Utilization of knowledge for economic growth in the Czech Republic

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Utilization of knowledge for economic growth in
the Czech Republic

• Karel Klusacek
• Technology Centre AS CR
• klusacek_at_tc.cas.cz

Knowledge Economy Forum V Innovation and Technolo
gy Absorption for Growth Prague, March 28 30,
2006
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Basic remarks

• This presentation brings some examples of main
  features of recently completed analysis titled
  Barriers to the growth of competitiveness of
  the Czech Republic with a special regard to the
  sector of innovative SMEs
• Presented results are a part of a complex
  analysis ordered by the Czech Government in
  2004-2005 through Ministry of Regional
  Development, Ministry of Industry and Trade and
  Ministry of Education
• The results are being used for formulation of a
  national strategy of the growth of
  competitiveness of the Czech Republic and for
  structuring and formulation of new Operational
  Programs (EU Structural Funds 2007-2013) focused
  on the support of innovation and development of
  a knowledge-based economy

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Structure of this presentation

• Survey (interviews) conducted in Czech innovation
  SMEs
  
• Main barriers to innovation and technology
  absorption sector of SMEs
  
• There is something to build on ...
• Utilization of results - strategic policy
  documents

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Survey in innovative SMEs - interviews

• Top managers of 140 SMEs responsible for RD and
  innovation strategy were interviewed to identify
  particular barriers hampering companies in being
  more competitive
• Nine blocks of questions
• Target markets, trade and marketing
• Human resources
• Financing
• Innovation activities
• Intellectual property rights
• Cooperation with research institutes and
  universities
  
• Science and technology parks, incubators
• Cause of obstacles in innovation activities
• Possibilities of public support to innovation
• Detailed interviews were performed in 40 SMEs

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Interviewed companies the prevailing field of
activity
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Main barriers identified in the SMEs survey
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The opinion of the SMEs managers

• The most important measures that should be taken
  by the government to support innovation in SMEs
  
• Targeted tax relieves for innovative SMEs -
  depreciation of investments in RD, extended
  deduction of expenses on RD and innovation
  (83)
• Systemic measures motivating mutual cooperation
  of SMEs and academia (65)
  
• Establishing new programs supporting RD and
  innovation in SMEs and the cooperation between
  SMEs and research and educational institutions
  (63)
• Improved infrastructure for technology transfer
  and business incubation(55)

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There is something to build on ...

• Some examples
• Legislation (tax relieves)
• Specific programs for SMEs
• Infrastructure for business incubation and
  technology transfer
  
• Foreign direct investments
• ......

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Tax relieves for Research and Develoment

• Czech Government approved (2005) tax relieves
  available for spending by business on RD
  
• Businesses can deduct up to 100 current
  spending on RD when they compute their taxable
  profits

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Specific programs for SMEs

• Mostly programs operated by the Ministry of
  Industry and Trade (MIT) through the
  implementation agency CzechInvest
  
• MIT distributed about 4.2 bln CZK in 2005
• About 3,000 SMEs supported
• The biggest program of the MIT is the Operational
  Program Industry and Enterprise with more than
  3.6 bln CZK allocated to projects of SMEs in
  2005
• Source Ministry of Industry and Trade,
  CzechInvest

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Science Parks and Incubators
existing
existing and expanding support from the Program
PROSPERITA
new projects support from the Program PROSPERITA

Source CzechInvest
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Czech Innovation Relay Centre

• Main business - technology transfer,
  commercialization of knowledge, IPR services
  
• Consortium of three organisations covering Czech
  regions with a dynamic sector of innovative SMEs
  and strong research base
  
• Member of an international network of 71 IRCs in
  33 (mostly European) countries

for success stories visit http//irc.cordis.lu
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Foreign Direct Investment
cumulated value US 43 bln GDP PPP US 187.5 bl
n in 2004
Source Czech National Bank
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Foreign Direct Investment

• Intensive promotion of the inward FDI since the
  2nd half of the 90s
  
• direct subsidies, land and infrastructure
  preparation, tax allowances
  
• large political support
• Positive capital, know-how, managerial quality,
  market ... consequently ... wealth creation, jobs
  creation, development of supply chains
  
• Questionable using of local RD capacities,
  development of own research capacity in the Czech
  Republic, investment into human resources
  
• Good example Skoda Volkswagen Czech research
  capacities anounced to develop (1,500
  researchers), project of own regional university
  
• Issue to be solved
• Minimal threshold for state support (100 M CZK)
  is too high for smaller companies ( SMEs)
  
• Consequently if you are neither SME or big
  investor there is no support for your projects
  

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Utilization of results

• Formulation of the Economic Growth Strategy of
  the Czech Republic - section Research,
  Development and Innovation (completed and
  approved by the Government of the Czech Republic
  in November 2005), http//www.hospodarskastrategie
  .org
• Results used (at least) by three Ministries -
  Ministry of Industry and Trade, Ministry of
  Regional Development, Ministry of Education for
  preparation of new Operational Programs (EU
  Structural Funds) for 2007-2013 (underway)
• Operational programs focus on research,
  development, innovation, SMEs and related human
  resources - distribution of 160 bln CZK over a
  period of 7 years

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Thank you for your attention