[Title will be auto-generated] by Toronto Region Research Alliance

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION An Analysis of National R&D Strategies

ABOUT US The Toronto Region Research Alliance (TRRA) is a public-private partnership supported by the governments of Ontario and Canada, and a wide range of regional stakeholders from the private sector, universities, colleges, and research hospitals.

MISSION TRRA is a regional economic development organization promoting increased investment in research and innovation to further economic prosperity.

GOALS 1.

Increase awareness of the Toronto Region among global R&D decision-makers and influencers

Retain and grow foreign investment into regional organizations, and attract innovative foreign companies to locate here

Become the pre-eminent source of intelligence on regional research assets and associated international trends

Promote enhanced research intensity among regional businesses

Advance initiatives to strengthen research and innovation capacity

VISION To transform the Toronto Region into a top 5 global center for research and research-intensive industry

TORONTO REGION INNOVATION ZONE TRRA defines the Toronto Region based on the location of key innovation clusters in a broad geographic area anchored by the City of Toronto, and includes the surrounding regions of Durham, Guelph, Halton, Hamilton, Peel, York, Waterloo and Wellington.

TABLE OF CONTENTS Executive Summary

Introduction

Scope

Canada’s Innovation Strategy

Innovation Plans at the Country Level

Stay ahead

United States United Kingdom

Get ahead China South Korea

Exploit existing strengths Israel Netherlands

Address points of pain

8 9

11 11 13

14 14 16

India African Initiatives

18 20

National prosperity

Germany Finland

22 23

Conclusion

Overview of Key Drivers for Innovation List of Acronyms and Abbreviations Methodology Endnotes

28 30 31 32

EXECUTIVE SUMMARY Nations worldwide are aggressively spending on science and technology (S&T). Knowledge-driven economic growth has become a top priority on national agendas, and governments are investing heavily in education, commercialization, entrepreneurship, and state-of-the-art research centers. As part of its mandate to monitor and analyze trends in global research and development (R&D), the Toronto Region Research Alliance (TRRA) reviewed innovation strategies of nine foreign countries and Africa in order to understand the main drivers for policy-setting around the world. Key drivers and priority areas were nationspecific and were identified from the study of national S&T strategies and policy papers. The analysis revealed that there are five distinctive approaches to S&T: governments frame their national strategies to (1) stay ahead, (2) get ahead, (3) exploit existing R&D strengths, (4) alleviate points of national pain, or (5) maintain the current level of prosperity.

National S&T strategies

While the challenge for developed-world countries is to stay ahead and maintain top positions in S&T, nations in the emerging world have strong ambitions for future S&T competitiveness. Countries in the Asian market are putting up substantial resources into activities to get ahead and catch up to innovation leaders. Although the United States (US) remains first in terms of gross R&D expenditures and technology leadership, aggressive strategies across Asia, especially in China, have pressed the government to continue to spend on science. Over US$100 billion of the American 2009 Recovery and Reinvestment Act was allocated to all aspects of science, technology, and innovation. China poses a major threat; it has set an ambitious target of becoming a knowledge-driven economy by the end of this decade and the global leader in S&T by 2050. Although China is still ranked relatively low in global competitiveness and accounts for a small percentage of high-value global patents and scientific publications, its share is growing. The focus of some strategies is on exploiting a country’s existing strengths. These governments have identified their industrial advantages and are attempting to make these industries and related research more innovative and more competitive. The Netherlands is an example of a country with a strategy that uniquely emphasizes its traditional areas of strengths in plants, food, materials, water, and chemicals. India and many countries across Africa, on the other hand, are moving ahead with S&T which will alleviate points of domestic pain associated with socioeconomic issues including high poverty rates, uneven distribution of wealth, health, and water concerns. Lastly, innovation plans in countries such as Germany and Finland emphasize the broader concept of prosperity and, particularly, the use of S&T in maintaining the state of wealth. Innovation is viewed as key contributor to productivity and economic growth. Within this global context, Canada has a strong agenda with a broad range of incentives and programs to expand its innovation capacity. Realizing the global competition, the federal government has commenced an R&D review to collect input from business on the effectiveness of its policies and programs. This report attempts to highlight the essential question: To what purpose is Canada investing in research and innovation? National S&T strategies are clearly driven by a number of broader economic and social factors including lagging economic productivity, recession, poverty, energy security, water scarcity, and wealth creation. Countries are trying to find S&T-based remedies to address emerging challenges. Furthermore, economies are realizing that they cannot continue to depend on industrial and manufacturing prowess alone. Future competitiveness and the overall health of any economy will hinge on the strength of the knowledge sector. Nations are in a race for global leadership in innovation because science and technology are the chief instruments that create value in the form of increased productivity, profit margins, and social well-being.

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

INTRODUCTION

S&T and increasing importance to national economies

Modern economies increasingly view science and technology (S&T) as a major competitive edge and are exploring strategies to use innovation and intellectual capital to drive economic development and growth. The current state of prosperity of some of the world’s largest economies, including the United States (US), Japan and Germany, can be partly attributed to their historic innovation strengths and excellence in science and engineering. Their corporations and universities have taken leadership positions in technology-intensive industries ranging from information and communications technology (ICT) and electronics to biotechnology and high-performance materials.

"Innovation drives economic progress. For businesses, it will mean sustained or improved growth. For consumers, it will mean higher-quality and better-value goods, more efficient services and higher standards of living. To the economy as a whole, innovation is the key to higher productivity." Sir Andrew Cahn, Chief Executive of UK Trade & Investment1

Innovation and a strong focus on S&T are now more important than ever, both at the national and regional levels. Most countries are moving toward idea-driven economies which recognize knowledge as one of the most important factors of production alongside labour and capital resources. Innovative economies are not only more competitive and resilient within the global setting, but gradually raise the standard of living for all citizens through productivity gains and enhanced products and services. Innovation generates ripple effects throughout the entire economy by creating jobs in existing or entirely new industries and is therefore considered essential to future prosperity. "Two centuries ago, the dominant economic theory was mercantilism… Today, theories of economic growth stress the importance of human capital to knowledge-based economies, and many countries aim to increase their stock of brainpower via immigration.” Christiane Kuptsch and Pang Eng Fong, International Institute for Labour Studies (2006)2

Rise of innovation nations

Countries are racing to transform themselves into ‘innovation nations’ by setting aggressive national S&T agendas, establishing world-class research centers and nurturing local entrepreneurs. National strategies stress the creation of networks and private-public collaborations that stimulate innovation by encouraging diffusion of knowledge across institutions. Education has become a priority for building a workforce with the depth of talent and skills essential for coping with sophisticated technology and complex financial and management systems. Therefore, graduates in science and engineering, doctoral candidates and number of professional researchers are viewed as major assets and a key measure of a country’s ability to adapt to emerging industries. Governments and corporations are competing for global talent and are recruiting top graduates and researchers to universities and labs with generous incentives and fellowships.

S&T to address the grand challenges of the 21st century

This emphasis on S&T goes beyond mere technology-driven economic development. It is about finding solutions to problems deemed of vital national interest. Although the extent of each problem may differ considerably between the rich and poor world, all governments are targeting R&D areas to address similar challenges including ageing populations, rising health care costs, disease, climate change, and poverty. Above all, innovation agendas are drafted to strengthen the national knowledge base to limit threats to security, be it national, political, food, or water security. This includes efforts to curb dependence on foreign resources, especially oil and gas imports. Countries are beefing up the talent and infrastructure with largescale investments in defence applications, clean energy technologies, transportation, life sciences and health care, ICT and advanced manufacturing. Recent forecasts predict that over US$1.19 trillion will be invested in research efforts globally in 2011.3 In purchasing-power terms, the US will continue to lead the world in gross R&D expenditures with over US$405 billion while China and Japan are predicted to be second and third with about US$154 billion and US$144 billion spent in each country, respectively (Figure 1).

Fig. 1

Global R&D spending - Gross expenditures on R&D, by purchasing power parity (PPP) Forecast R&D expenditure (Billions of US Dollars)

450 400 350 300 250 200 150 100

US$ 24.3B

a Au i n st ra lia

Ita ly Ta iw an

In di a Ca na da Ru ss ia Br az il

Ch in a Ja pa n Ge r So man ut y h Ko re a Un Fr ite an d ce Ki ng do m

ite d

St at es

Source: Toronto Region Research Alliance analysis based on data from Battelle, 2011 Global R&D Funding Forecast.

SCOPE Because many countries worldwide are rolling out ambitious strategies to boost domestic innovation and cultivate intellectual capacity for economic growth and competitiveness, the Toronto Region Research Alliance (TRRA) reviewed ten innovation strategies between June and December 2010. This research was carried out as part of TRRA’s mandate to monitor and analyze global developments in innovation and, particularly, to understand the main drivers for policy-setting. The countries selected for review were the United States, the United Kingdom (UK), China, South Korea, Israel, the Netherlands, India, Germany, and Finland, as well as initiatives across the continent of Africa. They represent the developed and developing world, and innovation leaders and followers. This study determined that, depending on the interplay between the drivers, S&T priority areas and funding programs, nations are working toward five distinctive goals in innovation: 1. stay ahead, 2. get ahead, 3. exploit existing strengths, 4. alleviate national points of pain, or 5. maintain the general level of prosperity. This paper begins with an outline of the Canadian innovation strategy and examples of recent initiatives and programs. We then provide an overview of other national innovation agendas and identify how they fit into the afore-mentioned categories. This is not intended to be an exhaustive analysis but rather a snapshot of recent developments on the innovation front across the world. National R&D Strategies at a Glance

Stay Ahead

United States Untied Kingdom

Get Ahead

Exploit Existing Strengths

Address Points of Pain

Israel Netherlands

India Africa

China South Korea

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

Maintain Level of Prosperity

Germany Finland

CANADA’S INNOVATION STRATEGY

Canada GDP/capita (international $): 37,945 Population (thousands): 33,740 GERD (2011 at PPP, billions, US$): 24.3 2011 R&D as % of GDP: 1.8% GERD as % of world: 2.0%

The beginning

The worldwide resurgence of innovation and S&T did not go unnoticed in Canada. The first set of Canadian innovation policies in the 1990s was mainly a response to two key issues: lagging productivity relative to the US and the exodus of Canadian scientists. It was in 1997 that the government adopted a comprehensive innovation strategy, which began with increased funding for direct and indirect costs of research, investments in university infrastructure, and provision of high-quality research opportunities at Canadian universities. Subsequently, the Canadian government increased

Fig. 2

support for research through programs including the Canadian Foundation for Innovation (CFI), the Canadian Institutes of Health Research (CIHR), and the Canada Research Chairs (CRC) Program.4,5

Canada’s expenditures on R&D

Canada is forecast to be the ninth-largest R&D spender in 2011 with US$24.3 billion (in purchasing power terms).3 Canada’s spending has grown at the same pace as the whole economy and the gross expenditures as percentage of GDP have remained relatively constant over the last decade (Figure 2).6,7 With approximately 2.0%, Canada’s gross expenditures on R&D (GERD) as percentage of GDP are slightly below the average of other G7 countries but substantially above the BRIC (Brazil, Russia, India, China) countries (Figure 3).8

Mobilizing Science and Technology to Canada’s Advantage

Continuing the strong focus on S&T, the plan ‘Mobilizing Science and Technology to Canada’s Advantage’ was released in May 2007.9,10 Innovation is still believed to be the answer to what are perceived as Canada’s key national challenges: health care, national security, energy, natural resource management, and the persistent productivity problem.

Canadian domestic domestic spending, *preliminary for 2008 and 2009 35,000

2.50%

30,000 2.00%

$ millions

25,000 1.50%

20,000 15,000

1.00%

10,000 0.50% 5,000 0

0% 9 19

91 992 19 1

9 19

94 995 996 997 998 999 000 2 1 1 1 1 1 19

Source: TRRA analysis based on data from Statistics Canada, 2010

01 002 2 20

03 004 005 006 2 2 2 20

GERD

0 20

7 *

0 20

00 *2

GERD as % GDP

Fig. 3

GERD/GDP in G7, BRIC countries and Canada (2000-2007)

4.0% Top Five Country Average

3.0%

G7 average

2.0%

Canada

1.0%

BRIC average

0 2000

2001

2002

2003

2004

Strategic priorities in R&D have been set in response to those challenges. Future investments by both the government and the granting agencies are set to target environmental S&T, clean energy technologies, ICT, health research and related life sciences.

Investments in infrastructure and funding programs

The 2007 budget granted an extra $85 million to funding councils for research grants and scholarships as well as $80 million per year for research that addresses social and economic issues. Green technologies received substantial funding through the $500 million that were awarded to Sustainable Development Technology Canada (SDTC) in 2007 to create the NextGen Biofuels Fund™ for renewable fuels and $1 billion through the 2009 Clean Energy Fund. An estimated $240 million was invested in Genome Canada in the 2007 and 2008 budgets to advance the agriculture, crop, and bioproduct sectors. The 2009 federal budget, ‘Canada’s Economic Action Plan’, allocated about $5.1 billion in initiatives that can contribute to Canada’s excellence in entrepreneurship, people, and knowledge. The government set aside $2 billion for construction and infrastructure improvements at Canadian universities and colleges. Federal labs received $250 million for repairs and upgrades. With its commitment to build an S&T hub in the Canadian Arctic, Canada is moving ahead to support research that ensures national security and sovereignty in the North.

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

2005

2006

Source: TRRA analysis based on data from Statistics Canada and UNESCO Data Center, 2010 (Note: GERD/GDP Ontario 2.3%, Québec 2.6%)

2007

Investments in human capital

The Canadian innovation strategy also puts an emphasis on human capital. Universities and colleges received $9.7 billion in 2008-09 including support for grants and loans to make education at the post-secondary level more accessible to youth. The goal of the recently-launched Vanier Canada Graduate Scholarship program is to retain and attract outstanding doctoral candidates with awards valued at $50,000 per year for up to three years. Canadian professors and their groups will be supported in setting up new programs at Canadian universities through twenty new $10-million seven-year Canada Excellence Research Chairs (CERC). The government also struck agreements with the provinces and territories in 2008-09 to channel $500 million per year over six years into new skills training programs.

Challenges with business innovation

Although contributions from the federal and provincial governments and universities put Canada amongst the top G7 nations in public GERD, private sector investments are lagging. A recent report suggests that the lack of innovative strategies amongst Canadian businesses has been the reason for the gap in productivity growth. Business expenditures on R&D have remained relatively constant over this decade and are well below those of other Organization for Economic Co-operation and Development (OECD) countries. Investments in high technologies, particularly in ICT, have been

inadequate. Canadian exports to the US are facing tougher outside competition from Asian countries. It has been observed that Canada’s prosperity has depended too much on the natural resources sector which has a dominant position internationally but is easily affected by commodity cycles. Despite this advantageous position, Canada’s natural resources firms have not sufficiently produced innovative proprietary technologies but rather have adopted foreign-made equipment and processes.12 “Because Canada’s productivity problem is actually a business innovation problem, the discussion about what to do to improve productivity in Canada needs to focus on the factors that encourage, or discourage, the adoption of innovation-based business strategies… This is a complex challenge because the mix of relevant factors varies from sector to sector and requires a much broader conception of innovation than the conventional R&D-centred view, which, while important, is too limiting.” Council of Canadian Academies (2009)11

Notable inventions: Canada

The discovery of insulin is one of Canada’s bestknown medical breakthroughs. While working at the University of Toronto under the supervision of Professor MacLeod, Frederick Banting and Charles Best developed a life-saving treatment for diabetes sufferers in 1921.

Creating a more competitive business environment

The Canadian government intends to promote private sector investment and entrepreneurial culture with policies aimed at creating a more competitive business environment for domestic companies as well as foreign firms looking to invest in Canada. The federal corporate tax rate is scheduled to go down from 22.12% in 2007 to 15% in 2012. The National Research Council Canada – Industrial Research Assistance Program (NRC-IRAP) will receive an additional $200 million over two years and the venture capital arm of the Bank of Canada (Business Development Bank of Canada, BDC) will use $350 million in new funding to expand initiatives for small- and medium-sized enterprises (SMEs) in the technology sector. Canada’s first S&T strategy was partly a response to a decline in performance relative to our largest trading partner, the US. But there is also widespread recognition that Canada as a whole must now take advantage of its excellent research instituitions and relatively strong fiscal position to stake a claim in global innovation. “The world [is] progressing whether Canadians [like] it or not and we should jump on the innovation bandwagon or risk being left behind and having our precious Canadian institutions eroded or (worse) eliminated.” Richard E. Mueller, Department of Economics, University of Lethbridge (2006)4

The BlackBerryTM series of handheld devices was developed by the Waterloo-based company Research in Motion (RIM). RIM was founded by the University of Waterloo student Mike Lazaridis. What began as a two-way pager in 1999, quickly evolved into a sophisticated mobile e-mail device with web browsing capability.

Saskatoon scientists Keith Downey and Baldur Stefansson developed canola oil in the 1970s. Derived from selections of rapeseed, it is considered one of the healthiest oils.

Other:: Telephone (1867), anti-gravity suit (1941), electric wheelchair (1952), heart pacemaker (1950)

INNOVATION PLANS AT THE COUNTRY LEVEL STAY AHEAD Countries in this category are widely perceived as traditional leaders in innovation. Developed-world economies such as the US and UK have been at the forefront of S&T fields but emerging markets are investing substantial resources into innovative activities that are generating new products and services and challenging their leadership positions. Hence, countries trying to stay ahead have made innovation a part of their comprehensive economic strategy in order to maintain their position on the top tier of the S&T ladder. Although their scientific and engineering systems are not necessarily weakening, other nations are rapidly improving their innovation capacity, thus narrowing the gap between leaders and followers.13

United States GDP/capita (international $): 46,436 Population (thousands): 307,007 GERD (2011 at PPP, billions, US$): 405.3 2011 R&D as % of GDP: 2.7% GERD as % of world: 34.0%

Losing confidence in US’ S&T prowess

Although the United States is ranked first in technology, innovation and R&D expenditures, the growing unease about S&T strategies in China and across Asia have pressed the federal government to set aside substantial funds for innovation.14 President Obama’s ‘Strategy for American Innovation’ released in September 2009 allocated more than US$100 billion of the Recovery and Reinvestment Act for all aspects of science, technology and engineering – from fundamental research and industrial R&D to education programs at all levels.15,16

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

“In most broad aspects of S&T activities, the United States continues to maintain a position of leadership but has experienced a gradual erosion of its position in many specific areas...Asia’s rapid ascent as a major world S&T center— beyond Japan—is driven by developments in China and several other Asian economies....All are seeking to boost access to and the quality of higher education and to develop world-class research and S&T infrastructure.” U.S. National Science Board (2010)14

Investments in basic Basic research will receive a significant boost over the science

next ten years with the doubling of the budget of three research agencies, the National Science Foundation (NSF), Department of Energy’s Office of Science (DOE SC), and the National Institute of Standards and Technology (NIST).17 The 2011 budget has committed US$13.3 billion – US$824 million more than in the previous year – and sets them well on course to achieve US$19.5 billion by the year 2017.18 These investments support fundamental research that enables technological breakthroughs for industries of tomorrow and simultaneously addresses such challenges as cancer and energy. NSF is an independent federal funding agency for basic science and engineering and its new funds will be used to finance renewable energy technologies and nextgeneration ICT. The National Institutes of Health (NIH) received US$1 billion from the recovery budget for DNA sequencing and the study of the cancer genome. In total, the NIH are setting aside US$6 billion for cancer research with potentially 30 new drug trials in 2011.19 “The United States now has to compete for every job going forward. That has not been on the table before. It has been assumed we had a lock on white-collar jobs and high-tech jobs. This is no longer the case.” Craig Barrett, CEO Intel (2003)20

Drivers for the American innovation policy

The main drivers for the American innovation policy are high carbon emissions, health care, national security, and America’s declining education system. The US has always been able to draw top foreign researchers and scientists to its prestigious universities, government or industry labs, but globalization has led to a fierce competition for both blue- and white-collar jobs. Although the US still attracts the largest proportion of foreign students, its share is being slowly eroded. The performance of the American education system is weakening in international comparisons. Recent graduation rates

Notable inventions: United States

Leo Baekeland’s invention of ‘Bakelite’ in 1907 was a pivotal moment in the modern plastics industry. This first synthetic plastic transformed the production of every-day items such as hair dryers, electrical wires and steering wheels.

at the post-secondary and university levels are some of the lowest reported of all OECD countries.21 Therefore, the R&D stimulus also emphasized improvements in science, technology, engineering and mathematics education at the K-12 level to produce the next generation of highly-skilled employees. The American strategy also focuses on restoring and modernizing the physical infrastructure, including roads, highways, bridges, electrical grids and broadband networks to stimulate the economy and improve the flow of products and services. The aggressive international competition is a threat to American leadership in innovation and has caused policy makers and industry to take bold action.

United Kingdom GDP/capita (international $): 36,496 Population (thousands): 61,838 GERD (2011 at PPP, billions, US$): 38.4 The US military began to develop a communications network during the Cold War era that would withstand enemy nuclear attacks. The internet has its roots in the Department of Defense Advanced Research Projects Agency (ARPA). The first message was successfully exchanged in 1969.

After seeing his father suffer through heart disease and open heart surgery, Dr. Robert Jarvik invented the artificial heart in 1982. The goal was to allow heart disease patients to survive while waiting for heart transplants.

Other: Assembly line (1913), nuclear reactor (1942), laser (1958), human papillomavirus (HPV) vaccine (2006)

2011 R&D as % of GDP: 1.7% GERD as % of world: 3.2%

UK financial performance is suffering

Although the United Kingdom maintains its position amongst the top five European innovation Drop in VC leaders, its performance investment has eroded. The recent financial crisis left the UK with a mounting national debt. Britain’s GERD of 1.79% falls short of the 3% target set by the European Council at the Lisbon Summit in 2000. Approximately 45% of UK expenditures on R&D are derived from private sources but venture capital investment in early-stage technologies dropped sharply from £214 million in 2007 to £124 million in 2008. The UK Innovation Investment Fund was created in 2009 as a £1 billion fund-of-funds for financial support of smaller private funds that can support businesses directly.

Vouchers Scheme for SMEs

Various Regional Development Agencies (RDAs) introduced the Innovation Vouchers Scheme for SMEs to foster information exchange between researchers and private firms. The provision of £3,000 and £7,000 vouchers allows SMEs to collaborate with research institutes of their choosing. This innovative scheme has proven effective and 1,300 vouchers worth £4.5 million had been distributed by mid-2009, only one year after introduction.22 Britain’s ‘New Industry, New Jobs’ released in April 2009 includes a number of industrial strategies for innovation. For instance, ‘Digital Britain’ provides a framework for upgrading Britain’s broadband infrastructure.23 ‘The Low Carbon Industrial Strategy’ will accelerate the transition to a clean economy with innovative green technologies,24 and the ‘Advanced Manufacturing Strategy’ will enable manufacturing companies to take advantage of advanced technologies and materials.25

Notable inventions: United Kingdom

A British Royal Air Force officer Sir Frank Whittle is credited with the invention of the jet engine in 1930. World War II expedited the development of the jet engine for military purposes.

“Innovation accounted for up to two thirds of average labour productivity growth between 2000 and 2007.” UK Annual Innovation Report (2009)22

Knowledge Transfer Networks

A number of UK initiatives are intended to accelerate the propagation of knowledge and technology from academia down to industry. Knowledge Transfer Networks (KTNs), overseen by the UK Technology Strategy Board and boasting a membership of more than 43,000 business members and 14,000 nonbusiness members, are extensive networks that connect centers of excellence, universities, corporations, companies, funding bodies and organizations across sectors. The Energy Technologies Institute was created in 2006 and is a private-public partnership for large-scale collaborative energy projects. It brings together industry partners, national research councils, and draws on the expertise of many UK research institutes in nine different areas, from offshore wind to energy storage and distribution. The development of such knowledge networks took place in response to the criticism that, although the UK is home to some of the world’s top-rated universities such as Oxford and Cambridge, the overall commercialization rate is low. For a country that once led the world in industrial revolution and trade, the current S&T plan is about maintaining its leadership position in innovation in the midst of the growing global competition.

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

DNA fingerprinting is a relatively recent discovery by the British scientist Alec Jeffreys of the University of Leicester. His research on genetic markers for illness and disease led him to a stunning conclusion in 1984: all individuals have a unique biological code.

Tim Berners-Lee, an Oxford graduate and physics major, led the invention of the World Wide Web (WWW) in 1989 at CERN, the European Organization for Nuclear Research. He proposed the definitions of URLs (Uniform Resource Locators), HTML (HyperText Markup Language), HTTP (HyperText Transfer Protocol), the basic building blocks and language of the web.

Other: Steam engine (1698), locomotive (1829), stainless steel (1912), human in vitro fertilization (1978)

GET AHEAD Countries in the developing world have set high ambitions for future S&T competitiveness. Although the Asian market still exports large quantities of lowvalue-added products, it is increasingly seen as a rich source of innovative ideas. Not only are the countries in this region attracting large foreign business investments due to their potential for S&T growth, but the nations themselves are spending substantially to modernize their innovation systems and to address technology and patent infringements by toughening domestic intellectual property (IP) laws. The countries in this category can take advantage of the concept of ‘leapfrogging’ to immediately move to the most advanced tools and technologies and skip the incremental and potentially long R&D stages that led to them in the first place. However, the national governments are simultaneously investing in infrastructure to undertake long-term research efforts analogous to those of innovation leaders.

China GDP/capita (international $): 6,838 Population (thousands): 1,331,460 GERD (2011 at PPP, billions, US$): 153.7 2011 R&D as % of GDP: 1.4% GERD as % of world: 12.9%

China’s ambitions

China traditionally served as the workshop of the world. Design specifications, IP and knowledge were typically imported, while inexpensive Chinese-made goods were exported. That is now changing; China is creating an innovative economy and has set an ambitious target of becoming a knowledge-driven economy by the end of this decade and the global S&T leader by 2050. Although China still ranks relatively low in global competitiveness, it has moved up from 35th in 2006 to 27th in 2010.26,27 The country is a rich source of brainpower and produced nearly 912,000 graduates in science- and engineeringrelated fields in 2006, compared to 478,000 in the US in the same year.28 The government is investing in institutes that will contribute to the overall S&T

development. For instance, the National Institute of Biological Sciences in Beijing was created in 2003 as a strategic initiative to strengthen China’s S&T in life sciences and biotechnology.29 The Beijing Institute of Life Sciences, under the auspices of the Chinese Academy of Sciences (CAS), was established in 2008 to oversee CAS-affiliated biomedical institutes in Beijing including the Institutes of Microbiology, Genomics and Biophysics.30 These investments are generating results. China’s share of S&T publications has increased in nearly all fields and this research frequently takes place in the public sector.31 With over 1.42 million researchers, China is now second worldwide in the number of people in S&T behind the US.32 “China has achieved a spectacularly high rate of economic growth over a sustained period for more than two decades. Nevertheless, today China faces the challenge of making the transition from sustained to sustainable growth from social, economical, ecological and environmental points of view. Innovation has been identified as a main engine for this new growth model, and the Chinese government has launched a national strategy to build an innovation-driven economy and society by 2020.” OECD (2008)33

Fostering indigenous Government strategies released since 1978, with innovation

the eleventh ‘Medium- to Long-Term Plan for the Development of Science and Technology’ announced in 2006, reveal the steady transformation of China’s innovation policy from a government-centric to marketcentric endeavour.34 The country is moving away from imported technologies while focusing on generating indigenous innovation with domestic inventors who own the IP, thus confirming that knowledge is the new engine of economic growth and those who control ideas reap economic benefits. China as a whole still makes up a small proportion of global high-value S&T patents, which are defined as inventions with patent protection in the US, the European Union and Japan; but it has grown slightly from 0.13% in 1997 to 1.0% in 2006.35 Even the make-up of China’s foreign direct investment (FDI) has evolved to reflect focus on knowledge-intensive activities. This marks a shift from the past in which majority of foreign companies used China as a low-cost locale for outsourcing of manufacturing operations. Multinational corporations now increasingly invest in Chinese expertise and there are more than 900 R&D centers.36 Firms such as Ericsson, AMD, Novartis and Siemens have established R&D hubs across China.

Key driver of innovation policy is rising energy demand

A key driver of China’s national innovation policy is its rising energy demand and the external pressure to curb consumption. Latest reports by the International Energy Agency (IEA) reveal that China has now moved past the US as the world’s largest consumer of energy.37 China has already established itself as the leading manufacturer of solar cell panels and may eventually become a strong contender in the production of wind turbine equipment. With approximately 70% of its current demand derived from coal, there is a push to install solar and wind capacity for the domestic market. China is, in fact, poised to become the world’s largest generator of electricity from renewable sources.38

Notable inventions: China

In 1965, research scientists working at the Biochemistry Institute under the auspices of the Chinese Academy of Sciences synthesized crystalline bovine insulin. It was the first manmade bioactive protein, a ‘living’ molecule, and set off the field of synthetic biology.

China’s growing population will shape future consumer trends

It is widely believed that China’s growing population will shape future consumer trends. Emerging markets are coming up with new and innovative products at an astonishing pace. Millions of potential customers in these markets are driving the development of products that satisfy local demand and the design of supply systems that can efficiently reach the masses. Some segments of the Chinese population are already enjoying rising incomes and the government aims to continue raising the standard of living by tripling per-capita income, from US$1000 in 2002 to US$3000 in 2020.34 In fact, this is a key component of the proposed twelfth economic plan covering the period 2011-15. The central government has placed the notion of a balanced economy, rural modernization and narrowing the income divide between rich and poor at the top of the economic agenda.39 The changing role of China in the world and its growing ambitions have prompted other goverments to respond with investments in S&T. Although China will undoubtedly play a major role in global innovation, the challenge for the government is to sustain rapid growth without creating internal economic imbalances and tension.

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

After years of research, hybrid rice was successfully developed by Yuan Longping, an agricultural scientist in the Hunan Province in 1973. His research into hybrid rice breeding transformed rice production.

The world’s narrowest carbon nanotubes, measuring 0.5 nm in diameter, were created by Chinese scientists in 2000. Nanotubes exhibit a variety of electrical and mechanical properties that are useful in materials and electrical devices.

Other: ‘Four great inventions of ancient China’: paper making (c. 200 BC), gunpowder (c. 800), compass (c. 1000), printing (c. 300)

South Korea GDP/capita (international $): 27,169 Population (thousands): 48,747 GERD (2011 at PPP, billions, US$): 44.8 2011 R&D as % of GDP: 3.0% GERD as % of world: 3.8%

Evolution of the South Korean innovation system

South Korea has undergone a remarkable transformation from a country which sustained itself on agriculture, textiles and footwear to a technologically-competitive nation, particularly in the area of ICT. Much of its basic innovation infrastructure and capacity building took place in the 1970s and 1980s, about two decades following the end of the Korean War. The last 20 years have been marked by a more coordinated approach to S&T policy. The nature of innovation in the country has gone through multiple phases, from one in which learning occurred largely through reverse engineering and imitation to one with the mark of a sophisticated knowledge-driven economy.40

Vision 2025: Korea’s Long-term Plan for Science and Technology

The Korean government has set an ambitious goal of not only reaching the top nations in S&T but also surpassing them in specific fields by the year 2025. The government set out its long-term strategy in its 2000 document called ‘Vision 2025: Korea’s Long-term Plan for Science and Technology Development’. Much of Korea’s prosperity depends on the ICT sector. The IT 839 strategy was rolled out in 2004 with emphasis on eight specific IT services, three infrastructure networks, and nine hardware and software industries with growth potential, such as next-generation mobile devices, digital TV/broadcasting equipment, home network equipment, etc. In fact, Korea is rolling out the most advanced communications network in the world, led by a consortium of government research institutes and companies. The vision behind the strategy is to promote investments in specific ICT areas, push the convergence of technologies, create

a fully-connected society and continue to set standards in a field that has been a traditional area of strength for Korea.42 “Korea has [had] tremendous economic achievements in the last 60 years. Torn apart by war and suffering from absolute poverty, Korea was one of the poorest countries in the world. Despite a late start in industrialization, Korea is now the 12th largest economy and is a worldwide leader in a number of key industries, such as semiconductors [and] ship-building. However, Korea needs to find a new and more sustainable path for further development…” Presidential Committee on Green Growth (2009)41

High hopes for biotechnology and green technologies

The government has high hopes for biotechnology to become a major industry alongside ICT. The plan Bio-Vision 2016 was revealed in 2008 and represents a commitment of about US$14.3 billion in biotech research and industry in the next decade.42 First established in 1985, the Korea Research Institute of Bioscience and Biotechnology (KRIBB) has now become the focal point of biotech research in the country, from the development of biotechnology platforms to technology transfer and commercialization. Researchers at the Institute are building Korean competence in biotechnology and are simultaneously searching for solutions to broad societal problems, including ageing, cancers, neuro-degenerative diseases, and bio-based oil substitutes.43 Although Korea has made tremendous strides over the last four decades with significant and early investments in S&T, the issue of limited natural resources and the resulting dependence on foreign oil still remains. The government set up the Presidential Committee on Green Growth in 2009 and allocated US$80 billion towards the development of green technologies between 2009 and 2012.

Korea’s conglomerates (chaebol)

Relative to other Asian countries, FDI has played a rather insignificant role in South Korea’s technological evolution. The R&D landscape in the country has been dominated by the national government and the chaebol, Korea’s familyowned business conglomerates that have evolved into global giants, including the likes of Hyundai Motors, Samsung, and LG.40 However, the emphasis on applied science has left Korea with deficiencies in basic research. The government is investing more than US$3 billion between 1999 and 2012 into an education

Notable inventions: South Korea

Seoul-based firm SaeHan Information Systems was the first company to develop and manufacture MP3 players in 1998. The ‘MPMan F10’ was the first portable digital player and it was capable of holding 32 MB of music. The South Korean industry began to install MP3 players into mobile phones in 2001.

Introduced in 2006, Wireless Broadband (WiBro) differed from other internet standards because it was designed to keep the internet connection while moving at high speeds in a train or a car

reform plan called Brain Korea with the objective to develop R&D talent and strengthen Korean universities. These learning programs are natural extensions of the Korean value system because the society as a whole has traditionally placed much emphasis on S&T education and technology adoption. Korea’s rise from an agrarian society has been attributed to the strong commitment to S&Tdriven economic growth. South Korea has evolved into one of the most technologically advanced and best connected societies in the world. But future ambitions will depend on its ability to create industries outside of ICT, and to do so in face of limited natural resources, competition from immediate neighbours and security threats from the North.

EXPLOIT EXISTING STRENGTHS Many nations have points of comparative industrial advantages and economic strengths that reflect a country’s history and development. Some national goverments are leveraging these strengths to build up capabilities in high technology. A study of their innovation plans reveals that they are focused on making existing industries more innovative and competitive or using the current business infrastructure and talent pool to diversify into budding areas such as the renewable sector.

Israel GDP/capita (international $): 27,673 Population (thousands): 7,442 GERD (2011 at PPP, billions, US$): 9.4 Samsung, which started out as a manufacturer of black-and-white TVs, has set many industry and world firsts including the development of 30-nmclass dynamic random access memory (DRAM), first full HD 3D LED TV and 3D home theater in 2010.

Other: Digital TV production (1998), 3D thin-film transistor LCD monitor (1999), largest flexible epaper (2010)

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

2011 R&D as % of GDP: 4.2% GERD as % of world: 0.8%

High private sector expenditures on R&D

Israel is an example of a resource-poor country that is exploiting historical R&D strengths to grow capabilities in renewables, ICT and biotechnology. It is the country with the highest expenditures on R&D as percentage of GDP (4.9% in 2008), mainly due to large

contributions from the private sector. The Israeli government accounts for only 19% of the total spending relative to the OECD average of 29%.44 High-technology makes up nearly 50% of all industrial exports and is therefore crucial for the national economy.45 Israeli ICT companies have the reputation as innovators and entrepreneurs. Because of the small size of the domestic market, Israeli companies become export-oriented from the start. They have found tremendous success in niche IT markets, including Voice over Internet Protocol (VoIP), encryption, automated inspection of printed circuit boards and firewalls.

Early focus on national security and defence shaped S&T in Israel

After Israel became an independent state in 1948, the government took on the central task of planning industrial activities which were rather traditional in nature, such as agriculture and textiles. Contrary to present-day Israel, R&D activities in the early years were concentrated in public research instituitions and GERD as percentage of GDP was under 1%. The economy remained relatively regulated until the 1980s. However, because of persistent national security threats, Israel made efforts in the 1960s to achieve military self-reliance and build a strong defence industry. The focus on national defence fundamentally shaped Israelis’ attitude to S&T. The labor force was virtually transformed because the military demanded state-of-the-art technologies and highly-skilled scientists and engineers. Government policies in the 1970s started to focus on advanced R&D capabilities. The state began to see the industry as the vehicle for conducting R&D while allowing knowledge to flow out from academia and defence to the private sector through privatepublic partnerships.46

Notable inventions: Israel

Modern drip irrigation was developed in the 1960s by the Israeli engineer Simcha Blass. Developments in the plastics industry made the invention possible. The system consists of plastic tubes and nozzles to deliver water to plants slowly and with precision.

Voice over Internet Protocol (VoIP), the first internet phone technology, began with a small Israeli company VocalTec Communications in 1995. VOIP converts voice signals into packets that are transmitted over the internet and allows people to make low-cost long-distance telephone calls.

Rise of ICT

This attitude spilled over into other sectors and particularly into ICT. This sector was the driving force of the economy in the 1990s; its share of GDP increased from 5% in 1990 to 14% in 2000. ICT multinationals have played an extremely important role in moulding Israel’s S&T environment. The first set of firms set foot in Israel through establishment of R&D centers in the 1970s.47 IBM Scientific Center was created in 1972 and, with over 500 employees, is one of its largest centers outside the US.48 The Intel R&D Center in Haifa

In 2001, the Israeli firm Given Imagining introduced the PillCam, a pill-sized capsule with an embedded camera and light source that can be ingested for imaging the gastrointestinal tract. In some cases, it is a less invasive alternative to endoscopic exams that does not require sedation.

Other: Unmanned aerial aircraft (1982), firewall security software (1994), instant messaging, icq (1996)

opened in 1974 and was the company’s first hub outside of the home country dedicated to technology design and development.49 More centers have been established over the years by leading ICT companies – Google, IBM, Cisco, Microsoft, SAP, and Motorola.

Biotechnology and water strategies

The Office of the Chief Scientist (OCS) in the Ministry of Industry, Trade and Labour is the government body responsible for setting S&T policy. Israel has recognized the need to make the economy less dependent on ICT. Attempts are underway to grow Israel’s market share in biotechnology, clean energy, and water technology industries. These have been Israel’s major research strengths in academic settings but have played a less prominent role in the past relative to ICT. The OCS will contribute €63 million to a venture capital biotech fund to be matched by private investors in order to realize Israel’s full potential in the field, which could lead to ‘an increase of billions of dollars in the GDP on a yearly basis.’50 In addition, Israel is making use of knowledge accumulated from its long-standing struggle with water scarcity and water security. The Novel Efficient Water Technologies (NEWTech) program, led by the Ministry of Industry, Trade, and Labour, was formed in 2006 to collectively brand Israel’s water sector and boost innovativeness in water technologies.51 Israel’s expertise in water reuse, desalination and drip irrigation attracted over US$770 million worth of investments by 2008 and resulted in an export boom with US$1.6 billion in 2008. The program struck cooperation agreements with Ministry of Water in China, Water Commissioner of Mexico, water authorities in Beijing, Madrid, Melbourne, São Paulo, and Buenos Aires, as well as industry-leading foreign companies including Siemens, General Electric, and Dow Chemicals.52,53 In spite of these efforts, Israel has been criticized for lack of an overarching innovation strategy because its S&T policies have focused exclusively on industrial innovation.45 Going forward, the challenge for Israel will be balancing its historical strengths with the temptation to enter new markets that might risk diffusing its limited financial resources.

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

Netherlands GDP/capita (international $): 40,715 Population (thousands): 16,531 GERD (2011 at PPP, billions, US$): 10.8 2011 R&D as % of GDP: 1.6% GERD as % of world: 0.9%

Portal to Europe

Holland is a country with premier trading hubs such as Amsterdam and Rotterdam and one of the highest standings in global logistics performance indices.54 It has been succesful at attracting companies trying to tap into the European market. As in the case of South Korea, the Dutch economy has been dominated to a large extent by its multinational corporations, such as ING, Philips, Akzo Nobel, Heineken, Shell and Unilever (these last two companies are British-Dutch multinationals). These corporations contribute significantly to Holland’s economy each year. The Netherlands has traditionally been considered one of the top destinations for foreign head offices with European activities. The government therefore sees an opportunity in the fast-rising Asian companies that are looking to expand their operations beyond Asia. The goal is to continue to position the Netherlands as the ‘Portal to Europe’.55

Slipping in innovation rankings

Historically, the Dutch economy has been propelled by the trade, distribution and services sector. The objective is to build up the knowledge base to make these sectors more competitive. Although the scientific quality of Dutch universities is high, the country has slipped in innovation rankings and has found itself in the group of ‘innovation followers’. Studies of the Dutch innovation system have identified a number of weak points associated with the innovation capacity of the SME base, the country’s attractiveness for foreign R&D investment, availability of knowledge workers, and the need to create an environment more conducive to excellence in learning and research. They are now focusing on reversing this trend.

Government schemes and programs

The Knowledge & Innovation Program (K&I) department, which is run with the involvement of multiple ministries, announced a long-term strategy in 2008 that focuses on pillars of innovation: talent, public and private sector research, and entrepreneurship. K&I also sets agendas for overarching themes deemed essential to society such as energy, water, health care, education, and sustainable agriculture. The government introduced two new schemes worth €280 million for 2009 and 2010 through the stimulus budget. The Knowledge Workers program allows industry researchers and scientists to work at public institutes for up to eighteen months, whereas the High Tech Top Projects program funds large-scale R&D projects. This enables businesses to continue to employ R&D personnel.56 The goal of the national Knowledge Investment Agenda (KIA), tabled by the advisory body Innovation Platform, was to propel the Netherlands into the top five most competitive knowledge societies by 2016, from 8th place in the 2008 global competitiveness index. KIA’s proposed pilot program called ‘1000 Ph.D.s’ is intended to boost Dutch graduate research by enticing highlyskilled Chinese talent to undertake doctoral research in the Netherlands, particularly, because Holland has been suffering from a shortage of scientific talent. The government Attracting and retaining knowledge- has recognized the importance of knowledge intensive firms

in attracting companies looking for high-value manufacturing and R&D locations. The long-term plan is to attract at least a hundred major global companies, including those from emerging markets, that align with Dutch key industrial strengths. The government is advancing traditionally strong industries including plants and food, materials, water, and chemicals. Initially, the state has set aside €2.5 million per year over three years to attract fifteen knowledge-intensive firms and R&D investment in two areas: flowers and food and chemicals. The objective to garner a share of global foreign investment is a remedy to a weakness in Holland’s innovation system: total investments in knowledge stood at approximately 1.7% of GDP in 2009, which is well below the European target of 3%. Corporate investments in R&D were relatively low with about 1.0% of GDP, whereas the goal for Euro

Notable inventions: Netherlands

The electrocardiogram (ECG) was invented by the physiologist Willem Einthoven in 1902. He designed a prototype for registering electrical heart signals and pioneered the field of cardiology.

Rally driver driver Maurice Gatsonides was the inventor behind the speed camera. As a sports car enthusiast, he designed a speedmeasurement system to help him go faster in rally circuits. He saw potential in other markets and founded Gatsometer B.V. in 1958.

It was in 1982 that Philips and Sony jointly introduced the scratch-free compact disc (CD) standard. The production began at a Philips’ plant in Germany. CD length was set at 74 minutes to fit the entire recording of Beethoven’s 9th Symphony.

Other: Optical microscope (c. 1600), optical telescope (1608), navigable submarine (1620)

zone countries stands at 2.0%. The government has attributed this to a lack of ‘onshoring’ of international R&D activities in the Netherlands. To encourage entrepreneurship and domestic innovation, the Growth Accelerator program was created to achieve a number of specific targets, for instance to increase the number of innovative start-ups by 50% from the current 3,100, and increase the share of fast-growing firms from 8% to 12%.57,58,59 The Netherlands is investing in its industrial strengths and the supporting R&D infrastructure to reverse trends concerning the shortage of knowledge workers and declining corporate expenditures on R&D.

ADDRESS POINTS OF PAIN Some of the world’s most populous nations are plagued by deep-rooted socioeconomic issues: high poverty rates, uneven distribution of wealth, failing or inadequate infrastructure and pressing challenges associated with health, sanitation, water and food. Unlike other nations that are clearly framing their S&T policies to become global leaders in innovation, the strategies in this category are aimed at addressing points of national pain. The emphasis is foremost on meeting social needs and satisfying local demand.

India GDP/capita (international $): 3,275 Population (thousands): 1,155,348 GERD (2011 at PPP, billions, US$): 36.1 2011 R&D as % of GDP: 0.9% GERD as % of world: 3.0%

Opening up of the Indian economy

India’s rise in the fields of information telechnology, telecommunications, health and pharmaceuticals is Success of the ICT remarkable given that industry India’s economy remained relatively closed to foreign trade and investment until the late 1980s. These restrictions were lifted gradually in the early 1990s. Not only did the government become more accepting

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

of trade, it actively sought out foreign investment with tax incentives and regulatory reforms. The ICT industry has witnessed a spectacular success in India, which has become one of the top-exporting nations in software and related services. FDI has flourished; in the 2009-10 fiscal year alone, India attracted US$26 billion in investments.60 Hundreds of companies have moved their service operations to India and about 650 multinationals, including IBM, Delphi, General Electric, and Hewlett-Packard, are expanding R&D centers in the country. India has worked to strengthen the innovation system to support these efforts, especially through national laboratories and the highly-regarded Indian Institutes of Information Technology (IITs). Led by the Ministry of Communications and Information Technology, the government has established 39 Science Technology Parks of India (STPI) since 1991 to offer facilities, computers, communication networks and services to export-oriented businesses.42 “The next ten years would be dedicated as a Decade of Innovation. It may be a symbolic gesture but an important gesture to drive home the need to be innovative in finding solutions to our many challenges.” India’s President Pratibha Patil addressing a joint sitting of Houses of Parliament (2009)61

India’s inclusive growth strategy

Although the information technology sector, which has experienced most rapid growth, employed more than one million people in 2004, it still accounts for a minor share of total employment. In fact, 89% of Indian workers find themselves in so-called informal sectors – largely agricultural activities. Since 1951, India has released eleven five-year plans that set the strategy for the overall direction of the country. The years between 2002 and 2007 (‘Tenth Plan’) was a period of strong economic growth with an annualized growth rate of 7.7%. Although poverty has fallen from 36% of the population in 1993 to 28% in 2005, it still persists. The government hopes to limit further economic inequality with an ‘inclusive growth’ strategy, which ensures that all benefit from India’s rise. The country’s renewed focus on innovation, science and technology is meant to address the needs of the poor: (1) how to provide income opportunities for those outside of India’s formal industry sectors, and (2) how to integrate those moving from the traditional economy into the new knowledge sectors of urban centers.62

Grassroots innovations

A unique aspect of India’s policy is the extent to which innovation is directed towards impoverished and rural communities. It is not only about channeling existing public and private R&D efforts to produce technologies and devices for the poor, but also about fostering innovation and entrepreneurship at the grassroots level. ‘Grassroots innovations’ originate in the community and are based on tacit knowledge, traditional ideas and practices, which are typically less expensive yet more efficient. An example is the Rain Gun, a lowcost irrigation system created by a 70-year-old farmer, which was successfully commercialized by the Rural Innovation Network. The current ‘Eleventh Year Plan’ (2007-12) aims to increase R&D expenditure from 1% to 2% of GDP to address energy and food security, water scarcity, water quality, and terrorism.63

Notable inventions: India

The Jaipur Foot is a cheap below-knee prosthesis that was created by the craftsman Ram Chandra Sharma in 1968 for the developing world and landmine-affected regions. With the natural movement and appearance of an ordinary foot, the prosthetic is more versatile than Western alternatives.

Improving higherlevel education

The Indian government hopes to improve higherlevel education and increase the overall enrollment rate in post-secondary institutions from 11% to 21% over the next decade. Although India’s total number of graduates outnumbers many other countries, it is estimated that only a quarter of all graduates have the qualifications and knowledge deemed of good enough quality for the industry.42 India’s elite instituitions, IITs and the Indian Institutes of Management (IIMs), produce the country’s highly-coveted graduates and the competition for placement is fierce. However, a major challenge lies in the ‘brain drain’ as many graduates and potential doctoral students head outside for better opportunities. Considering the current state of affairs, education is a top government priority and, especially, because India’s young and English-speaking workforce is a key reason why some economists predict that India’s economic growth rate will overtake China’s by 2013.64 The innovation policy in the world’s largest democracy is therefore a means to alleviate points of pain that present major obstacles to growth.

The Indian-American microbiologist Ananda Mohan Chakrabarty developed genetically engineered organisms that could metabolize crude oil in 1971 at General Electric. His patent for ‘oil-eating’ bacteria was highly controversial because it sought protection for a living organism.

In 2010, the Indian government released the prototype for the world’s cheapest laptop that was co-developed by India’s leading Institutes of Technology and Science. This touchscreen computer costs only US$35 and is primarily intended as an aid for students. Other: Number zero (5th century), assembly-line heart surgery (2001), Nano, the world’s cheapest car (2008)

African Initiatives

Although a vast continent steeped in cultural richness and diversity with tremendous differences from country to country, Africa as a whole is grappling with common issues ranging from food and water scarcity, weak and neglected civil infrastructure to drought, desertification, and disease. In the past, governments have relied on foreign aid and have, in most cases, failed to build up the R&D capacity necessary to address these fundamental concerns. “A problem for Africa as a whole, as it has been for China and India, is the hemorrhage of talent. Many of its best students take their higher degrees at universities in Europe, Asia and North America. Too few return…That is at least in part because of a chronic lack of investment in facilities for research and teaching.” Thomson Reuters (2010)65

African Ministerial Council on Science and Technology

Created in 2003 under the New Partnership for Africa’s Development (NEPAD) and the African Union (AU), the African Ministerial Council on Science and Technology (AMCOST) brings together ministers responsible for S&T from all AU member states. It is the venue for policy planning and priority setting for the whole continent. Africa’s leadership has recognized the significance of S&T in solving fundamental issues that pervade many of their countries and released a plan for action in 2006. At the core, it is about fostering innovation that works towards the achievement of the United Nations Millennium Development Goals (MDGs). The Council proposed flagship programs calling for research in a number of areas, including conservation, sustainable use of biodiversity, biotechnology, energy, water, materials science and manufacturing, ICT, and space science technology.66

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

Strategies in materials science and manufacturing, free and opensource software

The African S&T plan is pushing for strengthening materials science and manufacturing research to repair neglected or construct non-existent infrastructure including roads, railway and telecommunications lines, which presents a major development challenge. Because African institutions often lack the equipment and facilities to undertake sophisticated ICT research, the strategy is embrace innovation in free and open-source software, whose development and implementation costs are typically lower and can simultaneously circumvent the infrastructure issue through such applications as e-banking, e-health, e-education and e-government. In fact, Africa’s geography, climate and population distribution lend themselves to innovative e-business models. ‘Mobile money’, the use of cell phones for financial transactions including depositing, withdrawing and sending money, shows how existing technology can be used in interesting ways to ease the lives of those without bank accounts or in regions without systems in place.67

Wealth of opportunities in biotechnology

Biotechnology applications can address issues concerning food production, environmental sustainability and disease. There are tremendous possibilities for innovation in agriculture, from the development of biopesticides, biofertilizers, and irrigation systems to biotechnology techniques to generate enriched crops with resistance to drought. Just like India, African countries are rich in indigenous knowledge accumulated from years of dealing with scarcity of natural resources but the connections between formal R&D institutitions and communities are weak or non-existent. National governments will undoubtedly have to rely on foreign investment and aid for building up formal R&D efforts.

African Biosciences Initiative

A network of four regional centers of excellence was established through the NEPAD African Biosciences Initiative (ABI) whose design was funded with $30 million from the Canada Fund for Africa overseen by the Canadian International Development Agency (CIDA).68 The objective is to enable scientists in each region to share laboratories and technical

expertise in biotechnology for applications in health and agriculture. The centers of excellence include Biosciences East and Central Africa at the International Livestock Research Institute (ILRI) in Nairobi (Kenya), the Southern African Network for Biosciences hosted at the Council for Scientific and Industrial Research in Pretoria (South Africa), the West African Biosciences Network headquartered at Institute Senegalais de Recherches Agricoles in Dakar (Senegal), and the Northern Africa Biosciences Network at the National Research Centre of Cairo (Egypt).69

Pharmaceutical innovation strategy

Africans carry a heavy burden of global disease, which makes medical innovation one of the most important areas of focus. The AU, Council on Health Research for Development (COHRED) and NEPAD recently put forth a guide for national governments wishing to design and implement a pharmaceutical innovation system for local drug development and production.70 One of the recommendations is a strategy based on regional cooperation and sharing of resources similar to the afore-mentioned NEPAD-ABI because only a handful of countries within Africa have the capacity to contribute to the value chain. Nigeria’s National Institute for Pharmaceutical Research and Development (NIPRD) is part of its national strategy to push the local production of essential drugs. The Institute conducts research in plant-based drugs and pharmaceutical raw materials and has recently received a US$230,000 grant from the World Bank to produce anti-diabetic phytomedicine.71 Essentially, the questions that remain for Africa are about how to achieve a sense of self-sufficiency in S&T, combine the old with the new and how to take advantage of wealth of traditional knowledge that exists in its communities. African leadership sees S&T as an essential tool to solve pervasive challenges that hinder the continent’s prospect for economic development.

Notable inventions: Africa

The South African doctor Christiaan Barnard performed the world’s first human heart transplant in Cape Town in 1967. Although the nine-hour operation was a success, the patient died 18 days after the surgery due to pneumonia – not heart failure.

The theoretical foundation for the computed axial tomography scan (CAT scan) was laid by the African physicist Allan Cormack during his stay at Tufts University in the US. The CAT scan generates a map of soft tissues in the human body and helps identify diseases of the nervous system.

A ‘mobile-money system’ (or M-PESA) was introduced in Kenya in 2007 and quickly enabled access to financial services in an environment without extensive banking infrastructure, but with high cell phone adoption. M-PESA is particularly popular in rural areas and has been one of the most significant ICT innovations in Kenya. Other: Oil-from-coal refinery (1950), PlayPump water system (2006)

NATIONAL PROSPERITY A number of national S&T plans fit into the prosperity category. These countries have integrated innovation into a broad national economic strategy to maintain the state of wealth and enable competitiveness in the global economy. Research and technology development are used to drive productivity, sustain growth, create jobs, and make domestic industries more resilient to foreign competition and economic cycles. Finland and Germany are amongst leading countries in innovation and, above all, their strategies stress the importance of S&T to drive productivity, growth and jobs.

Germany GDP/capita (international $): 36,449 Population (thousands): 81,880 GERD (2011 at PPP, billions, US$): 69.5 2011 R&D as % of GDP: 2.3% GERD as % of world: 5.8%

Germany’s economic Germany is frequently dubbed the economic woes in the 1990s

engine of Europe but the country faced major challenges in the 1990s which have only been recently overcome. German economic growth suffered after the reunification of East and West Germany in 1990 and there was widespread unemployment and dependence on social security and welfare systems. This low-growth period persisted until 2006 when Germany’s growth rate jumped to 2.9% from approximately 0.8%, which was the norm in the early 2000s. The boom was driven by Asian demand for German exports and some early labour and social security reforms.72 A recent report argues that this growth could only be sustained through a reform plan that strengthens the national innovation framework and revamps the corporate financing and taxation systems to support innovative start-ups.73

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

“In the medium and long terms, however, the current financial and economic crisis will not stop the global race for knowledge from re-accelerating. International competition for talent, technology superiority and market leadership will continue to grow. In countries relatively poor in natural resources, such as Germany, enhanced innovation will provide the decisive basis for growth, new jobs and prosperity. Innovation is the key to a rapid recovery.” German Federal Ministry of Education and Research (2009)74

High-Tech Strategy

Germany has had a longstanding reputation for engineering and science excellence but its 2006 High-Tech Strategy formally set out to brand the country as the ‘Land of Ideas’.74 It recognized that challenges associated with health, climate and resource efficiency, transportation, and national security must be addressed through advancements in key enabling technologies: ICT, laser technologies, production technologies, materials technologies, biotechnologies, nanotechnologies, microsystems technologies, and services.

Investments in industrially-relevant R&D

Germany is making substantial investments in basic R&D to support long-term industrial developments. The Fraunhofer-Gesellschaft is a large German research organization with close ties to industry. Nearly 60 Fraunhofer Institutes across the country conduct industrially-relevant research. About two-thirds of its €1 billion budget is derived from private contracts. The federal and state governments contribute onethird for basic research that anticipates industrial or societal questions that may arise a decade down the line.75 The Fraunhofer Institute for Solar Energy in Munich is the largest research center of its kind in Europe and was established in 1981 to pursue work related to solar technologies – from basic science to production technology and prototypes.

Empowering the German Mittelstand and leveraging private sector R&D investment

One of the core elements of Germany’s strategy is to empower the German Mittelstand (Germany’s equivalent for SMEs). The government wants to ensure that innovation and prosperity do not only remain concentrated in the labs of large corporations but be spread among German start-ups and SMEs. Several programs, including the KMU-innovativ scheme and Central Innovation Programme for SMEs, improve access to financing

Notable inventions: Germany

Aspirin was invented in 1897 by Felix Hoffman, a German scientist working at Bayer & Co. Hoffman began to experiment with substances derived from willow plants that were an ancient remedy for pain. After conducting tests on his father who suffered from arthritis, Hoffman generated a version of the drug that could relieve pain and inflammation without stomach irritation.

and provide for collaboration and networking opportunities. In addition, the €272-million High-Tech Startup Fund grants up to €500,000 for fledgling R&D companies. These measures showed early signs of success as German SME expenditures on R&D increased from €6.6 billion in 2006 to €7.4 billion in the following year. The government policy aims to leverage private sector R&D investment so that each euro of government money spent delivers five euros from business. This is being achieved through the creation of partnerships and formal innovation alliances to pool expertise and resources. Ten businessacademic alliances were established in 2007 and 2008 and €600 million of government funds were leveraged in the form of more than €3 billion from businesses.76 The goal for the economic and S&T engine of Europe is to secure long-term prosperity through strategic investments in R&D as well as business innovation.

Finland GDP/capita (international $): 34,652 German inventors Jürgen Dethloff and Helmut Göttrup patented the world’s first plastic card with integrated circuitry in 1968. This laid the groundwork for industries that are dependent on chip cards, including telephone cards, credit cards, and health cards.

Population (thousands): 5,338 GERD (2011 at PPP, billions, US$): 6.3 2011 R&D as % of GDP: 3.1% GERD as % of world: 0.5%

Transformation of Finland’s economy

In 1987, a research effort led by Karlheinz Brandenburg at the Fraunhofer Institute to transmit music over telecommunications lines culminated in one of the most popular music formats in the world: the MP3. Other: Printing press (c. 1450), automobile (1885), drip brew filter coffee (1908), small-format camera (1925)

Finland has consistently ranked amongst the innovation leaders in European and global competitiveness indices. The Finnish government attributes this success to the quality of its education system and a long history of spending on R&D by both the public and private sector. However, Finland was the hardest hit European country in the recent economic crisis with a GDP drop of 8% in 2009.77 This served as a stark reminder of the deep recessionary period in the early 1990s that was brought about by the collapse of the Soviet Union, one of Finland’s largest trading partners, a slump in the forestry industry and the credit crunch-like developments at home. The 1990s were a time of industrial restructuring.

Finnish exports in electronics and other high-tech products increased as the share of wood products, pulp and paper declined. The S&T policies that were put in place before the 1990s served Finland especially well during this period and helped it transform into a fully-fledged knowledge economy. For instance, the programs that were set up in the 1980s to support ICT, technology transfer and commercialization, allowed Finnish companies, including Nokia, to benefit during the ICT boom of the 1990s. The ICT expertise had a positive spill-over effect in Finland’s natural resources and manufacturing sectors in terms of productivity gains.78

Consumer-centered innovation and ‘market pull’ approach

Although Finland was one of the first nations in the 1990s to embrace the concept of a national system that integrates policies on education, technology transfer and R&D, a comprehensive innovation strategy was not put forth until 2008.79,80 The government acknowledged the need to improve existing systems to maintain its level of prosperity and withstand a changing global reality and foreign competition. Finland’s proposal took a novel approach to the concept of innovation. The strategy emphasizes customer- or consumer-centered innovation, which, by trying to satisfy the needs in so-called lead markets, can allow individuals or entire communities to contribute to the process of innovation. The government’s role is to stir up demand by influencing consumer behaviour and public perception, and simultaneously bolster supply by providing innovative businesses with incentives, infrastructure and regulatory standards. Finland is participating in the European Lead Market Initiative which has identified six lead markets: e-health, protective textiles, sustainable construction, recycling, bio-based products and renewable energy.81 “The position of pioneer requires renewal…Finland’s longterm investments in expertise and technological research & development have produced good results, and its successful science and technology policy has created a basis for many successful industries…the challenges of growth and competitiveness can no longer be tackled only by means of a sector-based, technology-oriented strategy. Instead, a demand-based innovation policy must be strengthened alongside a supply-based innovation policy.” Finland’s Ministry of Trade and Industry Steering Group (2008)79

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

Notable inventions: Finland

The man behind text messaging was Matti Makkonen, a former engineer for Finland’s telecom and post authority. He invented the Short Message Service (SMS) protocol in the 1980s for exchanging text messages between mobile devices.

The Linux Operating System was created by Linus Torvalds in 1991 at the age of 22. He made his work available free on the internet. Linux has gained a reputation as a reliable operating system and is most popular with serious computer users and programmers.

In 2001, the Finnish food company Valio launched lactose-free milk that, unlike previous lowlactose versions, retains the taste of normal milk. Valio has pioneered lactose removal methods which have been licensed around the world.

Other: Modern ice-breaking technology (1890), the first practical cellphone (1989), ice touchscreen (2010)

Internationalization of R&D

A pervasive theme in Finland’s innovation strategy is the concept of ‘internationalization’, which is about accelerating the expansion of Finnish companies beyond the domestic market and building strong international links. The national government has had long-standing cooperation agreements with South Korea, Israel, Japan, China, Ukraine, Vietnam, and the US. It has also established FinNode Innovation Centers in Shanghai, California’s Silicon Valley, St. Petersburg and Tokyo to report back on developments in host countries, to track investments and link Finnish institutes, innovators and companies to global centers. The current strategy is also stepping up the international marketing campaign to promote Finland’s regional clusters as R&D locations for business. Finland has been unable to attract R&D-intensive foreign companies and international

experts. Finnish companies and would-be entrepreneurs have also been more risk-adverse than their foreign counterparts. The innovation strategy called for changes in the financing system to encourage individuals to be more entrepreneurial, as well as reforms in the tax system to attract international experts who might be deterred by high personal income taxes. For this export-dependent country with a strong track record in innovation yet a population of only about 5.3 million, the critical question revolves around how to influence global knowledge flows and value chains. The innovation policy is directed at sutaining national prosperity and economic growth despite an ageing population, concerns over climate change, sustainable development, and competition from other equally export-oriented countries.

CONCLUSION Regardless of their state of development, nations are clearly making large investments in world-class research centers, education, commercialization, and entrepreneurship. The innovation snapshots presented in this paper show that there are several approaches to national innovation frameworks. While countries in the ‘stay ahead’ category are targeting R&D areas to maintain leadership positions in S&T, other nations with ambitious targets for future S&T competitiveness in the emerging Asian market are spending substantially to modernize their innovation infrastructure to get ahead. India and many countries on the African continent, on the other hand, are battling entrenched problems associated with widespread poverty, disease, and crumbling infrastructure. Their governments see investments in S&T as a potential remedy to points of national pain. Some strategies are framed to exploit a country’s existing R&D strengths and bolster the industry and academic base in those areas. A number of national S&T plans fit into the prosperity category whose main objectives are not only to stay ahead of the pack but maintain the state of wealth and make the economy more resilient to economic recessions.

Finland P: 5,338 G: $34,652

Netherlands P: 16,531 G: $40,715 Canada P: 33,740 G: $37,945

United Kingdom P: 61,838 G: $36,496

$24.3

$6.3 $38.4 $69.5

$10.8 $405.3 United States P: 307,007 G: $46,436

Germany P: 81,880 G: $36,449

China P: 1,331,460 G: $6,838

$9.4

$153.7

Israel P: 7,442 G: $27,673

$44.8

$36.1 South Korea P: 48,747 G: $27,169

India P: 1,155,348 G: $3,275

2011 GERD (PPP, billions, US$)

P - Population (thousands) G - GDP per capita (international $)

Country GERD as Percent of World Canada 2.0% UK 3.2% South Korea 3.8% Germany 5.8%

Rest of the World 26.2%

Japan 12.1%

China 12.9% US 34.0%

Note: India (3.0%), Netherlands (0.9%), Israel (0.8%), Finland (0.5%) Source: Toronto Region Research Alliance analysis based on data from Battelle, 2011 Global R&D Funding Forecast.

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

R&D tops most innovation agendas

Societies worldwide are demanding solutions to pressing problems: climate change, health, disease eradication, food, water, and national security. Although the extent of each problem may vary from country to country, governments are spending to find S&T-based solutions to the same underlying issues. Inevitably, nations find themselves in a race to discover cures for cancer, create revolutionary energy storage and water treatment technologies, advance personalized medicine, and secure cyberspace to safeguard personal and national identity. In virtually all academic and industrial settings, scientists and engineers are vying to develop the next breakthrough technology that could spawn entirely new industries or transform existing ones. R&D now tops most national economic agendas and nations are racing to garner majority share of global innovation. There are certainly connections between a nation’s present innovation strategy, its state of economic development, history, and past innovation policies. In fact, the interplay between these factors offers opportunities for interesting future research and study. The Toronto Region Research Alliance hopes that this snapshot of S&T strategies around the globe will contribute to a meaningful discussion of Canada’s future innovation ambitions. TRRA is seeking input on the issues examined in this paper. Based on the current Canadian S&T strategy, the authors invite the reader to comment on how Canada’s role can be understood within the context of the five categories that have shaped the discussion here. If Canada were to frame its science and technology policy around one of the five themes, here are examples of possible outcomes. Canada is currently ranked ninth in the world in terms of gross expenditures on R&D. For instance, a Canadian innovation strategy looking to stay ahead, would have to maintain a lead over the nations presently in the number ten to fifteen positions: Russia, Brazil, Italy, Taiwan, Spain, and Australia. If Canada were aiming to get ahead, this would involve significant investments to catch up to those in leadership positions. The leap from ninth to fifth place would require R&D spending to double to nearly $50 billion. An innovation strategy looking instead to exploit Canada’s existing strengths may focus R&D efforts on historically strong industries such as natural resources, agri-food, or financial services. Under the theme ‘alleviating points of pain’, the innovation strategy could address unique Canadian challenges including climate change in the Arctic, health care for an ageing multicultural population, and depletion of natural resources. Lastly, if Canada were to frame its policy around prosperity, the national strategy would maintain a balanced approach with investments in both core and emerging segments, in applied and discovery research, and education of future innovation leaders. Given such realities as the size of the Canadian economy, population and make-up of the business sector, which approach should Canada embrace? Please forward your thoughts and opinions to: info@trra.ca

OVERVIEW OF KEY DRIVERS FOR INNOVATION

COUNTRY

Key Drivers for Innovation

Key S&T Areas

Canada

Weak productivity Weak business innovation Low business R&D expenditures Over-reliance on the natural resources sector

Environmental S&T Clean energy technologies ICT Health research and life sciences

United States

Rapid decline in S&T rank Anxiety about the strong innovation strategies across the world Low-carbon and foreign-energy independent economy National security Deficiencies in the education system Health care costs

Advanced materials Advanced vehicle technologies and electric vehicles Clean energy technologies Health research and health IT ‘Grand challenges of the 21st century’ (e.g. personalized and regenerative medicine, DNA sequencing of every cancer) ICT (cyber security, net neutrality, nextgeneration systems, quantum computing)

United Kingdom

Below-average innovation growth Recession and national debt Low-carbon economy Declining private equity and venture capital funding Low business R&D expenditures Weakness in commercialization rates

Advanced manufacturing and materials ICT Clean energy technologies Life sciences and health

China

Targeting global S&T leadership position Developing indigenous innovation to limit reliance on imported technologies Meeting domestic energy demand Increased prosperity for citizens Urbanization Population and health National defence and public security

Advanced manufacturing and materials Agriculture Biotechnology Clean energy technologies ICT Mineral resources Transportation Water technologies

South Korea

Global leadership in specific scientific fields Competition from other countries in the emerging market Boosting international competitiveness of Korean universities Weak fundamental research Dependence on oil and commodity imports Over-reliance on export-oriented manufacturing (high specialization in ICT) Low fertility rates and ageing population Increasing foreign R&D investment Attracting global talent

Advanced materials Biotechnology Environmental and energy technologies Mechatronics ICT Processing technologies

Israel

National security Limited natural resources Diversification of the economy (high specialization in ICT)

Agriculture Biotechnology Clean energy technologies ICT Water technologies

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

COUNTRY

Key Drivers for Innovation

Key S&T Areas

Netherlands

Slipping in innovation rankings Weak SME innovation Shortage of knowledge workers Improving the quality of research and education Low business R&D expenditures Increasing foreign R&D investment Safety and security Positioning the country as ‘Portal to Europe’

Automotive Clean energy technologies Food and nutrition High-tech systems (nanoelectronics, embedded systems, mechatronics/robotics) Life sciences and health Logistics and supply chain Maritime Plants Polymers, chemicals, and advanced materials Water technologies

India

High poverty rate Uneven distribution of wealth Population and health Urbanization Quality of education

Agri-food Biotechnology and pharmaceuticals Green energy technologies ICT Water technologies

Africa

Water and food insecurity Weak and neglected infrastructure Preserving biodiversity Health care and disease Environmental degradation, drought, desertification Quality of education Low expenditures on R&D

Agriculture Biotechnology, gene expression, bioinformatics Conservation science and biodiversity ICT Indigenous knowledge and technologies Energy technologies Materials science and manufacturing Mathematical sciences Space science technology Water technologies

Germany

Health care Climate and resource efficiency Mobility Security Talent shortage Ageing population Limited natural resources Prosperity and competitiveness

Advanced materials Biotechnology Clean energy technologies Microsystems technologies Nanotechnology ICT Innovative services Optical (laser) technologies Production technologies Transportation technologies

Finland

Attracting and retaining foreign investment and experts Ageing population and low immigration rates Increasing entrepreneurial activity Maintaining high levels of exports Impact of recession Diversification of the economy (high dependence on ICT and forestry)

Bio-based products ICT e-health Protective textiles Renewable energy Recycling Sustainable construction

LIST OF ACRONYMS AND ABBREVIATIONS

ABI

African Biosciences Initiative

AMCOST

African Ministerial Council on Science and Technology

African Union

BDC

Business Development Bank of Canada

BRIC

Brazil, Russia, India, China

CAS

Chinese Academy of Sciences

CERC

Canada Excellence Research Chairs Program

CFI

Canada Foundation for Innovation

CIDA

Canadian International Development Agency

CIHR

Canadian Institutes of Health Research

COHRED

Council on Health Research for Development (Africa)

CRC

Canada Research Chairs Program

DOE SC

Department of Energy’s Office of Science (US)

FDI

Foreign direct investment

GDP

Gross domestic product

GERD

Gross expenditure on research and development

ICT

Information and communications technology

IEA

International Energy Agency

IIMs

Indian Institutes of Management

IITs

Indian Institutes of Information Technology

ILRI

International Livestock Research Institute (Kenya)

Intellectual Property

KIA

Knowledge Investment Agenda (Netherlands)

K&I

Knowledge & Innovation Program department (Netherlands)

KRIBB

Korea Research Institute of Bioscience and Biotechnology

KTN

Knowledge Transfer Network (UK)

MDGs

Millennium Development Goals (United Nations)

NEPAD

New Parternship for Africa’s Development

NEWTech

Novel Efficiency Water Technologies Program (Israel)

NIH

National Institutes of Health (US)

NIPRD

National Institute for Pharmaceutical Research and Development (Nigeria)

NIST

National Institute of Standards and Technology (US)

NRC-IRAP

National Research Council Canada - Industrial Research Assistance Program

NSF

National Science Foundation (US)

OECD

Organization for Economic Co-operation and Development

PPP

Purchasing power parity

RDA

Regional Development Agency (UK)

R&D

Research and development

SDTC

Sustainable Development Technology Canada

SMEs

Small- and medium-sized enterprises

STPI

Science and Technology Parks of India

S&T

Science and technology

TRRA

Toronto Region Research Alliance

THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

METHODOLOGY TRRA reviewed ten innovation strategies at the country level between June and December 2010. The countries selected for review were: the United States, the United Kingdom, China, South Korea, Israel, the Netherlands, India, Germany, and Finland, as well as initiatives across the African continent. Their national governments have published innovation strategies which were studied to understand the key drivers for innovation, areas of focus and notable programs. The drivers and priority areas were nation-specific and were identified from the study of national S&T strategies and policy papers. Examples of drivers are lagging economic productivity, uneven performance in innovation indices, recession, poverty, the need to diversify the economy, wealth creation and the declining quality of S&T relative to competing nations. The study concluded that governments frame their national strategies to focus on five goals: stay ahead, get ahead, exploit existing R&D strengths, alleviate points of national pain or maintain prosperity. TRRA recognizes that each national innovation plan could display characteristics of more than one category. However, this is not intended to be an exhaustive analysis and, for the purpose of this paper, innovation plans were assigned to only one category. Countries’ gross domestic product and populations for 2009 were obtained from the World Development Indicators database, World Bank (27 Sept. 2010). GDP per capita values are given in international dollars. According to the World Bank, ‘an international dollar would buy in the cited country a comparable amount of goods and services a US dollar would buy in the United States.’ The data for forecast gross domestic expenditures on R&D and expenditures as a percentage of GDP were obtained from Battelle’s 2011 Global R&D Funding Forecast. Unless indicated otherwise, amounts are expressed in Canadian dollars.

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THE RACE FOR GLOBAL LEADERSHIP IN INNOVATION: An Analysis of National R&D Strategies

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