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The following OECD assessment and recommendations summarise Chapter 5 of the Economic Survey of the Czech Republic 2006 published on 8 June 2006.
Contents
Innovation policy reveals good intentions but much remains to be done
Research and development spending is equivalent to about 1% of GDP in the Czech Republic; this level is relatively low compared with the OECD average, but somewhat higher than in the other east European OECD economies. As in a number of other OECD countries, Czech innovation policy broadly aims to encourage both more private-sector research and a more market-driven approach to research by public-sector research institutions and universities.
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Some tightening of responsibilities and tidying up of financial arrangements is needed in the innovation policy system. It is important that plans reducing the large number of R&D-related budgetary lines are followed through. In addition, the responsibilities of the state administration in innovation need to be reformulated so as to orient innovation policy more clearly towards research that develops commercial applications or provides academic groundwork with potential for commercial application. In the case of the umbrella organisation for R&D, the Research and Development Council, this could be dealt with, for example, by greater business-sector representation. In addition, problems of overlap between the Council and the Ministry for Education and Sports need to be resolved and better co-ordination is required between the five ministries involved in R&D policy.
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As in many other countries, the authorities are trying to boost market-oriented research by encouraging stronger public-private links. To make the labour market for researchers more integrated, more performance-related pay in public-sector research positions could be envisaged. As well as strengthening industry-science ties, these measures could also help attract back Czech researchers from abroad. Public-private links could also be strengthened by raising the importance of joint work with business in evaluating research activities.
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Tax-based measures are also being used to encourage R&D. A 100% tax allowance on R&D expenditure was introduced in 2005. While such allowances are in place in several other OECD countries, evidence on their effectiveness is mixed and so the focus should be on impact evaluation both in terms of research activity and cost. There is also a proposal in a recent policy document to set up a scheme similar to the Hungarian Innovation Fund. The potential gains of this approach need to be evaluated against the downsides of increased complication of the business tax environment and additional administration costs. In addition, sunset clauses should be considered for such programmes.
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Access to finance is one of the key constraints for innovative SMEs in the Czech Republic, largely because the investment proposals are typically too small to attract venture capitalists. There are plans to address this with a government-sponsored risk capital fund. This scheme should be carefully planned and monitored to ensure good targeting and cost effectiveness. Indeed, there may be less costly ways of helping innovative SMEs access finance, for example, through changes to investment regulations on pension funds.
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Czech innovators often lack key skills and information needed to successfully launch an enterprise and more policy action is needed. One route is for universities to include more business training in courses for science and engineering, including coverage of patenting law and application processes. Improving the information and administrative systems for intellectual property rights would also help. In addition, innovative SMEs would benefit from the introduction of an information system on current and upcoming development projects in regions and municipalities so that they can more easily keep abreast, for example, of places available in technology parks.
Gross domestic expenditure on R&D
Per cent of GDP
1. Average expenditure, 2002-04.
2. Business finance means financed by private and public enterprises and institutes serving such enterprises.
Source: OECD, Main Science & Technology Indicators Database.
How to obtain this publication
The Policy Brief (pdf format) in English and Czech can be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.
The complete edition of the Economic Survey of the Czech Republic 2006 is available from:
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SourceOECD for subscribing institutions and many libraries
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OLISnet, under "Publication Locator", for government officials with accounts (suscribe)
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Additional information
For further information please contact the Czech Republic Desk at the OECD Economics Department at webmaster@oecd.org. The OECD Secretariat's report was prepared by Philip Hemmings and Alessandro Goglio under the supervision of Andreas Wörgötter. The drafting team was assisted by Lubomir Chaloupka (on secondment from the Czech Ministry of Finance) and Edward Whitehouse (OECD pensions specialist).
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Economic Policy Reforms: Going for Growth 2008
