Remarks by Angel Gurría,
20 October 2015
(As prepared for delivery)
Vice-Minister Sukjoon, distinguished guests, ladies and gentlemen,
It is a great pleasure to be with you today at the World Science and Technology Forum in Daejeon. This Forum is an excellent platform to promote global co-operation in science and technology, and it provides a perfect setting ahead of tomorrow's OECD Ministerial Meeting on Science, Technology and Innovation.
In a world beset by uncertain economic prospects, stronger innovation performance is essential to boosting productivity growth and job creation, and to addressing global challenges like climate change, pandemics and ageing populations.
But how do we make innovation happen?
First of all, we need to know what we mean when we talk about innovation. The OECD has been helping measure R&D and innovation for decades. Today, we are launching the 7th edition of the Frascati Manual – the world-class standard for measuring R&D since 1962, which continues to guide countries in the collection of comparable evidence in this vital policy area, now in 15 languages.
We are also analysing trends in innovation and innovation policies. The new OECD Science, Technology and Industry (STI) Scoreboard: Innovation for Growth and Society, that I am also launching today, highlights numerous transformations in innovation.
We are witnessing, for example, that disruptive innovations are enabling the next production revolution and changing the way we work. A new generation of ICT technologies, such as those related to the Internet of Things, big data and quantum computing are laying the foundations for profound transformations in how we will work and live in the future. Three countries are leading in these cutting-edge technologies, the US, Japan and Korea.
Such geographical concentration extends to most sectors. For instance, the US accounted for 22 of the top-30 universities with the highest relative impact over 2003-12. Four countries – the US, UK, Germany and China – account for 50-70% of all high-impact publications across all scientific disciplines. And the top 250 R&D corporations account for over 60% of all global business in R&D. This high level of concentration helps move the global frontier forward, but it also risks leaving many behind. Diffusing innovations around the world and getting more firms and organisations involved in innovation is becoming increasingly challenging. As a result the productivity gap between frontier and other firms is growing.
Let me also highlight that the research “mix” matters. The recent retrenchment of public support to R&D and its rising volatility could endanger the stability of research and innovation systems in OECD countries. Moreover, it could also shift the overall balance of research efforts away from fundamental research towards more incremental and applied development. The public funding of long-term research is essential for innovation. It underpins many of the key technologies driving growth today, from the Internet to genomics.
Last but not least, I cannot emphasise enough the importance of focusing on people skills as the number of highly-skilled jobs involved in GVCs is increasing. In 2013, 67 million business sector workers across 21 EU countries and the United States were engaged in GVCs, with about 36% of these jobs in highly-skilled occupations.
What are the policy settings that can help countries foster stronger innovation performance, taking into account these trends? Our recently updated OECD Innovation Strategy outlines four specific policy areas.
First, seize the benefits of the digital economy. An open and accessible Internet, with high fixed and mobile bandwidth, is essential for innovation in the 21st century. The Internet has become a platform for innovation thanks to its end-to-end connectivity and lack of gatekeepers, providing a place where creativity, the exchange of ideas, entrepreneurship and experimentation can flourish. Policy needs to preserve the open Internet, address privacy concerns and ensure access and competition. Digitally enabled innovation also requires new infrastructure like broadband, spectrum and new Internet addresses.
Second, let’s stop favouring incumbents.Young innovative firms generate many of the breakthrough technologies that drive innovation. They also account for over 40% of all new jobs in OECD economies. However, many policies – ranging from R&D tax credits to environmental regulations – still favour incumbents over new firms, which leads to high concentration of innovation. We should provide a better environment for new firms to experiment new technologies, ideas and business models; and for a healthy reallocation of resources from less to more innovative firms.
Third, focus on long-term STI investments and balanced support mechanisms for business. While public investment in long-term research has held up reasonably well during the onset of the crisis, when governments covered the gap left by business, it is now declining in many OECD countries under the pressures of fiscal consolidation. Among OECD countries, about 17% of R&D was in basic research in 2013, compared to about 5% for China, with the rest in the form of applied research and experimental development.
We also need to provide for more balanced support for business innovation. In 2013, R&D tax incentives accounted for nearly USD 50 billion across the OECD and key partner economies. While these incentives can support R&D, they often do not meet the needs of young, innovative firms and risk amplifying cross-border tax planning by multinational firms. Better design can help, but governments also need to strengthen support through competitive and transparent grants as a complement to tax incentives.
Fourth, commit to learning from experience. Policies for innovation operate in a complex, global, dynamic and uncertain environment, where government action will not always get it right. A commitment to monitoring and evaluation of policies, and to learning from experience and adjusting policies over time, can help ensure that government action is efficient. Obviously, such learning is a key objective of our Ministerial meeting tomorrow.
Fifth and final, foster talent and skills. Skills are a key challenge for innovation. The 2012 Survey of Adult Skills found that 2 out of 3 workers do not have the full skills needed to thrive in a technology-rich innovation. A broad and inclusive skills strategy is therefore essential for innovation. Education and training systems need to equip people with the foundations to learn and develop the broad range of skills needed for innovation in all its forms, and with the flexibility to upgrade skills and adapt to changing conditions.
Distinguished guests, ladies and gentlemen,
Before I pass the floor to Andrew Wyckoff, the Director of our Science, Technology and Innovation Directorate – who will present our STI Scoreboard in more detail – let me conclude by saying that only through concerted action can we move the global STI agenda forward, boost productivity growth, job creation, and address global challenges.