible assets such as firm-specific skills, data and new organisational processes is a key challenge given that that up to 40% of New Zealand’s productivity gap (when compared with the OECD average) could be the result of low investment in knowledge-based capital (OECD, 2015). To help address this challenge, New Zealand has committed to reinforcing investments in research and innovation. Through its Budget 2016, the Government is investing NZD 410.5 million over four years in science and innovation through the Innovative New Zealand package. By 2020, the annual investment in science and innovation will have increased by 15% to NZD 1.6 billion per year. This is one of the largest single investments in science and innovation in New Zealand’s history.

    • Norway

      Norway has one of the world’s highest incomes per capita, owing to its rich endowment and prudent management of natural resources. However, growth has recently decreased and unemployment has risen since 2014. Driven by low crude oil and gas prices, the energy sector has cut petroleum investments with spillovers on other sectors. Unemployment is low in terms of OECD standards but recently increased and is set to peak in 2016. Since the new government took office in October 2013 it has developed a new strategic framework and, following this guidance, increased public R&D funding and prepared major initiatives to improve research excellence and support the diversification of the industry away from oil and gas. The Long-Term Plan for Research and Higher Education 2015–24, adopted in 2014, has three overarching objectives: enhanced competitiveness and innovation, tackling major social challenges and developing research communities of outstanding quality. The plan also aims to increase public expenditures and private investment in six long-term priority areas. The plan also sets a target for government appropriations for R&D to one per cent of GDP

    • Peru

      Peru is a resource-rich Latin American country which economic growth has been driven by commodity exports, especially of agricultural products, hydrocarbon and mineral resources that make up about three-quarters of total Peru’s exports. Large multinationals have been playing a key role in national mining industry and the country’s integration into global value chains. Peru’s recent growth performance has been impressive with strong progress made in reducing poverty. Since 2000, GDP growth has averaged 5% per annum, compared to the Latin American average of 3.2% and the OECD average of 2%. Although the unemployment rate remains low, 46% of Peruvian workers are in vulnerable employment . There is also a large informal sector, at close to 70% of the total employment, which contributes to low levels of productivity. Persisting poverty pockets in rural areas coexist with the capital Lima that hosts the vast majority of the country’s high value services, manufacturing and transport and logistics. High levels of informality, low levels of skills and innovation, under-developed infrastructure and large inter-regional disparities weigh on Peru’s development perspectives. In view of falling global commodity prices, Peru is currently undergoing a transition away from a commodity-export economy towards an economy oriented towards industry and services. The National Plan for Production Diversification (PNDP) was implemented in 2014 and aims at promoting the diversification of the country’s production structure.

    • Poland

      Poland proved to be remarkably resilient in the face of the 2009 financial crisis and has continued to grow strongly and catch up with other OECD countries in terms of GDP per capita. The annual growth rate of the country’s GDP averaged 3.1% from 2007 to 2014. GERD increased from 0.56% to 0.94% of GDP between 2004 and 2014, but it is still below the OECD average (2.38%). The government aims to attain GERD of 1.7% of GDP by 2020. To continue its convergence with the most affluent OECD countries, Poland needs to strengthen its public research system, enhance business innovation and improve the innovation skills of the workforce. The main catalysers for the country’s strategic direction and policy action are the Strategy for Innovation and Efficiency of the Economy – Dynamic Poland 2020 (2013‑20), the Entrepreneurship Development Programme (EDP) and the National Research Programme (NRP). Furthermore, the Smart Growth Operational Programme (2014‑20) has been launched to boost the innovativeness and competitiveness of the economy by funding investment in research, development and innovation, with the support of the European structural funds.

    • Portugal

      The Portuguese economy contracted in the wake of the global financial crisis, with investment in S&T decreasing in recent years. Significant action restored the sustainability of the public finances and stimulated growth from 2014 onward. For 2016 and 2017, moderate GDP growth is projected. However, job creation remains sluggish, and weak bank conditions have been holding back investment. In order to cope with these challenges, the new government, elected in October 2015, intends to make several adjustments to STI governance. Ongoing reforms are designed in line with the Commitment to Knowledge and Science agenda, approved by the Council of Ministers in 2016. Its four main dimensions address human resources, institutions, innovation systems and regional economic development.

    • Russian Federation

      The Russian economy has been in recession since 2015, due to falling oil prices, international sanctions and capital flight, which together have reduced investment, domestic consumption and imports. Growth is projected to turn positive in 2017, as exports strengthen and domestic demand recovers. The Russian government aims to revitalise the country’s long-standing strengths in science and technology in an effort to diversify the economy and reduce its reliance on natural resources. In 2015, amidst the economic downturn, the Innovation Development Strategy of the Russian Federation to 2020, adopted in 2011, was revised to address the economy’s weaknesses by strengthening science, technology and innovation. A new strategic document, "Long-term Strategy for Scientific and Technological Development of the Russian Federation", is expected in late 2016 and will orient the national research and innovation agenda for the coming years.

    • Slovak Republic

      The Slovak Republic is one of Europe’s most dynamic economies. Yet, along with other post-communist countries, the country still faces major challenges in the field of innovation and in moving towards a knowledge-based economy. Business and public R&D remain well below the OECD average. Although gross domestic expenditure on R&D (GERD) has grown steadily (at an annual rate of 16.3% over the period 2009 2014), investment in R&D as a share of GDP is far below OECD norms (table 1). Publicly financed R&D reached 0.39% of GDP in 2014, which is about 60% of the average in OECD economies. Improvements in governance and reforms to the public research sector have continued in recent years. The current major STI policy priorities are R&D and business innovation, enhancing the transfer and impact of public research, and improving policy governance.

    • Slovenia

      In less than two decades, Slovenia has become a market-based economy. It has integrated with world markets and has joined the EU, the European Monetary Union and the OECD. It leads central and eastern European transition countries in GDP per capita and on a range of innovation-related indicators.

    • South Africa

      South Africa has progressively shifted away from dependence on primary resource production and commodity-based industries to open up to international trade and to building capacity in some knowledge-intensive industries. However, the country’s economic growth has remained weak by emerging-market standards, with GDP rising at 3.1% per year from 2000 to 2014. Employment has not risen fast enough to absorb an expanding labour supply driven by strong demographic dynamics, and unemployment has been chronically high. The exclusion of a large fraction of the population from the formal economy also contributes to maintain income inequality and pockets of poverty. Recent droughts, strikes and electricity shortages, combined with financial constraints, have weighed on economic performance in 2015 and 2016. Labour productivity has grown particularly slowly since 2011. The National Development Plan (NDP), A vision for 2030 (2011-30), provides a general roadmap for South Africa’s transition towards a diversified economy, with innovation underpinning almost every aspect and a strong focus given to strengthening human capital. The National R&D Strategy (2002 onwards) has planned for increasing public and private investment in the science base and improving the system of S&T governance. In parallel, the Ten-Year Innovation Plan (2008-18) identified five areas of competitiveness to be developed, i.e. bio-economy (formerly pharmaceuticals), space, energy security, global change including climate change, and social and human dynamics. In that respect, the National Industrial Policy Framework (NIPF) articulates South Africa's overarching approach to industrial development and innovation.

    • Spain

      Spain's economy continues its recovery: in 2015, the GDP of Spain grew by 3.2%, significantly above the euro area average. Labour productivity has been catching-up but potential for further improvement remains constrained. Growth prospects remain repressed due to lasting effects of the crisis and other structural factors of the Spanish economy (e.g. weak business dynamics). In terms of social inclusion, serious challenges remain. The unemployment rate of 22% of the labour force in 2015 is far larger than the OECD average. Unemployment among youth is among the highest in OECD countries: 48% in 2015. In terms of science, technology and innovation, Spain's significant progress in increasing R&D as a share of GDP in the 1990s and 2000s was curtailed and even reversed following the economic crisis. In particular, public R&D investment decreased steadily over the period 2009-14 at an annual growth rate of 3.4%. The trend has been reversed in 2015 with an increase of 2,1%. GERD intensity (relative to GDP) remains low: about half the OECD average. Major STI policy priorities are: reinforcing the public research system, addressing societal challenges, improving policy governance, business innovation, and human resources and skills. The current strategy and policy frameworks for STI seek to address these concerns. The main actions are defined in the Spanish Strategy for Science, Technology and Innovation (SSSTI) (2013-20) and the Spanish National Plan for Scientific and Technical Research and Innovation (2013-16), both approved by the government in February 2013.

    • Sweden

      Sweden has enjoyed strong economic growth in recent years. The present government aims to make growth more sustainable, inclusive and green, which will depend in part on Sweden’s future research and innovation performance. The government’s 2012 Research and Innovation Bill (for the period 2013-16) established a more selective, quality-based funding approach, and increased public expenditure on STI over this period by USD 445 million PPP (SEK 4 billion) – or by 15% compared to 2012- which followed a substantial increase of USD 625 million PPP (SEK 5 billion) during 2009–12. In connection to this target was set for for GERD to reach 4% of GDP by 2020. The Bill for 2017–20 was published on November 28 2016, setting the orientation of research and innovation policy and the funding frame for the coming four years (2017-20) and with a perspective towards 2026. and with a perspective towards 2026.

    • Switzerland

      Switzerland is a small open economy, with high GDP per-capita (59712 USD in 2015) and high export levels (64% of GDP in 2014). The country has maintained outstanding strengths in science, technology and innovation, with a GERD of 3% and a BERD of 2% in 2014. The federal government’s strategy document, Promotion of Education, Research and Innovation (ERI Dispatch), released every 4 years, aims to reinforce public R&D investment in order to maintain a leading position in global research and innovation. The government’s Financial Plan stipulates that the ERI budget should grow at an above-average rate compared to other policy sectors. At the end of 2015, the ERI budget has been growing by 3% during the budgetary period 2013-2016 and the federal expenditure reached USD 18.7 billion PPP (CHF 23.8 billion). The exact target rate as well as total planned federal expenditure for the period 2017-2020 will be decided in response to the Federal Council Dispatch on ERI 2017-2020 by the Swiss Parliament.

    • Thailand

      (forthcoming)

    • Turkey

      Turkey is a large, fast-growing, middle-income OECD economy. It has industrialised rapidly in recent years. Although growth has slowed in the last few years, it is projected to remain close to 4% in 2016, while the national objective is to reach average growth of 5% per annum in 2017 and 2018. The trade deficit has declined since 2013, as policy focused on industry and exports. Turkey has made significant strides in building up its STI capacities, with international STI cooperation playing a pivotal role, and GERD grew by 9.7% annually over 2009-14. Turkey is committed to sustaining its investment in STI. Currently, the National Science, Technology and Innovation Strategy (UBTYS) 2011-16 and the Tenth Development Plan 2014-18 provide the guidelines for Turkey’s national STI policy. Ongoing impact assessment exercises will serve as a basis for the new National STI strategy 2017-23. Targets for GERD and BERD were set by the Supreme Council for Science and Technology (SCST) to reach 3% and 2% of GDP, respectively, by 2023.

    • United Kingdom

      The United Kingdom is a very open and globalised economy, and its STI system enjoys a good level of funding and participation by foreign firms. Although unemployment rates have fallen to 5% in 2016, the results of the Brexit referendum have raised uncertainty regarding economic growth. Brexit comes after several years of very sluggish labour productivity growth . The Productivity Plan, Fixing the Foundations: Creating a More Prosperous Nation (2015), sets out a policy agenda to boost the UK's productivity growth, and the Competition Plan, A Better Deal: Boosting Competition to Bring Down Bills for Families and Firms (2015), aims to incentivise firms to invest in technology and to innovate. Maintaining research excellence, promoting innovation and strengthening the interface between universities and industry are major focus areas of new national strategies for productivity and competitiveness. These cross-governmental strategies have been complemented by a number of important recent reviews focused on specific aspects of the UK STI system, including the public research funding agencies and university-business collaborations. These reviews are providing the stimulus for significant structural changes in the governance and management, as well as the focus, of public investment in STI.

    • United States

      The United States has long been, and still is, at the forefront of cutting-edge science, technology and innovation. However, indicators such as business innovation surveys and data on the growth of multi-factor productivity suggest that the US lead is narrowing in spite of its world-class universities and global technology companies. R&D and patenting by businesses have also grown less rapidly than in the past. The 2009 Strategy for American Innovation: Driving towards Sustainable Growth and Quality Jobs, which was updated in February 2011 and again in October 2015, provides the strategic directions for government policies to further an innovation-based economy.

    • European Union

      The European Union’s 28 member states account for less than 20% of world GDP and around 20% of world trade (excluding intra EU trade). The EU contributes to the world's R&D on a similar order of magnitude (23%). The Union’s recent economic performance has been disappointing, with low economic growth and low labour productivity increases since 2009 . The unemployment rate, especially for youth, remains high in many EU member states. Weak economic and financial conditions are weighing on the EU’s future growth prospects and on its ability to address societal challenges (e.g. ageing, security, migration, climate change, etc.). EU member states are at different stages of development in their STI capabilities, and these cross-country differences have been increasing since 2009 (see chapter 4). Stagnating countries might fall further behind, while global innovation leaders might keep progressing. A widening gap between countries could hamper the EU's capacity to improve its overall innovation performance. As a result, EU Regional Policy has emphasised the importance of R&D to support sustained economic development and EU Research and Innovation Policy has been reinvigorated by focusing it on the three strategic priorities: Open Innovation, Open Science and Open to the World. The EU’s Horizon 2020 (H2020) Framework Programme for Research and Innovation (2014-20) is the funding programme implementing the EU's research and innovation policy. With a budget of nearly USD 101 billion PPP (77 billion euros, not including Euratom), H2020 is one of the few programmes for which the EU has significantly increased financial efforts. H2020 increased the EU R&D budget by nearly 30% in real terms as compared to the previous programming period (2007-13). A special focus has been put on improving the capacity of the EU’s STI system to address societal challenges.

    • Methodological annex to the 2016 OECD STI Outlook country profiles

      The OECD Science, Technology and Innovation Outlook reviews key global trends in science, technology and innovation (STI) and related policies and offers insights on recent national STI policy developments in OECD countries and key emerging economies, including Brazil, the People’s Republic of China, India, Indonesia and the Russian Federation (BRIICS). In particular, the country profiles of the OECD STI Outlook (Chapter 12) present the main features, strengths and weaknesses of national STI systems and major recent changes in national STI policy along a standardised and cross-country comparable structure. This annex describes the conceptual background used to design these profiles, as well as indicators, sources and benchmarking methodology.

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