Dr Jadranka

1
International ConferenceWHY INVESTING IN SCENCE
IN SOUTH EASTERN EUROPE?Ljubljana, Slovenia,
September 27-29, 2006CROATIAN INNOVATION POLICY
MEETS REALITY

• Dr Jadranka ŠvarcInstitute for Social Sciences
  Ivo Pilar, Zagrebe-mail jadranka.svarc_at_pilar.h
  r
• Dr Emira BecicMinistry of Science, Education and
  Sportsemira.becic_at_mses.hr

2
Starting points of the presentation

• Innovation system in Croatia is rather complex
  but not coherent set of institutions mutually
  interrelated to pursue the same mission of using
  knowledge for development
• It is laging behind NISs of other European
  countries (benchmark analysis)
• Innovation policy in Croatia is not an integrated
  policy but a narrowly-shaped program for
  fostering science-industry cooperation
• Therefore, the Croatian innovation policy should
  meet the reality and to be adjusted to the
  specific development needs of Croatia determined
  by

of the country for using innovation (knowledge)
as a main driving force of economic growth.

• technology advancements
• economic progress and
• social maturity

3
Content of the presentation

• Presentation consists of the three parts
• 1. Current state of
• a. Croatian NIS - institutional and
  organizational set-up, main stakeholders
• b. Croatian innovation policy policy framework
  (documents), main programs and instruments
• 2. Results of the pilot benchmark analysis of the
  Croatian NIS and NISs of EU countries to stress
  the critical points of the Croatian NIS
• 3. Brief discussion of the socio-cultural inertia
  and the lack of policy learning that are
  perceived as the main obstacles to faster
  development of Croatia

4
Beginnings

• Since 2000 Croatia made significant effort in
  establishing national innovation system and
  introducing innovation policy
• These endeavors were additionally supported by
  the
• Accession negotiations with the European Union
  (EU)
• opened on the 4th October 2005
• .brought Lisbon and Barcelona targets into
  strategic policy agendas of Croatia
• The screening processes for both the sectors
• ...have been successfully finalized with overall
  conclusions that
• From the legal and institutional point of
  Croatian systems are harmonized with the acquis
• Further development is needed..

RD and HE (Chapter 25)
Innovation policy (Chapter 20. 2)
5
Institutional set-up for RD and innovation in
Croatia (1/2)
6
Institutional framework for innovation policy
management and implementation (2/2)
7
Documents relevant for innovation policy
1996 The National Science and Research Program
2001 Croatian Program for Innovative Technological Development (HITRA)
2002 Croatia based on knowledge and the application of knowledge adopted by Croatian Academy of Sciences and Arts
2003 Strategy of Development of the Republic of Croatia in the 21 Century- Science
2004 Strategic plan of the National Foundation for Science 2004 2008
2004 55 recommendations of The National Competitiveness Council for increased competitiveness of Croatia
2006 2006 National Science and Technology Policy 2005-2010 accepted by the National Scientific Council Strategic Framework for Development 2006-2013, Central State Office for Strategic Developmnet (15.05. 2006)
8
The first innovation policy program -Program HITRA

• Croatian Program for Innovative Technological
  Development
• First government innovation policy program
  (adopted in 2001)
• Purpose building up efficient national
  innovation system
• Long term goals
• Fostering science-industry cooperation
• Revitalization of industrial RD
• Encouraging commercialization of the research
  results
• Current tasks
• Specialy designed to foster science industry
  cooperation
• Provides a framework for direct cooperation
  between entrepreneurs and scientific
  institutes/universities

9
Sub-Programs Type of projects Targets of the policy measures
T E S T Technology projects Simple technology projects (TP) commercially promising products, processes and services prior to their commercial use (prototype/pilot stage)
T E S T Technology projects Collaborative technology projects (STIRP) multidisciplinary, cooperative research for launching new or developing the existing technological areas
T E S T Technology projects Nucleus (Jezgre) Research and technological NUCLEUS concentration of RD resources (experts, equipment, instruments) to gain critical mass for research based services
Knowledge-based comp. RAZUM commercialization of research through companies (start-up, spin-offs, expansion.)
10
HITRA Main policy instruments
TEST RAZUM
Budget grants for research projects contracted among entrepreneurs and research institutions Subsidies to companies for research and development (30 of the total project value)
Budget grants for prototypes, pilot plans, feasibility studies Favourable commercial loans with the interest equalling the discount rate of the Croatian National Bank
Arrangements of IPR among partners Conditional loans in case of risk projects and academic spin-offs
Re-payment 21 of grants to MSES in case of commercialization of research results
On the spot monitoring of project implementation
Foundation of the Technology council
11
HITRA Programs

• RAZUM Knowledge based companies
• TEST technology projects

1/3 (37) projects proposals were selected for
financing
22 projects relates to start-up companies
16 projects are intended for companies
expansion plans
482 projects applications - received
252 projects selected for financial support
102 projects in progress
150 projects accomplished
12
Other programs related to innovation policy

• Programs of the National Foundation for Science
  (NFS)
• 1. Partnership in basic research (launched in
  2005)
• Aimed at attracting investments from industry and
  entrepreneurship to basic research in Croatia
• 2. Program Brain Gain - Visitor" (launched in
  2004)
• - Aimed at encouraging researchers resident
  outside Croatia to carry out research project in
  Croatia incl. industry

13
Institutional infrastructure of the Croatian
innovation system initiated by the MSES

• Business and Innovation Centre of Croatia (BICRO)
  
• The Croatian Institute for Technology (HIT)
• Centre for Technology Transfer (CTT), Zagreb

Technology and Innovation Centre, Osijek
Centre for Innovative Technology Rijeka (TIC)
1. Four technology and innovation Centres Centre
for Technology Transfer (CTT), Zagreb Technology
Centre Split (TCS) Centre for Innovative
Technology Rijeka (TIC) Technology and Innovation
Centre, Osijek 3. One Research and Development
Center Research and Development Centre for
Mariculture, Dubrovnik 4. Business and Innovation
Centre of Croatia (BICRO) 5. The Croatian
Institute for Technology (HIT)
Technology Centre Split (TCS)
Research and Development Centre for Mariculture,
Dubrovnik
14
Institutional infrastructure of the Croatian
innovation system initiated by the Ministry of
Economy and local authorities

• 9 business incubators
• 20 entrepreneurial centres
• 10 development agencies
• 14 free zones
• 2 technology parks
• Technology park Zagreb
• Technology park Varaždin

15
Institutional infrastructure of the Croatian
innovation system - technical infrastructure

• 2. Institutions of the technical infrastructure
• During 2004 the basis for technical
  infrastructure has been achieved and harmonized
  with the European standards and acquis
• State office for norms and measurement was
  transformed into the three new institutions
• Croatian Accreditation Agency (http//www.akredita
  cija.hr/)
• Croatian Standards Institute (http//www.dznm.hr/
  hzn/)
• State Office for Metrology (http//www.dzm.hr/).
• State Office for Intellectual Property Rights
  (http//www.dziv.hr/)
• State Bureau for Statistics (CBS)
  (http//www.dzs.hr/)
• These institutions make the core of the technical
  infrastructure necessary for overall
  technological and innovation development

16
Relevant international projects

• 1.Science and Technology Project of MSES
  supported by the World Bank, aimed at improving
  NIS, started in 2003
• 2. CARDS project Intellectual Property
  Infrastructure for the Research and Development
  Sectoraimed at introducing IPR system in
  academic sphere, started in 2005
• 3. The TEMPUS project Stimulating Croatias
  Entrepreneurial Activities and Technology
  transfer in Education CREATE has been approved
  by the European Commission in August 2005 .
• Aim create national university system for
  supporting entrepreneurial activities and
  technology transfer.
• 4. EURO-INFO Centre - The European information
  and communication centre Zagreb was established
  at the Croatian Chamber of Economy, started in
  2005

17
Towards Lisbon

• All these activities provide a platform for
  certain satisfaction with the innovation policy
• Although Croatia has no concrete National 3
  Action Plan or National Lisbon plan there is
  mix of policies and actions that should move
  Croatias orientation towards Lisbon goal-
  knowledge society.

Does Croatian NIS follow the path towards
knowledge economy?
18
Benchmark ecxercise Croatia
Simple model of NIS
RESEARCH CAPACITY SOCIAL AND HUMAN CAPITAL SOCIAL AND HUMAN CAPITAL ABSORPTION CAPACITY
RESEARCH CAPACITY Supply Users ABSORPTION CAPACITY
RESEARCH CAPACITY Creators Demand ABSORPTION CAPACITY
RESEARCH CAPACITY TECHNOLOGICAL AND INNOVATION PERFORMANCE TECHNOLOGICAL AND INNOVATION PERFORMANCE ABSORPTION CAPACITY
Input
Output
Source STRATA-ETAN Expert group for benchmarking
national research policies (EC DG Research, June
2002
19
Components of NIS - definitions

• RESERCH INTENSITY
• is a national pool of knowledge that makes a
  basis for the creation and adoption of new
  technologies and innovations

• HUMAN CAPITAL
• represents the knowledge and skills embodied in
  individuals that make them capable of taking
  advantage of knowledge and new technologies

• ABSORPTION CAPACITY
• is the ability of a company to recognize, accept
  and exploit new technologies. It is highly
  interdependent with innovation performance. It is
  capacity is closely connected to the
  infrastructure and channels that enable diffusion
  of innovation such as ICT, quality management,
  etc.

• TECHNOLOGICAL AND INNOVATION PERFORMANCE
• rather complex area that should indicate the
  degree of capitalization of science or
  transformation of research and human capacities
  into inovativnnes, competitiveness and
  production.

20
Components of NIS as composite indicators

• RESEARCH CAPACITY
• Gross domestic expenditures in RD (GERD)
• Total number of researchers (FTE) per 1000
  labour force,
• Number of scientific publications per million
  population

• INTELECTUAL CAPITAL
• Total public expenditure on tertiary education as
  a percentage of GDP
• Percentage of population aged 25-64 with upper
  secondary education
• New PhDs in SE fields per 1000 population aged
  25-34

• ABSORPTION CAPACITY
• Number of ISO certifications 9000 per million
  inhabitants
• Number of Internet Hosts per 10 000 inhabitants
• Researchers (FTE) in business sector as a
  percentage of total researchers (FTE )

• TECHNOLOGICAL AND INNOVATION PERFORMANCE
• Patent applications (PCT) per million population
  (technological output)
• High-tech exports as a percentage of manufactured
  exports (competitivenness)
• RD financed by industry (BERD) as percentage of
  GDP a measure of intrinsic interest and demand of
  industry for RD)

21
CALCULATION

• Our main task was to determine the relative
  position of Croatian NIS measured by composite
  indicators in relation to the two basic sets of
  countries
• EU 25 all the European member states
• EU 10 the New member states
• to see deviations or divergence of each country
  and Croatia from the average of the basic set of
  countries

22
Calculation of composite indicators

• In order to compare and to correlate the
  composite indicators, it is necessary to
  transform various sub- indicators that are
  measured in different unites into the same unit.
• .

Euros Percentages Per capita units, etc
Should be convert into the single measurement
unit
23
Results Research intensity vs. Human capital

• To see the relative position of Croatia we put
  into the relationship each of the composite
  indicator against each other. We receive 6
  graphs, as follows

24
Results Graph 2 .Research intensity vs.
Absorption capacity
25
Results Graph 3. Research intensity vs.
Performance
26
Results Graph 4. Human capital vs Absorption
27
Results Graph 5 Human capital vs Performance
28
Results Graph 6. Absorption vs performance
29
Results Croatia and EU 25

• EU 25 It is possible to identify at least
  three groups of countries
• Countries that are significantly above EU average
  in all the components of NIS Sweden, Finland,
  Denmark, Germany, Untied Kingdom, and
  (Netherlands with the exception of HC). These
  countries are the most efficient in the
  transition towards knowledge economy and in
  utilization of knowledge factors and
  innovation for economic growth
• Countries that are about EU average such as
  Belgium, France, Austria, Ireland and Luxembourg
  (with the exception of HC). Those countries are
  catching up with the first group in knowledge
  based economy
• Countries which are in almost all composite
  indicators (with some oscillations) below EU
  average. This group comprises all the new member
  states, but also southeastern countries like
  Greece, Spain, Italy, Portugal and Cyprus and
• .Croatia

30
EU 25 ( Croatia) Composite indicators
divergence from average, 2001
31
Divergence of Croatia from EU 25 average in
composite indicators, 2001
32
EU 10 ( Croatia) Composite indicators
divergence from average, 2001

• The position of Croatia in relation to the new
  member states (EU 10) is not much different from
  its position among all (25) EU countries.
• It is also possible to make the distinction
  between three groups of countries among new
  member states

33
Results - Croatia and EU 10

• ..
• Countries that are in all four or at least three
  components of NIS above average such as Czech
  Republic, Estonia,Hungary and Slovenia. Czech
  Republic and Slovenia are definitely the leading
  countries in innovation capabilities
• 2. Countries that are above (or about) average in
  2 components Cyprus, Lithuania, and Slovakia and
• 3. Countries with three or four components below
  EU 10averge Latvia (four components), Poland
  (three components) and Croatia (three components)

34
Croatia- divergence from EU 10 in selected
indicators,2001

• In comparison with EU 10 Croatia is better in
  only one composite indicators research capacity
  and one sub-indicator high-tech exports

35
GERD is in constant upswing line
36
GERD Croatia is topping the list of the New
member states
Figure 5.5 Gross domestic expenditure of RD (GERD), 2003
37
A pool of researchers in Croatia is bigger than
in majority of the New member states
Number of researchers (FTE) per 1000 labour force in Croatia and EU 25, 2003
38
However in human capital

• we are on the bottom of the list of the New
  member states

39
In absorption capacity .

• we are before Lithuania which is on the bottom

40
In innovation performance capacity

• we are below EU 10 average

41
Collapse of illusions

• .that we are maybe better than the previous
  transition countres in human capital or
  innovation capacities.
• In both groups of countries Croatia is lagging
  the most in
• absorption capacity and human capital

42
Croatian NIS critical components

• IT MEANS THAT THE MOST CRITICAL COMPONENTS OF
  THE CROATIAN NIS ARE

• ABSORPTION
• Quality management
• Number of researchers in industry and
• Computerization of Croatia

• EDUCATION
• Investment in tertiary education
• Number of new scientists in engineering
• Educated labor force

43
RD sector structural imbalances in number of
researchers and RD investments

• The analysis of RD sector in the narrow sense,
  in terms of investment in RD and number of
  researchers in public vs. private sector reveals
  that RD sectors is suffering the serious
  structural imbalance since public sector
  significantly domintes over private sector while
  in developed countries industry and business
  sectors in both research manpower and investments
  largely predominate the public sector
• While in developed countries about 50- 80 percent
  of researchers are employed in business sphere in
  Croatia, the situation is just the opposite.
  Pubic sector, (HE and government employs 85) of
  researches, while business sector employs modest
  15

Researchers () in public and business sectors in selected countries, 2003
44
RD sector structural imbalances in RD
investments between public and private sector

• Business sector in Croatia invests 0,45 of
  GDP. Business sector invests in EU 15 countries
  more than 1 of GDP from 0,27 in Portugal to
  3,32 in Sweden .
• Therefore, the development of RD sector should,
  presumably, involve further development of public
  sector RD to catch up with European standards
  but concerted actions of both government and
  private business for strengthening industrial
  research capacities are seriously needed.

45
CONCLUSIONS

• National innovation system of Croatia is
  underdeveloped in comparison with both all the
  member states of EU 25 and new member states
  EU 10 countries that belonged to transition
  countries as well as Croatia
• Croatia is lagging behind in knowledge based
  factors of growth that commonly shape the new
  techno-economic paradigm knowledge economy such
  as qualification structure of the labor force,
  technology capabilities of companies, research
  capacity in industry, computerization, etc.
• Croatia is competitive to EU countries only in
  research intensity that reflects the present
  orientation of innovation policy primarily
  towards supply side in terms of number of
  researchers and investments in RD in public
  sector
• It support the thesis that Science policy in
  Croatia is standard policy based on a linear
  model of innovation in which science is a prime
  mover of technology development.

46
CONCLUSIONS (cont.)

• Policymakers in Croatia assume that
  capitalization of science (innovation) begins and
  ends with research
• Therefore, science and innovation policy is
  primarily focused on public science separate from
  production and entrepreneurship (Innovation
  policy is a part of science policy that is
  centralized and dominated by MSOS as the main
  financer and consumer of RD
• Ministry of economy runs its own programs for
  business development mainly unware of the
  innovation policy

47
The main reasons for underdeveloped innovation
policy

• .are perceived in the socio-cultural inertia and
  lack of policy learning
• The policymakers should understand
• the complexity of the innovation process
  innovation is essentially the result of the
  interactive process between many actors and
  sectors (science, companies, financial sector,
  legal conditions, ect.)
• that there is a need to create conditions for
  their interactions and combinations of different
  kinds of knowledge scientific, engineering,
  production etc.
• that Lisbon agenda requests a shift from the
  conventional science policy towards integrated
  and pro-active innovation policy that means
  integration of science, industry and technology
  policy.

48
Is integrated innovation policy possible in
Croatia?

• However, integrated innovation policy should
  significantly influence both
• Science policy (science organization, evaluation
  and institutional set-ups), pushing it towards
  the norms and values of a concepts close to new
  knowledge production and triple helix that are
  not welcome in our scientific community and
• Industrial policy that is today reduced to
  privatization of state-owned companies and
  financial rehabilitation of weak industries but
  corresponds to neo-liberalism that is a dominant
  economic doctrine in Croatia
• CONFRONTATION WITH THE SOCIO-CULTURAL NORMS AND
  VALUES

49
IS CROATIAN DEVELOPMENT POLICY ON THE CROSS-ROAD?
INOVATION POLICY
SCIENCE POLICY
Fostering knowledge based factors of growth
Privatization and rehabilitation
Technology policy
Standard industrial policy