Science, research and innovation performance of the EU 2018 Romn - - PowerPoint PPT Presentation

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Science, research and innovation performance of the EU 2018 Romn - - PowerPoint PPT Presentation

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Science, research and innovation performance of the EU 2018 Romn ARJONA Strengthening Beat BILBAO-OSORIO the foundations for Europe's's future DG Research & Innovation European Commission Madrid, 15 June 2018 2 SCIENCE,

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Science, research and innovation performance

  • f the EU

2018

Strengthening the foundations for Europe's's future

Román ARJONA Beñat BILBAO-OSORIO DG Research & Innovation European Commission Madrid, 15 June 2018

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2 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

Key messages

▪ Science and Innovation are crucial for economic and social prosperity ▪ Innovation and its impacts are changing due to digitalisation and other longer-term forces ▪ A new wave of innovation ahead of us. Digital meets

  • physical. Large opportunities but also risks and

uncertainty ▪ The fast pace of changes in innovation needs a renewed and strengthened science and innovation policy agenda

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3 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

Changes in innovation dynamics are driven by long-term forces …

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4 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

… that are changing the pace, nature and impacts of innovation ...

➢ Increased complexity ➢ Concentration of benefits in Superstar firms ➢ Very rapid innovation pace change

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5 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

… increasing innovation divergence across firms, hindering innovation diffusion…

The widening labour productivity gap between global frontier firms and other firms (1)

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Andrews, Criscuolo and Gal, 2016 Note: (1)The global frontier is measured by the average of log labour productivity for the top 5% of companies with the highest productivity levels within each 2-digit industry. Laggards capture the average log productivity of all the other firms. Unweighted averages across 2-digit industries are shown for manufacturing and services, normalised to 0 in the starting year. The vertical axes represent log differences from the starting year: for instance, the frontier in manufacturing has a value of about 0.3 in the final year, which corresponds to approximately 30% higher in productivity in 2013 compared to 2001.

Frontier firms (top 5% ) Laggards

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0.0 0.1 0.2 0.3 0.4 0.5 2001 2003 2005 2007 2009 2011 2013

Manufacturing Frontier firms (top 5% ) Laggards

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0.0 0.1 0.2 0.3 0.4 0.5 2001 2003 2005 2007 2009 2011 2013

Non-financial business services

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6 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

… and holding back productivity and economic growth …

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: European Commission - DG Economic and Financial Affairs

0.50.40.1 3.2 1.31.00.70.50.40.30.20.20.10.10.10.10.1 0.00.0-0.1

  • 0.1
  • 0.3
  • 0.4
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  • 0.8
  • 0.8
  • 1.1
  • 1.3
  • 1.5
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0.5 0.1

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1 2 3 4 TFP - compound annual growth (%), 2007-2016

Total factor productivity - compound annual growth, 2007-2016

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7 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

…as productivity (TFP) is the crucial driver of long term economic growth

Science, Research and Innovation performance of the EU 2018 Source: Braconier H, Nicoletti G and Westmore B, (2014), OECD Note: (1) The non-OECD G20 countries are Argentina, Brazil, China, India, Indonesia, Russian Federation, Saudi Arabia and South Africa.

2000-2010 2010-2020 2020-2030 2030-2040 2040-2050 2050-2060

  • 1

1 2 3 4 5 6 7 8 OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 Percentage points

Contribution to growth in GDP per capita, 2000-2060 (annual average)

Capital Total factor productivity (TFP) Human capital Labour GDP

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8 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

R&I creates new and better jobs but can affect existing ones

There is no overall job destruction in Europe, but labour markets are becoming polarised, putting pressure on wages and on inequality

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: OECD estimates based on EU-LFS, Japanese Labour Force Survey, BLS Current Population Survey 5.4 3.4

  • 8.9

0.1 7.2

  • 0.7
  • 9.5

3.0 0.9 2.7

  • 4.5

1.0

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2 4 6 8 10 High skilled Medium skilled - non routine Medium skilled - routine Low skilled High skilled Medium skilled - non routine Medium skilled - routine Low skilled High skilled Medium skilled - non routine Medium skilled - routine Low skilled EU Japan United States Percentage points

Job polarisation - percentage point change in employment shares by skill group, 2012-2014

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9 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

Europe is a global public research and scientific powerhouse …

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10 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

… but less so an innovation leader, including in some forward-looking technologies…

Science, Research and Innovation performance of the EU 2018 Source: OECD Science, Technology and Industry Scoreboard 2015 Note: (1)The five IP offices (IP5) is a forum of the five largest intellectual property offices in the world (EPO, USPTO, JPO, SIPO, KIPO). They account for 90% of all patent applications filed worldwide. 10 20 30 40 50 60 %

New generation technologies - % share of IP5(1) patent families filed at EPO and USPTO by type of ICT technology, 2005-2007 and 2010-2012

Quantum computing and telecommunication (2010-2012) Big data (2010-2012) Internet of things (IoT) (2010-2012) 2005-2007

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11 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

… and drags behind in terms of supporting transformational entrepreneurship …

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12 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

… while significant resources are locked-in in unproductive companies

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: OECD (Adalet McGowan, Andrews and Millot, 2017) Note: (1)Zombie firms are firms aged ≥10 years and with an interest coverage ratio<1 over three consecutive years. The sample excludes firms that are larger than 100 times the 99th percentile of the size distribution in terms of capital stock

  • r number of employees.

5 10 15 20 25 30 %

% share of capital sunk in zombie firms(1), 2013

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13 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

…affecting Europe's bridging of the productivity gap in knowledge-intensive sectors

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Eurostat, OECD Notes: (1)Value added per person employed in current PPS€. (2)US: (i) Medium-low-tech MFG does not include repair and installation of machinery and equipment; (ii) High-tech KIS does not include scientific research and development and telecommunications (iii) Market and other KIS does not include employment activities.(3)Market and other KIS does not include investigation activities due to unavailability of data.

50000 100000 150000 200000 250000 300000 350000 Labour productivity(1) in current PPS€

Labour productivity(1) of manufacturing (MFG) and knowledge- intensive services (KIS) by type of sector - EU and the United States

United States (2) (2015) EU (2014)

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14 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

Low investment in intangible assets, such as business R&D…

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…coupled with the need for better conditions for open science…

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… open innovation…

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: EIS 2016, CWTS based on Web of Science database (March 2017 data), Eurostat, OECD Note: (1)LV, AL: 2013; US, JP, CN, KR, IL, BA: 2014.

20 40 60 80 100 120 140 160 180 200

Public-private co-authored scientific publications per million population, 2008 and 2015

2015 (1) 2008

3 6 9 12 15 EL CY PT MT PL RO BG LT LV RS TR UA BA MK AL

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17 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

…access to risk capital to support the creation and scale up of innovation…

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Invest Europe, NVCA / Pitchbook Note: (1)EU does not include HR, CY, MT, SI, SK.

25.6 24.6 8.6 15.1 16.5 18.7 15.8 26.4 31.5 38.0 6.7 4.6 2.6 3.3 3.5 3.2 3.5 4.8 4.9 6.0 5 10 15 20 25 30 35 40 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 billion euro

Venture capital funds raised (billion euro) in the EU and in the United States, 2007-2016

United States EU (1)

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18 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

…and better functioning markets partially explain this situation.

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: World Economic Forum. The Global Competitiveness Index dataset 2017-2018 Notes: (1)EU is the unweighted average of the values for the EU Member States. (2)MK: 2016.

1 2 3 4 5 6 7

Global Competitiveness Index - goods market efficiency, 2017 values are on a scale of 1 to 7 (best)

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General values mask significant differences across MS. An innovation divide persists, but is more nuanced…

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Eurostat, OECD, UNESCO Notes: (1)BG, CZ, EE, FR, HR, LV, LT, HU, MT, RO, SI, SK, CH, ME, MK, TR, BA, MD, UA, TN, IL, US, JP, CN, KR: 2015.

(2)BG, CZ, EE, FR, HR, LV, LT, HU, MT, PL, RO, SK, MK, TR, MD, UA, TN, IL, US, CN, KR: 2007-2015 ; SI, CH, JP:

2008-2015; EL, PT, SI: 2008-2016; RS: 2009-2016; ME: 2011-2015; BA: 2012-2015; IS: 2013-2016. EU BE BG CZ DKDE EE IE EL ES F R HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK F I SE UK IS NO CH TR IL US JP CN KR BA ME MD RS MK TN UA

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2 5 8 11 14 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 R&D intensity - compound annual growth (%), 2007-2016(2)

(4)

R&D intensity, 2016(1)

R&D intensity, 2016 and compound annual growth, 2007-2016

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…although there are still differences in the efficiency to transform investment into scientific excellence

Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: CWTS based on Web of Science database Note: (1)Scientific publications within the 10% most cited scientific publications worldwide as % of total scientific publications of the country; fractional counting method. KR JP EU US CN DK SE F I DE NL AT CZ EE F R LT BE PT LU ES IT UK SK EL SI PL LV IE HR HU MT CY BG RO CH NO IS IL TR

R² = 0.2494

2 4 6 8 10 12 14 16 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 Top 10% highly cited scientific publications(1) (%), 2014 (citation window: 2014-2016) Public R&D intensity (% ), 2014

Public R&D intensity, 2014 and the top 10% highly cited scientific publications(1) 2014 (citation window: 2014-2016)

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21 SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

Analytical conclusions

➢ Stronger innovation diffusion required to boost stronger productivity and economic growth, and avoid raising inequality ➢ Europe's R&I performance is improving slightly over time in most indicators ➢ Innovation Divide persists, but is more nuanced ➢ Despite this progress, Europe is far from meeting its

  • bjectives and weaknesses persist
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Policy implications

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Policy implications for Europe

▪ Ensuring essential investment and stimulating private investment ▪ Making regulatory frameworks fit for innovation ▪ Becoming a front runner in market-creating innovation ▪ Reconnecting R&I with citizens through EU-wide R&I missions ▪ Supporting the dissemination of innovation throughout the Union ▪ Investing in skills and empower universities to become more entrepreneurial and interdisciplinary

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SCIENCE, RESEARCH AND INNOVATION PERFORMANCE OF THE EU 2018 Strengthening the foundations for Europe's future

Visit http://www.ec.europa.eu/research/srip Email Roman.Arjona-Gracia@ec.europa.eu Benat.bilbao-osorio@ec.europa.eu