Building the Oslo Life Sciences Cluster: A New Agenda for Norwegian Innovation-Driven Entrepreneurship Scott Stern MIT and NBER 1
Norway has emerged as among the most prosperous nations in the world GDP PPP Per Capita Source: OECD Statistics 200 180 160 Denmark Finland 140 Germany Netherlands 120 Norway Sweden 100 United Kingdom 80 60 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2
Beyond leveraging abundant natural resources, Norway has established a strong foundational level of competitiveness Measure Rank Social Infrastructure and Political Institutions 4 Macroeconomic Policy 1 Microeconomic Competitiveness 11 National Business Conditions 11 Company Strategy 7 Foundational Drawn from MIT-Harvard Observabory of Economic Competitiveness 4 Complexity Based on 2013 HBS ISC Competitiveness Rankings 3
But declining oil prices have placed the need to invest in an innovation-driven Norway going forward….
Historically, Norwegian prosperity has not been matched by overall leadership in measured innovation WIPO Patents per Capita Source: OECD Statistics 4,00E-04 3,50E-04 3,00E-04 Denmark 2,50E-04 Finland Germany 2,00E-04 Netherlands Norway 1,50E-04 Sweden 1,00E-04 United Kingdom 5,00E-05 0,00E+00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 5
Norway has realized leadership in certain areas such as climate change technology PCT Patent Applications Per Capita by Applicant Country of Residence Class: Technologies Specific to Climate Change Mitigation Source: OECD Statistics 3,50E-06 3,00E-06 Canada Denmark 2,50E-06 Finland Germany 2,00E-06 Netherlands 1,50E-06 Norway Sweden 1,00E-06 United Kingdom United States 5,00E-07 Russia 0,00E+00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 6
Amid questions about business dynamism, rate of entrepreneurship has varied widely over the past decade…. New Business Density Source: World Bank Entrepreneurship Statistics 14 12 Australia 10 Denmark Finland 8 France Germany 6 Netherlands Norway 4 Sweden United Kingdom 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 7
The oil shock has only reinforced the need for a new “ Beyong Oil” Norwegian Competitiveness Agenda 8
“Life sciences increase our understanding of the nature of life…. but life sciences have an even greater potential. They represent a platform for new industry in Norway and transition to a greener economy with new jobs, products and services for the benefit of society, particularly in the health sector,” Ole Petter Ottersen Rector, University of Oslo
The Oslo Life Science Cluster Challenge • Norway has made enormous progress in transforming itself into an emerging innovation-driven economy • In the face of declining resource prices, an urgent agenda to leverage latent strengths and areas of potential comparative advantage • By investing in innovation that leverages and extends cluster strength, Oslo can chart a new path for economic development • The Oslo Life Sciences Initiative must leverage existing strengths, integrate researchers, knowledge, students, new infrastructure, and convene the entire range of the Oslo ecosystem • But what kind of life sciences cluster should Oslo build? 10
Building the Oslo Life Sciences Cluster: A New Innovation Agenda for Norway • Clusters and Innovation-Driven Entrepreneurial Ecosystems • IDE Ecosystems and Regional Economic Strategy • The Oslo Life Sciences Cluster: Towards an IDE-Driven Economic Strategy for Norway
Lessons from the MIT Regional Entrepreneurship Acceleration Program (reap.mit.edu) Mens et Manus: • Not simply an “ivory tower” perspective although the work is based on a systematic framework and nearly 20 years of empirical research • Not simply “learning by doing” although we do develop & run ecosystem programs => Interplay between thinking & doing 12
MIT REAP Framework System Strategy Stakeholder 13
MIT REAP Framework: System Economic Impact Social Progress IDE Ecosystem Potential E-Cap I-Cap Cluster Based Comparative Advantage Foundational Institutions 14 #MITREAP
Innovative Capacity & Entrepreneurial Capacity Are Distinct Regional Assets I-Capacity E-Capacity Ability to develop new to the Ability to start and build new to world innovations from inception the world businesses from through to the market. inception to maturity. Strong I-Cap: Strong E-Cap: Universities, Central R&D, Entrepreneurs, Mentors, Network of researchers, Founding Teams Medical Centers Investors at all stages 15
Innovation and Entrepreneurship are Related but Different Patent Rate (I-Capacity) vs. Business Formation Rate (E-Capacity) 300 Japan 250 Patent per million people '08 200 Israel Finland Korea, Rep. Switzerland 150 Sweden Germany Canada 100 Singapore Iceland Netherlands Denmark Australia Austria France Luxembourg Belgium United Kingdom Hong Kong SAR 50 Ireland New Zealand Italy Lithuania Croatia Spain Slovenia Hungary Malta Greece Bulgaria Malaysia Czech Republic 0 0 2 4 6 8 10 12 14 16 18 20 New Firm Registration/1,000 working people '08
Innovative Capacity and Entrepreneurial Capacity Reflect Distinct Investments, Policy and Norms E-Capacity I-Capacity PERFORMANCE Innovation output (patents and papers) Entrepreneurship output (new firms & growth) Pool of entrepreneurs Pool of innovators PEOPLE Quality of entrepreneurial education Education in tech and ommercialization Accessibility of entrepreneurial capital Funding for research FUNDING (government, private, equity, debt, grants) Government programs Physical infrastructure (space, transportation) Physical infrastructure INFRASTRUCTURE Availability of key services (internet, training) Example: hi speed internet Clear rules on new business creation Clear rules around patents POLICY Clear rules on business operations and growth Clear support for STEM education Culture of entrepreneurialism and failure CULTURE & Celebration of invention and innovation Societal support, ties and recognition COMMUNITY -Rewards to innovation – tenure process Government, corporate and consumer demand for DEMAND new products and services Nature of established companies in region 17
Assessing Norwegian Innovative Capacity I-Capacity 18
Not simply a matter of low patenting… WIPO Patents per Capita Source: OECD Statistics 4,00E-04 3,50E-04 3,00E-04 Denmark 2,50E-04 Finland Germany 2,00E-04 Netherlands Norway 1,50E-04 Sweden 1,00E-04 United Kingdom 5,00E-05 0,00E+00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 19
Norway’s R&D expenditures have historically been low relative to peers R&D Expenditures as Percent of GDP Source: OECD Statistics 4,5 4 3,5 Denmark 3 Finland 2,5 Germany Netherlands 2 Norway 1,5 Sweden United Kingdom 1 0,5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20
And its innovation workforce is in the “middle of the pack”…. Reseachers (FTE) per capita Source: OECD Statistics 0,90% 0,80% 0,70% Denmark 0,60% Finland 0,50% Germany Netherlands 0,40% Norway 0,30% Sweden United Kingdom 0,20% 0,10% 0,00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 21
Relative to peers, Norwegian R&D depends disproportionately on government… Percentage R&D Expenditures Financed by Government Source: OECD Statistics 50 45 40 Denmark Finland 35 Germany Netherlands 30 Norway Sweden 25 United Kingdom 20 15 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 22
But a relatively low fraction of research has historically been conducted by the university sector Higher Education R&D Expenditures as Percent of GDP Source: OECD Statistics 1 0,9 0,8 Denmark 0,7 Finland Germany 0,6 Netherlands Norway 0,5 Sweden 0,4 United Kingdom 0,3 0,2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 23
The Norwegian IDE Ecosystem Atop a strong foundation of competitiveness and social progress, Norway still needs to achieve a first- tier position in innovative capacity Linkages E-Cap I-Cap IDE Framework 24
Assessing Norwegian Entrepreneurial Capacity E-Capacity 25
Norwegian entrepreneurship is more variable than many peer countries… New Business Density Source: World Bank Entrepreneurship Statistics 14 12 Australia 10 Denmark Finland 8 France Germany 6 Netherlands Norway 4 Sweden United Kingdom 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 26
Norway is a better place for doing business than for starting businesses Ease of Doing Starting a Economy Economy Business Rank Business Rank Singapore 1 New Zealand 1 New Zealand 2 Canada 2 Macedonia, FYR 3 Hong Kong SAR, China 3 Armenia 4 Denmark 4 Georgia 5 Korea, Rep. 5 Singapore 6 Norway 6 Australia 7 United States 7 Hong Kong SAR, China 8 United Kingdom 8 … … Finland 9 Norway 22 Australia 10 Drawn from World Bank Doing Business Indicators 27
Mapping Silicon Valley: Population-level predictive Analytics
Oslo seems to be at the cusp of embracing the start-up energy that has emerged across many IDE ecosystems… 29
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