Economic Crisis: Innovation still lags, China and South Korea are booming

Πηγή: Nature
By Barbara Casassus
Sept 13 2012

Industrialized countries have pinned their hopes on research and development (R&D) to spur recovery from the financial and economic crisis. But these hopes remain mostly unfulfilled, according to the Organisation for Economic Co-operation and Development's report OECD Science, Technology and Industry Outlook 20121, released today.

Innovation declined across all sectors worldwide in 2009, in response to the most serious economic turmoil for half a century. Average business spending on R&D in the OECD's 30 member countries dropped by a record 4.5% that year. It has picked up again in most places, but spending has not returned to pre-crisis levels everywhere, says Dominique Guellec, head of the countries studies and outlook division of the OECD’s science, technology and industry directorate in Paris.

Member-state governments made innovation a pillar of the recovery, boosting their collective R&D spending by 9% in 2009. This partly offset the drop in business outlays, but budgets soon came under pressure. In 2010, member countries — by then numbering 34 — cut back public R&D allocations by a total of 4%.
National differences

In eastern and southern European countries such as Greece, where unemployment was already high and R&D spending low, the economic crisis has made things worse. By contrast, China, South Korea and other emerging Asian economies are out-innovating the Western world. Markers such as the number of patent filings have increased in these countries since 2007, and “are likely to continue to do so in the future”, the report predicts. China’s share of global R&D spending jumped from 7% in 2004 to 13% in 2009, and innovation has also risen up policy agendas in India and Brazil.

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OECD/THOMSON ONE

Economic difficulties can sometimes awaken a country’s entrepreneurial spirit, but that hasn’t generally been the case over the past four years: the creation of new companies remains considerably lower overall than in 2007, as do venture-capital investments (see 'Deal downturn'). “This is particularly worrying,” says Guellec. “Since the economic outlook is still extremely risky, venture capitalists are just not coming forward.”

The crisis has triggered changes in innovation policy among OECD governments, although they have been progressive rather than radical, the report says. Measures intended specifically to boost R&D — such as tax incentives, improved patent and intellectual-property rules and new infrastructure for information and communication technology — are in wider use now than before the crisis.

But the report criticizes governments for not going far enough to support entrepreneurship. “Unless both the public and private sectors turn more attention to innovation and R&D, they are unlikely to meet their objectives in restoring economic growth and employment to acceptable levels,” warns Guellec.

Indian ideas power US business innovations, says a study by IIM-Ahmedabad

Πηγή: The Economic Times
Feb 1 2012

AHMEDABAD: After lagging for years, India has now taken a lead in the business of ideas. Over 50% of total patents filed for industrial innovations in the US have Indian brains behind them, says a study by Indian Institute of Management, Ahmedabad (IIM-A ).

Foreign firms, including research and development (R&D ) centres, have increased their dependence on all-Indians teams - a trend reflected in the number of Indian inventors in patent applications filed by foreign companies in India and abroad in recent years.

The study 'Foreign R&D Centres in India: An Analysis of their Size, Structure and Implications' measures the contribution of multinational companies in the generation of innovations from India . The trend suggests maturing of Indian researchers and the fact that local researchers are the most important sources of ideas for R&D projects for foreign companies in India, according to the study.

The authors, IIM-A faculty Rakesh Basant, along with Sunil Mani from the Centre for Development Studies, Trivandrum , conducted a survey on a sample of 120 MNC R&D firms, the bulk of which were set up after 1990.

The study also says foreign R&D centres seem to have become the locus for creating 'reverse innovations' , which means innovations that are first created in India by these centres and then exported back to their parent firms for use both in developed and developing country markets.

Majority of the R&D centres are either subsidiaries or branches of US-based MNCs and one industry where they are extremely active is the ICT sector. "Over time, 50-66 % of the total US patenting of industrial innovations are recorded in India, conducted through these centres," says the study.

According to private estimates , the number of foreign R&Ds operating in India till December 2011 was about 900. The R&D expenditures by foreign companies have shown a robust increase from Rs 286 crore in 2002-03 to Rs 2883 crore in 2009-10 . Moreover, the share of foreign companies in total R&D has increased to around 20 per cent according to the most recently available estimates, says the study.

Finally, the study suggests that in order to get spill-over benefits of MNC R&D activities in India, R&D policy should be enhanced. "India does not have any explicit policies to promote FDI in R&D although there exists in the country a number of policy instruments, fiscal and otherwise , for promoting FDI and incentivising the conduct of R&D ," the study says.