Policy Briefs aim at presenting the results of IRI scientific work to a policy audience, to promote exchange and discussion that ultimately would lead to a reinforced evidence-based policy support.
Economic complexity to address current challenges in innovation systems: A novel empirical strategy linked to the territorial dimension
Authors: Emanuele Pugliese, Alexander Tübke
- Economic Complexity is a data driven empirical approach developed to inform the territorial development debate with quantitative metrics.
- In this framework, techniques inspired by complex systems analysis and network theory allow to measure the intangible capabilities necessary for a country or region to be competitive, both in absolute terms and in specific markets.
- This document addresses how different clogs of the innovation system co-evolve under complexity: both in terms of the different aspects (innovation, production, scientific activities) and geographical scales (countries, regions, cities)
- By using a number of techniques from the Economic Complexity toolbox, this document showcases examples of policy messages.
Technological innovation activities in the EU: A new perspective
Authors: Antonio Vezzani, Petros Gkotsis, Hector Hernández, Pietro Moncada-Paternò- Castello
- In many EU countries, a high proportion of local inventions are owned by foreign companies. On the contrary, in few countries the number of patents owned is much higher than the local inventions.
- Companies from Germany and the US are the most frequent foreign owners of patents invented in EU countries.
- Concentration of patents across companies changes largely from one country to the other.
- Differences between local inventions and patent ownership, as well as their concentration within countries matter for Innovation policies aiming at closing the EU gap of knowledge creation and technology diffusion.
Distribution of industrial research and innovation activities: An application of the technology readiness levels
Authors: Mafini Dosso; Lesley Potters, Alexander Tübke
- The Technology Readiness Levels (TRLs) approach is relevant to map the functional decomposition of companies' R&D value chains. TRLs matter for corporate location choices.
- Knowing what distinct types of R&D&I activities (or TRLs) stay, go and come back in EU territories – and why – is central for policies supporting local industrial and innovation ecosystems and clusters, and the identification and integration into strategic value chains.
- Fast-developing local strengths of Asian countries such as China, Japan and South Korea, in Automotive, and in Electronics and related fields are shaping companies' geographical decomposition of R&D&I activities.
- While the EU has strong value chains in e.g. automotive (network of combustion engine) and pharma (highly skilled labour force and strong research institutions), corporate R&D&I investments are finding their way to novel applications in emerging technologies in Asia.
R&D Intensive corporations and the job market: The danish case
Authors: Nicola Grassano; Alex Coad, Jacob R. Holm, Bram Timmermans, Christian R. Østergaard, Antonio Vezzani
- To boost job creation, the labour market role of big multinationals cannot be overlooked.
- Large R&D investing companies operating in Denmark act as agents of skill upgrading, rather than destroying mid-skill jobs through job polarisation.
- However, workers employed by these companies tend to move within such elite (i.e. remaining in the ‘Champion's League') rather than moving to other non-multinational indigenous firms.
- Scoreboard companies, domestic and foreign, pay higher wages for a given occupation compared to other firms; they also show a higher wage growth.
Industrial R&D continued to grow substantially in 2017
Authors: Petros Gkotsis, Hector Hernández, Antonio Vezzani
- R&D funded by the business sector increased in the EU by 5.6%, below the 6.1% global rate and the US R&D growth (7.2%).
- The worldwide growth of industrial R&D in 2017 is slightly higher than that recorded in 2016. This growth is largely driven by ICT and health industries.
- As in previous years, the industrial R&D growth in the EU is led by Germany, with France showing a stronger R&D increase compared to the previous year.
- In the EU, R&D inflows and outflows for Health industries were nearly equivalent in 2017 (€9.6bn versus €9.4bn) and showed a significant positive trend with respect to 2016.
Ten-year evolution of EU industrial R&D in the global context
Authors: Pietro Moncada-Paternò-Castello, Hector Hernández
- More than a quarter of the industrial investment in global R&D is made by EU companies.
- In the last decade EU companies have increased their specialisation in medium-tech sectors, with a significant R&D share increase in the Automobile sector and a decrease in the Aerospace & Defence sector.
- Industrial dynamics at company level provide insights into policy strategies to strengthen EU corporate R&D and to improve the competitiveness of innovation-driven industries.
For a Transformative Industry & Innovation Strategy
Authors: Pietro Moncada-Paternò-Castello, Alexander Coad, Antonio Vezzani
- EU R&D and innovation performance largely depends on industrial specialisation
- The EU needs a long-term strategy to foster industrial competitiveness
- A framework for designing a new transformative industry & innovation policy strategy is proposed
Innovation and Industry: Policy for the next decade
Authors: Pietro Moncada-Paternò-Castello, Nicola Grassano, Antonio Vezzani
- This document contributes to the discussion on the post-2020 policies that will start with the next EU multiannual financial perspectives and the subsequent preparation of the ninth Framework Programme (FP9).
- We identify seven major challenges posed by the industrial transformation. These challenges will shape the future economic landscape and should be at the heart of the next generation policies.
- Four main ingredients are proposed for future EU policies: they should i) be based on (truly) new policy vision, aims and objectives; ii) promote coordination, simplification and openness; iii) target EU specificities; and iv) embody experimentation.
Does manufacturing stir up innovation?
Authors: Alexander Coad, Antonio Vezzani
- Because of its positive contribution to employment and economic growth, the EU has set a manufacturing target of 20% of GDP. This could also boost R&D, productivity and exporting.
- Our analyses do not find empirical evidence that a large manufacturing sector has a direct influence on exporting activity or productivity growth.
- We find a positive association between manufacturing and R&D investment. The EU manufacturing strategy could help reaching the 3% R&D intensity target.
- However, the link between manufacturing and R&D depends on the industrial structure of a country. Support to new high-tech sectors should be coupled with actions to encourage technological upgrade in existing ones.
R&D and Innovation across Global Value Chains: Insights for EU Territorial Innovation Policy
Authors: Mafini Dosso, Lesley Potters, Alexander Tübke
- Firms organise innovation activities across a wider range of geographically dispersed and specialized units, as compared to previous decades. Moreover corporate innovation processes are broken up into ever finer stages and tasks at the global scale.
- The global dispersion of R&D and innovation activities occurs at a higher pace and goes hand in hand with a stronger regional polarization. Yet, corporate R&D remains a domestic activity, although functional and industry-specific patterns can be observed.
- The increased internationalisation of R&D and innovation activities does not imply the hollowing-out of domestic ones. Foreign innovation activities may actually support domestic increases in innovation.
- The internal and external connections of national and regional systems matter for their innovation performance. The quality of the regional learning and innovation systems is important to attract "relevant activities or segments" of the GVC. On the other hand, better connecting regions to the global innovation network is important for local growth and employment.
- The extent to which firms co-locate production and innovation activities depends on industry, product and process-specificities.
- Evidence is needed on how R&D and innovation activities are sliced and diced across GVCs, on how these global corporate dynamics interact with national and regional innovation systems and on how they impact on local growth and employment.
Significant Business R&D Growth in 2016
Authors: Petros Gkotsis, Hector Hernández, Antonio Vezzani
- This document shows first estimates on territorial R&D funded by the business sector, based on recent R&D and patent data from a representative sample of worldwide companies from the EU R&D Scoreboard.
- R&D funded by the business sector increased in the EU by 3.2%, below the 5.7% global rate and the US R&D growth (4%).
- As in the previous year, the worldwide growth of industrial R&D in 2016 was driven by ICT related industries.
- Among the three EU largest countries in terms of industrial R&D investment, Germany showed higher growth rates than France and the UK. However, only France recorded a better performance for 2016 compared to the previous year.
EU corporate R&D intensity gap: structural features call for a better understanding of industrial dynamics
Author: Pietro Moncada-Paternò-Castello
In order to achieve its 3% target of R&D intensity and boost its competitiveness and job creation, the EU needs to adapt its industrial structure and increase economic activity in the high-R&D-intensive sectors. A focus on fostering the conditions for the creation and growth of 'new-emerging innovative sectors' (NEIS) is recommended.
Disentangling the processes of firm growth and R&D investment
Authors: Alexander Coad and Nicola Grassano
- Sales growth kick-starts the growth process, having large effects on subsequent growth of capital expenditures, R&D investment, employment and operating profits.
- Policy interventions designed to boost business R&D investment should seek to remove the obstacles to firm growth, because it is sales growth that drives R&D investment.
- If Europe is to have 'smart growth' whereby firms growth occurs alongside investments in R&D and innovation, there is a key role of demand.
Top R&D investors' location decisions: How to succeed in the global regulatory contest?
Authors: Daria Ciriaci, Nicola Grassano, Antonio Vezzani
- Product regulation policies and employment policies show strong combined effects on decisions regarding top R&D investment locations. The higher the level of product market regulation (PMR), the higher the negative effect of employment protection legislation (EPL), and vice-versa.
- Reforms in these two policy areas should therefore be coordinated to be more efficient. Scientific evidence suggests a threshold of product regulation above which existing employment policies can start deterring investment decisions. Some Member States would particularly benefit from diminishing current levels of product regulation.
- Lowering barriers to trade and investment is more effective for attracting knowledge-intensive foreign investment than reducing the cost of starting a business or deducing the corporate income tax rate.
Technological drivers of R&D location
Authors: Mafini Dosso, Antonio Vezzani
- Countries' technological profiles shape the type of R&D activities they are able to attract
- Country specialisation in emerging technologies plays a crucial role in attracting international R&D activities of the leading innovators worldwide.
Industrial Research and Innovation: Evidence for Policy
Authors: Mafini Dosso, Petros Gkotsis, Fernando Hervás, Pietro Moncada-Paternò-Castello
This policy brief addresses the results of the fifth European Conference on Corporate R&D and Innovation CONCORDi 2015, on 'Industrial Research and Innovation: evidence for policy'. Taking stock from the underlined background issues, the document presents the main evidence-based insights for policy drawing upon the contributions and debates. It also highlights the main implications for industrial and innovation policies making and for the science-policy interface. A series of open questions for policy and evidence makers conclude the brief.
Leading R&D Investors for the Dynamics of Innovation Ecosystems
Authors: Mafini Dosso, Fernando Hervás, Antonio Vezzani
This policy brief discusses the key role of large R&D investors in the dynamics of innovation ecosystems. In a context of accelerated technological change and increasing global competition, firms should develop complex innovative solutions requiring the interaction of multiple-players. Therefore, knowledge integration becomes a key strategic dimension to keep the edge in the global competition and ecosystems of innovation are privileged 'places' where it can be organised in a way that ensures the creation of a higher collective value. Evidence shows that leading R&D investors can play a pivotal role in the establishment and development of such ecosystems, by bringing the necessary assets (resources, knowledge, capabilities and leadership) to activate their dynamics (along the three dimensions of interdependence, integration and initiative). This brief identifies a number of policy interventions to support the functioning of such innovation ecosystems and calls to tailor the interventions in accordance to the stage of development of the given ecosystem.
Innovation, competitiveness and growth without R&D? Analysis of corporate R&D investment - A country approach: Italy
Authors: Pietro Moncada-Paterno-Castello and Nicola Grassano
The objective of this policy brief is to analyse the status of private R&D investment in Italy based on recent evidence and to indicate possible policy actions to boost private R&D investment. For our analysis, we rely on microdata from an unbalanced 10 years' panel data-set (2004-2013), built using several waves of the European Industrial R&D Investment Scoreboard. Moreover, we also take into consideration other sources of quantitative and qualitative information (e.g. OECD, ISTAT, EUROSTAT, ERAWATCH Country Report Italy 2013, State of the Innovation Union 2014), and recent academic literature on the topic. In this document we argue that: i) innovation in firms' without their engagement in R&D activities is not sustainable in the medium and long term; ii) the Italian R&D and innovation (and competitiveness) gap is due to 'systemic'/structural reasons and thus targeted high quality policies are needed to address these issues; iii) such policy interventions will have little positive impact without comprehensive reform aimed at improving the innovation environment as a whole. Careful design of an 'innovation strategy' that includes support for R&D is needed. This strategy should be fine-tuned to tackle the actual specificities of the Italian economic context and its R&D-led innovation difficulties.
Boosting the EU Attractiveness to International R&D Investments: What matters? What works?
Authors: Fernando Hervás, Iulia Siedschlag and Alexander Tuebke
The Policy Brief discusses recent evidence on patterns and trends in the internationalisation of EU corporate R&D activities and the factors which drive location choices. This evidence suggests that boosting international investment in R&D activities requires a combination of policy measures aimed at enhancing the knowledge base of locations, and investment promotion policies tailored to investors from different countries. The policy mix should include measures aiming at improving the efficiency of national and regional innovation systems, particularly through: a) Increasing the quality of education systems and skills, to enable the emergence of centres of research excellence, b) Facilitating the clustering of R&D activities, given the importance of proximity for knowledge spillovers.
Financing R&D and Innovation for Corporate Growth. What new evidence should policymakers know?
Authors: Pietro Moncada-Paterno-Castello, Antonio Vezzani, Fernando Hervas and Sandro Montresor
The Policy Brief addresses the results of a recent European Conference on the Financing R&D and Innovation (CONCORDi-2013: http://iri.jrc.ec.europa.eu/concord/2013/index.html). It presents recent empirical evidence on the topic and attempts to draw a number of policy-relevant messages to be brought to the attention of policymakers, as well as open questions requiring further research to address policy needs.
Attracting foreign direct investment without weakening domestic firms
Authors: Jörg Zimmermann, Wolfgang Sofka and Fernando Hervas
The present policy brief builds on a recent study designed to provide insights that support the need for a comprehensive policy approach which simultaneously aims at attracting foreign direct investments while strengthening the competitiveness of domestic firms. More in detail, the applied framework provides policy-makers with an instrument to understand when foreign investments are beneficial with respect to knowledge inflows and when they start to jeopardise the competitiveness of local firms. This has interesting policy implications in relation to various relevant aspects of the Europe 2020 agenda, such as the need to strengthen the competitiveness of European firms in the global economy, by, among other things, promoting and supporting their mobility within the Internal Market, their internationalisation, and their capacity to contribute to and benefit from international knowledge flows.
The effect of innovative SMEs' growth to the structural renewal of the EU economy - A projection to the year 2020 -
Authors: Pietro Moncada-Paterno-Castello and Peter Voigt
This Policy Brief addresses the following question: To what extent the high-growth of current innovative R&D-intensive SMEs can drive the envisaged structural change of the EU economy towards high R&D intensive sectors? It aims to contribute to the debate about how to set the right priorities and find the most appropriate policy interventions to allow Europe to reach the 3% R&D intensity target and hence its growth and employment objectives. It first summarises stylised findings from the literature on the relevance of innovative companies for economic growth, then presents results from a recent JRC-IPTS study which go some way towards answering the question posed above, and concludes by outlining some of the contributions that enrich the policy debate.
Mind the Science and Technology Skills Gap
Authors: Maria del Sorbo and Fernando Hervás
This Policy Brief shows new evidence on the causes of the S&T skills gap in European regions. It highlights that the S&T skills gap is mainly due to shortages of capabilities that are crucial to support the innovation and growth of firms and the other actors of the regional system, including university and government. From these findings, ad hoc policy implications upon the development of innovation capabilities and skills for the European Research Strategy and Innovation agenda are proposed and future research issues identified.
The "green impact" of the open innovation mode. Bridging knowledge sourcing and absorptive capacity for environmental innovations
Authors: Sandro Montresor, Claudia Ghisetti and Alberto Marzucchi
This Policy Brief presents recent results on the impact that an open innovation mode has on European firms' environmental innovations. New evidence drawn from the CIS suggests that knowledge sourcing can increase the environmental innovation performance of firms. However, the way firms search for external knowledge and work to absorb it can lead them to different results, depending on whether they are involved in the adoption of an eco-innovation or the extension of their eco-innovation portfolio. Drawing on these results, policy implications for the European Research and Innovation Agenda are discussed.
Bridging ideas with markets: the impact of training, marketing and design on innovation
Authors: Daria Ciriaci and Fernando Hervás
This Policy Brief presents recent results on the impact of training, marketing and design expenditures on European firms' innovative performance. The new evidence drawn from recent JRC research suggests that these expenditures, in combination with R&D, are crucial drivers of innovation. Drawing on these results, policy implications for the European Research and Innovation Agenda are discussed and additional research questions identified.
The growth of companies in the EU: the case for a more sophisticated research and innovation policy
Authors: Pietro Moncada-Paternò-Castello
This policy brief presents a literature review on the economics of research, innovation and competitiveness, focusing on the evidence available regarding the determinants for company creation and growth and the role played by Research, Development (R&D) and innovation. Furthermore, based on this, it draws a number of policy implications to design future research and innovation support instruments targeting innovative company growth in Europe.
Is Smart Growth employment friendly?
Authors: Francesco Bogliacino
This policy brief presents recent results from JRC-IPTS scientific analysis on the nexus between R&D driven innovation and employment. The new evidence drawn from this analysis confirms the labour friendly nature of R&D and points to some relevant policy implications to be considered when designing and implementing concrete measures under the new research and innovation agenda (Innovation Union flagship initiative of the Europe 2020 strategy). IRI is carrying on additional work on data gathering and analysis to further characterize the impact to keep into account additional factors.