Innovation Investment and Economic Recovery A Green Paper for - - PowerPoint PPT Presentation

School for Business, Economics and Informatics

Innovation Investment and Economic Recovery A Green Paper for Successful Economic Policies

A Centre for Innovation Management Research Workshop Birkbeck, University of London 23 February 2017 Daniele Archibugi, Andrea Filippetti, Marion Frenz

Aim of the green paper

Serves as a vehicle to invite opinions, discuss evidence and data, help identify policy instruments and inform policy development. We start by inviting comments on three main themes (but comments should not be limited or constraint by those themes)

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Outline

• 1. The picture in the UK and Europe
• a. GDP
• b. Investment in fixed capital
• c. Investment in R&D
• 2. Green paper questions
• a. Is the engine of creative destruction kaput?
• b. Are the current economic policies the right ones?
• c. Investment in infrastructure projects vs

investment in research and innovation

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• 1. WHAT IS THE PICTURE?

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1.a) GDP annual growth rates

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• 5
• 3
• 1

1 3 5 7 9 11 13 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 UK USA China India EA15

Source: OECD

1.a) GDP annual growth rates

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0.5 1 1.5 2 2.5 3 3.5 2015 2016 2017 2018 UK USA EA15

Source: OECD

1.b) Investment (GFCF) growth rates

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• 7
• 2

3 8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 UK USA EA

Source: OECD

1.b) Investment as % of GDP

Business sector

8 9 10 11 12 13 14 2002 2004 2006 2008 2010 2012 2014 EU19 UK

Public sector

1 1.5 2 2.5 3 3.5 4 2002 2004 2006 2008 2010 2012 2014 EU19 UK

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Source: Eurostat

1.c) R&D investment as % of GDP

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0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Japan Korea European Union (15) China United States United Kingdom

Source: OECD

• 1. Summing up
• The decline in economic growth is more severe in the

UK and Europe in comparison to emerging countries and the United States.

• At the same time the investment needed for growth

is lacking as neither the private nor public sector is providing it.

• The fact that government expenditure on R&D is pro-

cyclically has not helped a return to growth

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• 2. GREEN PAPER QUESTIONS –

THREE THEMES

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2.a What is going on?

The pessimist A drought in new technological opportunities The optimist Issue with the exploitation of the current technological opportunities The business analyst Top technologies in the ICT cluster

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2.a What is going on?

1. Did the crisis come about because the potential of the current techno-economic paradigm is exhausted? 2. Which technologies will lead on the path of economic recovery? 3. Which innovations will drive the new economic recovery? 4. To what extent will they be based on social, organizational

• r technological components?

5. How can we overcome differences in public policy priorities in science and technology and business strategies? 6. Do we have appropriate indicators to measure the economic potential and impact of new technological

• pportunities in a changing context?

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2.b Is what is being done enough?

European Commission’s Investment Plan for Europe: The Juncker Plan The UK’s Green Paper: Building our Industrial Strategy

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2.b Is what is being done enough?

• 1. Is the Juncker Plan an effective tool and does

it counteract low investment in the private sector?

• 2. Is the UK’s Green Paper proposing the right

Industrial Strategy for the UK?

• 3. Do the UK and Europe need to commit larger

resources, and, where should those go?

• 4. Do the UK and Europe need a new golden

rule for investments?

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2.c Where should we invest?

Infrastructure investment Investment in research and innovation

Effect in the short- and long-run Effect mainly in the long-run Effects are measurable Difficult to measure and estimates vary Selection of projects reasonably straightforward based on established criteria Selection at the technological frontier Uncertainty and failure are less of a problem Uncertainty and possibility of failure high Moderate Increase in human capital high Low Increase in the knowledge base high with spillover effects

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2.c Where should we invest?

• 1. What type of publicly funded investment is more

appropriate in the current economic landscape?

• 2. Do we need a European public infrastructure push
• r a public research push for recovery?
• 3. Which innovation policies can make the biggest

contribution to economic recovery?

• 4. What specific innovation initiatives oriented

towards business are most useful: e.g. Small Business Research Initiatives, R&D Tax Credits, Knowledge Partnerships and Networks?

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