STIGFKE › 2012 Global Forum on the Knowledge Economy: Agenda
The first day of the Forum focused on how countries can strengthen their growth and employment performance, in particular in unlocking new sources of growth, and looked at the use of industry, innovation and entrepreneurship policies as part of a wider growth strategy.
The current economic performance of many OECD countries is still quite weak, marked by high levels of structural unemployment, high public debt ratios, and burdensome public sector deficits that have only recently shown signs of unwinding. Economic growth in the emerging economies and many developing countries – though slowing somewhat - will continue to outpace that in the OECD area, accelerating the shift in economic activity away from the OECD countries towards non-OECD economies, particularly in Asia and Latin America. At the same time, many emerging and developing economies are exploring new sources of growth in an effort to upgrade their economies, create higher value added sources for growth and job creation, and make their future growth path more inclusive.
This day focused on the potential for generating new sources of growth and employment from the perspective of policy makers responsible for industry, innovation and entrepreneurship policies. It also explore how policy makers could ensure that national growth policies do not come at the cost of growth in other countries, and that they result in global win-win opportunities for OECD, emerging and developing economies.
The first two sessions set the scene for the Forum in exploring the current policy context for new sources of growth. Session 1 looked at the need for new sources of growth and the ways in which policy makers are seeking to meet these demands, in particular in applying knowledge capital to economic development. Session 2 explored the role of more targeted policy interventions, and the opportunities and challenges associated with new approaches to structural change that are sometimes characterised as “new industrial policies”, going beyond old-style industrial policies characterised by national champions and subsidies.
The discussion in Session 3 then turned to the respective roles of small, high-growth and large business in growth, their interaction, and how policy can strengthen performance and innovation across the business sector. The final session of the first day addressed a key question in the global debate, namely how to draw greater benefits from the globalisation process, in particular from the involvement of countries in global value chains.
Throughout the day, the discussion focused on lessons learned from practical experience and on the exchange of good practices that can potentially be used by participants in their own national contexts.
08.30-09.00: Registration and refreshments
09.00-09.30: Welcome and opening session
The opening session set out the context for discussion at the Forum.
Both advanced and emerging economies have become progressively more intensive in the use of knowledge-based capital (KBC). In several OECD countries, firms now invest as much in KBC – such as software, databases, R&D, design, marketing, and new forms of organisation – as they do in physical capital such as machinery, equipment and buildings. These investments are increasingly important for business outcomes. For instance, in 2004, in the United Kingdom, around half of export sales from winners of the Queens Award for Exports could be directly attributed to investment in design. Software is now central to success in the automotive sector: new hybrid vehicles require millions of lines of software code. And KBC is increasingly key to generating value in global value chains: they are the assets that make multinational firms competitive. This is why many emerging economies are now also increasing their investments in KBC. For instance, China is investing in intellectual property (IP), acquiring/developing global brands and promoting design, all with a view to moving into higher-value segments of the global economy. Other examples include Thailand’s establishment of an IP capitalisation project, Brazilian assets in aero-space, and Indian information technology. However, the global policy agenda has not kept up with the growing importance of these knowledge-based investments. Some assets, such as data, hold the promise for considerable growth, but raise wholly new challenges for policy. Turning investment in KBC into growth and employment requires a supportive policy environment that reflects the specific features of these assets and the growing understanding of how KBC drives productivity and business dynamics. Important areas for policy include taxation, competition, intellectual property rights, enterprise finance (including corporate reporting of business investment in KBC) as well as human capital.
11.00-11.30 Refreshment break
In recent years, most economies have become more specialised, as firms have focused on their competitive advantages, sometimes off-shoring certain activities to other countries. This process has sometimes been supported by policy, where governments have sought to strengthen the structural characteristics of their economies by encouraging the development of new areas of economic activity, and also by helping the transition from declining areas of economic activity to areas of emerging growth. Following the recent economic crisis, debate in several countries has once more focused on the structure of their economies. Some countries with a very strong financial services sector or a large construction sector have been severely affected by the crisis, whereas others with strong and internationalised manufacturing sectors have experienced far more limited impacts. As many emerging and developing economies seek to industrialise and strengthen their manufacturing sector, many advanced economies are also seeking to reinvigorate their manufacturing sector, often with an explicit aim to create new jobs. At the same time, the interaction with the services sector has grown and manufacturing firms increasingly rely on their services and knowledge-based assets to create value and differentiate their products from those of competitors.
13.00-14.30: Lunch break and networking opportunities
13.30-14.00: Pre-launch of the OECD Science, Technology and Industry Outlook 2012
Dominique Guellec from the OECD Secretariat provided a preview of the forthcoming 2012 edition of the OECD Science, Technology and Industry Outlook, which focuses on the role of innovation policies in achieving strong and sustainable growth.
Large and small firms play different roles in economies. Three different groups of firms can potentially be distinguished. Large firms are often more globalised and have the scale and scope to commercialise new ideas, develop markets and reach across borders. Small and medium-sized firms form the backbone of many economies and account for the bulk of employment. Young innovative firms are typically small, but can grow fast and account for much of the net job creation in OECD economies, also making an important contribution to innovation and productivity growth. A healthy business sector includes a good proportion of all these firms and involves strong interactions between them. For example, small innovative firms are often better in developing new ideas, whereas large firms are often better in commercialising them. In the policy agenda, governments often have a mix of policies, aimed at different categories of firms. For example, many countries have policies to foster more innovative and high-growth firms, e.g. through policies aimed at strengthening equity financing. Many governments are also examining how to strengthen the capabilities of existing SMEs to improve their performance and enhance their contribution to growth and job creation. And large firms are often at the core of government policies, and may benefit most from general framework policies such as R&D support, tax policies, trade policies, etc. There are some signs that this may be changing, however, as some small firms now start as multinationals, enabled by the Internet, with the potential to strengthen dynamics in the business sector.
16.00-16.30: Refreshment break
Globalisation helps countries specialise in the activities in which they possess a comparative advantage, increases competition on product and labour markets and helps realise economies of scale. While economies benefit on the whole from increased openness, adjustment costs are often incurred, especially in sectors that have not yet been exposed to international competition. Likewise, negative impacts of openness might arise for specific occupations and skills categories in the labour market. In recent years, many economies have become more integrated in global value chains, as interactions between economies have grown. This international fragmentation of production is a powerful source of increased efficiency and firm competitiveness. However, the benefits of globalisation are not always clear, and not all countries find they benefit sufficiently from their involvement in global value chains. Some countries also see globalisation more as a threat than an opportunity. Moreover, when an economy is part of a value chain with complex ownership structures, a disturbance in any particular link can disrupt the entire chain. Many economies currently seek to move “up” the value chain, to help create high-wage employment and sustain future productivity and income growth.
The second day of the Forum focused on how our future growth path can be made greener and more inclusive, both key challenges in building a more balanced economy.
The first plenary session explored how to combine the need for a greener economy with new business opportunities and the lessons that can be learned by policy makers from experience across the world. This session also drew on the lessons from previous periods of economic transformation, to understand better what factors and policies can help drive structural change.
The second session of the day looked into the role that technology and innovation can play in improving the quality of lives, including fostering healthy ageing. Investments in research and innovation have led to path-breaking discoveries, technologies, products and services in the past, many of which have helped improve the quality of life. Today, there is growing pressure to meet various challenges of a global and social nature such as food security, scarce clean water and demographic pressure. However, policies are still mainly focused on strengthening technology development, rather than its uptake in society to effective demand-side policies.
The third session focused on how the growth-oriented policies explored in previous sessions could lead to job creation and be made more inclusive. Growth often ends up serving the needs of some groups more than others, and may even increase inequalities, both within and across economies. This is, for example, the case when new sources of growth primarily favour the creation of high-skilled jobs. Strengthening job-rich growth is therefore a key challenge for governments across the world.
Finally, the closing session of the Forum drew conclusions from the discussion, including on how the lessons learned can be applied in practice and how obstacles to policy change can be overcome. This session also look at further work that the OECD might usefully undertake to assist policy makers to further strengthen industry, entrepreneurship and innovation policies for strong, green and inclusive growth.
Green growth remains a key imperative for all governments. While countries need growth to address economic and social challenges, this growth needs to be green in order to avoid increasing systemic risks to future growth. The past decade has seen the start of a green transformation in many developed and emerging economies, facilitated by new technologies and innovations. Moreover, there are opportunities associated with green growth that could be better captured by countries, e.g. the development of new business models or new areas of economic activity. But achieving green growth will require an unprecedented economic transformation, with the need to shift trillions of dollars of investment over the coming decades. Making this shift will require that policy makers seize the opportunities associated with green growth and overcome the obstacles. Drawing on the experience from countries that are already making this transition, as well as the experiences from previous periods of transformation, can help smooth and accelerate the transformation process and ensure that countries seize the business opportunities associated with going “green”, including the scope for new business models. This session looked into the practical policy aspects of “how to” accelerate the shift to a greener future.
10.30-11.00: Refreshment break
Investments in research and innovation have led to path-breaking discoveries, technologies, products and services in the past, many of which have helped improve the quality of life. Today, there is growing political pressure to meet various challenges of a global and social nature such as climate change, food security, scarce clean water and demographic pressures. Science, technology and innovation play a key role in understanding the interaction between the various environmental, technological and social factors that frame global and social challenges; in assessing the associated risks; and in developing effective solutions. Technology and innovation also provide new opportunities, for example in the area of healthy ageing, where advances in science and technology, particularly genomic science, have brought significant opportunities for new innovations in health and biomedicine. Information and communications technology also offers new opportunities, in providing new ways to share, create and diffuse knowledge and innovation, and enabling more people to engage in science and innovation. For example, by 2009, four out of ten Africans had a mobile phone and thus a means to circumvent traditional market bottlenecks. Services that are rapidly scaling up include mobile payments, which reduce transaction costs, and e-agriculture, which enables matching supply and demand. Despite these benefits of investments in technology and innovation, the recent economic crisis has led to a growing focus on short-term benefits, sometimes at the cost of long-term investments. Moreover, most policies still concentrate on strengthening the development of technology, rather than its uptake in the market through effective demand-side policies, e.g. innovative public procurement, smart regulation or the development of lead markets.
12.30-14.00: Lunch break
Unlocking new sources of growth, including growth based on knowledge-based capital (KBC) or green growth, can provide new opportunities, including through the creation of new jobs. But growth may end up serving the needs of some groups more than others, and may even increase inequalities, both within and across economies. This is, for example, the case when new sources of growth primarily favour the creation of high-skilled jobs. Both within the OECD region and in many emerging and developing economies, inequality has increased in recent years. There are also concerns that some groups of workers may no longer have the opportunities to find suitable employment, as the structure of some economies has changed and certain job categories no longer exist. Several emerging economies, including Brazil, China and India, are emphasising the need for growth to be more inclusive, including by focusing more on the needs of those at the “bottom of the pyramid”. In OECD countries as well, there is a growing understanding that a future growth path will need to be more inclusive and better reflect the needs of society.
15.30-16.00 Refreshment break
This Final session session looked at the conclusions from the Forum, including particularly promising areas for policy action, and areas where further work needs to be undertaken. It also explored where international action may be required.
Close of the Forum